LaserBond (ASX: LBL) is working closely with SGS Australia to finalise a formal, binding material supply agreement within the next few weeks that could generate A$1.2 million in revenue during the first 12 months.
The company inked a non-binding memorandum of understanding last week with SGS subsidiary Gearhart United which is expected to result in LaserBond's expansion into South Australia.
Gearhart specialises in both manufacturing and repairs of oil and gas field drilling tools and components, including the manufacture of the world-renowned Redback range of roller reamers.
Under the deal, LaserBond will undertake laser classing of Gearhart’s components, including all Redback roller reamer bodies.
As part of the agreement, the company will establish a branch in South Australia and be operational by the end of May 2013, with LaserBond currently finalising a lease for premises.
The first 12 months revenue is forecast to reach up to A$1.2 million, which will provide a profitable base for continued growth in South Australia, with particular industry targets being defence, mining and minerals processing equipment.
LaserBond had around $2.9 million in cash at the end of December 2012.
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