- Cymat Technologies (TSXV:CYM) signed a letter of intent with Rio Tinto Alcan to acquire the latter’s aluminum metal matrix composite technology, including an existing customer base
- Based on Rio Tinto’s historical sales data, Cymat believes the acquisition could lead to a C$7.5 million-C$10 million boost in annual revenue
- Cymat manufactures and sells Stabilized Aluminum Foam, a patented, ultra-light, cellular metallic material with applications in architectural design, military and automotive
- Cymat stock is up by 61.54 per cent on the news trading at C$0.21 as of 9:35 am ET
Cymat Technologies (TSXV:CYM) signed a letter of intent with Rio Tinto Alcan to acquire the latter’s aluminum metal matrix composite (MMC) technology, including an existing customer base. According to Tuesday’s news release, “MMC is a ceramic particle-infused aluminum used in the automotive and rail industries for lightweight components requiring extreme wear-resistance.”
Despite Rio Tinto being the world’s only major supplier of MMC, supported by manufacturing expertise going back 40 years, the company is exiting the business “due to a strategic reorganization,” the news release goes on to state.
Cymat utilizes MMC as an input material to produce its flagship Stabilized Aluminum Foam (SAF), making it a prospective choice to optimize the business for long-term growth. The company intends to produce MMC at its operating plant in Mississauga, Ontario, leveraging the similarity in production process with SAF to lower costs and increase efficiency through the use of existing workforce, engineering and support services.
Based on Rio Tinto’s historical sales data, Cymat believes the acquisition could lead to a C$7.5 million-C$10 million boost in annual revenue, with margins comparable to or better than its Alusion product. It estimates capital costs for equipment to be between C$2 million-C$2.5 million and technology transfer expenses to be in the low to mid six-figure range, with financing to stem from outstanding warrant proceeds and equipment financing sources.
Cymat’s MMC production line is slated to be operational by fiscal year end.
Leadership insights
“This is a highly unique opportunity for Cymat to leverage our existing facilities and unique skill sets to realize a major expansion of our business,” Michael Liik, Cymat’s chairman and chief executive officer, said in a statement. “This initiative combined with anticipated sales growth in the nuclear and military verticals in our SAF business should accelerate our path to substantial profitability. Since inception, we have looked for ways to bring this capability inhouse and have now achieved this feat – together with a substantial book of business – making this absolutely transformational for Cymat.”
About Cymat Technologies
Cymat manufactures and sells Stabilized Aluminum Foam, a patented, ultra-light, cellular metallic material notable for its customizable density and dimensions, mechanical energy absorption, thermal and acoustic insulation, as well as time, temperature and strain-rate insensitivity. The technology, marketed under the SmartMetal brand, has applications in architectural design, military and automotive.
Cymat stock (TSXV:CYM) is up by 61.54 per cent on the news trading at C$0.21 as of 9:35 am ET. The stock has added 50 per cent year-over-year and only 5 per cent since 2020.
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