Technical Overview: Where REMSAFE has its purpose and its...

Technical Overview: Where REMSAFE has its purpose and its market.

Where/why it is needed: For example the metal detector on a conveyor belt detects something that could potentially damage a belt beyond repair. Because of safety issues you cant just send a man onto a belt to remove the object without a full isolation of that belt. This would involve the isolation of multiple High Voltage circuit breakers, breaks, counterweights etc. The REMSAFE unit is an user friendly isolation panel where unqualified persons can safely isolate all safety devices with the operation of a central switch. Typically a major conveyor system which feeds critical production facilities can take up to 6 hours to carry out a full isolation to perform a 5 minute job. 6 hours of downtime of feeding conveyors to critical plant can potentially mean millions of $s in production loss or having a shipping freight waiting at port. I say critical feeding conveyors because in most cases mine sites or port facilities have up to days storage to accommodate break downs or shutdowns, how else have they survived in the past??

I guess this system shows its market value when old production facilities designed at high ore prices did not factor in future low ore prices. At low prices some mines need to pump out ore at lets say ~150% designed capacity. Its not to say that they cant produce at 150% capacity but part of that 50% can be made up by cutting forecasted downtime.

So the question here is, is this system more beneficial with low ore prices or high ore prices (low price = high production/ high price = low production)?

Given the fact ore companies have survived so long without REMSAFE do they need this unit or can they cope with the downtime by sticking with their Stacker/Loader storage facilities?

When you ask yourself these questions you can then DYOR on where we are heading with Iron Ore prices, how many old facilities might need to ramp up/ increase production efficiency to survive.

In the end, REMSAFE would have been proposing and marketing 'what is a brilliant idea' since ~2014 to the whole of WA mine sites and have likely secured 2-5% of its market. I know from experience that nobody in the mining industry wants to put their neck on the line to push forward a hefty check for what is not guaranteed until proven by the brave so i think they can still potentially turn 2-5% into 10-20% of future local sales. Positive being that theres still room for growth.

Cost of the installation: Lets say from previous experience, it takes 2 weeks for the engineering team to design the equipment - unfortunately its not a matter of "1 size fits all". Every mine site has different existing Circuit breakers, Conveyor systems, safety controls, safety criteria, makes and models of equipment. This means that every new customer needs a tailored design to suit.

Then the installation, majority of the work can be done during operation but the final tie in work, testing, commissioning and run in needs to be done with the plant shut down. were talking about 4 techs for ~2 weeks.

Finally the teething problems which could mean ~1 week of 2 specialists overall.

Forecasted revenue/profit: Given the above and its risk in what is actually an addresable market, I think the price tag on a REMSAFE installation would be in the near of $2-3M

Say its 2 weeks per job to receive revenue of $2M and a profit of $200K, pushing out 26 jobs a year they will have $5.2M profit. Its not a bad number but given the figure stated in past investor articles and the market that i see above how true is he $1.2B addressable market? Over a 10 year time frame that means that they would install 600 REMSAFE units at 60/annum. I personally do not believe they can achieve this... At best i can see the below happening

year 2017: 5 units
year 2018: 8 units
year 2019: 12 units
year 2020 : 18 units
year 2021 : 27 units
year 2022: 41 units
year 2023: 60 units
year 2024: 75 units
year 2025: 90 units

Total over 10 years

Total units sold: 336
Total Revenue: 672,000,000
Total Profit: 67,200,000

Average per year
Total units sold: 33.6
Total Revenue: 67,200,000
Total Profit: 6,720,000

Please DYOR, this is only my opinion and these are only guesstimations of where i think REMSAFE alone could see growth/risk.