K2fly to buy ‘Decipher for Mining’ assets for $3.7 million in shares and additional performance shares

K2fly to buy ‘Decipher for Mining’ assets for $3.7 million in shares and additional performance shares

K2fly Ltd (ASX:K2F) is acquiring the business assets associated with ‘Decipher for Mining’ (Decipher) from CSBP Ltd (CSBP) and Wesfarmers Chemicals, Energy & Fertilisers Ltd (WesCEF) for 3.7 million in shares, plus performance shares.  The sale will see Wesfarmers Ltd (ASX:WES) (OTCMKTS:WFAFF) (FRA:WF3), through its subsidiaries CSBP and WesCEF, become K2fly’s largest shareholder with a 10.13% stake in the company, with the ability to raise this to 14.22%.  Decipher will bring additional depth to K2fly’s growing solution suite in tailings and rehabilitation and extends K2fly’s technical assurance and governance footprint inside existing global customers.  Decipher’s chief executive officer Anthony Walker will join K2fly in a senior executive position, along with the core of the Decipher team.  Accelerate growth in mining software portfolio K2fly chief executive officer Brian Miller said: “Following on from the Sateva acquisition, and in line with our strategy, we continue to expand our own IP. “We have already positioned Decipher within our own customer base and strategic partners, such as SAP. “Having Decipher now in our own suite of products will enable us to further accelerate our growth in the mining software portfolio.” Well-placed to commercialise WesCEF chief executive officer Ian Hansen added: “Decipher offers some of the best technology available to support rehabilitation and environmental services to the mining industry. Anthony Walker has built a strong team and a world-class platform that K2fly is well placed to commercialise.” ‘Many upsides to the deal’ K2fly chief commercial officer Nic Pollock said: “We have been partnered with Decipher for nearly a year now and we have found many synergies in our joint offering, go to market capabilities, and operational models that the acquisition was a logical combination. “We are both lean start-up companies and there is virtually no duplication and many upsides to the deal. “We are pleased that Anthony Walker, the Decipher CEO, will be joining K2fly in a senior executive position, as well as the core Decipher team.” Dramatically increase pace of delivery Decipher’s Walker added: “We have formed a very close working relationship with the K2fly team, and we all share a passion for delivering better ESG (Environmental, Social and Governance) monitoring and compliance outcomes to the mining industry and the communities in which they operate. “This transaction will dramatically increase our pace of delivery on these aspirations.” Terms of the deal The acquisition is subject to the following conditions precedent: The approval of the company’s shareholders of the issue of the ordinary shares and performance shares to be issued to the vendors at completion; and ASX approval of the terms of performance shares. K2fly will issue 11,366,691 fully paid ordinary shares (consideration shares) in the company and up to 5,345,633 performance shares. Consideration shares are to be held in voluntary escrow for two years. The performance shares will convert on an annual basis into a number of fully paid ordinary shares to a value equal to 22% of the annual revenues attributable to the Decipher business, over a four- year period following completion. Each tranche of shares issued on conversion of the performance shares will also be subject to voluntary escrow for 12 months. A maximum of 5,345,633 fully paid ordinary shares in the company can be issued to CSBP as a result of the conversion of the performance shares. CSBP will hold a 10.13% interest in the company at completion, with the ability to increase to 14.22% should all of the performance shares convert into ordinary shares, assuming no other shares are issued in the company. Timetable K2fly expects to dispatch to shareholders shortly a notice of meeting to seek approval of the acquisition, to be held in mid-March 2021. Completion of the acquisition is expected to occur shortly after shareholder approval. Decipher Decipher, which has been developed and operated by CSBP and WesCEF, offers cloud-based software-as-a-service monitoring and compliance solutions in tailings management and rehabilitation for mining industry customers. Decipher will bring additional depth to K2fly’s growing solution suite in tailings and rehabilitation and extends K2fly’s technical assurance and governance footprint inside existing global customers.

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