CFoam’s (ASX: CFO) partly-owned aeronautical engineering firm Innovaero Group has signed a memorandum of understanding with Boeing subsidiary Insitu Pacific to strengthen and support the development of Australian drone technology.

The agreement is expected to help advance projects and innovations which promote the interoperability of uncrewed aerial systems (UAS) platforms (or drones).

It will also explore the ways in which these technologies can be employed by the Australian Defence Force and regional Asia Pacific forces.

Agreement terms

Under the terms of the agreement, Insitu will provide its common architecture software and ground control solutions to CFoam’s 10%-owned Innovaero. This will enable Innovaero to fast-track the development of its flagship Fox vertical take-off and landing (VTOL) drone.

There will also be opportunities for Innovaero to support Brisbane-based Insitu by participating in its global supply chain.

Innovaero chief executive officer Simon Grosser said the agreement would advance plans for integrating Fox with a common operating system across a range of platforms.

“We are delighted to begin working with Insitu and Boeing on areas of mutual interest [and] I am very proud that as an Australian-owned company, [we have] been able to demonstrate a sovereign design and manufacturing capability which is clearly world class,” he said.

“We recognise that partnerships with established defence prime systems integrators plus ongoing government support are key to accessing global markets for unique Australian products such as Fox.”

Work in progress

The Australian-made Fox drone has been a work in progress over the past two years by Innovaero’s wholly-owned subsidiary 5DSystems.

It has been specifically designed for applications within Australia’s defence forces and overseas, and to meet capability gaps in the current unmanned aerial vehicle (UAV) market.

During development, the drone has been subject to tests at 40% scale involving the execution of short controlled circuits at varying speeds and airframe configuration settings, as well as hover tests of a 30% scale VTOL system in November.

The flight tests provided valuable data for the unit’s operating envelope and are part of an ongoing comprehensive program in the lead-up to trials of the full scale 8m-wingspan unit.

Full-scale flight demonstrations of the FTA-1 VTOL and FTA-2 (conventional take-off and landing) platforms will take place later this year.

Innovaero is engaged in discussions with the Australian Government, the Australian Defence Force and other industry stakeholders regarding potential applications for the drone.

CFoam equity

Last month, CFoam announced it had received binding commitments to raise $4.14 million before costs through a two-tranche placement of approximately 258 million shares priced at $0.016 each.

Approximately $975,000 of the placement proceeds will be used to invest further in Innovaero.

In October, CFoam acquired a strategic 10.24% stake in Innovaero and invested $1.5 million into the company as a condition of the acquisition.

CFoam director Gary Steinepreis described it as an “exciting WA business” which is tackling a significant domestic defence market.

“The Australian Government is set to invest $270 billion in defence force capability and infrastructure over the next 10 years [and that is] a key target market for Innovaero,” he said.

“Further, all defence tenders must include Australian sovereign content and we believe Innovaero is well placed with its domicile and unique skill set to address this demand.”

ASX listing

Mr Steinepreis said CFoam also plans to commit up to $1.9 million towards Innovaero’s current capital raising of $6 million via a pre-initial public offering convertible note fundraiser, allowing it to maintain and increase its interest when converted to equity.

Innovaero is considering the IPO and subsequent ASX listing later this year and the conversion is subject to a 30% discount to an initial public offering valuation.

Consequently, CFoam’s interest would increase up to 17%, subject to the valuation conversion.

CFoam business

CFoam manufactures inorganic carbon foam material for use across a variety of markets including composite tooling for the aerospace sector, and applications with energy-absorbing, fire-resistant requirements.

Its products were developed to meet growing demand for ultra-high-end performance engineering materials in industrial, aerospace, military and commercial product markets.