Orica goes all geospatial with Axis deal

Chemicals and mining explosives company Orica (ASX:ORI) will pay $A260 million in cash to buy Axis Mining Technology, a specialised geospatial tool which will help miners explore, extract and refine material from “mine to mill.”

There will also be an extra $A90 million if Axis meets certain benchmarks in an earn-out period.

The money will come from the $650 million capital raising Orica revealed to the ASX on Wednesday at $16 a share, a 7% discount to Tuesday’s closing price of $17.20.

In addition to the fully underwritten $A650 million institutional share placement, Orica will also offer a non-underwritten share purchase plan (SPP) capped at $A75 million to eligible shareholders in Australia and New Zealand at the same price of $16 a share.

Orica said the remaining proceeds of issues “will be used to fund incremental trade working capital requirements arising as a result of global supply chain dislocations, and also provide balance sheet capacity.”

In Wednesday’s statement Orica described Axis as a “leader in the design, development and manufacture of specialised geospatial tools and instruments for the mining industry.”

“Axis represents a highly strategic acquisition and a valuable addition to Orica’s Digital Solutions platform, positioning it to become the industry’s first integrated, end-to-end, mine to mill solutions provider. Axis’ existing management team will enter into new employment agreements with Orica and are committed to ensuring a successful integration of the business.”

Orica CEO Sanjeev Gandhi said: the “strategic acquisition further strengthens our existing Digital Solutions vertical and expands our Orebody Intelligence portfolio upstream.”

“I believe that Axis’ differentiated geospatial tools and instruments, combined with our existing suite of digital solutions will provide compelling orebody intelligence to customers and support the delivery of the industry’s first end-to-end solutions platform, from mine to mill.

“The integration of Axis’ technology and expertise will accelerate our ability to support our customer’s digital transformation efforts around the world, helping them to operate more efficiently, sustainably and safely.

“In addition to facilitating the Acquisition, the Equity Raising will allow Orica to fund incremental trade working capital requirements arising as a result of global supply chain dislocations, and also provide additional balance sheet capacity,” Mr Gandhi said.

Axis is a growing business that designs, manufactures and distributes specialised navigation instrumentation, data and drilling solutions for the mining industry.

Axis operates a vertically integrated, scalable business, with low capital intensity and an attractive margin profile. Products are manufactured and assembled at Axis’ UK and Australian facilities, and distributed to over 30 countries, with earnings primarily generated through recurring product rental.

Orica said all Axis employees are expected to remain with the business under Orica’s ownership.