OXT (ASX) Ann: Notice of change in substantial shareholding

Originally posted by madamswer: ↑

Thanks @stocking,

Having seen the laborious and soul-destroying job of core logging first-hand, and having spoken to umpteen geologists who've complained bitterly about how soul destroying it is, I've always wondered when some AI product would come along and simplify (and cheapen) the process.

So this business looks somewhat interesting that light.

So I read the prospectus, and about the unusual way this company was born into the listed world. In that regard the obvious question to arise in my mind why didn't Swick take it to the next logical level, namely full commercialisation? It would have been worth a lot more then.

Also, I'm doubtful about the scale-ability of the business model.

Yes, its a "technology" stock, but the service offering requires rather large and discrete physical units to be deployed in order to deliver the tech.

And then we also need to have a crew of in-house consultants/geologists on hand to help interpret the data being generated.

There's elements of capital- and labour-intensity here that I don't see with other tech plays.

So, I dunno so much.

Yeah, its only a $10m company (with $8m in cash in the bank today, but its burning that up at a rate of close to $1.5m per quarter), so its not priced for any success at all, but I really don't have any real feel for what the business can look like in 2 or 3 years' time and, importantly, if it is adequately funded to get there.

I'm happy to have lash at tiddlers from time to time, but I don't want to feel like I'm shooting craps, which is the way I feel with this one.

If it does end up making it, its going to be a multi-hundred million dollar business, but I think I've got time to watch it evolve, even it means I miss out on the $10m to $50m re-valuation leg. But with execution having been demonstrated to a degree, I'd be happy to catch the $50m to $500m leg.

So thanks for alerting me to it, but I'm going to have to say its just too early for my delicate investing constitution.

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This is quite a competitive space (perhaps more so than people realise). There are several private companies that are potentially ahead of OXT in both the technology, service offering and client base (mere speculation on my part). I personally know the Chairperson of Datarock (https://www.datarock.com.au/) and spoke with him last year about the company and the technology behind it. As a geologist by training, I was amazed at what additional information and optimisation this "AI" can offer. With the high resolution core imagery, they can map in significantly more detail than the average geologist. You are correct though that they will always need a team of engineers, programmers and scientists sitting behind the scenes to manage software and sense check output. In many cases the idea would be to train the mining companies themselves to use the technology under licensing agreements (limiting staff numbers and providing some scalability).

I believe Datarock may already be on the books of various of the larger players (BHP, RIO etc) so tough for competitors to also get a foot in the door at the same companies. The contract that OXT has with Oz Minerals is a good start so they better make hay while the sun shines. Once BHP completes the Oz takeover they will be in direct competition with the likes of Datarock to extend / expand the contract.

It will be quite difficult for non-users to assess which companies have the best service offering and pricing structures at this stage. Will be interesting to see how it evolves and who comes out top.