An interview with IBC Advanced Alloys President, CEO and Director Anthony Dutton
For the uninitiated please describe IBC Advanced Alloys and the services it provides.
IBC Advanced Alloys is a Vancouver-based rare metals and specialty alloys manufacturing company currently trading on the TSX Venture Exchange. We use disruptive technology to provide leading-edge alloy material castings, including copper, aluminum and beryllium, for high-tech aerospace applications, but we also are working to provide material castings for other specialized industrial applications ranging from aerospace and more.
One of the key contract wins IBC Advanced Alloys has on the books is a purchase order from Lockheed Martin for cast components of the EOTS (Electro-Optical Targeting System) for the F-35 fighter jet program which earned the reputation of being the Pentagon’s first trillion dollar effort. What was IBC Advanced Alloys able to offer which made the company a contender in Lockheed’s supply chain?
It isn’t the fact that we can supply beryllium alloys, there are others who also provide that service. What makes IBC Advanced Alloys a special case is that we were able to provide a solution to a challenge which has plagued the aerospace industry for many years. Aircraft manufacturers, especially those involved in the military side of things are always faced with the challenge of making products lighter which lends to performance increases while lowering costs for such things as fuel. Beryllium-aluminum alloys are some of the lightest materials known while maintaining the stiffness and strength required for aerospace applications.
Until now, however, beryllium aluminum alloys were only available as powder metallurgical alloys which could ONLY be machined, which resulted in a costly manufacturing process and a great deal of material waste. To really be effective from a production standpoint, these materials should be cast, not machined, however the existing process of casting beryllium aluminum was also extremely expensive and became cost prohibitive but in only a very few specialized applications. IBC Advanced Alloys has developed a technology, Beralcast®, that allows for casting these components to near net shape which significantly alters the cost structure and procurement schedules for existing users of beryllium aluminum alloys. This gives aerospace companies the freedom to explore more component designs with improved options on any of the advanced systems where they need to be both stiff and light. This is clearly a disruptive element in the aerospace industry’s supply chain.
Just what is the potential of this particular purchase order from Lockheed Martin?
The initial order for Beralcast announced in September 2014 was for $2m for one part from one Lockheed Martin division (EOTS) for two LRIP years (LRIP = Low Rate Initial Production which precedes multi-year production contracts. LRIP production orders are nearly always less than multi-year production orders). Anticipated production for the F-35 is 20 years (F-16s were less and have had had a substantially longer production run) and assuming repeat orders will occur subsequent to successful testing and delivery of first articles, total revenue for one part could be significant even for this single component.
However, investors should be aware that IBC’s Beralcast®, in addition to the Lockheed Martin EOTS commitment, has received commercial validation (purchase orders) from two other aerospace companies since March 25th, 2015; Kaman Corporation and UTC Aerospace Systems. Our reputation as a provider of premium beryllium alloy components with ground-breaking cost-effective casting technology is definitely being recognized in the aerospace community and I foresee far more growth coming from within this sector.
IBC Advanced Alloys has reached a formative milestone in its contract with Lockheed Martin; can you explain what that is and what impact it will have on the company as a whole?
IBC Advanced Alloys, as published in a press release today, is proud to announce that we have successfully delivered our first completed Beralcast® azimuth gimbal housing components to Lockheed Martin Missiles and Fire Control to be used in the Lockheed Martin F-35 Lightning II Electro Optical Targeting Sensor. This is an incredibly important step in not only our relationship with Lockheed Martin, but in IBC’s life as a company. In the business of providing high-tech components of this nature, the deal isn’t really done until the provider can prove they are capable of providing the paid-for component according to spec and price.
Many providers receive these purchase orders but are unable to follow through and therefore lose the contract before it really even starts. With this delivery, we’ve more than demonstrated our ability to meet delivery commitments to specification which not only propels our relationship with Lockheed Martin forward but it also positions the company very strongly for future business and aerospace growth. This is a powerful time for us, as I am sure you are well aware of, the F-35 program has been taken to task in the media in the past for being cost exorbitant and the DOD, as well as the supply chain for the program are looking for ways to become more cost-effective without sacrificing the quality necessary to build the next generation fighter jet.
As a result of this drive, Lockheed Martin has said beryllium aluminum cast components will be a major part of its commitment to the Blueprint for Affordability. Our proprietary Beralcast® technology, depending on component geometry and size, can save an aerospace company up to 50% more than traditional processes with our near net shape casting. IBC’s Beralcast® is an excellent example of Canadian / US cost cutting technologies which will assist Lockheed Martin to meet its commitment to the Blueprint for Affordability.
This milestone also puts us in the spotlight which will help facilitate our expansion into other sectors from automotive manufacture to nuclear fuel rod production. IBC is happy to be part of the TSX Venture Exchange which has allowed us to raise the necessary financing to bring this disruptive tech to market and we would like to thank our investors for their faith and perseverance as we move forward to capitalize on the blue sky opportunities before us after reaching this incredibly important stage in our corporate existence.
FULL DISCLOSURE: IBC Advanced Alloys is a Stockhouse Publishing client.