Fractal takes the path to Canada

Nick Archibald, the founder of pioneering Western Australian minerals software developer Fractal Graphics, is close to completing his biggest ever deal as chief executive of listed Canadian company Geoinformatics Exploration Inc.

Dr Archibald’s move to Canada reflects a wider trend among explorers and miners to choose the Toronto Stock Exchange as the best market for raising capital.

Geoinformatics is an explorer with a difference, as its business model incorporates a lot of the intellectual property that Dr Archibald developed in Perth with Fractal Graphics.

Fractal was a pioneer in the development of 3D data management and visualisation software for mining exploration.

Dr Archibald undertook the original research in the early 1990s in partnership with CSIRO’s Bruce Hobbs, who served recently as the state government’s chief scientist.

It followed the development of similar software by companies such as Surpac and Maptek for underground mining.

Dr Archibald’s business, which he runs with his wife and co-director Jenny Archibald, has experienced the highs and lows of the mining and exploration cycle.

For instance, in the late 1990s, Fractal commenced a $2 million research project (co-funded by AusIndustry) just as a major downturn in exploration spending eroded its consulting income.

“We were in the middle of this major R&D project and had already hired seven people, so that was quite a tough time for us,” Mrs Archibald said.

In 2001, Fractal gained a big boost by winning a unique international competition run by Canadian company GoldCorp, which invited exploration experts to study its online geological database to help it find new gold deposits at its Red Lake mine.

Mrs Archibald said the prize money “was a lifesaver for us at the time”.

“The thing that came out of it more strikingly for us was that we suddenly became well known in Canada, and because we worked in 3D that was sensational,” she said.

“They just hadn’t used 3D in exploration.”

The next big milestone came in 2002, when venture capital firm Foundation Capital invested $2 million to back the development of Fractal’s software products.

“We were very fortunate to be able to convince a venture capital group to come on board, particularly at that time,” Mrs Archibald said. “It took nearly 12 months but they were brave enough to come on board, when the mining market was quite slow.”

A few months later, the Fractal business was divided in two – the technology arm continues to be run from Perth, while the geoscience consulting arm merged with Canada’s St Andrew Goldfields and changed its name to Geoinformatics.

“We went to Canada because that’s where the opportunity was emerging; we had been working with people there and we just ran with it,” Dr Archibald said.

“That said, I think it would have been very hard to do anything like that in Australia, particularly at that time.”

Dr Archibald said the formation of Geoinformatics “was the start of our journey of being an international explorer with a difference”.

Since 2002, the company has completed a backdoor listing on the TSX Venture Exchange, and raised a total of C$13.5 million ($A16.5 million) from investors.

Dr Archibald was initially chief operating officer but took the reins last November when he was appointed chief executive.

Under his leadership, the company is seeking to raise $US20 million ($A26 million) to support an alliance with Rio Tinto subsidiary Kennecott Exploration Co.

This will allow Geoinformatics to conduct its own drilling program on selected properties, which it has targeted using its own research.

This is a change from its normal approach, which involves bringing in partners to handle the drilling on targeted tenements.

Its existing partners include Midas Resources, Polaris Metals and Nickel Australia.

Dr Archibald said a clear point of difference for Geoinformatics was its intellectual property.

“The company has always focused very strongly on building intellectual expertise and intellectual property, and that goes from proprietary software tools to the process of how we work, it’s a very rigorous process,” he said.

The company has also invested heavily in research alliances, including with the predictive mineral discoveries CRC and with universities.

“It’s pretty unusual for an explorer to get involved in that spread of research in technology but you have to get smart if you want to find something in a reasonable cost and time frame,” Dr Archibald said.

Looking ahead, the company has plans to continue as an explorer.

“We’ve got a big team and we would like to keep it together and maintain our focus.”

While Dr Archibald has focused on Geoinformatics, Mrs Archibald has run Fractal Technologies, which has developed two products – 3D integration and visualistion software and a spatial data server.

“We believe we have two very strong products in the market,” she told WA Business News.

Its product development has been aided by a second $1 million AusIndustry grant, awarded in 2003.

In hindsight, Mrs Archibald acknowledges that the spin-out of Fractal Technologies as a stand-alone company was a little early.

However, she said it had steadily built its cash flow and over the next year or so the company would consider new capital-raising options.