The K-Tig Ltd (ASX: KTG) share price was climbing today following the company's announcement regarding a signed Memorandum of Understanding (MoU) with a South Korean military manufacturer.
At the market's open, the welding technology company's shares jumped 10% to trade at 55 cents. However, by the end of the day, the K-Tig share price had retreated back to 51 cents, up 2% for the day.
What did K-Tig announce?
The K-Tig share price was running higher after the company provided investors with an update that could propel its future prospects.
According to its release, K-Tig has entered into an MoU with Hanwha Defence Australia Pty Ltd and Hanwha Defence Corporation (Hanwha).
One of South Korea's largest military manufacturers, Hanwha represents an attractive opportunity for K-Tig to align with.
Based in South Korea, Hanwha has been selected as the preferred supplier of the Australian Army's multi-billion-dollar Land 8116 self-propelled artillery (Huntsman) project. In addition, it has also been shortlisted for the Land 400 Phase 3 Infantry Fighting Vehicle project.
Under the MoU, K-Tig will use its technologies to develop advanced keyhole welding procedures for Hanwha. This will see advanced steel composites welded together for the proposed military vehicles contracts.
Should K-Tig be successful in its welding demonstration, Hanwha will work with the company to develop automatic welding procedures. This is expected to take place in the regional city of Geelong, where the Huntsman will be manufactured. In total, 60 self-propelled artillery systems are planned to be produced along with 15 ammunition supply vehicles, support systems, and maintenance works.
K-Tig managing director Adrian Smith commented:
Partnering with Hanwha to create crucial equipment for Australia's defence is a significant opportunity for K-Tig to deploy the speed, efficiency and effectiveness of our advanced keyhole welding technology, all while helping to create local jobs, develop strategically vital manufacturing skills for the nation, and provide the Australian Army with the self-propelled artillery capability it's desired for many years.
About the K-Tig share price
The K-Tig share price has gained 750% over the past 12 months, reflecting strong investor sentiment. Year to date, the company's shares are up 50% and are within striking distance of their all-time high of 58 cents.
On current valuation grounds, K-Tig commands a market capitalisation of around $63 million, with more than 125.8 million shares outstanding.
