PPK Group (ASX:PPK) share price tumbles despite distribution agreement

The company’s shares are taking a breather…

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The PPK Group Limited (ASX: PPK) share price is falling today, subtracting yesterday’s strong gains of 6.46%. This comes despite the technology and mining equipment company announcing a supply and distribution agreement today.

At market close, PPK shares are down 3.93% to $13.45. In comparison, the All Ordinaries Index(ASX: XAO) is up 1.3% to 7,760 points.

PPK expands market presence

A possible catalyst for the decline in PPK shares is that investors are taking profit off the table.

In the release, PPK revealed that its 51% owned subsidiary, BNNT Technology has entered into a non-exclusive supply and distribution agreement with Filgen Inc.

Founded in 2004, Japan-based Filgen is a leading specialist in the sale of science research equipment in the biotechnology market. The company distributes nanomaterials in Japan and has an extensive network of international clients.

The deal will see BNNT Technology supply Filgen with its Boron Nitride Nanotubes (BNNT) for entry into new international markets. This is expected to reach research and development centres as well as industries using nano-materials in complex manufacturing.

The BNNT product is by BNNT Technology employing Deakin University’s patented technology. Both PPK and Deakin are joint venture partners in BNNT Technology, with the latter owning a 49% interest.

The agreement will last for a period of 12 months, which excludes marketing and the sale of BNNT in the lithium-sulphur batteries space. PPK’s 48% owned subsidiary, Li-S Energy has exclusivity over those rights.

PPK Group previously noted that the significant potential of BNNT, however, the material could only be produced in small quantities. BNNT Technology is continuingly scaling up production efforts, recently adding a second 4 furnace module production unit. In addition, the company will install 2 new larger 6 furnace module production units.

It is assumed that the total BNNT production capacity will increase from 2 kilograms per week to 8 kilograms per week. Just as little as 2 years ago, only 1 kilo of BNNT could be produced per year.

Management commentary

PPK executive chair, Robin Levison commented:

This is a landmark deal for BNNTTL, being its first distribution agreement with an international company.

As a major shareholder in BNNTTL, PPK is highly cognisant of the potential for this relationship to broaden awareness of BNNTTL’s unique high purity BNNT in international markets.

…There is potential to employ BNNT in a revolutionary manner as a component of multiple other commercial products beyond its existing applications in lithium-sulphur batteries, ballistic protection and metal alloys to name just a few of its current uses.

We expect partnering with Filgen will accelerate BNNTTL’s penetration into new industries.

PPK share price snapshot

The PPK share price has shot up over the last year, moving around 340% higher for shareholders. Year-to-date performance stands at a gain of around 130%. 

PPK has a market capitalisation of close to $1.2 billion, with just a tad over 89 million shares on issue.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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