- PyroGenesis Canada, an unloved ESG stock, has received a C$667,252 (US$500,000) down payment from a U.S.-based technology company for a multi-year plasma torch contract
- The contract represents more than US$13 million in revenue
- PyroGenesis Canada designs, develops, manufactures and commercializes advanced plasma processes and sustainable solutions that reduce greenhouse gases
- PyroGenesis Canada stock has lost 49.11 per cent year-over-year, but is down by only 10.94 per cent since 2019
PyroGenesis Canada (TSX:PYR), an unloved ESG stock, has received a C$667,252 (US$500,000) down payment from a U.S.-based technology company for a multi-year plasma torch contract.
The payment follows negotiations with the client – who wasn’t disclosed for competitive reasons – for a US$13 million contract for five high-power 2 MW air plasma torch systems. The parties recently signed a master agreement granting the client exclusivity to PyroGenesis’ plasma torch technology until Feb. 15, 2024, by which date the client intends to secure financing and finalize a first statement of work (SOW) in collaboration with the company. The master agreement details the potential for more SOWs covering the purchase of related equipment and services, as well as additional plasma torches.
“This nonrefundable down payment is a significant step towards concluding the first SOW under the master agreement, a contract which anticipates many more SOWs to come,” P. Peter Pascali, PyroGenesis’ president and chief executive officer, said in a statement. “Provided the client receives adequate financing, this contract has the potential to be a springboard from which PyroGenesis introduces a significant number of plasma torches into the marketplace. These direct sales would have an obvious impact on revenues and profitability, but they would also speak to our strategy to develop ongoing revenue streams from activities such as maintenance and spare parts sales.”
“As industries increasingly seek efficient alternatives to fossil fuel-based systems,” he added, “PyroGenesis’ electric and carbon-free plasma torches continue to be proven as not just a highly suitable alternative, but also a potentially faster and more cost-effective solution.”
Promising technology plagued by slow adoption
PyroGenesis’ electric-powered plasma torches are currently helping numerous clients in heavy industry to reduce waste, fossil fuel use and greenhouse gas emissions. Recent examples include:
The company also collects revenue beyond plasma torches, with a focus on plasma-atomized titanium metal powder, aluminum production optimization and silicon, granting it access to industries that represent more than US$1 trillion in revenue.
That said, the relatively small size of most of PyroGenesis’ contracts, as well as their lengthy trial phases, have stood in the way of the company moving out of its growth phase and into consistent profitability, sending the stock down by more than 95 per cent from its all-time-high.
As outlined in its Q3 2023 results, PyroGenesis believes it is positioned to benefit over the long term from rising pressure on governments and the aluminum, steelmaking, manufacturing, defense and aeronautics industries to lean into decarbonization. But whether the company’s efforts end up generating shareholder value will ultimately depend on trials reaching full commercialization, and efficiently dispatching its C$35 million backlog as of Nov. 9, 2023, such that it can come out ahead of its historically high operating expenses.
Click here to read a thorough overview of Pyrogenesis’ business.
PyroGenesis Canada designs, develops, manufactures and commercializes advanced plasma processes and sustainable solutions that reduce greenhouse gases. The company’s technologies are being vetted and adopted by multiple multi-billion dollar industry leaders in iron ore pelletization, aluminum, waste management and additive manufacturing.
PyroGenesis Canada stock (TSX:PYR) last traded at C$0.57 per share. The stock has lost 49.11 per cent year-over-year, but is down by only 10.94 per cent since 2019.
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