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February 2014

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Abakan to Develop Coatings for Small Diameter Pipe Market

Abakan Inc. has signed an exclusive agreement with LIMO Lissotschenko Mikrooptik GmbH, based in Dortmund, Germany. The agreement is intended for the development of a laser based system for the production of wear and corrosion resistant cladding to supply the multi-billion dollar coating market for 3" to 8" diameter pipe used extensively in the oil and gas industry. LIMO will design and build the laser coating systems, while Abakan will design the auxiliary components to install and operate these systems. The cooperation will focus initially on the cladding of the smaller diameter thick walled pipes, which are in constant demand due to the mounting development of large scale offshore oil and gas fields. The prospect of supplying the demand for small diameter clad pipe adds to Abakan's current focus on cladding large diameter (10" and up) pipe.

"LIMO has demonstrated laser melting technology that can produce smooth and thin coatings which, for the first time in history, exhibits a verifiable metallurgical bond almost without any metallurgical substrate effects," said a company spokesperson. "The LIMO technology is based on optical systems, which facilitate industrial level productivity for the seamless treatment of the inner diameters of pipes. The utilization of this technology in small diameter offshore pipe and in other industrial applications would have an effective life more than sufficient for most products where cladding is used. Hundreds of test sample coatings already conducted by LIMO offer major evidence of the effectiveness of its technology for cladding applications.

"The current process of relying on mechanically lined and clad plate-to-pipe solutions for clad pipes is not ideal for thick walled pipes due to inspectability and quality concerns. Abakan believes that LIMO's laser based system will result in a product that offers the ideal solution for producing small diameter clad pipes. Abakan expects that its collaboration with LIMO could also develop a product that enables very thin corrosion- and wear-resistant cladding for pipes, plates and components that would compete directly with paints and epoxies. The new product envisioned would offer a 3 - 5 times longer life than coatings that are currently available, at a cost that would be only marginally higher when compared to the cost of the epoxies now used over a variety of applications in the oil and gas, petrochemical, shipbuilding, tooling and infrastructure industries."

Abakan CEO Robert Miller said, "We expect to substantially complete the development of the smaller diameter pipe cladding system within the next few months for planned commercial sales by mid-2015. Abakan will fund the development of the prototype system, and then pursue strategic collaborations with oil majors and pipe manufacturers to accelerate its timeline for development and market entry. After working with partners and potential customers from multiple industries, we understand the critical challenges faced by those that might come to rely on our products, and believe that our alliance with LIMO will result in the development of a platform of products that will address those challenges."

Dr. Vitalij Lissotschenko, President and CEO of LIMO, said, "We are the only company whose core competence uniquely combines optics design with laser systems and materials processing know how. Our expertise places us in the unique position of being able to develop complete solutions for our customers and partners. In Abakan, we see a team with a vision for long term sustainable growth, tremendous expertise in material science and surface engineering which for us is more complementary than competitive in respect to our core competencies, existing channels and network to drive the adoption of disruptive technologies. Most importantly, we are extremely impressed with the way Abakan has built a brand and reputation for innovation and excellence in such a short span of time."

For more information contact:

Abakan Inc.

2665 Bayshore Drive, Suite 450

Miami, FL 33133


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