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Alloy Steel: A Picks And Shovels Play On The Mining Industry

David Pinsen profile picture
David Pinsen

Alloy Steel International (OTCPK:AYSI) is a nano cap company headquartered in Western Australia that uses a high tech, proprietary process to manufacture protective wear plates for mining equipment. The image below, from the company's website, shows a front end loader bucket with Alloy Steel's Arcoplate wear plating installed.

In addition to protecting against wear, Alloy Steel's wear plates are also designed to reduce "hang-up", which is the tendency of ore to adhere to the surfaces of mining equipment, reducing their efficiency. Some of Alloy Steel's corporate customers have included BHP Billiton Limited (BHP), Caterpillar, Inc. (CAT), Arch Coal, Inc. (ACI), Alcoa, Inc. (AA), Rio Tinto, plc (RIO), Fortesque Metals Group (OTCQX:FSUMF) and AngloGold Ashanti Limited (AU).

Essentially, the company is a picks and shovels play on the mining industry, particularly iron ore and coal mining and as such, is positioned to potentially benefit indirectly from Chinese demand for those commodities. Alloy Steel has had some stumbling blocks over the last year and a half though. I recapped most of them in my last article on Alloy Steel in June.

Below is an update on some recent developments. Let's start with the news that knocked shares of AYSI down 11% Tuesday.

New Organizational Structure Further Unravels

At the end of last year, Alloy Steel's founder and majority shareholder, Gene Kostecki, was also the company's chairman, CEO and sole board member. On February 25th of this year, the company announced that it had brought in three new board members, one of whom, Michael Minosora, it had appointed as chairman. Kostecki, the company announced, would remain a board member and technical advisor to the company. In addition, the company announced it had hired a new CEO, John Cleland.

In June, the company announced the departure of the new CEO, John Cleland. At the end of

This article was written by

David Pinsen profile picture
I developed the hedged portfolio method of investing at Portfolio Armor, and I run a Marketplace service at Seeking Alpha based on it called Bulletproof Investing.

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Comments (7)

Weighing Machine profile picture
kosteki is a crook
Value Digger profile picture
BHP trade also with pbv > 2.

BHP is cheap but it is not a bargain like TC (Thompson Creek).
TC has a TERRIBLE 1yr chart.What will get this to turn positive?
Value Digger profile picture
I think one should pick mine stocks with pbv around 1 and single digit pe with growth potential.

RIO trade with pbv > 2 currently so it is not such a bargain for me. It is cheap but it is not a bargain.
john s. gordon profile picture
this is a market sector where stellite hardface has been used for a number of years.
> jack
David Pinsen profile picture

Thanks for your comment.

For those unfamiliar, here's some info on Stellite hardface from the company's website: publishing.yudu.com/Fr...

And here's some info from Alloy Steel's website on its Arcoplate product: alloysteel.net/about-a...
john s. gordon profile picture
good comparison, thanks.
i have watched the monster diggers operate at gillette WY. very impressive.
> jack
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