CYMAT ENTERS INTO LETTER OF INTENT WITH RIO TINTO ALCAN TO ACQUIRE TECHNOLOGY & ASSUME CUSTOMERS OF THEIR PROPRIETARY ALUMINUM METAL MATRIX COMPOSITES BUSINESS
MMC is a ceramic particle-infused aluminum used in the automotive and rail industries for light weight components requiring extreme wear-resistance. RTA, who has been manufacturing and selling its proprietary MMCs for over 40 years, has decided to exit the business due to a strategic reorganization. As the only major supplier of this proprietary MMC in the world, RTA is seeking a smooth and un-interrupted transition of this business for its long-standing customers. Cymat utilizes this product as its primary input material to produce stabilized aluminum foam ("SAF"). Its familiarity with the material makes Cymat well qualified and uniquely positioned to take on this business line.
Cymat intends to establish MMC production capability within its existing Mississauga plant. Given the similarities and common skill sets required to produce MMC with its own SAF product, Cymat will have the ability to utilize its existing workforce, engineering, and support services to efficiently and economically produce this proprietary MMC.
From a financial perspective, historical sales volumes provided by RTA suggest that Cymat could realize incremental annual revenue in the range of $7.5M - $10M with margins comparable to or better than its Alusion TM product. Capital costs for equipment are estimated to be in the range of $2M - $2.5M. Technology and knowhow transfer expenses, while yet to be finalized, are anticipated to be in the low to mid six-figure range. Cymat is planning to finance this initiative through a combination of existing outstanding warrant proceeds and equipment financing sources. Cymat anticipates that it will be fully commissioned and operational with this product line by fiscal year end.
The assumption of this new business line provides two major benefits for Cymat. Firstly, it adds a substantial uncorrelated and predictable revenue stream to Cymat's existing business. With its ability to utilize existing resources among other synergies, Cymat expects this venture to be highly profitable. Secondly, it reduces the cost of Cymat's primary input material and majority cost element by a substantial factor. This positions Cymat to be extremely price-competitive and compelling for targeted customers in its key automotive vertical. It also opens up business opportunities in high-volume verticals where SAF has historically been price un-competitive.
Michael Liik, Cymat's CEO and Chairman, stated, "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. This initiative combined with anticipated sales growth in the nuclear and military verticals in our SAF business should accelerate our path to substantial profitability " He added, "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 Ltd.
Cymat Technologies Ltd. has the global rights, through patents and established know-how, to manufacture and sell Stabilized Aluminum Foam ("SAF"), a unique, ultra-light, cellular metallic material. The proprietary production process entails the injection of gases through a molten bath of alloyed aluminum infused with ceramic particles. The result is an advanced, lightweight, recyclable material that exhibits unique characteristics including customizable density and dimensions; mechanical energy absorption; thermal and acoustic insulation; and time, temperature and strain-rate insensitivity. A key benefit of this continuous foam production process is its scalability and resultant low cost of production. SAF is used in such industries as architectural design, military and automotive. Cymat markets its architectural SAF under the Alusion TM brand and its automotive and military SAF under the SmartMetal TM brand. For further information, please visit our website at www.cymat.com.
Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding future financial position, business strategy, use of proceeds, corporate vision, proposed acquisitions, partnerships, joint-ventures and strategic alliances and co-operations, budgets, cost and plans and objectives of or involving the Company. Such forward-looking information reflects management's current beliefs and is based on information currently available to management. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "predicts", "intends", "targets", "aims", "anticipates" or "believes" or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. A number of known and unknown risks, uncertainties and other factors may cause the actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of the Company including, but not limited to, the impact of general economic conditions, industry conditions and dependence upon regulatory approvals. Certain material assumptions regarding such forward-looking statements may be discussed in this news release and the Company's annual and quarterly management's discussion and analysis filed at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Company does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by securities laws.
SOURCE Cymat Technologies Ltd.
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