IMDEX Acquires AusSpec, Adding Another Important Component, Mineralogy in Technology Stack

Summary

• Leading Mining-Tech company, IMDEX has acquired AusSpec, a provider of spectral mineralogy through its unique industry leading low-touch SaaS product, aiSIRIS
• IMDEX’s technology stack addresses three components of rock knowledge – location, texture and grade, and aiSIRIS satisfies the fourth – mineralogy
• Acquisition is immediately cashflow positive, expected to provide additional recurring revenue stream, with likely earnings accretive from years 2-3
• aiSIRIS is a proven product ready to be scaled through IMDEX’s global distribution network

IMDEX Limited (ASX: IMD), a leading global mining-tech company, has acquired AusSpec International Limited in a cash and share deal, providing a compelling opportunity to build on its total rock knowledge offering for clients.

Post the acquisition update, IMD stock closed the day’s trade at A$ 1.115, inching upward by 0.905 per cent from its previous close. The Company has a market capitalisation of A$ 428.8 million and annual dividend yield of 2.17 per cent.

Knowing IMDEX and AusSpec

IMDEX is engaged in developing cloud-connected sensors and drilling optimisation products, enabling its clients to achieve successful and cost-effective operations from exploration to production. Its offerings help drilling contractors and resource companies to improve the process of mineral resource identification and extraction.

The Company’s vision as a leading global mining-tech company is to offer real-time access to its customer base, aiding them with quality rock knowledge that improves decision making across the mining value chain.

New Zealand-based AusSpec International Limited, founded in the year 2013, is the industry leader in automated mineralogy from infrared scanners and hand-held spectrometers in the field. It has developed a third-generation SaaS product, aiSIRIS or Artificial Intelligence Spectral InfraRed Interpretation System.

Transaction Details

The consideration for the strategic acquisition of AusSpec stands at A$ 8.5 million, including A$ 3 million in three cash payments and A$ 5.5 million in IMDEX shares. On the transaction completion, IMDEX shares worth A$ 5.0 million would be issued, with the remaining shares due for issue in July 2022.

IMDEX would fund cash considerations from its existing cash flows with cash components and equity considerations conditional on the delivery of the next-generation aiSIRIS-X and successful contracting sites with new or existing client base.

The deal completion is subject to satisfaction of certain conditions precedent and is likely to become effective in late-July 2020.

Key Acquisition Benefits for IMDEX

The deal would add aiSIRIS to the Company’s portfolio. IMDEX’s technology stack currently addresses three components of rock knowledge – location, texture and grade, and the deal closes the gap for the fourth component, mineralogy, now being satisfied by aiSIRIS.

aiSIRIS is a unique industry leading low-touch SaaS product with high barriers to entry, and as a SaaS product, the product delivers premium gross margins that are consistent with the strategy of IMDEX. aiSIRIS also enables the timely delivery of critical data, enabling real-time decisions to be made, instead of waiting for long periods like weeks or months.

aiSIRIS is a proven product ready to be scaled through the global distribution network of IMDEX, which would work with AusSpec team and its co-founder Dr Sasha Pontual, who is the world-leading spectral mineralogy expert, to develop and commercialise the next-generation aiSIRIS-X. The next-generation product eliminates the need for expert validation as well as facilitates mineralogy results to be securely accessed in real-time, from any location and at any time.

Moreover, Dr Pontual and highly knowledgeable team of AusSpec will join the IMDEX team. Dr Pontual and her team started the aiSIRIS development in 2013, and since then, the product has processed more than 2 million spectra on approximately 1,000 projects with early technology adopters and major resource sector players.

AusSpec not just improves IMDEX’s rock knowledge offering with spectral mineralogy and AI technologies, it also offers access to its well-established relationships with major resource sector players.

Moreover, aiSIRIS integrates with IMDEX geochemistry analysis software, namely IMDEX ioGAS™ while complementing the Company’s existing In-Field GeoAnalysis solution.

Since AusSpec has a four-year consistent and profitable growth profile, and through a SaaS consumption model, generates revenue, the deal is expected to result in an additional recurring revenue stream for IMDEX and is likely to be earnings accretive from years 2-3.

Via the Company’s existing global network and integration with adjacent IMDEX solutions, further growth is expected.

Commenting on the deal, IMDEX Chairman, Mr Anthony Wooles, stated that the Company is continuing to invest in new technologies such as aiSIRIS, which hold the potential to deliver substantial earnings growth for shareholders in the long term. He added that the deal aligns with the Company’s growth strategy and boosts its world-leading product development capabilities.