Alexium International Group keeps momentum rolling with new reactive surface technology agreement

Alexium International Group (ASX:AJX) is finalising the terms of an agreement with Bruck Textiles that will see the two companies work together to develop ballistic fabrics, as well as other fabrics, treated with Alexium’s Reactive Surface Treatment (RST) technology.

While the product developments and negotiations cover a broader spectrum of fabrics, Alexium and Bruck are already engaged in performance trials for ballistic fabrics treated with Alexium’s repellency treatment.

Importantly, Alexium’s RST repellency treatments do not contain perfluorooctanoic acids (PFOAs) or perfluorooctanesulfonic acids (PFOSs), which are currently used by other traditional repellency treatments, and which are now being phased out by industry and regulators for health reasons.

PFOA is a carcinogen, liver toxicant, a developmental toxicant, an immune system toxicant, and also exerts hormonal effects including alteration of thyroid hormone levels.

PFOS is a man-made fluorosurfactant and global pollutant. PFOS and PFOAs have been found to be persistent, bioaccumulative and toxic to mammalian species.

Alexium International Group chairman Gavin Rezos told Proactive Investors today the world is currently moving away from what is called C8 chemistry to C6, which is far more environmentally friendly.

“In essence, under conventional treatment using heat curing, producers can’t get the same performance that they can with C6, however we know that using the microwave Reactive Surface Treatment we can get equivalent performance,” he said.

“So environmentally, we have a significant benefit in that we can use C6 without loss of performance. We can also do it in a competitive way which doesn’t cost anymore.”

RST is a process, developed initially by the U.S. Department of Defense, which allows for the surface modification and attachment of nanoparticles or multiple chemical functional groups to surfaces or substrates to provide functions such as water proofing, oil proofing, anti-microbial, non-stick and UV protection.

Alexium is negotiating a licence agreement on defined products with Bruck as an exclusive licensee in the Australasia territory, including the delivery and commissioning of a production unit, technical and business milestone and royalty payments. 

Since 1970, Bruck has been the major supplier of combat and non-combat apparel fabrics for the Australian Defence Forces.

The company is also a major supplier to Australia's leading work wear brands that operate at both retail and institutional level, and is Australia’s largest fabric manufacturer.

In terms of the target market for ballistics fabrics, Rezos said, “You simply have to look at the number of soldiers around the world that need ballistics protection and that’s in the millions of units.”

Rezos said Alexium will have similar transactions to the Bruck Textiles partnership over time in the U.S. and Europe.

Chief operating officer Stefan Susta told Proactive Investors recently Alexium has been in a number of discussions with potential partners.

Alexium is seeking partnerships in other geographic locations for certain applications with several commercial partners that manufacture and supply the fabric.

“There’s a significant market opportunity that we’re chasing and I think we’re extremely close in applying the technology that we’ve developed here in translating it to other markets,” Susta said.

Significantly, this latest news comes less than a week after Alexium announced the commercial roll-out of its flame retardant, oil/water repellent nylon.

The company is aiming to address demand from the U.S. military, which currently has 1.4 million soldiers serving on active duty and 800,000 soldiers on reserve duty, as well as commercial customers in the U.S. and abroad.

Alexium anticipates a combined market demand of at least 4 million linear yards per year, with high profit margin potential.


Broker placed $0.35 share price target

Being in the initial phase of corporate development Alexium is valued lightly by the market, however, a broker has recently placed a price target of $0.35 per share on the company, which offers investors a potential upside of 338% based on the current share price of $0.08.

The valuation is based on Alexium’s improved prospects with a patent grant in Singapore for its RST technology and an additional purchase order from the U.S. Department of Defense that further strengthens strong revenue potential from Defense deals.

Analysis
With an OTCQX listing assisting investors in the key U.S. investor market, this is a stock to watch.
Alexium has high value applications involving speciality fibres. High molecular weight polyethylene (HMWPE) and aramid fabrics for example, are being increasingly employed in composites and other technical applications, areas where we believe RST coatings could be highly beneficial.

Alexium's repellency treatment on nylon fabric Environmentally-friendly flame retardant coatings (FR) for selective synthetic fabrics is another exciting market where Alexium felt that the RST process offered exceptional opportunities.

Alexium's business model is based on licensing the RST treatment technology to commercial partners, and/or to jointly develop products for both the military and commercial sectors.
The company’s strong relationship with the U.S. Department of Defence holds it in good stead to win contracts under programs to provide protective suits for military personnel.

The company looks to have an exciting future ahead of it with a very light valuation given the wraps and perception of the value of the technology in licensing deals.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24465/alexium-international-group-keeps-momentum-rolling-with-new-reactive-surface-technology-agreement-24465.html