ScienceFirst wrote: Holy smoke! Where's Gojotv and our shorts???
More than doubling the previous NPV from 3M$/torch to 7M$/torch
“We have achieved another major milestone as this is our second commercial plasma torch order with a major iron ore producer,” said Mr. P. Peter Pascali, CEO and Chair of PyroGenesis. “In addition, Client B has advised that they would likely be ordering approximately 130 torches upon the successful installation of today’s order. This is particularly interesting given that Client B does not have the largest need amongst iron ore pelletizers. For example, we estimate that Client A, who has over ten (10) plants, each possibly requiring up to 50 plasma torches, has a significantly higher need. The iron ore pelletization industry is under extreme pressure to reduce their carbon footprint and GHG emissions. As the industry is expected to grow at 3.0% pa from 2021 to 20271, iron ore pelletizers are looking for technology solutions to help them meet their carbon footprint and GHG targets. PyroGenesis’ proprietary plasma torches which significantly reduce GHG emissions are an attractive solution as an environmentally friendly alternative to fossil fuel burners. As sales of PyroGenesis’ plasma torches increase, PyroGenesis should also benefit from providing proprietary spare parts and services, which would generate significant high-margin, recurring revenue. We cannot overemphasize the opportunity this order presents. Although nothing is certain with respect to success and/or future contracts, and there are always risks as we move forward, we can now say without a doubt that we are on the right path and things are evolving in the right direction.”
Management has previously estimated internally that a typical pellet plant producing 10 million metric tonnes of pellets annually emits approximately one million metric tonnes of CO22. The total world pellet production of 400 million metric tonnes of pellets represents a potential market for torch sales in excess of $10B worldwide. The world pellet industry generates about 40 million metric tonnes of CO2 every year. The use of plasma torches running off a clean electrical grid would reduce these emissions significantly. For reference, 40 million tonnes of CO2 represent the combined yearly emissions of 8.7 million US passenger vehicles3.
Given recent sales, and the fact that the torches are expected to last 25-30 years, PyroGenesis has revised the estimated net present value (NPV) of each torch sale to be approx. $7MM (calculated based on 20-year life). This is an increase from previous disclosures wherein the Company estimated that each torch sale could represent a $3MM NPV to the Company. The original figure was based on very conservative estimates which projected the initial torch sale to be between $1-1.3MM with subsequent maintenance and spare parts contracts limited to 5 years.