Here’s why the Amaero (ASX:3DA) share price rocketed 20% on open

The Amaero International Ltd (ASX: 3DA) share price is rising 15% this morning following an agreement with mining giant, Rio Tinto Limited.

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The Amaero International Ltd (ASX: 3DA) share price is performing strongly this morning following news of the company’s agreement with mining giant, Rio Tinto Limited (ASX: RIO). At the time of writing, the metal alloys producer’s shares are up 9.57% to 63 cents.

It’s worth noting that, when news broke out, Amaero shares reached an intraday high of 71 cents, up more than 23%, before some profit taking occurred.

What’s driving the Amaero share price higher?

The Amaero share price is pushing ahead today after the company updated investors with the positive announcement.

According to its release, Amaero has entered into an agreement with Rio Tinto to work together on the commercialising of Amaero’s high-performance, high-operating-temperature aluminium alloy (HOT AI).

Recently, Rio Tinto received a sub-licence to produce Amaero’s patented aluminium scandium alloys. Under the arrangement, Rio Tinto will exclusively provide Amaero with alloy billets to process into powder for 3D printing.

HOT AI is a breakthrough type of aluminium alloy that offers superior strength and durability at high operating temperatures. The lightweight material can be used in an array of defence and aerospace applications. In addition, it can also be employed in sports equipment industries such as the manufacturing of tennis rackets, baseball bats, bicycle frames, and more.

While Amaero holds the exclusive global commercial licence rights for HOT AI, the company applied for a broad international patent coverage in July 2020. It noted that it is now in the final stage of approval.

Amaero and Rio Tino plan to scale out the patented alloy’s production in Australia, the United States and other international markets.

The deal between both parties will run for a period of three years with options to extend for an additional three years. 

Management commentary

Amaero CEO Barrie Finnin welcomed the new partnership, saying:

We are very pleased to enter into this Agreement with Rio Tinto. This is an important step in the commercialisation of this high-performance aluminium scandium alloy that will be used in our breakthrough 3D metal printing technology. We look forward to working with Rio Tinto to progress the production of the alloy so we can commence the qualification process with key customers in the aerospace sector and other industries.

Rio Tinto sales and marketing vice president Tolga Egrilmezer went on to add:

As a global leader in aluminium and the first producer of high-quality scandium oxide in North America, Rio Tinto is uniquely positioned to provide a secure source of aluminium-scandium alloy to the market.

…This first sale demonstrates our ability to develop products that meet our customers’ needs, drawing on our technical expertise and world class assets.

The Amaero share price has accelerated over the past 12 months, delivering gains of 425% for investors.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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