HighCom will sell hard armour plate and helmet products to Mexican government customers following approval from the US State Department for a distribution agreement XTEK says could be worth up to US$50 million.
XTEK managing director Phillipe Odouard said securing permanent export licences was the key to unlocking value from its distribution partners in Mexico City.
“Previously, exports to Mexico were limited by the need to continuously request export licences for quantities of any size, with each request typically taking several weeks to be awarded,” he said.
“So, this new licence streamlines the process significantly and makes it a much more attractive opportunity to export to these Mexican customers.
“The orders represent the start of a new expansion into Mexico that we are confident will build significantly.”
XTEK won approval from the US State Department to sign a warehousing distribution agreement with its Mexico-based strategic partner, Performance Materials, which will see personal protective armour products sold by HighCom distributed in the country.
The deal is for 10 years and could be worth up to US$50 million, with an option to increase beyond that timeframe.
Already, two tranches of product export valued at US$2.1 million have been placed, with more than half of the products delivered and the remaining volume to begin in the first quarter of 2021.
Mexico strategy accelerated
HighCom CEO Mike Bundy said the distribution agreement would accelerate its Mexico strategy, with federal, state and local government using personal protection equipment manufactured by XTEK.
“We’re excited about this opportunity not only from the more than two decades of working in Mexico but also from the standpoint of our continued commitment to international trade compliance and the effective deployment of resource capability through such programs,” he said.
“Today is important for what tomorrow brings, and our business development and trade compliance team members have executed on a thorough and exhaustive process to ensure our company and group globally is adhering to the strict US Government trade compliance regulations while streamlining supply and delivery of critical life-saving equipment to our allies south of the border.”
XTEK shares have been as much as 5% higher to 61.5 cents on the news, up from Monday’s close of 58.5 cents and are higher than 51 cents at market close on November 6.
- Daniel Paproth