Perth's Imdex in $25.4m deal for Swedish-based Reflex Group.

Perth-based drilling products company Imdex Ltd has entered into a $25.4 million heads of agreement to acquire the Swedish-based Reflex Group.

Reflex is a leading supplier of borehole survey equipment to the global exploration, mining and construction industries.

The transaction is made up of a $15 million cash component and a convertible note with a face value of $10.4 million.

The acquisition facilitates the expansion of the Imdex range of products, and broadens the locations it operates in internationally.

It also complements Imdex's existing business which is already the exclusive distributor of Reflex products in Australia and Asia, as well as enhancing the skill base of Imdex, enabling it to develop and market products internationally.

It should also provide an attractive financial return to the company.

Imdex intends to retain the existing Reflex management team to maximise the synergies available from combining the two businesses.

Reflex is currently owned by Swedish venture capital group, Smefvretagsinvest AB, and has operational bases in Canada, South Africa and South Americ, and agencies throughout the world.

The additional distribution infrastructure provided by the acquisition will enhance the ability of Imdex to develop and supply proprietary products rather than acquire existing technology from other suppliers.

The current Reflex operations will also benefit from their linkage with Imdex, as Reflex has recently targeted the oil and gas sector, where Imdex has a strong presence.

The deal is subject to due diligence and shareholders approval, likely to be dealt with at a meeting held before the end of June 2006.

Funding for the transaction will be from a combination of internal resources and borrowings using existing banking relationships.

ASX and Media Announcement

ACQUISITION OF THE REFLEX GROUP OF COMPANIES

Statement by I F Burston, Chairman, Imdex Limited
Imdex Limited (Imdex) has executed a Heads of Agreement to acquire the Swedish-based Reflex
Group (Reflex) for AUD$15 million cash and the issue of a convertible note with a face value of
AUD$10.4 million.
Reflex is a leading supplier of borehole survey equipment to the exploration, mining/quarrying and
construction industries globally. Its innovative technology offers cost saving solutions through the use
of electronic instruments to deliver survey data accurately and in a timely fashion.

The transaction:
facilitates expansion of the Imdex range of products;
broadens the locations in which Imdex currently operates;
complements the existing Imdex business which is already the exclusive distributor in
Australia and the Asian region for Reflex products;
strengthens the skill base of Imdex, including the ability to develop and market products
internationally; and
provides an attractive financial return to the company.
The Reflex product range is already well-known to Imdex. The transaction will further boost the
market presence of Imdex as it positions itself as a global supplier of services to the exploration and
drilling industry.

Existing Ownership
Reflex is owned by Smefvretagsinvest AB (SMAFI) (see www.smafi.se for details), a venture capital
company 51% owned by a consortium of private investors, including Volvo Aero and Saab Bofors, and
49% owned by the Swedish Industrial Development Fund.
Business Opportunities
Reflex is based in Sweden (see www.reflex.se for further details). The group has operational bases
in Canada, South Africa and South America. Agents and distributors in other locations around the
world give it coverage in many other countries.
Ace Drilling Supplies (Ace), an operating unit of Imdex, has been the Reflex exclusive distributor in
Australia and the Asian region since 2000.

The Reflex business complements the existing drilling products and services business of Imdex. The
existing operational locations of Reflex in Canada, South Africa and South America will facilitate the
market penetration of Imdex's existing product range, including the new generation electronic core
tool developed and sold by Ace and used in the diamond drilling market.
An illustration of the already developing relationship between Imdex and Reflex is the recent
appointment of Reflex as the agent for Ace in North America. This will be one of the more active
centres for the marketing of the electronic core tool.

The additional distribution infrastructure provided by the acquisition will enhance the ability of Imdex
to develop and supply proprietary products rather than acquire existing technology from other
suppliers.
As well as the business advantages for Imdex, the current Reflex operations will also benefit from
their linkage with Imdex. Reflex has recently targeted the oil and gas sector, where Imdex already
has a strong presence which will be of assistance to Reflex once it becomes a part of the Imdex
group.
Financial Performance
The projected EBIT for the year ending 31 December 2006 for Reflex is approximately AUD$5 million
on revenue of approximately AUD$15 million.
The profitability of Reflex reflects the leading nature of its technology. Its new generation optical tool
which was introduced during 2005 should ensure existing margins are maintained.
Directors of Imdex continue to expect the Group to achieve revenue growth of approximately 15%
with total revenue of $55 million and an EBIT margin of 15% in 2005/06 before the impact of the
Reflex transaction.

The Transaction Terms
The transaction is subject to a detailed due diligence and approval by shareholders in a General
Meeting which is likely to be held before the end of June 2006.
Funding for the transaction will be from a combination of internal resources and borrowings using
existing banking relationships.
Subject to shareholder approval, Imdex will pay SMAFI $15 million in cash and issue to SMAFI a
Convertible Note with a face value of $10.4 million. SMAFI will have the right to convert the note into
20.8 million Imdex shares at a price of 50 cents per share at any time until 30 June 2008. The coupon
rate will be 8% per annum.
Under the terms of the agreement, conversion will be triggered automatically by the Imdex share
price reaching $1 per share. Any Imdex shares issued to SMAFI prior to 30 June 2008 will be held in
voluntary escrow until 30 June 2008.

Current Management
It is the intention of Imdex to retain the existing Reflex management team to maximise the
opportunities available from combining the two businesses.

About Imdex:
Imdex is a Perth-based public company listed on the Australian Stock Exchange, whose core business is the
supply of drilling products and services in Australia and internationally to the oil and gas, mining, water well,
horizontal directional drilling and civil industries