Despite a 24% contraction in global exploration activities, mining technology company Imdex (ASX:IMD) achieved record revenue of $445.3 million during the 2024 financial year.
Imdex, which has a market capitalisation of $1.09 billion, says this record revenue, representing an 8% increase from 2023, was supported by the integration of Devico technologies.
The company also achieved record earnings during FY24 of $112.9 million, representing a 12% increase from FY23.
CEO Paul House says the company achieved record revenue against a backdrop where exploration activity contracted by 24%.
Speaking to Mining.com.au following the release of the results, House says “with Imdex’s revenue being up, that’s obviously a good counter to that (declining exploration activity).”
The CEO tells this news service that Imdex has managed to weather the massive drop in exploration as its a diversified industrials tech firm which has been able to win market share in some segments and create new markets throughout its global network, such as its Devico business.
The difference between exploration activity and spend is that inflation is impacting capital spend in the sector due to the rising cost environment over the past few years with exploration spend dropping some 5-7%, House explains.
According to S&P Global, while there was an increase in financing activity at the end of 2023, this was unlikely to continue through 2024 amid global economic turmoil and high inflation, “which does not bode well for explorers’ ability to access the capital required to fund this year’s programs”. As such, S&P Global had forecasted exploration budgets would decrease by around 5% this year, in line with the figures cited by Imdex’s CEO.
In the company’s ASX release yesterday (21 August), the CEO notes the results highlight the effectiveness of Imdex’s strategy, its “robust business model, and capability of our global teams”.
During FY24, Imdex completed the Devico operational integration and organisational redesign, with revenue and cost synergies running ahead of schedule.
Imdex says Devico generated $69.6 million of revenue during FY24, representing a 14% increase on the comparative period benefiting from its global network. The operational integration of Devico has yielded significant revenue and cost synergies and unlocking greater savings than anticipated. Full-year benefits will be realised in FY25.
The company will reinvest some of the savings into directional drilling and new business growth, positioning it for the upturn. Significantly, net debt was reduced to $35 million from $64.9 million, a 46% improvement from 2023.
In 2023, Imdex entered into a binding agreement to purchase Devico, which is a supplier of directional core drilling services and borehole surveying solutions. Since completing the acquisition in February 2023, Imdex has focused on people and diligent integration to deliver growth in FY25 and beyond.
“A highlight was the 14% uplift in revenue from Devico technologies,” House says of yesterday’s results.
“The strategic alignment of Devico’s directional drilling technology and sensors within the broader Imdex technology stack has enabled us to win market share and create new opportunities through our global network.“
The company reports normalised EBITDA totalled $130.7 million, a 7% increase from the previous year.
House says achieving such an EBITDA margin in an inflationary environment and amid declining market activity is “pleasing” and reflects disciplined cost management and synergies from the Devico acquisitions.
“The result underscores the strength and resilience of our core business to outperform market conditions while continuing to invest in R&D and our new growth businesses, digital and Imdex Mining Technologies,” he says.
For its new digital and IMT business portfolios, Imdex is building geoscience analytics, artificial intelligence, and computer visualisation capabilities to enhance orebody knowledge for customers, while also leveraging its core capabilities in the mining production market.
Imdex is a global mining technology company which enables cost-effective operations from exploration to production. The company develops cloud-connected sensors and drilling optimisation products to improve the process of identifying and extracting mineral resources for drilling contractors and resource companies globally.
According to S&P Global’s World Exploration Trends 2024 report, the higher operating cost from years of inflation and lower revenues compared to recent years is putting pressure on producer margins.
“Typically, in this type of scenario, exploration budgets are the first item to be trimmed. While this is likely to occur, the critical minerals narrative will continue to support investment into those commodities, so the bulk of any reduction will occur for commodities outside this classification,” the report says.
Write to Aaliyah Rogan and Adam Orlando at Mining.com.au
Images: Imdex
