Titomic Limited (T04.F) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Titomic. This is our new office we moved recently to be adjoining the bureau, which you'll see later on. So -- this is a big day for all of us here in the office. So thank you. Look, firstly, I want to acknowledge that Titomic has, for some of you, been a challenging investment. And let me just put that on the table. We're here today to give you your confidence in the business. And let me tell you why. For 2 reasons, in particular, Firstly, the technology has become better understood by our customers, and they are now seeing ways how they can integrate this into their business operations. That's the first thing. The second thing is the company has matured. It's no longer [indiscernible]. We have a very clear strategy. We have a very good team. We know what to do. So -- what we want to do today is to give you an outline of how Titomic is working with its customers. And I want to be very clear, this is not R&D projects. Yes, there remains some R&D projects with our customers. But we are not a third-party R&D laboratory. We are a commercial enterprise. And what you will see today is how we are commercializing the Titomic technology with our customers. And you will see that we have defined road maps to revenue and profit. That is very clear. We will not do business with any customer that doesn't tell us where this is going. Doesn't matter how secret it is in defense world. If we don't know what the product application is for and what that means for us as a commercial opportunity, it's thank you and no thank you because there's no money in it for us. We need to know where it's going. And what you will see today is tangible evidence of how we are partnering with customers to deliver sales and profit for the company. So that's what the purpose of today is. I hope you leave with a renewed confidence. You have a terrific management team, which you will meet later led by Herbert Koeck, our CEO, and you've got a good Board. And I say it's your Board. We're there to represent you to deliver value to you and that's what our focus is. So without further ado, let me produce you to Herbert Koeck, our Chief Executive.

Thank you very much, Humphrey. Good morning, everyone. Okay. Certainly, on behalf of the entire Titomic team, I'd like to welcome you here today at our premises. And I can tell you, it's kind of a very proud exercise that I'm capable of standing here today in front of you, and that so many followed our invitation to short and -- to hear about the commercialization, which we are driving right now, okay? As Humphrey said, we have come a long journey. As you know, I'm on board since July last year. I came into Australia in September, I enjoyed 2 lovely weeks in quarantine. And since then, I'm enjoying life in Melbourne, and I have had a chance to go around the country a couple of times. And I can tell you, we are having a beautiful country here, second to none. What I would like to do today before doing anything else, let me go through quickly the agenda and the time line, what you're supposed to hear today, okay? At the end of the day, I'm not going through the details of the agenda, you can read through it, but there are 2 parts of the whole day. There is a presentation part, which is approximately the first 45 minutes to 50 minutes, where we are going through the very few selected applications and use cases, which we are monetizing as we speak, where we are working with customers, where we are working on contracts, where we are selling and getting orders already today, 1 part. And the second part then is a hands-on part where we invite you to walk over together with us into the manufacturing bureau, which actually technically is next building. Okay? One thing which Humphrey also said, we moved into that office just 3 weeks ago, we were with a headquarter a little bit further down the road. But I can tell you, it doesn't matter if it's 500 meters or 5 kilometers, it's a problem for a company if they are not together. Now we are together, and there is a huge productivity gain, which we have as an organization as such. Before moving further, let me also introduce you the team who is talking to you today and which is available for you for question and answers. Let me start first with Colin Horman, Colin is driving -- is the Head of Strategy and Planning. He is the kind of a mastermind behind any customer agreement, engagement, acquisition contract. So he is, yes, he is tough in the sense of that we are trying to get the best out of the contract for us as a company. While at the same time, we want to have a win-win within a joint venture partner going forward. In the past, he also was the CFO of our company, has all the experience also from the financial side, Colin Horman. Next one is Max Osborne, Max. Max joining us over many, many years coming from Boeing. He's heading our engineering group, and I can tell you what Max has achieved is in a short period of time because actually he was being with Titomic for 2 weeks, as he started in June last year, is getting into a structure for the engineering, which is objective base. Okay? There is a customer need where we have to work for and do the engineering, not a blind R&D action, which at a certain point in time will answer to nowhere, but we always have a specific customer need in mind. We are trying to identify the problems for the customer and what is our solution for. And that was Max driving in a very structured way and you're going to see the outcome in the minutes and the hour ahead. Thank you very much, Max. Next one, Dominic Parsonson, Dominic. Dominic is with us, as I learned today already for 3 years. Dominic is heading the sales and marketing team at Titomic. Very experienced also in additive manufacturing. Just came back from a trip last week in India with lots of other opportunities coming up also in the titanium business overall. Has been engaged with customers across the globe. It is also just seeing now that we are getting more engagement with customers as we are beefing up and the employee -- have employees in the U.S. and in Europe, which obviously makes the work a lot more structured and productive. Last but not least here on this list, Klaas Rozema. Klaas, Dutch citizen, lives in Holland. Klaas is the founder and the manager of Dycomet, the company which we acquired in December, which bring in 15 years of cold spray experience, has developed its own machinery, which is complementing our products which we have here in Melbourne, and is also bringing with him a lot of existing business, okay? Business for machines, business for powders, for service and consulting, obviously, on top of the experience on the technology as such. And you're going to hear more from him in the minutes ahead. Thank you, Klaas. Let us ground -- get grounded in where we are coming from, okay? Because it's so important in this whole process where we went through, you could say so that we tried a lot of things in the past and when successful, to monetize some of the stuff, that's 1 way to look at it. At the same time, I can tell you, every single piece of product we produce, every single project we went through over the last couple of years was contributing to the experience and to the competency we have right now, okay? Whenever a new technology is developed, it's not so that everybody can master the technology in the next day. I can tell you from my own experience from 3D systems, the fact is that it took them 5 to 6 years in some cases to develop solutions out there for customers or refine solutions and still improve that, okay? We have gone through this process if you're going to see what we have done and what the experiences we gained out of that. The machine as such, cold spray is an interesting animal, okay? It's a very fascinating technology. Actually, it's a technology we [indiscernible] from the other side of the world, and I say literally from the other side of the world because a lot of people will realize my accent, I'm Austrian, native Austrian. But what attracted me when I saw this technology Cold Spray is that -- it could overcome and it is overcoming actually technically, a couple of limitations, which I found with other additive manufacturing guys, okay? And they are mainly related to a few factors. It's mainly related to size. -- okay? Because laser bed, powder bed fusion product, they're handling at 500 millimeters at the end of the day. If you want to build an aeroplane or carbon fiber structures or tools, 500 millimeters is not really sufficient to support these customers. So it's size, it's speed because we can depose more material in a shorter period of time than any other technology in the metal world, specifically not with laser bed, powder bed fusion. And then it's a sustainable process both from the material, the powder production, but also in the production process itself, to the third point, which is machining type because it's a different thing if you work off a billet from 100% to 20% of -- if you work off a near-shape product, which is from 40% or 35% to 20%. Okay? There's a couple of very interesting aspects of the technology, which we started to master, which we started to propose to customers and customers are liking it and in return, started to buy machines and products from us. All these things are not going to happen, especially not if you are in aerospace and in defense if you can show as a company a couple of basic processes, okay? You may say, hey, this is all additional workload. This is all additional admin. But the reality is, if you work with defense providers, if you work with aerospace providers, until you have these certificates, there's no way they're going to engage with you. They can't place even an order with you unless you show them, do you have the ISO certifications in place, and you can have the processes in place, which they are used to. Okay? That's a necessary infrastructure. And also, you have to understand, for example, when it comes to cybersecurity, and that's a hot topic right now as we speak in the whole world at the end. If you're working with defense providers, unless you have proof that you have the proper processes in place, you don't get orders, no way. Now let me move further on showing you 2 pictures because talking about the technology of cold spray is 1 thing, but seeing the machinery is another one. These are the 2 machines that you have seen in multiple presentations from us already. And in an hour from now, you're going to see these machines real, okay? These are not kind of fancy pictures, and I hope -- I expect you're going to be as impressed as I was when I saw the real size and the magnitude of the machinery over there because, yes, it's real, okay? It's big stuff. Now beside these 2 machines which we had in place already, we got a couple of additions now. And at this point in time, I would like to ask Klaas quickly to say a few words about Dycomet because he is bringing in -- as I said before, existing business, he is bringing in customers and he is bringing in a machine portfolio, which complements Titomic, Klaas?

My name is Klaas Rozema. I'm the Founder and CEO of Dycomet Europe. This company was founded by me in 2006, 15 years ago, and this is the time we have been working for Cold Spray. We have been focusing on coatings and repairs. So Titomic is working on cold spray also, but working on additive manufacturing. And there's a whole world besides additive manufacturing, which is related to cold spray. And we have been focusing on that. To do that, we have been developing our own equipment, cold spray equipment, which we are building in-house in the Netherlands at our facility. We have 8 colleagues, which help us -- and in the last few years, we have sold over 70 machines in the last 5 years. In total, we have sold more than 120 cold spray systems in Europe and throughout the world. The customers that we work with are Rolls-Royce, Airbus, Lufthansa, Mercedes, Volkswagen, General Electric. These are all customers, which we are not doing research work for, but these are all customers who actually buy our equipment and use it for their individual applications. Which equipment are we talking about? We can supply simple, we call it simple turnkey low-pressure cold spray system, which is the D523 stand-alone system, which a company can use in-house for handheld repairs or they can mount it on a robot. It's a very convenient system for all different kind of cold spray repairs. You will also see it in the bureau during the tour. But we can also build turnkey solutions for customers who have a specific application that needs specific handling or other specific needs. We develop them in-house. We build them in-house and supply them all of the [indiscernible].

Can you like to give an example of that [indiscernible]?

Yes. That's a system which we designed for research applications. So it's going to be shipped to a university to do research with Cold Spray. It's an integrated cold spray system with robotics and a [ a dust section ]. It has the size of a Euro-pallet and we can just move it to a university and they can do research.

[indiscernible]

They use it mainly for repair of engine components. That's the largest -- the biggest application. But we will come back to the applications in our later stage of the presentation. Yes.

Let's move forward. Now obviously, the machine you have seen is the very, very little, little product of the TKF9000, which you see next, okay? The teaser version, I would say, of the bigger system. Now -- that's a thing which is very close to my heart, and I would like to spend a few seconds on that chart overall and what it says, okay? One of the question is when you are investing when you go forward, the question is at what maturity level is that technology, okay? Because it could be a PowerPoint presentation in the first stage where somebody has a great idea and just put together a couple of PowerPoint slides with some thoughts and ideas to the point where there are some prototypes already existing about a machinery where the inventory at the end of the day can think about it, up to the level where you're dealing with the technology, which is used every single day in manufacturing and industrial production, where it's cold spray now, okay? And what you see here from this AM Power chart. AM Power is a German company, which is surveying the end market and gives a kind of a maturity index every year on technology, okay? You can say now there's a lot of criteria and a lot of assumptions behind. Yes, there are. But what they have stated already a year ago that cold spray as a technology will get into industrial use in less than 2 years. That also attracted me on the technology, by the way, beside the speed, beside the size, beside the sustainability because I wanted to get an understanding how far are we away from making real business with customers. And today, we are the -- and what you could see here is that's also interesting on cold spray, we move from here to here was the move in the last year. So cold spray technology significantly improved on this maturity curve within the first year since we are on board. And obviously, we were a major contributor with some of the solutions we are proposing. You're going to see this dot basically moving up at the point in time when first industrial agreements are in place. And as you know, we are working on a couple of JVs. So we will be a major contributor to drive that dot further up in the year ahead. So at this point in time, I would like to pause for a second. We'll open up for any question you may have in between. Otherwise, you're going to go forward with the process which we applied so that you get an idea that we are not smoking near as here that we are having a constructive straightforward process to assess the solutions where we are going forward. Thank you. Let me hand over to Colin to walk us through.

Thank you, Herbert. My name is Colin Horman, Head of Strategy Execution, which is a strange title. I joined around about the same time as Herbert and Max. So in the middle of last year. When I arrived, there were a number of things which were apparently ready to move forward with. But I found that wasn't quite the case. And -- we put together a slide here, so we've been on a journey now looking at our applications that we have, we're assessing those. If you look at Titomic over the last 7 years, it's had a very wide focus. So we've had investigated hundreds of applications, and we listed on here. Now I don't actually expect you to read those. And if you're looking at those, you're saying, "well, I can't." That's sort of where the focus has been -- it's been wide, as we call it, a mile wide, but in HD. You have in the last year heard of tooling and weapons barrels. There are the 2 areas that have floated to the top, but the rest has been a little bit muddy. So we have, over the last 6 months, been looking at our strategic applications, where we can take them, we've tried to apply a logical process about how we would prioritize and focus what we do. So in doing that, the first thing we needed to do was really map our customer journey. And for those of you who can't quite see that, I really also want you to take note of the colors on the top and on the bottom. They're very relevant for the next couple of slides. But certainly, it starts with both a commercial assessment and a manufacturing assessment. We've tried to do it in 2 streams. So previously, I think the business has tended to focus mostly on the manufacturing assessment, seeing if we can actually make something, then look at whether we can sell it. What we try to do now is to apply a process where we do those 2 in unison. So we basically start with the customer inquiry, which in the past has been our business development team going out and finding those inquiries. As Herbert said, in the last 6 months or so, these inquiries have been coming to us, a very positive, I think. On the process we look to go through, yes, we start with, as Herbert said, a concept. We then work through, see if we can have market alignment, we do the material testing. We take it through. We then have the financial models. We then look to see what the cost of production will be. And then you get to the end of the process, agreements finalized. You have a move from low rate of production to full rate of production, hopefully at the end of that you have customer success. Now that's a very abbreviated version of what we do. We can sit here for an hour or 2 and go through the whole process if we needed to. But that's what we're trying to do, apply that size, but particularly along the manufacturing readiness and the commercial assessment.

Two quick comments, Colin, if you allow me to get in. First of all, the process is not something we have invented, okay? At the end of the day, we are learning from great companies who is very used to this kind of process on assessing R&D inventions and on its applicability to customer and to business. Actually, this was an ongoing process. So this is not a kind of a one-off. We introduced this process, we have the skills now. We know what we have to do. We have stage gates. And only if the stage gates are fulfilled, and at the end of the day, we move to the next level, okay? And here, we are really engaging with customers already. And if customers at the end of the day, don't want to move forward, we make the decision, okay? If -- is there another customer who is willing to go with us or we stop, okay? The worst thing is, we only have a limited amount of cash, and we have to focus the cash on the places where we get a return.

So we've taken all of the applications that we've looked at in the past. Clearly, some very minor ones we've left out, but we've evaluated all of those applications looking to see where we fit manufacturing readiness and the commercial maturity scope. So the manufacturing readiness level we have taken -- or based it on the Department of Defense in the U.S. So it's a scale that Max is very familiar with that we brought in -- and with all of our applications, we've assessed where we are at on that scale. So again, it moves through from conception through the prototypes, through the trials, through the commercial production. We've also looked at it on a commercial maturity scale, and we have tried to do exactly the same thing along the way. The commercial maturity sale, we've developed this in-house, and we've tried to marry it up and match it with the manufacturing readiness scale. Why we've done that, you'll see in a minute, but we've ultimately tried to create a scale, which mirrors the AM Power chart because it makes sense to be up in that top right corner. So we've gone through -- we have on manufacturing readiness for all of the applications we have, we have a raft of parameters, which include geometry, which include thickness, which include the metal spread. It includes the qualification process post-processing. It includes heat treatment. All of our abilities in those areas. From a commercial maturity scale, it includes the potential revenue that we can get out of the product. It includes the market, the availability of the market, the customer acceptance, all of those sorts of things. So we have, again, a raft of measures. All of those, we have been given a rating out of 10, and we average them to come up with 1 manufacturing readiness scale, 1 commercial maturity scale for each application. We then plot those and see where they fit. Once we've done that, these are the applications that are percolated to the top. And the ones that you can see in bold, Max, Dominic and Klaas will take you through shortly. But of these, as I say, tooling and weapons barrels, you've heard before. No surprise, they came to the top for us. The other ones that are right up near the top, Glass Equipment Coatings, which is an application that we got as part of the Dycomet acquisition and Klaas has spent the last 6 years, worked the last 10 years working on that one. And coating and repair, which is a new business area. The other 2 will be taking through titanium structures and radiation shielding, Titanium structures for us is a very important one. The use of Green Titanium, which I know, Max will take you through, is very important to our business. And radiation shielding is a very big opportunity for us. The other ones that are there are all really good opportunities, not quite as ready as the ones that are in the bowl. And you'll see that on the next graph where -- what we've tried to do is, again, is plot manufacturing readiness on the bottom scale, commercial maturity on the right-hand -- on the left-hand scale. Once you get to a score of 6 on both scales, we essentially have a product that is ready for commercialization. That's the way we've looked at it. So therefore, on that basis, we, right at this point in time, have 4 pillars, as we call them, which are ready for commercialization and very close. The glass of equipment coatings is basically there. It's in an operating, which Klaas will take you through. The barrels and the tooling, we have JV arrangements, which we've spoken publicly about, the weapons barrels with Repkon, the tooling with NEOS, they're not far away. The other one is the repair and coating business. And with the advent of Dycomet, we now have access to that technology. We can then open up that business looking in the future. All the other ones that were in the 13 pillars that you saw on the previous page are the dots that are there. So all of those are in that area just below where we get to commercialization. So we specifically have 13 pillars that we can work on over the next few years. But 4 are there ready for commercialization. So if you hope we were at the start, over 100 applications, narrow it down to 13, which had leaks, I want to say, down to 4, which are at the commercialization stage. So we have that focus right now. Anything else. Any questions?

[indiscernible] timeline for the first [indiscernible]

It can vary depending on the application. So for example, if -- I won't spot between slide, but 1 of them is ballistic panels, so ballistic panels, for example, it's actually very easy to make, but it's a long qualification process with the customer. So that can be 3, 4, 5 years to get qualification from the customer. Certainly, on some of the other ones, it's much shorter. And if you look at weapons barrels and tooling, for example, we've already been on that journey for probably, I'm going to say, 18 months in each case, 2 years.

Longer than that probably.

So we're now at that stage where we are at the point of signing up agreements for the commercialization of the process. And then it will be another year until the machine is installed.

It's really a question, [ Colin ], on the application of the use case.

Yes.

Okay. There is 1.5, 2 years in some cases. If you think about the machine, which Dycomet brought it to our [ party ] in terms of services and the repair services -- for services. We got Dycomet on board in December, and we sold 2 machines so far, okay? So that's the kind of things which can happen pretty quickly. Will it also take only a couple of months to build out the service network over the country? That's a separate story, okay? But it depends on the use case and the application. Okay? Other questions?

[indiscernible]

The point is we wouldn't start without having a customer behind, okay? Because the difference between an R&D shop, where you invent something and later on look for a customer, is to what we are doing on the engineering side right now is, you have a customer, you have a customer demand and you try to make it happen. That's the starting point, no customer behind. No R&D.

It's the very reason for using manufacturing readiness alongside commercial readiness. So the commercial readiness covers that customer, yes.

Selected [indiscernible] Max, your turn?

So what Dominic, Klaas and myself going to do is, just take you through a few of those selected applications that are on the pillars that Colin shares. But before that we're going to focus on the really ready to commercial and production uptake by our customers today. And 2 of the kind really interesting, exciting applications that are very, very close. I'm an engineer, so I don't get excited it very easily, right? But...

[indiscernible] sounds get excited?

But we've got to the really, really on the customer. I just want to provide the people some visibility of what those are.

So you'll see that Max and I each have favorite topics and favorite products. And we stop between each other while we talk about them quite a lot. And the thing I want to highlight with barrels is the problem we're solving. And if you look at barrels -- weapons barrels, have largely been unchanged where manufacturing technique has been unchanged for hundreds of years, hammer forging, cold forging and deep drilling. But as the demands of warfare increases, the projectile loads change, the range at which these projectiles will be fired change, the lethality of the projectiles change. But this barrel technology has remained unchanged until we arrived. So we've been this unique capability of being able to address numerous problems around how do you get more powerful projectile in a barrel and get that barrel to still be light and perform well. How do you ensure that you can deal with the propellant using the projectile to ensure you don't have corrosion and erosion problems in the barrel. And so what we are doing is we're now adding this capability to change the way these barrels we made over the last 100 years, to introduce value around weight, performance and lethality of a barrel.

All right, some comments. Everybody obviously knows what a barrel is, but perhaps you don't know why cold spray as a manufacturing, such a fantastic solution. The parts that we see such compelling value proposition into cold spray, are things that can be rotationally fabricated. So anything that's got an access of revolution, it makes the manufacturing flow so efficient, so elegant and it's really, really simple to get high quality, robust manufacturing. In an application like barrels, the ability to use a range of materials like Inconel. So Inconel 718, highly corrosion-resistant, highly durable, highly strong, but also really external performance. It is really interesting prototyping work the other week where we're doing some heat trials with different materials and the ability of Inconel to actually stay cool throughout a thermal cycle is outstanding. That improves barrel accuracy, it improves performance in the field. The materials like titanium for lightweighting and the multi-material solutions, the ability to use multi-metals and layers that can obtain high performance in terms of corrosion and erosion where -- and lightweighting and strength we need on the outside of the barrels. So there is some really interesting work there. The ability just to customize the tool geometries in a matter of minutes or -- change the tooling on the machine, change the material that you're doing and change the diameter to be a 30 mil, 40 mil or larger barrel, change the thickness and change many, many other properties about the structure.

So as you know, we've been talking about our Repkon joint venture for some time now. And the qualification process is quite long when you're talking about barrels. Because it's not just about, can you make the shape and can you make the geometry. It's about does it stand up to the environment it's going to be required and kind of last for 20,000 or 30,000 projectiles. The benefit of our joint venture with Repkon or proposed joint venture with Repkon is the fact that they have this capability to do that qualification in-house and Turkey is a NATO partner. It means that once we get these barrels qualified, we have NATO certification, allowing us to look at joint ventures elsewhere as well with a barrel that's been certified to a NATO specification, which offers enormous opportunities for us. If you look at the revenue we expect to earn from these joint ventures, we're looking at in excess of $15 million per barrel joint venture. And this is not a barrel -- a single barrel joint venture, these will be joint ventures or will be a joint venture that will manufacture, as Max said, barrels ranging from a 14-millimeter barrel up to something much larger. And in all of that value, we have spoken about to the customer, Repkon in this case, and to the end user for defense force of the NATO organizations and their allies.

Before you leave that, it's just worth noting that Repkon invested $2.5 million in the last capital raise. Our customer doesn't pay up $2.5 million unless they think this is a viable technology input to their existing manufacturing. It's really important to understand that.

Absolutely. And I think 1 comment I'll make, too, about the quality of our joint ventures -- the key to a successful joint venture is a good firm relationship between both organizations. The contractual stuff all matters. But at the end of the day, you want to work with people who share similar values and we can communicate with on a regular easy basis. And all of the joint ventures we speak about publicly, we have that sort of relationship where we speak regularly, evenings, mornings, at any time of the week about how we are progressing and how our technology is adding value to their organization.

Absolutely. In both Repkon's case and several other major customers that we're working with, myself and [indiscernible], I'll call it out at the back of the room there, materials, lead from my team, working with these customers hand in glove, right? Really, really open, regular communications, transparent sharing of mechanical results, feedback and optimization, that's a 2-way conversation. So it's a really genuine positive engaged relationship.

[indiscernible]

Let me answer that one. Globally at the end of the day, you're talking about a handful of large manufacturers, it's not more than that. Yes.

And if you work with one, can you work with the other? I guess [indiscernible]

The big thing for us is to get NATO certification first because that opens the door. We don't want to engage outside of NATO and the UN rules in that perspective. So just to be clear.

I've 1 question. In terms of the revenue generation, you mentioned like $15 million annual So I would imagine that top of that will be going to the JV partner and top of that would be...?

It very much depends on the agreement as such to what extent we can report revenue out of the JVs event. There are setups where we would have the benefit of profits coming out, and we would report it offline. So depending on the JV construction, it's -- we either can report a revenue or they report a revenue, okay? There is different setups possible.

What kind of like profit margin you can expect?

We don't think -- I can't disclose the margin expectations.

[indiscernible] Can you give us some color on where you're at like, are you still testing materials, are you still [ thermal ] testing [indiscernible].

First of all, this business always run in parallel because if you only start 1 process step after the other 1 has been finished, you would simply delay the whole process. So the testing at this point in time is undergoing already for a while, okay? We have started more than a year some of the testing. At this stage, we have agreed with Repkon. We signed a heads of agreement that we want to get into -- think about the Repkon story as a journey, okay? It was sometimes an early engagement where we showed some R&D projects with them. And we got engaged with them where we signed a heads of agreement, which happened last year. Then we had the investment from Repkon moving in $2.5 million into the company, which kind of confirmation that we are serious and -- they are serious of this whole stuff. And at this point in time, we are [ worth making ] the joint venture agreement. And actually, it's not 1 agreement you need to think about it because you want to structure the agreement that's becoming a win-win for both companies, okay? There is a lot of details in there. And an example would be is, what kind of agreements do you find with them that they are obliged to fulfill and to respect the same laws that we do at Titomic, for example, okay? When it comes to export controls, you want to have the proper ruling in there. So this is [ the worthwhile thing ] which is happening right now.

I'm trying to get a sense further on the actual manufacturing agreement as part [indiscernible] for a minute. I'm trying to get a sense eventually on the actual end product. Are we still testing and is testing a journey that goes on forever? Or are we close to saying, hey, we're going to make these barrels and they're [ X ] cheaper and [ light ].

So at this point in time -- Without disclosing further details, at this point in time, we are zooming in two specific levers, okay? And we are at the level where at a different time, I could share with you pictures of the manufacturing hold they have reserved already for the joint venture. So that's the level where we are right now.

I'll add a little bit of color on the technical. So we're absolutely past the validation stage on the material. There's still ongoing material testing activity, that's more of an optimization phase. So we're really looking for the 99 percentile performance improvements that we're absolutely past the validation step.

I think you mentioned, I think this is very important to realize -- for everyone to realize that we're not [indiscernible] given the sort of geopolitical environment that we're in there?

Absolutely. Inconel was in the context of [indiscernible] the price. So we can fairly typically consider exotic metal and alloy of nickel and chromium, highly resistant erosion strength. So the really exciting thing about cold spray and our equipment is the ability to do those multi-metals essentially on the same system. So traditional AM systems, high amount of downtime to change over from 1 material to another, limited suite of materials that they can do [ full ] stop because we're using that kinetic energy to obtain fusion, [ whole rent mills ], essentially limitless, which is a really exciting proposition.

And it's a range that adds value and interest to barrels manufacturers as well, you're not limited to something that has been used for hundreds of years. You were able to open up these combinations of metals to provide unique applications and unique capabilities.

Okay. [indiscernible] I might pass up to talk to some glass equipment coating applications. [indiscernible]

There is a reason for that because we're talking about glass equipment coatings. And obviously, glass is a very big market. But we're talking specifically about producing glass bottles. And the reason why I have a Corona bottle is that the first real production application with this technology was to produce Corona bottles. So that's the reason we have the Corona bottle. Maybe a little bit of explanation about what this means. Producing a glass bottle means that you have a molten drop of glass, which falls in a mold. It drops at very high speed in molds. Once it's in a mold, compressed air expressed in the molten glass and the bottle or the glass expands to the shape of the molds. That's why these molds -- these typical molds are called blow molds. The fact that this glass is dropping in the mold with a very high speed, creates a lot of friction, which is no good for the lifetime of the mold. The solution that they found is to grease the mold during the production. So this means that an operator needs to go -- it needs to be in sync with the production because these drops of multi-glass [ fall with speeds 100 kilometers ] an hour. So the operator needs to go in sync with the machine and grease the molds inside. So this is a dangerous job and also a very dirty job. Besides that, these molds can only stay in production depending on the type of bottle that they are producing, between 4 and 6 hours. And it has to be taken out of the machine, needs to be maintained and then can be placed back into the machine. That's a little bit of the background. We have been working on this project for 10 years. So when you were asking, well, what's the cycle between starting a project and getting to commercial readiness. In this case, it was about 10 years. We have been developing coating to be applied inside the molds. And by applying this coating, we eliminate the grease, which is called swapping. We eliminate the swapping. So this means that there is no operator anymore necessary to do the dangerous job of greasing the molds. There is no dirty -- not dirt anymore because you can imagine if these molds are greased every single time, it gets a mess inside this machine. And what's more important, the lifetime of the mold is going to be expanded from 4 to 6 hours until 2 to 5 days. So imagine that to 4 to 6 hours, up to 2 to 5 days. This depends on the type of mold that you're having. But this is a huge benefit for the glass industry. So it's the danger for the labor, which eliminates -- it's the fact that you are not having to grease your molds anymore. It's not getting a mess. And most important for the management, they save up to 4% of costs by applying this technology. So all in all, there's a big benefit. As we speak, we have a system in the U.S.A., which has been restarted again. the guys who are working with us from the glass factory say, this is the only -- glass bottle production because they've never seen it before producing glass bottles without the need of swapping. Well, then what's in it for Titomic? Very important. This group of companies that we work for, this is a research institute, which represents 15% of the annual glass -- the worldwide glass production, 15%. They represent, they have around 45 production facilities all over the world. And each facility could need at least 1 of these systems. These systems require 6,000 kilograms of powder per year. So we do not only supply the equipment, we also supply the powders that we need in order to keep the system running. And most of all, these systems also needs to be maintained. So there's a huge business case behind this glass production facility. We're actually now at our facility in the Netherlands, building the first industrial system, which in going to be [indiscernible] Austria before the summer, where one of the members of this group is going to really operate the system and use it in their construction facility. Questions?

Do you -- is this a [ Razor ] blade -- [ Razor ] type business model? In other words, do you sort of sell the machine and then you've got a lifetime supply.

It's always -- it's an interesting question. But obviously, -- it's an initial investment the customer has to make by buying a machine and the installation. And then there are ongoing repetitive revenue streams, which are coming back to us. And in that sense the answer is, yes, but what I would say consciously from the very beginning, if you remember, I've laid out saying we have 5 distinct revenue streams. And this is a perfect example of what's going to happen as soon as you start placing these machines. At the end of the day, we are solving a cost problem for our customers and a safety issue for our customers. Okay. In return, we get machine sales, We get the powder sales, we get service and maintenance and ongoing consulting because now this doesn't stop, we further develop and optimize the machinery over time.

[indiscernible] question is we used to sell machine tools and the 90% of the revenue came from the machine sale, but in your case, you see 90% of the revenue...

It's much more balanced, it simply has to do with, I don't know in which machine business you have been, but obviously if you have large investment machinery for millions of dollars, service and maintenance is going to be a fraction out of it. If you have a machine, which is, for example, $0.5 million and you have multiple years of use with tons of material, which is going in, the balance is certainly different.

Consumables are a very important part of the business case.

Can anybody copy your patent ?

How can I say as always, but the point is I think we just have to be always a step ahead. That's way it is unfortunately. You really can't protect anything anymore forever.

But for folks that are interested, I'd really encourage you to go on to YouTube and look up swabbing. It's phenomenally archaic process, like the definition of dull, dirty and dangerous for manufacturing. Crudely, it's a guy with a rag on a stick. He's jumping in, in front of these molten hot glass -- globules that are popping down into the molds on a 30-second basis, if you don't sync with the machine, your hand gets taken off.

Really dangerous.

Unbelievable, but it's still in production. So this is really a step change technology in terms of improving that.

Okay. Klaas Just had a quick question. I mean are there any other companies trying to solve the similar problem as competitive dynamic or maybe not in [indiscernible] sort of this technique.

I mean, this has been -- as this customer in the U.S. is saying, it's a holy grail of bottle production -- glass bottle production. So there's -- the alternative is swabbing with a robot. But this doesn't work. It still creates the mess. It eliminates the danger for the operator, but it's not a good alternative because you need the swapping robot for every line you have and this system can facilitate the entire production set up right.

Yes, I would expect that even after this day, some others will look at it and say can we do something done, as I said to you that's the name of the game.

In profitability given the size of the machine say a few dollar is there a possibility we can discharge like one set of models like [indiscernible] revenue on that?

There is separate models possible. Actually, we are evaluating at the moment what is the best possible return for us as a company. It's a subscription model. You are thinking about it. We are thinking of that on retail services in another business which you are going to see is where we are exactly there. Also the go-to-market, [indiscernible] and the go-to-market has to be different depending on the use case and on the application. It is not one-size-fits-all.

[indiscernible]

And the companies like [indiscernible] still doing this maintenance now.

Actually those companies are not producing the bottles. They buy the bottles. There's actually 1 company in the U.S., which is controlling the entire production line. So they no longer make glass bottles, but they also produce the wine and they make the cartons and they make everything, but that's a unique situation. They just buy them from a company who is producing glass bottles.

And Max is right. If you look at YouTube, it's a new -- relatively new video. It's this video from the '70s and the process [indiscernible] that's what they do, even here in Australia, the glass bottle manufacturers are swabbing the molds, manual operator.

Okay, so moving on to tooling. Tooling is a very broad description, and we are working a number of applications in that space. But specifically, what we're moving forward with today and in the near term is really what we call face plates of tooling. So the face plate traditionally, the thin shell of the tool sits on top of the composite mold, used for molding aerospace components, automotive components and a whole range of other industries, wind turbines everybody that's making carbon parts needs a tool to make it. So you might have heard of Invar, for Invar is an alloy of nickel and iron that's 36% nickel content. It's used extensively in large composite parts manufacturing essentially for its coefficient of thermal expansion. So it has very limited growth over useful range of temperatures. That's very useful composites. Specifically cure a composite at a hot temperature. So you are laying carbon pliers on to the tool, curing it at a higher temperature, and then the cooling down actually restores the mechanical properties of the carbon. So you don't want to tool may be too much around underneath tool. Invar is a really target controlled supply chain I was going for about 15 years. And often, the critical half on major composite airplane programs is the long lead time tooling. So there were cases where for large spas, for example, or skins on [indiscernible] components. You're tooling billets would need to get on order up to12 months before the actual design phase would kick off. So you kind of need to take a little bit of parts and say, I think my wing is going to be this big and you need to get your material on order. So fantastic value proposition that we're offering really with near net shape manufactured in faceplates, feasibility to do that way, way later in the design cycle. We're taking a powder to preform say preform kind of a near net shape faceplate for a tool in a matter of hours or days or a couple of weeks as opposed to all that duration of having to get to in the past on order combined with butterfly benefits. So because we're making it so near to net shape, only really putting minimal amount of excess material on the tool and then using subtractive machine to take it down to tolerance, much better material utilization, less cost in the supply chain and less waste as well. So that's Invar and Invar has really necessitated for your larger tools. It's something pretty exciting that we've been waiting for the last couple of months. I'm putting that down because it's heavy, is lightweight tooling, so titanium. So we know it's been titanium -- why is that half that of steel, and it's about the same strength, give or take the grade. And it's really, really interesting for tooling applications in that traditional [indiscernible] expenses like cost prohibited to make tool a tool up to a couple of meters out of the titanium billet. But it's actually got a whole lot of really favorable properties for tooling. So it's really hard. It's really, it's durable. You look at some of the steels that they use for tooling, if you don't regularly prep and repair and clean that tool if it's coming out of service and it's going on the shelf for a couple of months. You come back to it, it's covered in rust. Titanium is essentially corrosion resistance. You can use it when you want to use it and you put it in storage when you're not. Over time, it's not going to degrade from cleaning between cycles. So for every composite curing you need to wipe down the tool really extensively to remove any resin flash. Titanium is -- it's a really hard surface. So parts demold really nicely. You don't get mark off. And because it's strong, it's also a bit lighter, because it's lighter it takes less time to heat up. One of the challenges of Invar is about being an alloy of nickel and iron that heat up relatively quickly as individual elemental metals. it's actually got quite a slow heat up rates as a total material on its own. So you make it out of titanium, you can heat the whole product faster, faster cycle times and get more parts for equivalent number of tools. So really, really exciting.

If you look at the aircraft industry, they constantly challenge to reduce weight of aircraft because weight of aircraft is fuel load and it affects the sustainability. So carbon fiber is the fastest-growing requirement for the aircraft industry moving forward and Invar tooling, titanium tooling is a crucial component for all of these carbon fiber manufacturing processes. So we have initiated, as you would have known from what we've announced a joint venture with NEOS, NEOS has gone through a validation stage like many of our customers do, where we have produced a demonstrated plate for them, that has been delivered -- they've machined it in-house and have approved in-house machine is going to an external customer who is giving the receipt of approval for vacuum decay and helium leak testing, which are crucial things they test for in carbon fiber tooling. And they are now saying this material performance where we would expect it to perform and we can move forward. We're also exploring other joint ventures around the world all around tooling faceplates. Now that we've also added titanium and this is relatively new to us, titanium into our tooling portfolio, the size of our tooling opportunity does increase dramatically because we now have this unique capability of being able to offer lightweight, high-performance titanium tooling to the same industry as well, expanding the portfolio without having to change the way we do things and what it is we do. So we expect the joint venture to deliver about $30 million worth of revenue. The tooling market is, at the moment, a $0.5 billion market globally and growing very rapidly to deal with this requirement for carbon fiber components for aircraft.

Any questions or I was going to comment about the kind of the horizon 2 work we're doing as well. Now the ability to embed things within tools being inherently as manufacturing process. Composite manufacturing today is dominated by large expensive monoliths being [indiscernible] and ovens. The kind of next evolution of composite curing is what they're calling out-of-order cloud or vacuum wagon and [indiscernible]. Today I would put actually sensors inside the tool, heating elements, cooling elements and other smart sensors, leveraging some of the work from the Bytepipe. The Smart Oil & Gas sensor work we have been doing with the U.S. team. It's a really exciting opportunity in that space.

So that's how the tooling manufacturers would buy the system or fuel [indiscernible]?

So in the joint venture, we've parted the journey. Our preference would not be to sell a machine if there are application because when we walk away from it, we only have the powder supply, whereas if we join the joint venture, we are on the complete journey, and we get the added value of the customers' understanding of the marketplace in-built customer, in-built supply chain and gives us a far better and more rapid route to market.

Just the let's get us back from why I've said is I'm interested in joint ventures going forward. Obviously, you can approach the market in different ways. And once we could provide the machinery with know-how about the applications, sell it to the customer, they operate it and whatever this machinery then produces is basically on the business of these customers. That's one way to do it. And in some cases, this makes sense. This ongoing businesses we are interested that not only I want to have the benefit going forward on the machine sales, the materials service and maintenance, but also on anything, which is the output of the joint venture, okay, which is fundamentally different than a pure machine sale and a tale material Okay. So I'm interested in the commercial -- in the output of that joint venture for the lifetime of the joint venture. It's a little bit of an extra step. But at the same time, the joint venture gives us the opportunity to get into certain markets without replicating and also building the expertise on our side entirely. Because us building up the tooling in go out over years on the go-to-market, which tooling companies have already would be a duplication at the end of the day, okay? Us building the know-how about barrel manufacturing would be a duplication of things which exists already because of getting the joint venture accelerates the process and also let them play on the strength they have and let us play on the strengths we have with the technology.

And customers generally open to that?

Absolutely. Absolutely because it accelerates them, also to get access to a new innovative technology, which otherwise, they would need to justify with a full bunch of investments, which would be at least twice as big when going into the joint venture technically if it's 50-50 could be variations, but in general.

And you've already started making machines or you have to wait [indiscernible].

Usually, from a timing perspective, the way it works, you start with an idea first, you habilitate that basically, you cannot do the product, then you go into a heads of agreement, which is kind of a more formal commitment also of these customers that we engage together. Then you go into a joint venture agreement, while all the other prototyping and so works in barrel and then you go into the next step where you specifically configure the machinery for that use case. Okay? While we are talking about TKF1000 or TKF9000, these are kind of generic machines out there for barrels, you would need a TKF, you call it, 2,400, okay, from the size of the product. These are tailor made configurations, which you start where you get the order or we get the order at the point in time when the joint venture side is signed off.

And then in what time we can have the machine ready?

Depending on the machine, you're talking about 6 to 8 months at this time.

Because at the moment, there is shortage of raw materials, considering all those factors [indiscernible].

Yes, it's keeping some of our colleagues out there busy to make sure that we can do it. We have the specific situation right now with [ DWUI ]. As you know, this was a machine sale, which we got the order for in last year of August, where the plan is that we install the machine and commissioned the machine at [ DWUI ] in May in the U.K., okay? And what we found over time is that, for example, the normal process, we would have had -- if we are building this machine here, we precommission it here, then put it on a ship, get it to the U.K. and do the 500 installation is not working. Okay, because the shipping times have moved from 5 to 6 weeks to 10 to 12 weeks. So we went to Plan B, where we are partially assembling at Dycomet in Holland and bringing it together then in the U.K. that we can hold the time line of May. It's challenging. I can tell you, it's not so that supply chains are uninterrupted at this point in time in the world. So on cost, for example, shipping a container overseas was a $1,500 investment has turned into a $9,000 investment, okay, but that's just a minor thing on the side.

Yes please, when you're talking about saving money, traditionally titanium powders cost about 20 times the cost per kilo of titanium billet. So although you save a lot of material you save a lot of money.

Actually, I can tell you -- so your numbers have been correct. It has changed over time. It's not that bad anymore, okay? If you think about it, if you take a titanium billet on the kilo, you would be somewhere in the $35, $40 today as a billet as such for the kilo. If you take a titanium powder today, it would be 200, 250 million. So the ratio is not 1 to 10 anymore, but it's still significant. On top of it, what you need to understand is that that's the reason why we are thinking about titanium powder plant because the specific power we can use in cold spray, which is called -- [indiscernible] part of it, I've done what I buy with some technology, where we think we can go down with that power plant to the cost per kilo titanium of commercially pure titanium, nonsphericity which is in the billet price. That would give us a significant step-up in the availability there because then we have the full advantage of new shape with a full advantage of the power pricing.

Yes. That was my next question is the opportunity to make your own account.

Yes. You're going to see more from us in the weeks ahead, but establishing such a power plant in Australia, obviously, also from a geopolitical situation in a place where you want to have it and not somewhere else in the world.

When we talk the titanium applications I'll touch a little bit more on the green titanium because it's something that really needs some good emphasis.

One question, how JV strategy helped in terms of the validation time [indiscernible] opposed to all the customers, if you are manufacturing.

[indiscernible] think about it. What we really want to do is, if you know you can do great tools, for example, in Invar or in titanium you want to engage to start with in the joint venture with the tooling company. This is for us to start with these news. At the same time, you want to diversify. There is no reason why we would stop and not approach as many tooling companies as we can in the U.S., in Europe and in Asia to also derisk our approach going forward because on every tooling company, which we are going to engage with going to be commercially super successful in the future. So you want to derisk the approach.

Yeah. You only need to validate with the tooling companies. Correct, so you doesn't...

So the manufacturing validation cycle independent customer wanted to know their particular requirements. But in terms of the technology maturation, that's certainly done once right, so that's we work we've been doing over the last 18, 24 months.

As I mentioned before, Dycomet has been working on a different kind of cold spray, as [ titanium ] has been working. The glass industry, which I told you about, is a typical example of a coating. The layer thickness is maybe a few microns. So that's a typical example of a coating. When you talk about repairs, you can think about defects in components fitting due to corrosion were due to life cycle fatigue. Those are typical examples of repairs. The customers I mentioned, like Mercedes, Rolls-Royce, Lufthansa and many others they use our low bridge cold spray systems for repair of components. And this is a typical example of a creative repair. But what you see here there is a groove in this aluminum bar. And it's been filled with cold spray, right. This is a typical example of how you can repair component with cold spray. This is done with hand-held cold spray systems, which are easy to implement for a customer. We give the operators training, training takes usually 4 to 6 hours, and they can immediately start working with the cold spray systems. The business case for us in that is that we supply cold spray systems which we build in-house. We have a continuous stream of power supply to these customers because the more they repair more powders as we supply. And the good thing is that the powders that we supply are unique powders. They cannot be bought anywhere else. They can only be bought at Dycomet, which gives us a unique position. And in general, these customers, which -- because there was a question about copying powders and those kind of things, if someone wants, they can copy everything. But these customers are manufacturing companies. They are not interested in looking for a powder, which may be EUR 5 cheaper or USD 5 -- AUD 5 cheaper. They're interested in the reliable supply chain. So that's why they buy the powers at our situation -- at our place.

And if you look at what it means for us in Australia, Dycomet joined a titanium team in December. And now in March, we've already sold 2 machines in Australia. So it hasn't been available in Australia. So repairs and coatings are typically done with high-heat applications or welding, what is replaced. And in a very, very short period of time, we have a large demand from customer base occurring. This technology solved problems. We didn't know where soluble before. So these first 2 machines sold, I think, are going to be the tip of the iceberg. And once we develop our service portfolio for the whole of Australia, it would be very interesting to see what we can do. And then we'll be taking this through the whole Asia-Pacific region as well. And we are able to leverage this 15 years of experience that Klaas and his team have. So when we go to these customers not having to validate and go on a long technical journey, that technical journey has been done. The machines exist. We just need to demonstrate what -- how it works and the customers are on their journey very, very rapidly.

Is this something they are going to be using in the mining sector?

Yes. So I was up in Sydney at [ AusRAIL ] which was -- although [ AusRAIL ] isn't a very specific application case for us, we wanted to test the market, and the interest from the market guys who service mining, service the rail industry and other large infrastructure industries in Australia was significant.

And another example, this is about repairs. Another example for coatings is applying silver on copper. This is a $25 billion market electroplating, which is done with a chemical process where dip a part in silver and you can cover this entire section with silver. Using cold spray, you can only selectively coat the area where you need silver -- so it's safe silver. It's an environmental-friendly process and it's much more cost effective than doing the electroplating. So this is also a very huge market for cold spray, which is in addition to the repair, also an example of what can be done with cold spray technology and which we bring to the Titomic activities.

In this application, what kind of materials you can apply that?

Silver in that case. Well, this is silver, of course but you can do aluminum, copper, zinc, tin, nickel, we can do special coatings for ware applications.

Because I'm from a manufacturing environment as well, and we do a lot of aluminum.

Have a look at when we do the factory tour, the machine is over there, have a look at it. If there is any kind of application.

Do you want the [indiscernible] business model.

Yeah. So that the story on the -- obviously, because we had this conversation before and selling a machine and joining the powder at a later stage okay? From a total market perspective, it's pretty obvious that when it comes to services, to repair services, this is going to be very personnel intensive because you need operators off the machine, okay? That's one thing. Now are we the company to have a lot of employees going forward, which are running around in the mining fields or some other places, maybe not okay? So the approach is very clear for us is to build a group of authorized service providers, which we authorize, which we train, which we give them -- provide them the equipment and they move on and go to these fields and do the repair out there, okay? So they are never buying these machines. They are buying basically the ability to perform that service, and from our side, it's all [indiscernible] the leasing agreement with the services and the power around it and the proper training from our side. And with that one, we're also reducing the barriers for a young folks which want to build their own companies doing services in these areas out there. You can do use the machine. It's a kind of a subscription model, if you would think about it. Franchise subscription model, you have different names out here. But at the end of the day is we as Titomic, we're going to provide services and the service is going to picked up by companies as we have already, which we are working on, which we have trained already, which starting the services in the days that ahead.

And to reference what Herbert said about this provides an opportunity for big companies as well as young people to start their own business. When the machine was delivered 3 weeks ago here, the first time one our operators who is a qualified welder switch the machine on within 2 minutes he was spraying metal and fixing things. And he was in love with the machine. And you've never seen it before him being trained -- and when you go through the bureau, you'll see he's already gone out and found applications for the machine and repaired things that we hadn't ever spoken about. So he's gone and got a damaged mag wheel that's got curb rash and he's repaired it, which is much better than either throwing away or using bog which would be the typical way of doing it. So there's numerous applications that just crop up all the time.

The very specific thing here is in a specific area this is an alternative to welding right? And once again, it's important that you understand, I'm not here to disrupt welding. That's not the approach. The approach is to provide the tool for the welders to perform certain service and repairs specific cases where it makes sense for them, where it delivers a better result for the customer and potentially gives them more money from a cost structure standpoint of doing that service, okay? It's not replacing welding. It's offering another toolbox for these service companies, and that's what they like. That's what they really want to have.

Okay. Radiation shielding. So we've been through about 4 of the, I guess, applications that are really in the process of rationalization and commercialization today. I'm going to close out just a couple that are really on the cusp of being ready for a really, really good market opportunity. We talked about this question before about what's the soft of development cycle for some applications. This is an example of one that has been relatively short in the scheme of things. This is the one that I described as relatively simple, but not necessarily easy. So to take a product like this to market, you not only have to have knowledge of the manufacturing process, which in this case is relatively simple. It's the layering of a series of varying atomic number metals on a piece of aluminum which what is in a satellite. But you also kind of need to know, well, what does that means to the customer? So why would a customer use radiation shield. So will talk about, we really are on the cusp of a bit of a new space race, say, seen increasing commercialization of space, number of small startups around the world now launching into launching small sats, cubesats and kind of lower end commercial satellites into space, getting a ride the likes of SpaceX and other new operators like Rocket Lab, but the approach for durability and lifetime on their electronics today as is somewhat fraught. So satellites that need to be service ready for any more than about 6 months to 12 months. Typically, today, would have line with radiation hardened satellite components, namely the silicon chips and integrated circuits are actually used to perform the function of the satellite. Those are astronomically expensive in the order of 100x to 1,000x more expensive than what I call cost components than commercial off-the-shelf components. And this radiation shielding really is a potential solution of a technology that could allow a whole range of the market to use commercial off-the-shelf electronics, really just for adding a little bit of shielding. So I brought a brief demonstration of really just to kind of show what is happening and why this is important. It's might look familiar. This is an electron. This is a proton. It's not quite to scale. Protons are about 2000x bigger than an electron. But this is really what radiation in space looks like. It's these elements spinning around in the magnetic field. Electrons going around the earth in the order of once every 3 minutes. So absolutely zipping around. When you put satellite up into the orbit of these things that is absolutely ripping through the electronics, ripping through the structures and they can cause degradation through the an effect called total ionizing dose, which basically degrades the components over time. If you put something that's unshielded up into orbit or something that might be minimally shielded through basically just the intrinsic shielding of the aluminum. Many of the satellites are dropping out of useful service in 6 months. And for many operators, that's kind of a concession that they have made. They can't afford the radiation hardening, and there's really no commercially viable production solution for shielding. And that shielding what this has been proven in the past, as has done fine work on this in the 2000s, but you can't go out and buy it. So I genuinely believe that the elegance of cold spray to be able to make these shields is just phenomenal.

If you look at a satellite launch, you're talking about $50,000 per kilogram of satellite for launch costs. There's no production costs that just launch costs. So anything you can do to either increase the longevity of your satellite in space or reduce the weight in satellite is dollars in your pocket. If you look at NASA back in 2016, was predicting 1,700 satellites per year were going to be required to be sent up cubesats, which seems like a big number back then. When you look now, StarLink, which is the big provider of satellite broadband says they need 10,000 satellites just to get global coverage with an optimum load of 42,000 satellites required above the earth's atmosphere to ensure global coverage of high-speed broadband and styling on the only high-speed broadband provider going satellite to provide low-cost. So it's an absolutely interesting market. And as Max says, we're on the cusp now, we've got a technology that we know delivers at against particular results with regards weight and shielding. And now we know the market is potentially large, it's our job to go find those companies and tie the 2 together.

How much does it save them?

Fantastic question. So how is the business team, right? The fantastic ability this is customization. So over the last 6 months, my team has been working not only the manufacturing development work, how do we get the different metals and the relevant coat and fitnesses with the tolerances. But how do you actually design and analyze the performance of a particular shield. So it really depends on what you want to do. Do you want to reduce dose to a particular threshold, do you want to reduce the weight of the platform. Example I ran an analysis last week, we're just adding 0.2 millimeters of tantalum on the outside of a 2-millimeter aluminum sheet will reduce the dose by about 55% to 60%. So notionally, that would extend the satellites' operational time by about double. When you look at those satellites about 50% of the cost is in the product, 50% in the launch, you can launch half as many satellites by lasting twice as long.

So to launch got $50,000 per kilogram at launch -- so somewhere between 260 and 306 kilograms of small satellites. If you look at StarLink, they originally designed their satellite of 260 kilograms. It's now going up at about 306 60 kilograms. So what the shielding does is it offers the operator the opportunity to have equivalent shielding for lower weight. So equivalent performance, my satellite lasts long, but might be lighter, and therefore, the ROI is around cost of launch. All you might say, I'm going to go for equivalent weight with longer lifespan because it gives me a satellite that is more robust and lasts longer. So the opportunities vary depending on the mission requirements of the satellite and the end requirement from the customer.

It's got 3 metrics. So there's performance, how long it lasts, weight, obviously how much it weighs, and therefore, how much it costs to orbit and thickness. So thickness is a really interesting one for certain users that are designed particularly some of these small sats. When you're designing the architecture of the satellite, you're launching in 6 months, you've probably chosen your chassis and your packaging 3 years ago. If you decide late in the design cycle that you want a little bit of shielding, you kind of can't go and just change your entire chassis design, and so we're going to use 4-millimeter aluminum instead of 1.5 millimeters. So it's putting that a little bit of shielding on the outside, there's an opportunity there. I want to, I guess, then expanding exactly on what we're taking to market here. So it's both the product and the service. It's the ability to take a customer's particular mission in particular orbit interest, characterize the radiation spectrum of that satellite is going to be flying through, through some modeling tools, we're working on over the last 6 months. Understand what their requirements are in terms of their dose reductions. So what's their performance threshold of their electronic components to a radiation and design and shield, particularly for that application. So the actual mechanisms of how many layers you put in, how thick are each of those layers, that all comes out of the design process, which is to our knowledge absolutely unique value proposition for this technology and that could be good really, really nice.

[indiscernible]

Absolutely. So you talked about sort of simple, but not easy or easy not simple. We can deposit 5 kilograms an hour material onto an aluminum plate that can be cut up in that satellite manufactured in a matter of the conventional ways of doing shielding like this is something that NASA pioneered years ago, lamination of really, really inexpensive metallic foils. You can get a basic tantalum foil millions of dollars, if not available at all, [indiscernible] processes like that, really, really slow build processes depositing on to other services. So speed, scale, flexibility, plus the ability to customize it's really exciting.

The market this is one of these areas where, at this point in time you would look after. What is the market you want to characterize it and you find barely any data out there. But we have the head of the space agency here in our office. We had a rocket provider here at our office. And they all say there is hundreds of thousands of devices going into space. They're only shielding. So this is a business at the end of the day, where I would say even a small piece of coating and creating this kind of shields is could be hundreds of million dollar business going forward.

One of the terms that is used for the technology description. We are calling it multilayer radiation shielding, the Graded-Z shielding is another term that is used if you want to check it out, is something from NASA cubes that market, $0.5 billion to $1 billion over 3 years. So is really just growing at the lower end.

And that number was based on the 1700 satellite prediction.

You are not limited to the small [indiscernible].

No absolutely not.

Initially we were very big satellite services especially also the specific satellite in defense, these guys always had enough money to do proper encapsulated electronics and which are protected from shielding. This will continue to do so because if you have the approach that stays up in orbit for years and stays operational for years, and that's what you have to do. So coming down to the cubesats, where operators like research labs, institutes, Starlinks where they think they have lifetime of these cubesats of a couple of months. And you do shielding and suddenly it turns into 2x.

The big defense satellites might go up at a rate of 10 or 20 a year, whereas the small commercial satellites are going up to thousands per year.

There's really -- I could talk about this all day. There's really trade-off of altitude and spectrum -- so typically, you're really big infrastructure satellites, often really, really high altitudes. So it's a geostationary 36,000 kilometer type range. Obviously, it's a lot harder to get things that higher and so there might be a point at which paying for the electronic radiation rating is justified. An enormous range of low earth orbit up to high medium earth orbit which is where like 95% of the smaller end of the market is operating. Cost of launch, not as high as so therefore, we can afford to put a little bit of shielding literally just like a couple of percent of weight on your satellite and extend the life.

[indiscernible] this was one of the 4 dots part of matrix. It's a fantastic stuff. It's the next generation coming through but be very clear as a business. This has got some work to get into before one side further down [indiscernible]. And that's the commercial maturity I'm talking about. We'll focus on the things that can make money for us in the soonest. Tempering expectations.

So you see how Max loves radiation shielding that's why they wanted me to talk about ballistic protection because that is my pet subjective as well It's the next generation coming through would be very clear as a business. This has got some work to get into before you cited this further down the $3. And that's the commercial maturity I'm talking about. We'll focus on the things that can make money for us.

Titanium structures. I'll skip this up and so this is the last really one that we've been focusing on the last 6 months or so as people are aware. Fortunately, the recipients of MMI grants about 6 months ago, which has really been key in our funding for some of our developments in this area. Titanium super-hot topic at the moment, and it was a great question before around cost of [ AM ] powders and a story I often like to tell that that's kind of the dirty secret of most additive manufacturing. But the powders that those technologies use go all the way through the value chain to [indiscernible] format typically a rod or some slow small billets and that's turned back into a powder through a gas itemization process. So talk about value-add value destroy. So the really exciting thing that we're doing, and we're sort of calling it green titaniums, so we're actually using more of an intermediate stage of production, stage of refinement where we're taking a powder manufactured directly from Titanium's sponge. So it's called an HDH, a hydrogen embrittlement improvement process, where it's in a regular morphology powder because cold spray uses kinetic energy and velocity to impart fusion throughout structures. We're not using heat. We don't quite need that level of control on our powder specifications. We don't need the sphericity and the tight particle size distribution control that AM systems do because they're firing a laser or some other form of heat that they need to really calibrate the melting process to get it to for. So we're using green tie, a much, much lower cost base, but really fantastic mechanical properties with that process. So a couple of example applications that I'm excited about large titanium rings. Things that traditionally be manufactured out of a large billet you'd have to machine out a lot of material, butterfly ratio. You might machine at 99% of this material making it from a billeter, do it with casting, titanium casting extremely expensive, fairly fraught process with vacuum control and other challenges around tooling, you need molds. So the ability to manufacture some of these large, again, uniaxial structures that I talked about and starting that can be fabricated rotationally, is really, really compelling. Another fantastic one is the titanium tanks single-piece, monolithic structures, no welds, no assembly, basically made all in one piece. It's modulus material and the ability to do that without having to then secondarily do expensive electronic beam welding or other finishing processes is pretty compelling.

That ring on the left-hand side is a great example of where added to manufacturing our process really adds value. It's a region that was designed by the customer that we made out of aluminum, and was going to weigh about 76 kilograms. We got involved early in the project. We're able to redesign it to suit the process, still fits the need of the customer, it suits our process, as Max talks about the rotational spray. And we're able to reduce the weight of that part by 36 kilograms to a single production process, not a multistep process and reduce the wastage on that part only about 8 or 9 kilograms in total. So it really demonstrates the value add the TKF has when it comes to manufacturing large titanium components as well. Especially when we can get involved early enough with the customer and design it and be will be involved in the design phase to make sure we get the best out of our technology. So 76-kilogram part down to 36 kilograms with minimal wastage is a real big win for both ourselves as well as the customer.

So at this point in time, we have come to the end of the use cases, okay. But let me summarize once again what we have been doing over the last couple of months. When we started off where hundreds of applications and use cases, okay? All great ideas. One of our more really great ideas in the sense of our ability to monetize. So zoomed in on basically what you saw there on 14 specific cases, which we have investigated further down to the point. And we share out to you 6 out of which 4 we are making business as we speak, okay? These are -- as you can see them, these are where customer agreements are formalized right now where we have sold already components and where you're going to see joint ventures coming up. At this point in time, before we go to the next session over there, I would ask that open up for some questions at this point in time about the use cases and what you have seen so far.

The four mains ones that are on the forefront for you guys which is kind of biggest [indiscernible] opportunity that is coming up out basically?

The biggest opportunities -- as you could see here, the closest at the end of the day is the barrel manufacturing and the glass opportunity because these are sitting with customers right now and they are proven applications, it's an implementation phase.

Sorry. I mean great to the hear there is focus on those key areas you are looking for. Just looking through some of the past application candidates, you able to give any idea as to when assess that framework and there's some similarities in some of the industries there where is there a common area that they seem to fail or they didn't stack up or was it?

Across the board obviously would go beyond the exercise right now. I think about it as we are talking about near shape tools, for example, whenever you're building 3D structures, which go beyond a certain thickness. You add a lot of complexity, a lot of stress in the material, so you have to be careful. That's one thing. The other thing is the thing we're learning, obviously, is anything which is a rotational structure, which can turn and your spray and sticking things and make things better is a sweet spot of the technology. Okay? Anything what you think about it, in a number of cases, you could see is covers for golf drivers, bike frames and at the end of the day. The technology is one thing, but you have to have to go to market in place on the other side. Building the go to market is as time continuing and that's complex than having mastering the technology on the other side. And I think as we have changed in our focus and commercializing the solutions, we are spending a lot of time in getting understanding how does the go-to-market and look like, okay? -- does this customer want to buy from us? Is it a subscription model? Is it the machine buy? Is it whatever? Is it a joint venture besides only focusing on the technology side of thing.

There's one more here. I have a question. I remember previously in you previous presentation, you mentioned you expect Titomic still have maybe a further capital raise by the end by the end of this year. I just do some rough calculation myself because you probably you hear like $20 million in profit in the year, and you may probably have to generate at least 35 to 40 in the future to become profit? So how far are you?

So first of all, nothing has been decided yet, okay? As a young start-up company, we are facing the same problem than many other startup companies at this stage. On one side, we have to drive revenue and with that in cash flow coming back into our books, you can do the math, and we are reporting the financials every quarter and every half year. Yes, this is something where, at this point in time, unless cash flow at the end of the day covers entirely your spending, you are dependent on the money of investors. There is multiple ways to do so. Companies like Repkon were helping us in terms of investing into the company. But you're going to see further information from our side in the weeks ahead. To what extent we would need to go for a new capital raise process or not? Or is it not a strategic investor coming into the company to allow us to move forward. At this point in time, we are looking at multiple options.

You consider like borrowings instead of capital raise?

One of the options.

[indiscernible ] first of all of the top 4.

So first of all, I can tell you a saying from my parents. My grandma always states, he's too poor to buy cheap. So I wouldn't recommend you buy any cheap stuff. And I never want to sell as a company cheap stuff, okay? We want to sell always at the highest possible quality levels for our customers at the best possible prices. Then we want to make a good margin out of the business we are doing. Otherwise, I call it a hobby. So we are seriously here to generate revenues and profits [indiscernible]. And I think here we are on the way forward to do so. But yes, unfortunately, that can't really be achieved now.

I can't do your as...

I can tell you. Just wait. With that one, let me close up the time as it is progressing also. Let's pause here. Okay, we will have a 10-minute great refreshment break. From the pure logistics, our team here is available to show you all. There are some refreshments on the back of [indiscernible]. And we continue basically in 10 minutes with the security [indiscernible ]. At this point in time, I'd like to introduce to you, Michael Rochford, here in the back of the roadmap from floor who is going to be your [indiscernible] going forward. And before we move over, he has a couple of things to say, but now we have a 10-minute quick break. Thank you.

Yes. Just before we go to the break.

Yes. Yes.

After we come to the [indiscernible] of the day, but I'm a spectrum guy. So we're going to do it to our next door. We can give you a chance to see firsthand equipment , prices and even get very close to some of the products and make more of our fantastic team. We have some amazing people. We're very, very proud of that team, and we want you to experience some change in this well. Firstly, one of the most [indiscernible] is your health, your safety and your security -- so I just want to do a very short safety [indiscernible ] before we go up there. In terms of the factory, we've changed things around a bit. We're not spraying today. We've set up organize things both sites, bring groups through, especially our larger group [indiscernible]. So it won't look exactly what that goes every day, but we've made it safe and secure place. We will ask you to don't [indiscernible]. It is mainly so we don't lose you. Obviously [indiscernible] we've got side on the whole time. And also, we're going to manufacturing [indiscernible] something like this will [indiscernible ]. So we ask you to stay together. We're going to have brief 2 groups. We thought it'd be nice to have smaller groups. You get a chance to ask more questions [indiscernible]. So we've got 2 advises for you. So Angelo will be taking the first group and is the Head of Business Systems and has been [indiscernible]. Yes, it's one long decisions you place and should be with Adam who is a senior analyst over here. Second group, John, is going to take care of the second group. With Alex, who's head of the digital side of that business. He and his wife Jake. And the third group will be with John, who's our CFO; and [ Dr. Arash ], he is in [ Pretronas ]. [ Arash ]is a doctor in metallurgy. Do you want to know anything about metals [indiscernible ]. Other important things today, please no photographs. We do have some items out there that we don't want to make competition. We don't want our competitors to know about and are a little bit sensitive. We do, however, have one location where we'll be able to take the photographs for you -- so we'll take a photograph for you [Audio Gap].