IBC Advanced Alloys (TSX:IB) Revolutionizing Alloys for Aerospace and Beyond

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Our world is increasingly digital. But our homes, our businesses, and our economy are still enabled by products made through the shaping and forging of metals and alloys.Whether it is copper that threads through our electric power transmission system, or aluminum in our cars, trucks and airplanes, or beryllium alloys that enable advanced defense capabilities like the F-35 Joint Strike Fighter – metal alloys are the foundation of our modern society.

Advanced alloys also are helping to reduce the weight of cars, trucks, buses and airplanes today. This increases their fuel efficiency and reduces harmful air emissions. In fact, an alloy-driven “light-weighting revolution” is underway today, promising to deliver large and near-term reductions in greenhouse gases while also reducing costs and increasing safety margins for consumers.

Relatively few companies are willing to take on the risks associated with pioneering new advanced alloys and materials – especially high-performance alloys that are made of very difficult-to-combine metals. The chemistries are challenging, development costs are high, and the time needed to qualify new materials with manufacturer-customers can be painfully long.

One company that is successfully advancing in this market is IBC Advanced Alloys Corp. (TSX VENTURE:IB) (OTCQB:IAALF). While not yet on many investors’ radar screens, IBC operates today at the forefront of a materials revolution that is increasingly enabling new applications and environmentally preferred technologies.

The New IBC

Once an upstream mineral exploration company, IBC now operates as an advanced alloy manufacturer. Earlier this year, the Company completed a successful corporate and capital restructuring and named a new CEO, Major General Duncan Heinz (USMC, ret.).

General Heinz has successfully led high-performing teams for decades. Hebegan his military career as fighter pilot for the Marine Corps. After serving several combat tours, he became a test pilot for the USMC. In the General’s words, that job entails “flying advanced fighter jets to their absolute limits and trying to break them so weaknesses can be identified and addressed.”

The General then segued to becoming an expert in military acquisitions policy, and served as the USMC’s first “acquisition general.” He continued rising through the ranks until he was tapped to lead the Pentagon’s F-35 Joint Strike Fighter development program.

Primarily an F/A-18 pilot throughout his career, General Heinz calls the F-35 “the most advanced fighter aircraft in history and a truly amazing platform.” It combines advanced stealth technology with formidable speed and agility and a devastating array of armament. Equally as important, the plane serves as a highly networked communication center in the sky.

The General notes that virtually all of these capabilities are made possible by metals and advanced alloys that increase the plane’s stability, boost performance, and enable an extraordinary array of electronic capabilities.

Today, General Heinz and his team at IBC provide some of those advanced alloys that are now flying in the F-35.

IBC’s Secret Sauce: Precision Casting of Beryllium-Aluminum Alloy

IBC pioneered a way of precision casting ultra-stiff and ultra-lightweight parts made of a combination of beryllium and aluminum. These metals are very difficult to bring together as there is a difference of nearly 600 degrees Celsius between the melting points of beryllium and aluminum. That makes the process of precision casting highly complex geometries very challenging.

IBC’s process of pouring molten beryllium-aluminum alloy into molds, and making near-net-shape components, contrasts sharply with the traditional method of making these parts,utilized by IBC’s primary competitor. IBC’s competitor combines elemental powders into a steel can, uses Hot Isostatic Pressure (HIP) to consolidate the can and powder into a block, chemically strips the steep can off, rough cuts the material to a block shape, and then machines out the part from the block of alloy. That approach creates significant waste and can take weeks to complete for each part. Parts made in this fashion also tend to be much more expensive for the customer than IBC’s precision-cast version.

IBC’s proprietary beryllium-alloy cast material is known as Beralcast®. In systems like the F-35,Beralcast®enables a much lighter and stiffer component housing for the plane’s Electro-Optical Targeting System, or EOTS. Thanks to IBC’s product, the EOTS system enjoys greatly reduced vibratory “noise” that causes “jitter” in long range imaging systems. That, in turn, allows the EOTS sensing systems to see much further into the threat environment and with higher accuracy. The result? A7X increase in standoff distance for weapons acquisition and release.That greatly increases the platform’s effectiveness and allows pilots to ‘fire and forget’ from a much farther, and safer, distance.

Lockheed Martin examined and tested IBC’s precision cast product over a period of several years. These initial qualification processes are very difficult for small companies like IBC to navigate. However, Beralcast®passed with flying colors.

The IBC division that has perfected this technology, the Engineered Materials Division, or EMC, is led by division President Chris Huskamp, and recentlyposted a record-breaking quarter with sales reaching $1.85 million.

IBC’s Copper Alloy Division

The other of IBC’s two operating divisions is the Copper Alloys Division, is led by division President Mark Wolma. It makes both finished and unfinished copper products, as well as specialty copper alloy products, such as those made with copper-beryllium, copper-chrome, and others. The Copper Alloys division has a customer base that spans many industrial sectors.

Copper Alloy’s ring business grew a robust 14% in FY2016, as compared to FY2015, and bookings in FY17 are continuing to climb. The division’s non-beryllium alloy, used primarily in injection molds, experienced an extraordinary 88% year-on-year growth in FY2016, and shipments and bookings for this alloy in the first quarter of FY2017, on a combined basis, have already surpassed FY2016 sales.

Overall, copper sales are relatively flat, the Company reported recently. However, there are macro-economic signs that the copper market may be emerging from several years of relatively stagnant growth, and IBC is well situated with multiple upstream raw material suppliers to take advantage of that.

IBC Now An Approved Forging Supplier to Two Major Shipbuilders

IBC recently made news when it earned “Approved Forging Supplier” status from two of the world’s largest shipbuilding companies: General Dynamics’ Electric Boat Division (NYSE: GD) and the Newport News Shipbuilding division of Huntington Ingalls Industries (NYSE: HII). Electric Boat is one of the nation’s premier submarine builders, having designed and delivered 15 of the U.S. Navy’s 19 classes of nuclear submarines. Newport News is the largest shipbuilding company in the U.S. and is the sole designer, builder, and re-fueler of U.S. Navy aircraft carriers, and is one of two providers (with Electric Boat) of U.S. Navy submarines. The new designations are an important step for IBC because it opens the door for more forged product sales to the shipbuilders.

This news came just in time for a new and expanding investor base that is growing from Canadian shareholders to more American and European shareholders. IBC may still be unknown to many investors, but that could soon change.

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