An investor’s (less pessimistic) thoughts, take from it what you will.
As a shareholder heavily invested in PYR, I’ve noticed increased negative sentiments on various social media platforms that center on 2 topics: missed timelines and decreasing stock price. Fair enough, I get the sentiment too - it’s discouraging to be down 50+% and can definitely sympathize (heavily in the red). But seeing this negativity uttered over and over again by the same individuals who apparently “believe” in the Company and hold a “large position” is getting tiring, and I think it’s important to balance the negativity out with the incredible potential of this Company.
In regard to missed timelines, there seems to be a running gag on certain social media platforms about Peter’s use of the word “gangbusters” to describe 2021, whether this be in reference to the delayed torch orders from Clients A, B, C, the $40 mil DROSRITE upstream process bid, $65 mil dollar pipeline by mid october, etc. I think what investors can realistically conclude is that giving guidance in PYR’s position is VERY hard, whether this be due to COVID supply chain delays, government grant incentives that clients would surely want to apply to, on-site infrastructural demands, delayed paperwork, long qualification periods, etc. Peter is not perfect and he can’t foresee every obstacle. In his defense, PYR is aiming to disrupt multiple industries while learning about these business obstacles along the way. There are no other/or very few companies out there that PYR can use as a benchmark of success. So while I understand that missed timelines are frustrating for anyone, and investors want to hold Peter accountable, overstating this argument pales in comparison to the bigger picture of long-term potential for recurring revenue.
As for stock price, well, are you approaching it from a trader, or investor’s perspective? If you have an investor’s mindset, did your due diligence and accounted for your personal timelines/risk tolerance, then why focus on day-to-day price actions? PYR is commercializing disruptive plasma-based technology that reduces GHGs while lowering CAPEX and OPEX for multi-billion dollar enterprises. These are largely untested waters, and if you trust that management will execute successfully, then these temporary price fluctuations are just that - temporary. Alternatively, many small caps have been hit hard, some are even down 80%+ from their all time high stock price. PYR’s drop is likely partially attributable to general macro-level market dynamics among trading and short-selling.
With that out of the way, below are quick reminders why PYR has massive long-term potential (recurring revenues) in all of its business lines. If you just want a general overview/history of the Company and its business verticals, I invite you to a fantastic post by MazerRR that delves into these points in great detail:
https://stockhouse.com/companies/bullboard?symbol=t.pyr&=post&postid=32418137
Iron ore pelletization:
Iron ore represents more than 90% of all mined metals in the world, the majority of which goes into steelmaking. The GHG emissions resulting from diesel burners in iron ore pelletization are massive, and industrial giants such as Vale (Client A) and Rio Tinto (Client B) have stated they are looking into plasma as a decarbonization solution.
https://www.visualcapitalist.com/all-the-metals-we-mined-in-one-visualization/ https://www.riotinto.com/-/media/Content/Documents/Invest/Reports/Climate-Change-reports/RT-climate-report-2020.pdf?rev=c415a8138bd7408496ccb3834511abc0 (PAGE 18) https://www.vale.com/brasil/PT/aboutvale/news/Documents/2021/Vale_CC_2021-EN%201.pdf (PAGE 19)
To date, PYR has received a cost estimate for 36 torches for Client A and expected future orders of 130 torches for Client B. Net present value (NPV) of a torch has increased from $3mil (5 years) to $7mil (20 years). A torch life expectancy is 25-30 years, so the true NPV is likely even higher. Each torch is 1.5 mil upfront. So the remaining 5.5 mil per torch is recurring revenue for 20 years, which translates to 275k recurring revenue per year, per torch. There is an expected demand of 1000+ torches in iron ore pelletization between just Clients A, B and C, meaning recurring revenue is expected to be 275 mil per year for 20 years. This does not factor in Clients D and beyond. PYR also holds the patent for use of torches to replace diesel burners in this industry, therefore any other torch company will have a rough time looking to gain a piece of the pie.
https://www.globenewswire.com/news-release/2021/09/14/2297042/0/en/PyroGenesis-Announces-6-Million-Torch-Order-with-Another-Major-Iron-Ore-Pelletizer.html
Right at the time of typing, PYR announced that a factory acceptance test for the use of its plasma torches in iron ore pelletization has been scheduled to be completed with Client A. Vale appears committed to the shift over the PYR torches and is not going through this for nothing. While timelines may be delayed, indicators all seem to point to an eventual, long-term adoption of PYR tech.
https://www.globenewswire.com/news-release/2022/01/27/2374681/0/en/PyroGenesis-Announces-Factory-Acceptance-Test-for-Plasma-Torches-Scheduled-with-Client-A-a-Multi-Billion-Dollar-International-Producer-of-Iron-Ore-Pellets.html
Check out this post by developbc on stockhouse for the margin of PYR torches and further information regarding any possible competition out there. Remember, PYR has first-mover advantage, and is also getting interest for its torches from the steel, automotive, cement and aluminum industries. If history is any indication, you can bet PYR is looking to lock in its IP in those industries in the form of future patents.
https://stockhouse.com/companies/bullboard?symbol=v.pyr&postid=31508334
So, 1000+ torches, more needed by Clients D and beyond, AND more needed by other industries. How much recurring revenue do you think PYR can realistically lock in? 300 mil? 400 mil?
DROSRITE:
From PYR's investor deck, there are 3 mil+ tons of aluminum dross produced each year, which translates to ~600 DROSRITE systems (each processing 5000 tons). Tolling of DROSRITE systems is PYR’s preferred strategy, which would ensure a consistent revenue stream for years to come while also providing an on-site, turnkey solution for smelters with NO CAPEX requirements.
Each system could produce >$1mil in recurring revenue, 600 systems is $600 mil, which is absolutely mind boggling. This doesn’t take into consideration that the zinc and copper industries can also be targeted. Combine that with the payments from 1000+ torches in iron ore pelletization alone, and you are looking at close to $1 bil in recurring revenue.
Can PYR successfully sell/toll 600 DROSRITE in the next several years? Well, in terms of the technology, DROSRITE boosts the highest metal recovery rate (98%), an additional upstream process, the ability to process dross residues, and repurpose spent pot lining. This multifaceted “one-stop shop” strategy should make PYR’s DROSRITE offering very attractive compared to other technology out there.
https://www.globenewswire.com/news-release/2021/10/20/2317741/0/en/PyroGenesis-Announces-Formation-of-PyroGenesis-Aluminum-Division-Dedicated-to-Serving-the-Aluminum-Industry.html
The key reason why PYR offerings are enticing is because they make sustainability sustainable, as Peter puts it. Aside from directly reducing GHGs, “the savings, with DROSRITE PLUS™, would be about $191 and $418 per MT of aluminum and zinc dross, respectively.” The link to the full paper describing the DROSRITE patent is posted below, and the numbers speak for themselves. The return on investment for purchasing a system is less than a year, meaning the system pays for itself.
https://www.pyrogenesis.com/wp-content/uploads/2019/09/2012-09-Drosrite-Plus-COM-2012-Paper.pdf
One question is whether DROSRITE systems can be scaled down to meet the requirements of smelters that don’t need to process as much dross per year ( <5000 tons/yr). That is exactly what the Mini-DROSRITE system is made for. It can “economically process 500 tons of dross/year as compared to the 3,000-7,500 tons/yr that our current systems are designed for. This smaller system enables us to target thousands of smaller facilities which were not originally in our target market. The price tag of $600k has a similar pay-back for clients as our original designs.”
https://www.pyrogenesis.com/wp-content/uploads/2018/11/PyroGenesis-Unveils-New-Mini-Drosrite-System_Final.pdf
More recently, PYR received an LOI for three 10-ton DROSRITE™ systems from an existing client, speaking to the rapid adoption of PYR’s technology. “Aside from the three systems disclosed today, PyroGenesis now has eleven (11) commercial Drosrite™ systems either in full operation, delivered or in the process of being delivered,” added Mr. Pascali. “Once all eleven systems are in operation, the Company expects to benefit from a recurring revenue stream, from spare sparts alone, in excess of $4 Million per year.”
PYR has also recently won a $40 mil bid for the DROSRITE upstream process (only delayed because of government documentation), further cementing the fact that there is probably no/little technology out there that can directly compete with the environmental and economic advantages of PYR’s offering.
https://www.globenewswire.com/news-release/2021/06/07/2243069/0/en/PyroGenesis-Announces-Receipt-of-an-LOI-for-Three-10-Ton-DROSRITE-Systems-from-an-Existing-Client.html
So effectively, you have a system that has better system efficiency than legacy tech, offers lower capex and opex (through direct sale of a system) or zero capex and lower opex (through tolling), coupled with optional turnkey waste management services (upstream, dross residues, spent pot lining) for on-site tolling. Recurring revenue through hundreds of tolled systems seems like a real possibility to me. PYR’s confidence in their DROSRITE offering is undeniable with this quote:
“Combined with the increased market penetration we now have with the Mini- DROSRITE™ design, we estimate the market for DROSRITE™ to be in the thousands of units and not the hundreds of units we originally estimated.”
https://www.pyrogenesis.com/wp-content/uploads/2018/11/PyroGenesis-Unveils-New-Mini-Drosrite-System_Final.pdf
Waste destruction and PFAS:
The PFAS contract came out of nowhere and is the first commercial land-based waste destruction system outside of the military/navy. Given Biden's plan to combat PFAS, and with PFAS gaining popularity in the press, this emerging hazardous waste seems like an opportunity for consistent long-term contracts in the states and worldwide. In the most recent agoracom Q&A video, Peter said the potential market size is so huge they can’t put a specific number to it. Maybe this is the only contract PYR will ever get for PFAS, but given the magnitude of the issue, and seeing as how PYR is actively pursuing two other opportunities in the same state, it seems logical to assume that PFAS presents a future business opportunity.
You may have forgotten that PYR also announced in 2021 a contract to provide two plasma torches to an Asian client for destruction of medical waste. This makes me wonder what kind of “inside-the-fence” opportunities the PFAS contract will open up. Being inside the fence has considerably strengthened PYR’s DROSRITE offering, and I foresee similar success where PYR is approached to destroy other kinds of waste streams beyond PFAS.
https://www.natlawreview.com/article/pfas-drinking-water-issues-get-10-billion-funding
https://www.globenewswire.com/news-release/2021/08/17/2282192/0/en/PyroGenesis-Announces-1-2MM-Plasma-Torch-Contract.html
Additive manufacturing:
PYR’s NEXGEN process has a production rate of ~25kg/h (industry standard is ~ 10kg/h), lower CAPEX, OPEX, and narrower particle size distribution. The significance of such high production rates allows PYR to sell powders at extremely competitive price points and squeeze out competitors. High production rates also allow PYR to enter high value metal powder markets that would otherwise be too costly.
https://www.globenewswire.com/news-release/2021/04/19/2212305/0/en/PyroGenesis-Announces-Completion-of-Additive-Manufacturing-NexGen-Powder-Production-Line.html
The potential for recurring revenue is intoxicating. From what I recall, powder towers can run 24/7 with little maintenance breaks. What that means is:
25kg/h * 24h = 600kg of powders daily per production line.
Assume each kg of titanium sells for $250/kg (conservative).
600kg * $250/kg = $150k daily
$150k daily * 30 days = $4.5 mil monthly
$4.5 mil monthly x 12 months = $54 mil recurring revenue yearly for a single production line. That sounds pretty darn gangbusters to me.
Realistically, you’d assume that there might not be enough demand to warrant 24/7 production. If you are conservative and assume that towers are online for 6 or 8 hours a day, that still results in $13.5 and $18 mil recurring revenue per production line, respectively. The estimated 3d printing metals market is estimated to be around ~$3.2 bil by 2024. Major top tier aerospace companies and OEMs across Europe and North America have chosen to wait years for PYR to finish their NEXGEN process. PYR has also drawn potential interest from the automotive industry. “Of note, a major tier one global aerospace company entered into an agreement with the Company to qualify its powder, at considerable expense to the global aerospace company, with a view towards having the Company become a supplier. The Company expects that such developments will continue and will translate into significant improvements in contributions to revenue by this segment in the mid-long term.” Given all the benefits of PYR’s NEXGEN process, there is no reason to think that PYR can’t capture a modest 5% of the 3d printing market, which would produce recurring revenues of > $160 mil.
Two competitors that come to mind are Tekna and 6k. Briefly, both companies use different processes than PYR that result in lower quality products with barriers to profitability, and Peter does not view them as competition. See writeup on Tekna by midtownguy and response about 6k by Peter on agoracom. If that doesn’t seem convincing enough, PYR INVENTED the plasma atomization process for powder production and their old tech is owned by GE.
https://stockhouse.com/companies/bullboard/t.pyr/pyrogenesis-canada-inc?postid=32912368
https://agoracom.com/ir/PyroGenesisCanada/forums/discussion/topics/735375-6k-additives-vs-pyr/messages/2254648#message
Partnership with HPQ:
PYR designs and builds all of HPQ’s silicon reactors (QRR, NSiR, FSiR). In return, PYR gets a 10% royalty on all future sales and the option to convert the royalty into a 50% ownership stake in HPQ NANO (for nanosilicon) or HPQ Polvere (for fumed silica). With PYR and HPQ’s array of reactors that produce metallurgical grade silicon metal and nanosilicon at lower CAPEX and OPEX than legacy tech, in combination with silicon prices and demand soaring through the roof, the global silicon market is a very lucrative business opportunity for both companies.
https://www.metalbulletin.com/Article/4009219/Global-silicon-prices-hit-record-highs-amid-Chinese-shortage.html
GEN3 of the QRR pilot plant will be in operation before the end of Q1, producing 5 MT of 2N-4N purity silicon metal per month. The addressable market for 2N silicon metal alone is 10+ bil by 2025. What's so special about the QRR? It requires cheaper feedstock, lower OPEX, and is a safer and greener alternative than legacy tech that relies on processing silane gas.
Alternatively, the 2N-4N silicon metal could also be used as feedstock for the NSiR which will further convert this silicon metal into high purity nano-sized silicon powders for applications in EV battery anodes. GEN1 NSiR nanosilicon samples are currently being 3rd-party validated and will soon be sent to auto manufacturers that asked for them. GEN2 NSiR design will soon follow. What is extremely exciting is that per the January 12 NSiR update news release, HPQ can now produce nanosilicon powders as small as 10 nm and as big as micro sized if necessary. This flexibility will be important to meet the customized demands of various battery players looking to incorporate silicon in the battery's anode.
Tesla has recently locked in supply of graphite and nickel from North American sources. The race to become vertically integrated and to lock in the supply chain of auto/battery materials is on between all auto manufacturers, with Tesla ahead of the game. As for HPQ, silicon WILL overcome graphite as the major ingredient in battery anodes, whether it's lithium ion or solid state batteries.
-
Silicon will become the dominant component of anodes due to better charging speed and energy capacity. Many battery players and auto manufacturers are including silicon in some capacity in the anode, including: SilLion (Tesla), Nanograf, NEO, Unifrax, Sicona, Sila Nano, Amprius, Nexeon, Altech, StoreDot, Enovix, SinAnode, PRiMX, Mason Graphite, OneD, Farasis, InoBat, and who else am I missing lol… the whole crowd of battery players have no choice but to procure their silicon from legacy silicon providers like Ferroglobe. HPQ is entirely upstream and looking to become THE supplier of nano/microsilicon to all battery players and auto manufacturers.
-
HPQ is the only one that can provide CHEAP, GREEN micro/nanosilicon.
-
Tesla is in talks with Quebec about battery materials.
-
Tesla specifically bought out SilLion for rights to a patent that incorporates over 60%+ silicon material in the anode.
-
A move by Tesla will incentivize other auto manufacturers to move quickly and sign respective supply deals.
https://www.smh.com.au/business/companies/australian-miner-syrah-resources-to-supply-graphite-for-tesla-evs-20211223-p59jsb.html?ref=rss&utm_medium=rss&utm_source=rss_business
https://www.mining.com/tesla-signs-1-5-billion-deal-for-nickel-from-talons-minnesota-project/
HPQ is also looking to disrupt the fumed silica market space with the FSiR, a one-step-process reactor that converts quartz directly into fumed silica while requiring significantly less energy consumption, does not use or emit harmful chemicals, and does not require as much starting feedstock. On the latter point, quartz itself as a feedstock is only 5cents a kg. Legacy tech on the other hand has to first convert quartz and other materials into 2N silicon, which is then used as feedstock to make fumed silica. 2N silicon as feedstock costs 2.5$+/kg, so HPQ's one-step process is 98%+ cheaper in the feedstock department alone.
Conclusion:
Recurring revenue from 1000+ torches in iron ore pelletization and other industries, tolling services for 600 DROSRITE systems, torches for waste destruction across different sectors, additive manufacturing and HPQ royalties suggests eventual consistent recurring revenue of > $1 bil. Take half of that if you’re conservative. What kind of market cap does that number warrant? The opportunity for a $10-50bil+ market cap is entirely possible… but maybe I shouldn’t say that for fear of being labeled as the uncle. Assuming a conservative margin of 40-50% across all of PYR’s offerings, PYR is a future blue-chip in the making with a gigantic moat in my mind.
The stock is currently trading at ~$300-350 mil (USD) market cap. If you believe in investing in disruptive, undervalued companies before the recurring revenues come by, then the current stock price is a STEAL. Considering the doubling of employee headcount, additional warehouse facility, increasing backlog, use of cash for share buyback, I am extremely bullish for PYR’s future.
I didn’t touch upon Pyro Green-Gas (formerly known as AirScience Tech), PYR’s new ZCE hydrogen initiative, or today’s announcement of a funded research collaboration with Progressive Planet Solutions Inc., simply because there is so much going on with this Company and I need to refresh my memory. Off to do more reading, good luck to all with your investments.