Ann: DroneShield Awarded $33 Million U.S. Government Contract, page-75

Todays AFR

Shares soar as US government buys up Aussie company’s anti-drone tech

Shares in ASX-listed defence technology company DroneShield have soared 19 per cent, after it struck a $33 million deal to sell equipment to the United States Department of Defence, underscoring the importance of the versatile unmanned vehicles to modern warfare.

DroneShield makes systems that stop drones from communicating with their controllers or satellites, rendering them useless. Some are mounted on vehicles or the buildings, but its most popular products, which resemble an oversized rifle, are designed to be carried.

Its deal with the Department of Defence, announced on Monday, is a coup for the Sydney-based firm, which has never signed a contract remotely as large.

The war in Ukraine has shown the full potential of drones as weapons, with small kamikaze drones loaded with explosives that cost in the thousands capable of destroying multimillion-dollar vehicles or weapons systems.

Both the invading Russians and defending Ukrainians are using drones, with specialised units serving different purposes. Some are highly sophisticated and used for surveillance, others for launching strikes and still others function as flying bombs.

The US deal is being treated by investors as a key moment for the company. Its entire revenue for 2022 was just shy of $17 million, which produced a net loss of about $1 million.

Its shares charged to 32 cents on the news of the US deal, giving the company a market value of $181.4 million.

DroneShield’s chief executive Oleg Vornik declined to say what the Department of Defence had bought, or how it would be used, but described the challenge that his company addresses.

“You’re essentially looking for a flying Wi-Fi router,” Mr Vornik said.

“Say if you’re in the city, in a sea of other Wi-Fi routers. Minimising false alarms and specifically detecting drones, as opposed to anything else, is really challenging.”

The market for anti-drone systems is becoming increasingly congested, with large defence manufacturers entering the space.

But Mr Vornik said his company had a time advantage. It had been making anti-drone systems for eight years.

Its systems are already being used in Ukraine, though Mr Vornick declined to specify how many. But he said the company would probably be profitable this year.

DroneShield hopes its sale to the Department of Defence, one of the largest purchasers of military kit in the world, will be the prelude to a much larger sale of standing anti-drone systems on US bases.

DroneShield is part of one of three consortiums vying for the work, with others having been previously ruled out.

Mr Vornik said DroneShield mainly sold directly to customers in the United States and Australia, but used distributors in markets such as Saudi Arabia and Brazil.

He said it would not do business in “grey” markets that were not banned but were not Western allies, such as Venezuela. “We choose not to supply to grey list [countries] to keep our reputation,” Mr Vornik said.

In future, he said, he hoped DroneShield systems would be deployed around prisons, especially in America. “Some individual states have 20-plus individual prison facilities, and that’s, of course, drawn smuggling contraband into those [via drone].”