IMDEX delivers record revenue amid M&A activity

Global mining-tech company IMDEX has announced record first-half revenue matched with targeted acquisition activity designed to further enhance its market-leading position.

The company reported strong growth in Africa, South America, and the Asia Pacific and increasing demand for critical minerals as it revealed record revenue of $198.8 million, an 18.4 per cent increase on the same time last year. Revenue from the Americas was up 14 per cent increase on the same period last year to $89.3 million; Africa and Europe up 22 per cent ($48.4 million); and Australia and Asia up 22 per cent ($61.1 million).

IMDEX’s proposed $334 million deal involving Norwegian company Devico – its main competitor – was the standout amid M&A activity that included a binding Heads of Agreement to acquire a 40 per cent interest in Krux analytics, which delivers market-leading drilling analytics software, and an increase in its Datarock holding to 40.9 per cent from 30 per cent. Datarock provides image analysis software.

The proposed Devico deal to combine the global operations of both business is expected to be completed by February 28. IMDEX Chief Executive Officer Paul House said the M&A activity was a highlight of the first half of the year and the results demonstrated the strength of the company’s core business.

“We increased our interest in Datarock, and successfully progressed the proposed investment in Krux and the combination of our IMDEX and Devico businesses, all of which advance our growth strategy and support our purpose as a leading global mining-tech company,” Mr House said.

“We are very pleased with the performance, particularly our ability to grow the business notwithstanding the current macro-related uncertainty in our operating environment and to deliver further margin expansion on a normalised basis. “The company is well positioned to leverage the robust industry fundamentals through the unique competitive position our global presence, leading technologies and integrated solutions provide.

“Combining the IMDEX and Devico businesses is expected to further strengthen this position. “Directional drilling, a market where Devico is the leader, is one of the fastest growing segments of the mining-tech space, as companies continue to look for deposits at depth, explore complex ore bodies and respond to the growing needs of faster, cheaper more accurate drilling services.”

IMDEX successfully protected its IP in Australia and the US, which resulted in exceptional legal costs during 1H23 of about $9.4 million. Normalised EBITDA for the first half of the year of $62.8m, which excludes the exceptional litigation costs not expected to recur during the remainder of the financial year, was up 22 percent on the same time last year, and up 11 per cent on a constant currency basis.

Net profit after tax of $22.7 million was down 6.9 per cent on the same period last year but was up 20 per cent on the same time last year on a normalised basis which excludes the exceptional litigation costs. Mr House said revenue from sensors and software had increased as had activity linked to the search for critical minerals.

“The global commitment towards net zero emissions and the resultant demand for critical metals or the continued extraction of reserves is outstripping their replacement,” he said. “Critical minerals are growing at a faster rate and IMDEX is well place to benefit from the necessary supply demand rebalance.”

Industry growth was underpinned by strong demand from mid to major mining companies, which reported ongoing or expanded exploration budgets for CY23, and strong financing for junior and intermediate companies in December.

Drilling clients report strong forward looking order books and resource company clients report strong ongoing exploration budgets.

Other first-half highlights included:

• Rock knowledge sensors on rent up 6 per cent and IMDEX HUB-IQ™ connected revenue increased by 41 per cent
• Released next generation IMDEX ioGAS™ V8, leading data analysis software
• Completed first generation IMDEX MINEPORTAL™ software to support BLAST DOG™ trials and contracts
• Commercial prototype IMDEX BLAST DOG™ trials progressing as planned
• Spectra analysed with aiSIRIS™ software up 4 per cent

Proposed Devico acquisition

Providing further details on the proposed Devico acquisition, Mr House said the combined presence would extend IMDEX’s market presence in key mining regions globally. IMDEX assessed the reach based on “super sites”, which it defined as operations with five or more coring drill rigs on site. Super sites account for 1000 of about 3500 coring rigs globally.

Mr House said the proposed acquisition would deliver a combined presence on 22 of 43 super sites in North America, 12 of 18 in South America, eight of 13 in Europe, 12 of 30 in Africa, and 11 of 28 in Australia and the Asia Pacific. The combined IMDEX/Devico group would have total super site market penetration of 29 per cent. The proposed acquisition increases IMDEX’s exposure to key industry megatrends:

• Global mining megatrends will drive increasing use of sophisticated technologies to unlock value from orebodies globally.
• Increasing depth of deposits is expected to drive demand for Directional Drilling Technologies, leading to higher penetration and increased share of total metres drilled.
• Advanced Sensor Technologies allow drillers and resource companies to optimise their drilling campaigns and drive cost efficiencies on site.
• Drilling activity is expected to continue given the favourable commodity outlook, in particular for critical metals, and growing exploration budgets for both juniors and large cap miners.