Advanced materials group Haydale Graphene announced new market opportunities for its US-based producer of proprietary silicon carbide (SiC) micro-fibre, HCT, on Friday.
The AIM-traded firm said SiC micro-fibre had been marketed and sold by HCT for a number of years.
Since Haydale's acquisition of HCT in October 2016, it had been working to "significantly broaden" its list of customers and product offering, initially targeting the US paint anti-corrosion powder coating market.
Haydale reported that a "global leader" in pipe coatings had continued to purchase monthly quantities of SiC micro-fibres from HCT which, at the end of April, amounted to sales in excess of $0.2m for the six months previous.
It said HCT was of the understanding that the global customer was incorporating SiC into its epoxy-based coatings, in order to improve the scratch, wear and corrosion resistance of ferrous structures, which it called an "important" industry-wide issue.
As a result of increased demand, HCT recently began a new production run of SiC micro-fibres to ensure sufficient quantities were available to meet the ongoing contracted deliveries and the anticipated future demand from this new market.
In addition, Haydale said HCT had been developing opportunities within the ceramic matrix composites market where its SiC micro fibre was currently undergoing evaluation with a multinational oil and gas major as part of its advanced testing of the product as a strength enhancer for the catalysts used in its existing petrochemical production process.
It explained that, while there could be no guarantees that either of the two new market opportunities for HCT's SiC would develop into recurring revenue streams, it was "pleased" that HCT was starting to generate traction with substantial businesses in these new markets.
June was set to be a "significant" sales month for HCT and its SiC micro-fibre, the board added, with contracted sales of $0.9m due for delivery.
The delivered product would be used by its customers who incorporate it into aluminium oxide to produce hard-edged ceramic cutting tools, principally for non-US markets.
As it announced in March, HCT had successfully launched its own newly-developed SiC hard-edged cutting tool product as a strategy to grow its revenues and profit by moving Haydale up the value chain and increase its gross profit margins.
Haydale said HCT's product was currently being manufactured by third-party contractors, but HCT was investing $1.5m in its own ceramic cutting tools manufacturing capabilities at its South Carolina facility to address this growing market opportunity.
The first equipment was scheduled for delivery in the summer, with the new product to incorporate the SiC micro-fibre already being produced in the same facility.
The board said the strategic move was being driven by growth in demand from the aerospace industry for jet engines, which use ceramic cutting tools in their manufacturing process.
Once the equipment became fully operational, Haydale would expect to be able to refinance the equipment from traditional asset-backed lending institutions to repay the group's investment in the project.
"The lead times to grow the ceramic customer base demanded that we widened our portfolio in what was initially a relatively restricted market," said Haydale chief executive Ray Gibbs.
"The new range of SiC uses in anti-corrosion and coatings for the oil and gas industry has started to grow the company's product sales and introduced Haydale to additional markets.
"The group looks to maximise sales opportunities through removing existing supply side problems and offering finished product to order which will also capitalise on increased margins."