10 June 2015
Fast Facts
Capital Structure
Shares on issue 234.2M
Options 31.5M
ASX Code NXR
Directors &
Senior Management
Patrick Flint
Chairman
Paul Jurman
Non-Exec Director &
Company Secretary
Peter Turner
Non-Exec Director
Project Highlights
WBT Investment
Biometric technology
Potential global market
Strong management
Guinea (Iron)
High-grade iron discovery
Large resource potential
Targeting DSO production
W Australia (Iron)
Woodley DSO Project
Contacts
Mr Patrick Flint
T: +61 8 9388 2277
www.nemexres.com.au
TRADING HALT
Nemex Resources Limited (ASX: NXR) (Nemex or Company) is pleased to
announce that it has signed a binding heads of agreement (HOA) under which
it has a conditional right to acquire 100% of the issued capital in Wavefront
Biometric Technologies Pty Ltd (Wavefront) that it does not already own
(Acquisition). Nemex currently holds a 40% interest in Wavefront.
The key terms of the HOA are:
Nemex to increase interest in Wavefront from 40% to 100% by
acquiring all Wavefront shares not currently held by Nemex.
Purchase consideration to be such number of Nemex shares that result
in the vendors holding 49% of the issued capital of Nemex immediately
following settlement.
As part of the Acquisition, Wavefront’s Chair Dr Shanny Dyer is to be
appointed Managing Director of the Company.
Wentworth Group Capital Partners and Intrasia Capital advised Wavefront on
the HOA and have been mandated to manage a capital raising of a minimum
of $5 million in order to fund the planned increased commercialisation
activities.
Wavefront’s executive management recently completed a successful
roadshow to North America, with strong interest generated in the technology
across multiple sectors. Discussions with various parties are continuing and a
follow up visit is planned for July 2015.
Non-Executive Chairman of Nemex, Patrick Flint, commented:
“The acquisition will consolidate the ownership of Wavefront’s unique
biometric technology and ensure the Company is fully focussed on the
successful commercialisation of the technology. “
Dr Shanny Dyer, Chair and Managing Director of Wavefront commented;
“As personal data and identity continue to be hacked and stolen, Wavefront
has a unique opportunity to become a solution able to be deployed across
multiple platforms to enhance current biometric security systems and build
robust environments far more secure than has until now, been achievable.”
NEMEX TO ACQUIRE 100% OF
WAVEFRONT BIOMETRIC TECHNOLOGIES PTY LTD
Page 2 of 7
We refer to Appendix A which provides an overview of Wavefront’s technology and business,
and Appendix B which outlines in detail the terms of the Acquisition. Further details will be
provided to shareholders of Nemex in a Notice of an Extraordinary General Meeting to be issued
in July 2015.
For further information about Nemex and Wavefront contact:
Patrick Flint Dr Shanny Dyer
Chairman Chair and Managing Director
P: 08 9388 2277 P: 0410 526 130
E:
[email protected] E :
[email protected]
Page 3 of 7
APPENDIX A - TRANSACTION BACKGROUND AND WAVEFRONT OVERVIEW
In April 2014, the Company entered into a conditional agreement to earn up to a 51% interest in
Wavefront. Wavefront has developed and patented a biometric technology for reliable and
secure authentication of a person’s identity, based on capturing data associated with the eye.
With the Company’s funding, Wavefront commenced a three phase development program with
the objective of adapting its technology to a mobile platform and commercialising the product.
The first phase of the program was completed in August 2014. This “proof of concept” phase
involved Wavefront successfully miniaturising and adapting its technology to a mobile platform
(Wavefront’s prototype unit).
The second phase of the development program, which was completed in March 2015, focussed
on improving the design and performance of the prototype unit and included completing a series
of performance tests of the prototype unit. These performance tests were conducted by
Wavefront and its consultants under laboratory conditions and included completing a series of
performance tests of the prototype unit.
The results of the performance tests completed during Phase 2 demonstrated the technology
delivers performance, via a mobile platform, comparable to the current industry leading
biometric modality (the iris modality). In addition to its high fidelity (reliability and accuracy), the
technology also has a number of competitive advantages including the use of the visible light
spectrum (as opposed to near infra-red as used by most iris systems), universal application, fraud
resistance and proof of liveness.
Wavefront also developed a multi-biometric system built around its unique, patented corneabased
technology and incorporating other eye-based biometric modalities. The different
biometric modalities combine as a single sensor, multi-modal and multi-algorithmic biometric,
generating further advantages to the competitiveness of the technology in the market. This new
multi-biometric system was successfully incorporated into the prototype unit utilised for the
performance testing.
The current phase of the program is focussed on:
• further improvement of the performance of the multi-biometric system.;
• completion of independent testing and assessment of technology performance;
• submission of patent applications in respect of the new intellectual property developed;
and
• ongoing commercialisation activities, including presentation of the technology to leading
mobile device manufacturers, technology companies and defence industry groups in
North America and Asia.
Page 4 of 7
APPENDIX B – KEY TRANSACTION TERMS
1. Terms of Agreement
Nemex has entered into a binding heads of agreement (Agreement) with Wavefront and the
majority of the holders of the fully paid ordinary shares in the capital of Wavefront (Wavefront
Shares) (Vendors) which are not currently held by the Company, under which Nemex has agreed
to acquire 100% of the issued capital in Wavefront that it does not already own (Acquisition).
The key terms of the transaction are as follows:
a) Consideration: In consideration for the Vendors transferring their Wavefront Shares to
the Company, the Company has agreed to issue to the Vendors (on a pro rata basis) such
number of fully paid ordinary shares in the capital of the Company (Shares) as would
result in the Vendors holding 49% of the Company’s issued Share capital following
settlement of the Acquisition (excluding any Shares issued as part of the Company’s
fundraising in connection with the Acquisition) (Consideration Shares).
b) Proportionate Consideration: In the event that not all Vendors agree to sell their
Wavefront Shares to Nemex, the total number of Consideration Shares to be issued shall
reduce in proportion to the number of Wavefront Shares acquired by Nemex. Nemex will
seek to bind the remaining holders of Wavefront Shares that have not entered into the
Agreement over the next 28 days. In the event that these remaining holders do not enter
into the Agreement, Nemex will hold 87.35% of Wavefront at completion.
c) Conditions Precedent: Settlement of the Acquisition is conditional upon the satisfaction
(or waiver) of the following material conditions precedent by no later than 31 October
2015 (unless indicated otherwise):
i. completion of due diligence by the parties by 7 July 2015;
ii. Nemex receiving shareholder approval in respect of all resolutions required in
order to complete the Acquisition;
iii. approval of the ASX to admission of Nemex to the official list following completion
of the Acquisition and re-compliance with Chapters 1 and 2 of the ASX Listing
Rules;
iv. In addition to complying with any applicable escrow restrictions in accordance
with the ASX Listing Rules, the Vendors delivering executed voluntary escrow
agreements pursuant to which:
A. 25% of their total Consideration Shares will be escrowed for 3 months from
completion of the Acquisition; and
B. 75% of their Consideration Shares will be escrowed for 6 months from
completion of the Acquisition;
v. shareholders of Nemex representing at least 25% of the issued Share capital of
Nemex immediately prior to completion of the Acquisition delivering executed
voluntary escrow agreements pursuant to which 75% of their total Shares will be
escrowed for 6 months from completion of the Acquisition;
vi. Nemex becoming entitled to acquire 100% of the Wavefront Shares not currently
held by Nemex (this condition can be waived at Nemex’s election); and
vii. Nemex completing a fundraising for a minimum of $5 million (Capital Raising).
Page 5 of 7
d) Options: Upon settlement of the Acquisition, certain members of the incoming board and
management team will be granted Options (Management Options) to acquire Shares as
follows:
i. such number of Options exercisable at 10 cents on or before 30 June 2016 (10
Cent Options) as equal (following their issue) 49% of the aggregate number of 10
Cent Options on issue at completion; and
ii. such number of Options exercisable at 20 cents on or before 3 years from issue
(20 Cent Options) that have an equivalent value to the number of Options
exercisable at 5 cents on or before 31 December 2015 (5c Options) which are on
issue at the date of completion.
e) Proxy Requirements: Nemex and Wavefront must use their best endeavours to procure
proxies for 25% of the Shares in the Company under which shareholders agree to approve
the Acquisition.
2. Loan Agreement
Nemex has agreed to advance a sum of $600,000 to Wavefront (by way of unsecured loan) to
fund ongoing development and commercialisation activities.
3. New board & Management team
Upon completion of the Acquisition, it is intended that the current directors of Nemex will resign
from the Nemex board and will be replaced by five new members (including Dr Shanny Dyer,
managing director of Wavefront) who will have the appropriate skills and qualifications
necessary for directors of an ASX-listed biometric technology company. The parties are yet to
finalise the final make-up of the Nemex board.
Dr Dyer has extensive experience in senior management and Board roles in technology
companies. She has completed many large and complex licence negotiations over the years with
global companies and is well placed to undertake the next phase of Wavefront’s accelerated
commercialisation strategy.
4. Re-Compliance with ASX Listing Rules Chapters 1 and 2
Since the Acquisition will result in a significant change to the nature and scale of Nemex’s
activities, the Acquisition will require shareholder approval under ASX Listing Rule 11.1.2 and will
also require that Nemex re-complies with Chapters 1 and 2 of the ASX Listing Rules.
Page 6 of 7
5. Capital Raising
To enable Nemex to re-comply with the ASX Listing Rules and to support its growth strategy
post-completion of the Acquisition, Nemex plans, subject to shareholder approval, to conduct
the Capital Raising under a full form prospectus to raise a minimum of $5 million.
6. Pro-Forma Capital structure
On the basis that the Acquisition completes on the terms set out above, Nemex’s capital
structure will be as follows (assuming that it acquires 100% of Wavefront, $5 million is raised
under the Capital Raising at $0.10 per Share (being the 30 day volume weighted average share
price of Nemex), no options are exercised and no other Shares are issued):
Shares 5c Options 10c Options 20c Options
Current 234,162,921 19,575,000 12,000,000 Nil
Consideration Shares 224,980,061 Nil 11,529,412 36,703,125
Capital Raising 50,000,000 Nil Nil Nil
TOTAL 509,142,982 19,575,000 23,529,412 36,703,125
7. Financial impact on Nemex
As noted above, as part of the process for re-complying with Chapters 1 and 2 of the ASX Listing
Rules, the Company will be required to conduct a capital raising. The quantum of the raising and
the offer price per share are yet to be determined but a minimum of $5,000,000 is currently
proposed.
As the final details of the capital raising and the final quantum of the Consideration Shares to be
issued are not yet known, and due diligence is yet to be completed, an unaudited pro-forma
balance sheet showing the impact of the transaction has not been included in this
announcement but will be included in the notice of meeting seeking shareholder approval for
the Acquisition.
Page 7 of 7
8. Indicative Timetable
An indicative timetable for completion of the Acquisition and associated transactions is set out
below:
Milestone Indicative Timetable*
Execution of Agreement 9 June 2015
Completion of due diligence 7 July 2015
Execution of formal agreements 7 July 2015
Release of notice of meeting in respect of Acquisition 14 July 2015
Issue Capital Raising prospectus 21 July 2015
Hold general meeting in respect of Acquisition 18 August 2015
Completion of Capital Raising 21 August 2015
Re-quotation on ASX 7 September 2015
* Please note this timetable is indicative only and the directors of Nemex reserve the right to
amend the timetable as required. Shareholders should also note that the Company’s
securities will be suspended from trading on the day of the general meeting seeking
shareholder approval for the transaction and if such approval is obtained will remain
suspended until such time as the Company has satisfied Chapters 1 and 2 of the ASX Listing
Rules.
