Nemex Goes All The Way With Biometric Security

Article today from Share Cafe / Wise Owl....nice coverage giving a wrap up of where NXR is (as holders know):

http://www.*********.com.au/wiseowl.asp?a=AV&ai=35337

Nemex Resources (ASX:NXR) is an Australian based resources company with a current focus on biometric security through a tactical investment in Wavefront Biometric Technologies (WBT). WBT is an Australian based biometric technology developer and has developed a single sensor multi-biometric system built around a patented cornea based technology and incorporating other unique aspects of the eye.

The biometric recognition technologies market is estimated to be worth US$7billion and growing. WBT has secured patents for the technology in the US, Japan and Australia. Nemex currently holds a 40 percent stake in WBT with a heads of agreement granting Nemex a conditional right to acquire 100 percent of the issued capital in WBT, subject to shareholder approval.

The Biometric Security Technology market is growing rapidly with identity theft being the fastest growing crime in the United Sates. Unauthorised abductions of utilities and mobile phones nearly tripled during 2013 and biometric security is shown to be the best method in mitigating this growing problem. According to the Biometrics Research Group, the global market for biometrics has grown to an estimated US$15 billion in 2015 from an estimated US$7 billion in 2012.

Not a new concept, Biometric technology is now in several everyday products such as fingerprint scanners on laptops and smartphones, however the technology is constantly developing and evolving to make it more efficient and reliable. Common biometric security technologies include voice recognition, fingerprint scanning, face recognition, iris and cornea scanning, and most recently the emergence of vein recognition. There are several benefits and limitations to all methods however currently the most viable and commercially accurate method is iris recognition.

WBT was created in 2007 for the purpose of commercialising biometric research developed by its founders. The company’s main assets are intellectual property surrounding its CSRA technology or Corneal Specular Reflex Authentication of identity. CSRA is biometric recognition technology that utilises the corneal topography within a person’s eye. Internal validation of the technology within a mobile setting has concluded and has shown comparable performance to industry leading iris technologies and advantages including universal application, prove of liveness, fraud resistance and the use of the visible light spectrum as opposed to near infra-red as used by most iris systems.

The technology is yet to be independently tested and is yet to prove its performance in a commercial setting. Additional capital will be required to further develop and commercialise the technology. Patents for the technology has been granted in several large markets where the use of personal identity authentication is crucial.

In 2014 Nemex entered into an agreement with WBT to purchase a 30 percent stake in the company and currently owns 40 percent. On the 10 June 2015, the company announced that it has signed a binding heads of agreement under which it has conditional rights to acquire 100 percent of WBT. To comply with the ASX listing rules, Nemex will have to conduct a $5m capital raising as a result of increased commercial activities. The deal is currently subject to due diligence which is set for completion on 7 July 2015.

On the resources side Nemex currently has interests in a number of prospective projects. Nemex was originally incorporated to acquire, explore and develop iron ore and mineral projects in the West Africa and Australia. Changes in market and operating conditions prompted the sale of certain interests, however Nemex retained their interest in the Télimélé Iron Project in Guinea and the Woodley Iron Ore Project in Western Australia. The Télimélé project is located in West Guinea and they have identified an inferred iron ore resource of 258million tones.

The FY14 activities focussed on generating funding for further drilling and development, however the decline in the iron ore price has made it difficult to secure further funding. The Woodley Project is located in Western Australia, approximately 600km north of Perth. The project is currently in the exploration phase and is yet to identify defined resources. In March 2012 Nemex signed an agreement with Golden West Resources Limited (ASX: GWR) for the Woodley Project. Under the agreement GWR can earn up to 85 percent interest on the project with Nemex free-carried to completion of a Bankable Feasibility Study.

Nemex currently provides speculative exposure to the rapidly growing market of Biometric Security. Internal testing of their CSRA technology has yielded positive results however positive independent testing and performance in a commercial setting is now the current objective. Nemex also provides speculative exposure to the resources sector through their interests in exploration projects however are dependent on the respective exploration and drilling results. Since increasing its stake in Wavefront Biometric Technologies in mid-September 2014, Nemex has seen a significant rise in their share price, climbing approximately 525%.

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0		Tim Morris is Head Analyst at Wise-owlTim has conducted over 500 corporate valuations and appraisals, specialising in pre revenue assets and emerging markets. Tim is Wise-owls specialist in equity analysis for Australian small and mid-cap companies across a diversified range of industries including resources, technology and financial services. Tim’s Equity Capital Market insights have been featured as part of a weekly column in The Australian, and regularly features on Sky News, CNBC, ABC, and Bloomberg TV.