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RPMGlobal (ASX:RUL) announces Canadian acquisition

RPMGlobal (ASX: RUL) has announced a Canadian acquisition called Revolution Mining Software. The RPMGlobal share price will be on watch this morning.

What is RPMGlobal?

RPMGlobal is an IT company within the mining industry that has traditionally provided advisory services and technical support in regards to mine preparation and planning. Questions of where, when and how to dig are the types of questions RPMGlobal’s technical consultants and mining software addresses when dealing with miners looking to extract their commodity in the most efficient way possible.

Today, by far RPMGlobal’s most important business is its software division. Thanks to years of visionary management and research & development (R&D) spending, RPM’s software is amongst the leading tools for mining equipment tracking, maintenance, planning and financial reporting.

In a recent Australian Investors Podcast episode, Investment Analyst Owen Raszkiewicz explains why RPMGlobal is one of his top ASX share ideas. Click here to subscribe to the series on YouTube, it’s free.

RPMGlobal’s Canadian acquisition

RPMGlobal is going to acquire mine scheduling optimisation company Revolution Mining Software.

This Canadian company has been developing and selling its software called ‘Schedule Optimisation Tool’ (SOT) for six years. The software is used for scheduling optimisation for tier one miners around the globe. RPM has also acquired the software called Attain and SurfaceSOT.

SOT is apparently well known in the industry for solving complicated mining industry problems through innovative thinking. RPMGlobal said it’s the industry’s only strategic financial optimisation tool for underground mines that enables mine planners to improve productivity and profitability by optimising the net present value (NPV) of the mine schedule.

RPMGlobal CEO and Managing Director Richard Mathews said: “We are very pleased to have concluded negotiations to acquire Revolution Mining Software and are really looking forward to welcoming Lorrie and the rest of the Revolution team into the RPM family. We will invest in their industry leading scheduling optimisation tools to deliver innovative solutions that add real value to our customers.

RPM was born from the understanding that mine planning needs to be built on sound economics and the Revolution Mining product strategy is completely aligned with that core value.”

All of Revolution Mining Software’s employees and management will move across into the RPM business.

The acquisition will be funded by RPM’s existing cash reserves and comprises an upfront payment and two-year earn-out. The acquisition is expected to close on 31 July 2020.

Summary

This seems like a really good bolt-on acquisition for RPMGlobal. Being able to sell a packaged software product will make it an even better offering for clients. We covered RPMGlobal shares in great detail in a recent podcast and article on Rask Media.

Which would also increase switching costs if a client was using all of RPMGlobal’s software. It’s an exciting business and is one to watch (and perhaps even invest in, if you like it). The RPMGlobal share price has risen 14% over the past six months.

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