Abakan's Robert Miller and Andy Sherman Interviewed by James West on Midas Letter Money

(Thomson Reuters ONE) -


 Robert Miller and Andy Sherman, principals of Abakan Inc. (OTCQB: ABKI)
(ABKI.PK) participated in an interview with James West of Midas Letter Money
recently, in which they discuss Abakan's joint venture relationships and
propsects for full commercialization of their nano composite coatings products.

Abakan seeks to raise $20M in this round of funding. The first $5M will be used
to finalize construction of the new manufacturing facility in Euclid and fund
scale-up of PComP production. The final $15M will be used to expand CermaClad
operations and build out Phase 4 manufacturing capability at Powdermet.

Click on the link below to watch the video:

http://www.midasletter.com/index.php/abakans-robert-miller-and-andy-sherman-
interviewed-by-james-west-on-midas-letter-money

Transcript:

James West: Hi, I'm James West and this is Midas Letter Money.  My next guests
are the founders and directors of Abakan Inc. who trades on OTCQB under the
symbol ABKI.  Bob Miller is the president of the company and Andy Sherman is the
founder and director.  Gentlemen, thank you for joining us today.

Bob Miller: Thank you James.

Andy Sherman: Pleasure to be here.

James West: Andy, why don't you tell us about your technology in a nutshell?
What does it do and where is it applied?

Andy Sherman: Abakan was started with the global trend in mind of making our
resources go farther, sustainable materials.  And we do that by applying
nanotechnology and advanced metallic coatings to extend the life of large deal
assets, so taking a large 100 million to billion dollar assets such as an oil
drilling rig or oil and gas pipeline, and extending its life and eliminating the
maintenance and downtime associated with that.

James West: Okay.  By how many times do you extend its life?

Andy Sherman: Typically, our value propositions are five to tenfold over
competing products.

James West: Wow!  So basically, you're reducing the cost of an asset by one-
sixth or extending its life by a factor of six.

Andy Sherman: The largest cost of a large asset is its downtime.  So for example
in the oil sands, every hour of downtime is over $500,000 of lost profits.  So
by eliminating that downtime, we add profits to the bottom line while
eliminating CO2 waste chrome plating and other environmental degradation that
sustainable materials eliminate waste.  So we are in a waste elimination
business.

James West: Okay.  And tell us a bit, Bob, if you would about the size of the
market.

Bob Miller: What we're talking first of all, the cladding market, which is one
of our three main projects, is currently $3.8 billion a year market in various
parts in the oil and gas industry that's $2 billion.  In Alberta, for the
coatings they use to protect the pipe, it's about $300 million growing to $600
million in the next couple of years.

James West: Okay.  And you aim to capture a portion of that business, I take it?

Bob Miller: Well, in oil and gas, the protection of pipes either from corrosion
or from wear, these are big projects so these are $30 to $200 million projects
and we think we can capture a fairly large chunk of that fairly quickly.

James West: Okay.  So Andy, tell me what is it about your coating that is so
much better than the incumbent products.

Andy Sherman: Well, we have two technology platforms which we brought together
to deliver these solutions.  One is nanotechnology, so we use small amounts of
nano additives that lead to perform its enhancement.  By controlling the
structure and engineering the metals, we're allowed -- we're able to produce 4X
to 10X or even 30X performance improvement.  The other process is licensed under
the national labs and it is a high density arch lab, a very large area
application process that is 40 times as productive as well over laser overlay.

What this combination allows us to do is to provide higher performance, longer
life but actually a lower cost that what our customers or buyers are paying
today.

James West: Okay.  Now, I interviewed you both back in December and Bob, you've
mentioned that you were in discussions or at various stage of development with
-- I believe Petrobras was one of the companies you talked about.  And then you
also mentioned that you are going to be approaching some of the major oil sands
producers in Canada.  What's the status of that?

Bob Miller: With Petrobras, we came through phase one with spectacular results,
minimum we were six times lower corrosion rates.  We've now started coating
inside the pipe.  We were always doing plate samples before this.

James West: So Petrobras is now a paying client?

Bob Miller: They're a paying client and they're -- well, they're a joint
development partner but they will be a paying client.  That will lead to them
being a paying client.  In Alberta, we've gone there.  We've presented to them.
They literally told us they've never seen a company like ours, a true nanotech
company.  We have lots of offers from them from about five different -- both
provincial and federal government agencies to get our technology into Alberta.
They've been using chrome carbide for 40 years there.  They know it well but
they've never done anything new.  And their scientists have sort of been wowed
by Andy as far as what he is proposing to do for them.  We should be setting up
there in this quarter, the second quarter.

James West: Okay.  What's the size of the market there, Andy?

Andy Sherman: The current market is $350 million in welled overlay services.

James West: Annually?

Andy Sherman: Annually.  And the projections are with the new projects coming on
at Kern River and elsewhere, that production is going to be more than double.
So that is -- since maintenance costs are proportional to production, that leads
to doubling of the market over the next two to three years.

James West: So Bob, why don't you elaborate a bit on the financing requirements
of establishing the various lines of business and how you are going to evolve
those into revenue streams for Abakan?

Bob Miller: What's very attractive about Abakan is that our plants cost less
than a tenth of what the revenue potential is from each plant.  In that line, we
are looking right now in the short term of opening up two more in addition the
plant we're just opening in the Cleveland area of Ohio.

00:05:14

We are opening up two more plants in the next 18 months.  These are $12 million
plants with very high potential revenues.  We are being offered project
financing everywhere we are looking at.

James West: Okay.  So let's zero in on that for a minute.  A plant costs $12
million.  How much revenue can it produce and what is the cost of sales going to
be EBITDA?

Bob Miller: Okay.  A CRA plant costs $12 million, not including all the R&D and
all the lead-up costs, but just the plant.

James West: CAPEX per plant.

Bob Miller: Right.  That plant could throw -- if you had orders three shifts a
day, it could throw $300 million in revenues.

James West: Okay.  So you're establishing three of these plants.

Bob Miller: Well, we have one under construction almost finished in Ohio.  We
have five choices of -- five locations to pick to.  One of them will probably be
Alberta.  One of them will either be Brazil, Indonesia, the Middle East or the
United States.  These are for corrosion-resisting plants for the oil industry.

James West: Okay.  So Andy, you've got this technology that extends the life of
pipelines by six times.  You're going to build, by the sound of it, at least
five.  You've got one in place.  Petrobras is a client.  You've gone into the
oil sands and then you're going to start producing -- you're going to install a
plant there, I would assume?

Andy Sherman: Yes.

James West: Okay.  Well, the opportunity for an investor looking at ABKI right
now is that you're really at the start of commercialization of this product,
which has been proven to work according to Fortune 100 oil and gas producer.

Andy Sherman: Yes, we have two main businesses, component manufacturing and
repair.  We're already at market entry and selling product.  We had a long-term
order just placed where we shipped the first delivery to Alberta.  We also have
the clad steel products, which is a typical $20 million to $30 million per
order, a very scalable business that we are going to market entry in 2012.

James West: Okay.  It sounds like you guys are well organized but I've got to
ask, where are the risks to your business model?  Who is going to threaten to
unseat you as you're disruptive technology?  How is the incumbent industry going
to respond to that?

Andy Sherman: Well, we are addressing that really short-term.  We area
qualifying to the current specifications and offering lower cost and faster
delivery.  Instead of 22 months delivery for a metallurgically clad pipe today,
we are offering three months delivery.  So we feel that's very competitive and
we will take market share particularly in the growing markets if those market
multiples are realized over the next two years.

James West: Sure.  But how is the company you are going to basically take sales
from?  You're going to take food out of somebody's mouth.  Have they got the
ability to unseat you in any way, shape or form or at least deflect the threat
that you represent to their revenue stream?

Bob Miller: Let me answer this.  Andy and I were talking about this waiting for
the meeting -- this interview to start and people is one of our risks.  If you
want to say put in together good management teams in different locations, some
countries have country risk less than Canada, more in Indonesia.  We are with us
unseating other incumbent companies that already have their relationships with
our end clients.  We have to play very smart as far as how we deal with them.
It's a lot of hand-holding, a lot of protecting your back side.

James West: So strategically, have you got a plan to address the -- by the sound
of it, you are telling me that qualified, technically-capable people are a bit
of a challenge and that your competitors are going to make that even more
difficult because they're the source of these people?

Bob Miller: Sometimes the source of these people but no, we have a full HR
department where we have good connections in Brazil, good connections in
Indonesia.  We have a really excellent adviser in the Asia Pacific area.  We
have a good adviser in our Board of Directors 35 years in the pipe business,
Hermann Buschor.  And basically, that's -- you asked what the risks are.  The
risks are we put together the proper team that prevents us from making major
mistakes.

James West: Okay.  What's the market cap of the company right now?

Bob Miller: Shares issued at 66 million; fully diluted it's 77 million.

James West: Okay.  And do you expect to go on to a major exchange from the OTCQB
at any point?

Bob Miller: Yes, we do.  We hope by the end of the year to be listed.  That
means we'll have to file for NASDAQ listing probably -- or an AMEX listing by
June.

James West: Okay.  Midas Letter is a shareholder of your company, so obviously
we're biased about this.  But what other stumbling blocks do you see before a
rapid share price appreciation can be realized for investors?

Bob Miller: Share price is the perception in getting up there and telling your
story.  A lot of people are telling our story for us now but that's actually
something -- it's a well worn path to getting awareness to your company.

James West: Okay.

Bob Miller: It's not a difficult science to understand.  We have a great company
and --

James West: It sounds like it.  You are awarded the Forbes Top 50 Companies
recently.

Bob Miller: Top nanotech company on the Forbes list.

00:10:14

James West: Top nanotech company.

Bob Miller: Top nanotech and the hundred most promising companies in America.

James West: Okay, well that's great.  We are going to keep following with
interest.  I'd like to thank you both for joining me today.

Andy Sherman: Thank you, James.

Bob Miller: Thank you, James.

James West: If you'd like to learn more about Abakan, you can visit them online
at Abakaninc.com.  I'm James West, this is Midas Letter Money.













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Datum: 03.04.2012 - 15:49 Uhr
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