- K2fly Limited has executed a Share Sale Agreement (SSA) to acquire Perth-based technology company SATEVA.
- K2F will acquire 100% of the fully paid ordinary shares for a cash payment of AUD 2,000,000, based on the consolidated net assets of SATEVA to be paid on the settlement date.
- The issue of fully paid ordinary shares (Shares) in the capital of K2F equal to AUD 2,000,000 (Share Consideration)
- SATEVA provides IT consulting services and innovative software solutions.
- SATEVA’s main products include - SATEVA Maximum Return, SATEVA Model Manager, and SATEVA Automation
ASX-listed technology company, K2fly Limited (ASX: K2F), has executed a Share Sale Agreement (SSA) to acquire Perth-based Sateva Pty Ltd and Sateva Development Pty Ltd, together referred to as SATEVA.
Its acquisition will help K2fly bolster its technical assurance space of software solutions that address global tier-1 and tier-2 mining companies.
Talking about the acquisition, K2fly chief executive officer Brian Miller said:
Share Sale Agreement Consideration for Acquisition
K2F will acquire 100% of the fully paid ordinary shares in SATEVA.
Cash payment of AUD 2,000,000 based on the consolidated net assets of SATEVA to be paid on the settlement date, excluding any amounts relating to intangible assets. Any refund or balance to be paid within 20 business days of settlement (Cash Consideration).
Issue of fully paid ordinary shares (Shares) in the capital of K2F equal to AUD 2,000,000 (Share Consideration), to be issued at a deemed issue price of the lower of:
- 10-day volume-weighted average price (VWAP) of K2F Shares calculated for the period ending on the business day before the settlement date;
- AUD 0.355 (closing share price on 23 October).
The share consideration will be subject to one-year voluntary escrow period.
Additionally, K2lfy will pay performance-based consideration (Deferred Consideration) to SATEVA. It will be based on SATEVA Software Product and product consulting invoiced amounts until June 2024.
SATEVA is a Perth-based technology company that provides IT consulting services and innovative software solutions including software development and services for mining, resources, and rail industries.
The company is in the process of developing additional Software as a Service (SaaS)-based solutions within the resource technical assurance space and has an established consulting services business with tier 1 and 2 resource companies.
It specialises in building IT applications in areas spanning grade control, planning, ore tracking, inventory management, reconciliation, exploration, and data management.
Its current clients in the resources sector include Rio Tinto Iron Ore, Roy Hill, and FMG. Further, RAC Insurance is also part of SATEVA’s client roster.
SATEVA is also undertaking the development of a new solution for Block Model Management which is believed to substantially improve and simplify model management for multi-site global miners, and provide a direct line of sight and governance from the block model to the annual inventory report.
Block models are combined to create annual Mineral Resources and Reserves reports – governed by K2fly Resource Inventory solution (RCubed).
A sneak peek at SATEVA products
Image source: ASX announcement dated 28 October 2020
- SATEVA Maximum Return (in production): SATEVA Maximum Return has an integrated QAQC (Quality Assurance Quality Control) system. It manages all blast and grade block spatial data. To manage the entire ore block-out process, SATEVA Maximum Return integrates with the client's mine planning and Laboratory Information Management (LIMs) systems. SATEVA Maximum Return is still in the production stage.
- SATEVA Model Manager (due for release late 2020): Block models are getting more massive (terabytes), making them difficult to manage and distribute. SATEVA Model Manager provides improved block model management by offering high-performance storage and analytics solution, and a direct line of sight and governance from the block model to the annual inventory report. It is due for release in late 2020.
- SATEVA Automation (due for release late 2020): The technology is an automated ore block-out solution integrated into SATEVA Maximum Return. It is typically performed by a mine geologist and replaces the manual block-out process. It automatically creates the ore blocks for a blast based on block model grades or blast hole assays. It can improve the ore recovery by 5-10%, which significantly increases the revenue.
SATEVA Financials For FY2020
- Total revenue of AUD 1.4 million with an unadjusted EBITDA of AUD 181,000
- As of 30 September 2020, total current assets were AUD 2,960,000 with cash of AUD 2,557,000. The company had current payroll liabilities of AUD 30,000 and no debt.
About founder Mark Forster
SATEVA was established by Mark Forster. He has joined K2fly's executive team as its Chief Development Officer and has signed an employment contract with K2F. As per the agreement, K2F will issue Mark zero exercise price options (ZEPOs) to the value of AUD 50,000 which vest upon the completion, and commercial delivery of 3 software products by SATEVA referred to as Maximum Return, Optimiser and Block Model Manager by 30 June 2021 and Mark remaining as an employee of K2F.
He has significant experience in the design, construction, and implementation of large complex systems for organisations like Hamersley Iron, Rio Tinto Iron Ore, BHP Billiton Iron Ore, BMA Coal, and Rio Tinto Exploration.
SATEVA and RCUBED Integrated
After acquiring RCubed solution 17 months ago, the Resource Inventory Management solution with 14 tier 1 and 2 mining companies has been particularly successful. RCubed Reconciliation module released in mid-year is gaining momentum with several paid-pilot studies underway. The acquisition of SATEVA will provide additional software solutions and increase the opportunities to improve Annual Recurring Revenues.
Stock performance: On 29 October 2020, K2F shares were trading at AUD 0.365, with a market capitalisation of AUD 33.95 million.