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MISSISSAUGA - Cymat Technologies Ltd. (TSXV:CYM) (OTCQB:CYMHF), a $37.5 million market cap company whose stock has gained over 13% year-to-date despite recent volatility, announced Tuesday it has entered into a Letter of Intent with Rio Tinto Alcan Inc. to acquire technology and customer relationships for manufacturing aluminum metal matrix composites (MMC).
The proprietary MMC, a ceramic particle-infused aluminum used in automotive and rail industries for lightweight wear-resistant components, has been manufactured by Rio Tinto Alcan for over 40 years. The mining giant is exiting the business as part of a strategic reorganization.
Cymat plans to establish MMC production within its existing Mississauga facility, utilizing its current workforce and engineering capabilities. The company already uses this material as primary input for its stabilized aluminum foam products.
Based on historical sales volumes provided by Rio Tinto Alcan, Cymat estimates the acquisition could generate incremental annual revenue between $7.5 million and $10 million. Capital costs for equipment are estimated at $2 million to $2.5 million, with technology transfer expenses expected in the "low to mid six-figure range," according to the press release.
The company plans to finance the initiative through a combination of existing warrant proceeds and equipment financing. Cymat anticipates being fully operational with the new product line by its fiscal year end.
Michael Liik, Cymat’s CEO and Chairman, called the opportunity "transformational" for the company, noting it would allow Cymat to leverage existing facilities while reducing costs for its primary input material.
The acquisition is expected to provide Cymat with an additional revenue stream and improve its price competitiveness in automotive and other high-volume markets where its stabilized aluminum foam has historically faced price challenges.
The information in this article is based on a company press release statement.
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