A few months ago I put more than half of my portfolio into shares of Pyrogenesis as I believed it was the best trade setup I’ve ever seen and it looks like I was right! My cost basis on the shares is about $0.46 and the price of the shares when I first shared it on this blog was $0.40. As of the close today the shares are trading at $1.25 per share!
In my first post on Pyrogenesis I laid out why I thought the shares are conservatively worth $1.40 per share. Since that post there have been several developments that I believe now make the shares worth $10 or more. The major reason behind this bump up in valuation is what looks like the imminent signing of a contract for plasma torches to replace fossil fuel burners for iron ore pelletization. In a recent news release Pyrogenesis disclosed that it has entered into the final stages of negotiation for equipment supply with the iron ore pelletization client. Below is my prediction on how all the pieces are going to come together to make this deal an absolute winner for Pyro.
Tomorrow the European Commission will unveil the final details on it’s Green New Deal to rescue the economy from the COVID-19 recession. This deal will be sized at half a trillion euros and in particular will designate 30 billion euros towards difficult to de-carbonize industries such as steel and cement. Absolutely perfect as Pyro’s torches are the ideal technology to help reduce green house gas emmisions for a iron ore pelletization which is a part of the process of making steel.
I predict the company Pyrogenesis is doing business with is LKAB which is an iron ore mining company wholly owned by the Swedish government. This makes sense as the torches were first tested by RISE Energy Technology Center which is also located in Sweden. Pyrogenesis has indicated that this deal to supply torches for iron ore pelletization could be worth up to $1.5 billion dollars if they upgrade all of their plants using the new technology. I however would not expect that the client to do that all at once, likely they would seek to upgrade one plant then run it for a year, confirm the technology then plan to progressively roll it out plant by plant. I don’t think it will happen that way though.
Putting the European Green New Deal and the torch deal together I believe that LKAB wants to get it’s own slice of the 30 billion euros up for grabs and has put together a shovel ready proposal to upgrade all of it’s plants at once so it can grab the financing while it’s available. I am sure the politicians pitching this Green New Deal want to get the money flowing as fast as possible to shore up the economy and are going to look for very large and short timeframe shovel ready projects to direct this money towards. Upgrading all of LKAB’s pelletization plants all in one go checks off all of the boxes the politicians are looking for. In the recent news release it is specifically mentioned that the client is moving at a rapid pace and is not even waiting for Pyrogenesis to finish it’s modelling work before proceeding. This is all likely due to LKAB wanting to move as fast as possible to be able to apply for the money.
If this connection is true then it means that after the final details on the European Green New Deal is officially announced tomorrow LKAB and Pyrogenesis are going to be moving very rapidly to get this deal signed as soon as LKAB lands the money. This could mean that in a matter of weeks Pyrogenesis could be press releasing a $1.5 billion deal which will act like rocket fuel propelling the share price up to and past $10 per share.