AML3D Ltd (ASX: AL3) shares are having a strong session on Thursday.
In morning trade, the ASX defence stock is up 23% to 16 cents.
Image source: Getty Images
Why is this ASX defence stock rocketing?
Investors have been fighting to get hold of the 3D manufacturing solutions provider's shares following the release of an update.
According to the release, AML3D has entered into a manufacturing license agreement with Blue Forge Alliance, (BFA) which will allow the company to substantially expand its access opportunities to manufacture parts for the US Navy.
Importantly, the contract is open ended and has no fixed term.
Management believes this is a major strategic development in its supply relationship with the US Navy. It notes that BFA is a US non-profit, neutral integrator, supporting the strengthening and sustainment of the US Navy's Submarine Industrial Base.
Under the agreement, BFA may facilitate the provision of technical assistance and data on parts and components used in US Navy Submarines to AML3D. This will allow the company to use its proprietary large-scale, industrial ARCEMY Wire-arc Additive Manufacturing metal 3D printing systems to manufacture, test and validate a wider range of US Navy submarine parts and components.
The MLA builds on AML3D's successful relationship with BFA. It also supports the company working with other US Navy submarine suppliers to exchange technical assistance and data to support the production of an expanded range of parts and components.
Management commentary
The ASX defence stock's CEO, Sean Ebert, was pleased with the news. He said:
We are very pleased to see this Blue Forge Alliance Manufacturing License agreement signed, which creates opportunities for AML3D to print more parts for the US Navy. We are looking forward to working with Blue Forge Alliance, the technical teams within the US Navy's Submarine Industrial base and amongst the US Navy's wider supplier network to access the technical knowledge and data needed to 3D-print, test and validate metal parts and components for US Navy submarines.
AML3D's US scale up strategy is designed to support the US Navy's submarine industrial base by directly supplying the US Navy with advanced manufacturing technology, components and services. Importantly, this strategy also includes embedding ARCEMY systems and service contracts within the wider US Navy supply chain. Today's MLA agreement creates many opportunities to develop and deepen relationship that have the potential to further accelerate our US scale up strategy.
Following today's gain, AML3D shares are now up 60% since the start of the year. Though, they still remain down 38% from the 52-week high they surged to at the beginning of July.
