PPK is weeks from finding out if its ‘super fibre’ can be commercialised
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In November, PPK Group (ASX:PPK) revealed it was buying a stake in a cutting edge nanofibre technology. The company is now less than six weeks away from finding out whether it has a potential company maker on its hands.
Imagine a fibre 100 times stronger than steel but as light as carbon fibre, super flexible, more thermally conductive than copper, and able to sustain high temperatures of up to 1000 degrees without degrading.
Boron Nitride Nanotubes (BNNTs) sound too good to be true — but they could be the future of aviation, automotive, space travel, power generation, electronics, defence, sporting goods … and everything else.
It looks like this:
Right now, 1 kilo of the stuff sells for ~$900,000 because no one has been able to produce it in commercial quantities.
On this website it can sell for up to $US1600 ($2,348) per gram.
But Melbourne-based Deakin University scientists made a breakthrough. They are the only ones (probably) who have been able to manufacture BNNT at low temperatures, which is crucial to bulk scale commercialisation.
In March, mining services company PPK finalised the acquisition of 50 per cent of the patented BNNT manufacturing technology developed at Deakin.
PPK director Robin Levison says the company saw an opportunity to take the successful, but very small, pilot plant Deakin were running and scale it up to commercial level.
Huge strides have been made since then. Levinson says the company is about six weeks away from finding out whether the process can be commercialised.
“There were three stages to this process, and we have now achieved stage one and stage two,” he told Stockhead.
“We are effectively into stage three.”
In a Geelong Advertiser article last week, chief project scientist Dr Luhua Li was quoted saying that the production plant was operational and that he expected first product to be available at the end of this month or early October.
At this point, if successful, the JV could focus on ramping up volumes towards the end of the year.
But Levison likes to err on the side of caution. He says PPK is trying to be measured in the way that it talks about the opportunity.
“There is still is a risk that when we finally turn the machine on to higher volumes that it doesn’t work for some reason,” he says.
“However, I don’t believe that Dr Luhua Li would make those comments unless he was confident that things are going well.
“Assuming that we can get the plant to operate successfully and manufacture commercial quantities of BNNT, there is no doubt that it will be a company changing outcome for PPK and its shareholders.”
With a share price that has increased almost 800 per cent over the past 12 months, you could argue that BNNT is already a ‘company changer’.
But Levison says that it is not just speculative capital jumping on the register.
The company’s core mining services business is doing very well, reporting a 215 per cent increase in after tax profit ($1.8m) for FY19.
“What I’m hearing from our existing shareholders is they are also happy with the progress that the mining business has made. We announced our second dividend with our year-end results,” Levison says.
And the outlook is good for the mining business, due to the underlying price for high quality steelmaking coal and the lower Australian dollar, Levinson says.
“We deliberately didn’t make a detailed forecast [for FY20],” he says.
“But we are expecting further improvements, both in revenue and overall profitability. And we also expect to at least maintain the dividend, if not improve it.”
PPK is a small cap with a strong cash generative business, complemented by the huge upside that BNNT represents.
Levison says the company has already had strong enquiries from a range of Australian and global entities on BNNT availability and price.
“We’ve had mining interest, global defence interest, and we’ve also had what I would call ballistics interest [like bulletproof jackets],” he says.
“To my knowledge, we could be the first organisation to be able to produce commercial qualities of high quality BNNT for sale.
“We are probably less than six weeks away from knowing if we have the last step achieved.”