Sydney-based investment company Morning Star Holdings Ltd has withdrawn its proposed $11 million acquisition of Wembley- based International Mining Technologies Pty Ltd after deciding its product commercialisation risk was too great.
Sydney-based investment company Morning Star Holdings Ltd has withdrawn its proposed $11 million acquisition of Wembley- based International Mining Technologies Pty Ltd after deciding its product commercialisation risk was too great.
Morning Star had signed a term sheet to acquire 100 per cent of IMT for an outlay of 153.1 million shares worth around $9.6 million at the time of the offer, as well as assuming $1.1 million of IMT's debt.
The acquisition would have seen five IMT representatives join the Morning Star board, as well as the company adopting the IMT name.
Morning Star would also have placed 18 million shares to raise $1 million to assist the deal, as well as providing a $500,000 bridging facility to the company to enable the operation and development of project trials.
IMT is a family-run mining services company which developed, among other things, a core collision avoidance system for the mining sector - a product which Morning Star today said it believed was the key to the company's future growth.
"The company believes that there is a need within the mining industry for an andvanced CAS to be deployed in mine sited to assist in the reduction of mine related accidents," Morning Star said in an announcement.
But the company said due diligence had revealed the IMT technology was not as advanced as it had believed at the time the deal was struck.
"On completion of its due diligence the company has come to the conclusion that the CAS currently being developed by IMT is not yet at a point where definitive full mine testing can be scheduled. Subsequently the Company believes that the level of risk associated with both the successful commercialisation of a CAS product and timing of that commercialisation by IMT is not in line with the comapny's risk parameters."
The Morning Star announcement said the companies had agreed to mutually terminate the term sheet.
The full text of the Morning Star announcement is pasted below
The Company has completed its due diligence in respect to the proposed acquisition of International Mining Technologies Pty Ltd ("IMT") as announced on the 17 April 2007.
This due diligence process included discussions with IMT management and shareholders, discussions with consultants to IMT, discussions with other industry participants and visits to IMT premises based in Perth, Western Australia.
The key to the future growth of IMT was the development of an advanced Collision Avoidance System ("CAS") for the use on all mobile mining equipment within mining operations including dump trucks, excavators, fleet vehicles, ground units and caterpillar track drill rigs.
The CAS unit being developed by IMT was presented as being at an advanced stage of development, with high level prototype testing currently being completed. The final barrier to acceptance of CAS by industry was to be full mine testing in conjunction with Phelps Dodge Corporation ("PDC"), this was scheduled to commence in the third quarter of 2007. Following successful completion of the testing of CAS, IMT was to deliver to PDC 3 haul truck units, 1 light vehicle unit and 1 personnel unit. IMT then expected to roll out further systems across PDC's entire fleet in late 2007.
The Company believes that there is a need within the mining industry for an advanced CAS to be deployed in mine sites to assist in the reduction of mine related accidents. There is also a real desire from mining industry participants to employ a system which overcomes some of the limitations which exist within systems currently available in the market.
On completion of its due diligence the Company has come to the conclusion that the CAS currently being developed by IMT is not yet at a point where definitive full mine testing can be scheduled. Subsequently the Company believes that the level of risk associated with both the successful commercialisation of a CAS product and timing of that commercialisation by IMT is not in line with the Company's risk parameters.
As such both IMT and the Company have agreed to mutually terminate the Term Sheet. The Placement and Bridging Finance agreed and announced in the Company's release dated 17 April 2007 will no longer proceed.
