Delta Drone (ASX: DLT) was up 10.53% two hours out from the close following revelations the drone-based data service solutions provider plans to sell its drone safety business ParaZero to a consortium of investors led by Medigus for $6m cash.
The all-cash deal comprises an upfront payment of $5.1m, while the remaining $0.9m will be released from escrow 12 months later.
The transaction will allow Delta to focus on aggressively growing its global drone services business, after successfully acquiring Delta Drone South Africa late 2020.
Funds raised are expected to be used to acquire new drone-based software and geospatial data-related technologies that more directly complement the company’s ongoing service offerings within the Australian and African markets.”
Interestingly, while ParaZero was the driving force behind Delta’s 2018 ASX listing, management now believes it’s time to focus on the drone services business.
However, the company retains usage rights in relation to the use of the technology and products developed by ParaZero going forward.
Driven by contracts with multinational enterprise mining companies, the last quarterly update (30 September 2021) revealed that receipts from customers totalled $1.427m, an increase of $95k on previous quarter.
Contracts wins with multinational enterprise mining companies, included: Barrick Gold (Holdings) Limited, Anglo American Platinum Limited subsidiary, Rustenberg Platinum Mines Limited and Corteva Agriscience RSA (Pty) Ltd subsidiary, and Pioneer Seed RSA.
During the quarter, the company also embarked on its Australia-based expansion strategy through the acquisition of 60% of the shares in Perth-based provider of aerial and terrestrial surveying services, Arvista.
The company continued to expand its footprint into Africa, entering both Mali and Niger to examine mining site expansion options.
Commenting on recent growth, CEO Christopher Clark believes the company is on its way to becoming the becoming the leading drones-as-a-service provider in Australia.
“We will continue to provide our industry leading services in the mining and agriculture sectors as we look to expand past these industries and into others, that can benefit from the range of ways we can capture data to enhance business operations,” said Clark.
Consensus does not cover this stock.
Based on Morningstar’s fair value of $0.04, the stock appears to be undervalued.
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