SOURCE: Alloy Steel International Inc.

Alloy Steel International Inc.

January 12, 2010 19:05 ET

World First Product Secures Growth for Alloy Steel

PERTH, AUSTRALIA--(Marketwire - January 12, 2010) - The introduction of the new thicker Super Alloy Arcoplate onto the market this year has cemented Alloy Steel's (OTCBB: AYSI) standing as a world leader in bi-metallic overlay technology.

As the first company to develop and manufacture the thicker alloy, Alloy Steel is now in an unrivalled position and set to continue on a growth path in coming years.

The past 18 months have been difficult for mining and mining service companies worldwide due to international economic conditions. However, Alloy Steel has not only weathered the financial storm but has improved and strengthened its market position. The company has increased its market share in Western Australia from 20 percent to an estimated 80 percent in just two years as a result of a concerted effort from the entire team.

According to Mr Kostecki, the company's founder and CEO, this year's result is "truly a remarkable achievement given the difficult times which were experienced by clients and ourselves in the downturned economy.

"The company is now well placed to face 2010 in a very positive manner to achieve increased sales, and continued growth and market share across the entire mining and mineral processing spectrum."

New Super Alloy Arcoplate was developed to solve problems caused by wear and hangup. These two issues can plague mining, quarrying, power generation, cement production and other industries, and can cause immense productivity and profit losses.

Alloy Steel used cutting-edge technology to create an alloy overlay over 3/4 of an inch thick in a single pass operation. Conventional methods involve multi-pass overlays using layer-upon-layer welding methods.

Field trials for the new product show outstanding results. The Super Alloy Arcoplate outperforms conventional weld overlay in abrasive wear applications of similar alloy thickness between two and twelve times.

Alloy Steel is currently negotiating supply contracts with major iron ore mining companies. Super Alloy Arcoplate will be used for upgrades and continuing wear plate requirements. There is increasing demand for the product in Western Australia, an area with vast iron ore resources and home to some of the largest iron ore mining companies in the world.

However, as reported from previous filings, Alloy Steel has not been immune to the effects of the economic crisis. This is evidenced by the depressed commodity markets in the first nine months of the financial year.

Investors should be aware that the new Arcoplate Mill was completed and commissioned in the current financial year. Costs required by accounting standards have been expensed to profits resulting from the operations. This has reduced the company's bottom line result accordingly.

Costs incurred from developments were settled using internal cash flow and cash reserves. Alloy Steel used available staff and facilities, and achieved considerable cost savings by carrying out this work 'in-house.'

The following comments should be considered when considering the company's financial performance for the year.

After add-backs for once-off items, the company shows an approximate net profit before tax of $2,150,000.

Add-back items include materials and other costs that have been expensed in relation to completion of the new machine and include:

--  Commissioning and testing of the new machine
--  Diminution in listed investments
--  Foreign exchange loss due to the appreciating Australian dollar compared
    with a small foreign exchange gain in the previous year.

The first quarter of the 2010 financial year (Oct to Dec) has shown sales of:

Oct  $ 1,910,330 USD
Nov $ 2,997,347 USD
Dec $ 831,639 USD

Total for quarter: $ 5,739,316 USD

December is a short trading month because of Christmas and New Year holidays.

Extrapolating these figures shows an excellent potential result for the full year.

To give 2010 a flying start, the company is pleased to advise that Synohydro Corporation of Beijing - China has confirmed a second supply contract for Arcoplate as part of their dam enhancement program in the Sudan.

This contract to the value of USD 921,000 is a direct result of the performance of the product previously supplied and the ability of Alloy steel to provide on time delivery of quality price/performance product.

The contract is also based on favourable payment terms to Alloy Steel.

The company and the directors are highly confident for the future for Alloy Steel.

For further information please contact CFO Mr. Alan Winduss +61 412949225

Contact Information

  • Contact:
    Mr. Alan Winduss
    +61 412949225