Privately-owned mining software leader Maptek is now the biggest investor in ASX-listed K2fly after snapping up two-thirds of a circa-A$6 million equity raising at 18c a share. The news fired up a previously moribund K2fly share price, which leapt more than 34% Friday to 24c.
Environmental, social and governance software-as-a-service (SaaS) provider to a number of tier-one and two mining companies, K2fly has seen its share price slump since last October amid a general cool-down in the worldwide technology equity space. Today’s jump restores its market value to A$32.5 million.
The company raised A$7.25m at 29c-a-share last April. Shortly after it updated the market with a plan to build annual recurring revenue to $20 million-plus within three years.
December-quarter ARR of $4.8 million was double that of the same period in FY21. K2fly CEO Nic Pollock said the company’s market capitalisation was only two-times its total contract value at the time.
Circa-A$120 million-a-year Maptek is the world’s largest privately-owned supplier of mine planning and geological modelling software. Chairman Peter Johnson, who has joined K2fly as a non-executive director, indicated recently Maptek would look at providing funding to more small tech companies.
Johnson said this week K2fly was “leveraging technology to ensure the ESG and reporting expectations of the community are met, as well as providing a sustainable platform for enhancement”. Maptek has acquired 13.2% of K2fly for A$4.05m. Under an agreement it can’t buy more than 19.9% within a year without K2fly board approval.
K2fly non-executive chair Jenny Cutri said Johnson’s “wealth of knowledge in applying and scaling innovative technological solutions in the mining sector into sustainable and profitable businesses will be invaluable to K2fly”.
Maptek, established more than 40 years ago, has achieved revenue growth of about 60% since the bottom of the last global mining investment cycle in 2016. It now employs about 400 people and its footprint extends worldwide.
Johnson told InvestMETS in a recent interview surging mining tech M&A hadn’t driven valuation multiples to “outlandish” levels relative to values in the broader, overheated international tech arena. But they were rising.
“I suspect maybe this is an indication that the digital transformation and perception about the role of technology in [mining] by those not intimately involved with it has matured somewhat to be accepted as a core capability that can deliver huge value to a mining company,” he said.
“Historically mining technology has been considered a bit of a risky prospect by outside investors as the approach of mining companies to technology was not always easy to understand without some appreciation for how the benefits of technology can make a mine more successful.
“If you weren’t in the industry this was not easy to grasp.
“I think that has changed and much of the industry is now openly promoting their use of technology in all sorts of ways and espousing it as a critical enabler to their success. The general public historically had no idea that technology plays such an important part in a mine.
“It’s not thought about, not visible and not understood … so there will be some surprise to learn it is valued so highly, but that does not take away from the reality of that value being delivered.
“The current environment is certainly driving the adoption of and innovation in technology very fast. There are more opportunities now for tech companies than I have ever seen. It is very exciting.
“That, coupled with a strong commodity price outlook and mining companies being much more focused on maximising performance of existing operations in recent years will maintain these opportunities for some time I think.”