Connec charges ahead with commercialisation with imminent Anglo deal

The backbone of modern industry is built on the ever-increasing efficiency of processes through new technologies, and every now and then an innovative company comes along with what they believe is a game changing product that all the majors would be foolish not to buy.

The backbone of modern industry is built on the ever-increasing efficiency of processes through new technologies, and every now and then an innovative company comes along with what they believe is a game changing product that all the majors would be foolish not to buy.

The mining industry has a particularly insatiable appetite for these types of inventions, especially in the age of autonomous mining. The average grade of copper reserves has collapsed almost 50% over the past 30 or so years, and the average head grade of the world’s primary gold operations has declined 7.5% from its 10-year peak in 2017 of 1.46g/t to 1.35g/t in 2021. This is only feasible due to the technologies that are continuing to drive efficiency which are allowing production of lower grade mines to flourish, but it’s a pursuit that never ends and one that Connec is at the forefront of.

Connec is an Australian company that developed the world’s first polymer high voltage coupler system (HVCS) – which is the lightest, safest and more economical HVCS, the coupler also includes fiber optics transmission that allows for future next generation smart mining.

Anglo American is committed to global implementation of their ‘FutureSmart’ autonomous mining program. Connec’s HVCS is the only connector able to facilitate wide-bandwidth data communications through an optic fibre cable that is inside the electrical cable, a necessity for autonomous mine monitoring and operating. This means that there is only one cable system required, instead of the traditional two systems that come with an array of safety and cost issues.

The global mining industry is dominated by companies wanting to achieve optimal efficiency. The global mining automation market was worth US$3.3 billion (in 2021) and is forecast to grow at a CAGR of 7.8% to reach US$6.4 billion by 2030. Most of this demand for innovation is being driven by global mining companies looking to optimise their operations, sparking tech companies like Connec to facilitate this transition. For companies it is all about reducing downtime and increasing uptime by mere fractions of a percent can be worth a fortune. This is reflected in a mine’s All-In Sustaining Cost (AISC), a key indicator of profitability and a metric that Connec can substantially improve.

In a critical development for the company, which is embarking on a new pivotal chapter of commercialisation after almost a decade of R&D, Connec has recently received global IECEx quality certification for the fibre optic connectivity aspect of their connectors. This has allowed Connec to start penetrating global markets.

Connec have recently signed with Sojitz for an upcoming trial in September 2023, at their Crinum mine in Queensland. Once the data rolls in, Sojitz is keen to expand Connec products across their other 7 mining locations.

Anglo American have also signed a $6M AUD LOI with Connec with first installations scheduled for November 2023. Success at the November 2023 trial with a singular Anglo mine, which is expected to take just a few weeks, will trigger the $6 million LOI Connec signed with the global miner. 

Once Connec receives the optimisation data from their upcoming product trials with Anglo American and Sojitz, then a sales campaign will aggressively move forward roll out their next-gen HVCS across the world to the likes of Glencore, Vale and Rio Tinto – all of which are currently in discussions with.

To give size and scope of landing an Anglo American as a client, on the the basis of servicing only 10 of Anglo American’s mines, Connec could achieve $20 million of revenue during 2024. If they are able to get into 25 of Anglo’s 57 global mines, it could propel Connec to over $50 million of revenue in 2025 – with a $23.5 million operating profit to go with it. This is the potential from just one of Connec’s clients, and the data the company is about to collect will open up the door to all the major mining companies becoming clients.

Source: Connec Limited

In order to execute on their distribution plan with maximum effectiveness, they have recruited industry veteran Brad Neilson, who scaled his technology business Cram Australia from less than $1 million in sales to over $20 million in revenue by carefully selecting innovative products predominantly for the mining sector. The company was acquired by the Nasdaq-listed Joy Mining Machinery, which was subsequently acquired the US$25 billion market cap Komatsu.

Brad has subsequently consulted at Newcrest Mining (ASX: NCM), and has been a part of advanced manufacturing, engineering, new product development, marketing, sales and business development for over 35 years, with a passion for Innovation, finding solutions to problems and driving business growth. His appointment at Connec will be a significant driver of value for the company’s sales plan.

Upon the completion of the optimisation data Connec will look to commence discussion with Glencore, BHP and RIO.

 

Reach Markets has been engaged by Connec Limited and associates of Connec Limited in relation to certain capital raising or trading activities. Reach Markets or its related entities receives fees from capital raising or trading activities and also receives fees arising from trustee responsibilities associated with the issue of certain financial products that invest in Connec Limited.

Past performance is not a reliable indicator of future performance.

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