Mining company enters defense sector. Share price explodes

• As part of its new development strategy, Bumech intends to produce armored vehicles for uniformed services.
• Hard coal mining is an increasingly large burden for the entire capital group.
• After the news of signing a letter of intent with OTT Technologies was published, the share price shot up.

Bumech has signed a letter of intent with OTT Technologies from South Africa regarding cooperation aimed at launching the production of armored cars in Poland.

Bumech plans to produce armored vehicles

These vehicles are currently in service with the South African police and military. Production would be carried out at a plant in Katowice and distributed to European uniformed services.

The aim of the cooperation is to enable the Bumech Group, first of all, to carry out the vehicle assembly process based on ready-made components supplied by the OTT Group, and then to conduct independent production based on the OTT license and components originating from the European Union, the company said in a statement.

Bumech intends to use the plant in Katowice for this purpose, which, due to its current production profile of heavy equipment for the mining sector, meets the requirements of the new process.

The parties to the agreement are expected to conduct further negotiations to establish detailed terms of cooperation. The development of activities in this new segment will be one of the key directions of the Bumech Capital Group's strategy.

In June, the Bumech Group, as the owner of PG Silesia, which operates the largest private hard coal mine in Poland, submitted a restructuring plan to the court.

The signing of a letter of intent was enough for the company's shares to skyrocket.

Following the announcement of the letter of intent, Bumech shares exploded on the Warsaw Stock Exchange. Within minutes of the announcement, the share price rose 21.64% to PLN 10.40, before reaching PLN 11.26, a 32.40% increase.

Bumech did not disclose any details related to the production of the armored vehicles, including estimates of potential future customers. The company plans to assemble three vehicles by the end of the year.

The main shareholder of Bumech is Marcin Sutkowski (36.69%), the company has been listed on the WSE since February 2009.