Australian mining and exploration companies are turning to acquisitions and reverse-takeovers of technology firms in a bid to diversify into new areas as traditional revenue taps run dry.
Mineral exploration company Esperance Minerals on Friday said it had entered into an agreement to acquire 51 percent of Australian ecommerce company eDutyFree.
The platform - which sells Australian health and beauty products into Asia online - will allow Esperance to tap into China's $445 billion e-commerce market at a time when losses from its traditional operations are growing.
Esperance lost $1.1 million in the six months to last December, compared to $296,770 in the previous corresponding period. It had around $770,000 in cash at the end of June.
EDutyFree has been trading since mid-2013. It brought in almost $1.1 million in revenue in fiscal 2014, and $1.6 million in 2015. It recorded a loss of $37,566 in FY14 and posted net profit of $104,524 in FY15.
EDutyFree will become Esperance's main operation.
Esperance has had no active business since its Kununurra Project lapsed earlier this year due to a lack of sufficient exploration results.
It has been reviweing two potential mining projects while conducting a review of opportunities in the Asian health and wellness sector, which led to Friday's announcement.
"There is strong demand for high quality Australian health, baby care and beauty products from consumers in Asia, so much so that many manufacturers and retailers are experiencing well-publicised shortages of the most popular products," Esperance director John Rawicki said.
"The board believes this acquisition will give [us] the potential to develop a successful integrated 'tech and retail' business in the health and wellness industry for the benefit of all shareholders."
Esperance is far from the only one looking for avenues outside the resources sector.
Just last week, copper and gold exploration company Naracoota Resources participated in a reverse takeover with healthcare software provider Alcidion, which saw the latter listed on the stock exchange.
Naracoota was attracted to Alcidion's flagship "Miya" platform, which uses patient data to allow clinicians to make real-time decisions on support.
Its technology is currently in use in 11 Australian hospitals, and the company posted FY15 revenue of $5.2 million, up 36 percent on the previous year. To date, Alcidion has invested around $14 million in its technology.
The reverse listing - alongside a planned $2 million capital raising - is expected to provide Alcidion with $7 million towards its global expansion plans.
Naracoota had $3.7 million in the bank at the end of June and a market cap of around $8 million. It has been looking for projects for acquisition in recent months, but did not limit itself to traditional mineral exploration projects.
It's no surprise that exploration companies like Naracoota and Esperance are opting to look outside the mining industry for money.
Gold is only just beginning to rally after a period of underperformance: it reached a five-and-a-half-year low in July. And commodities are crashing, with "everything from egg futures to natural gas" yesterday falling to the lowest levels since 1999, according to the Bloomberg Commodity Index.
One of the more high-profile examples of a miner turning to a tech company was 2013's reverse-listing of hosting provider Bulletproof Networks.
It landed on the ASX thanks to a deal with mining entity Spencer Resources, which bought 100 percent of Bulletproof shares to facilitate the backdoor entry.
Spencer had suffered a $497,000 loss on revenues of $59,000 in 2013, and decided to actively divest its exploration interests in favour of a focus on IT infrastructure and cloud computing.
Not always a success
But sticking your neck out doesn't always work in your favour.
Sydney-based shopping and mobile company Yatango took the same approach as Bulletproof, announcing plans to arrive on the Australian stock exchange following a reverse takeover agreement with mining company Latitude Consolidated Limited in March this year.
Yatango had wanted to raise around $8 million from its listing, which would offer up about 22.1 per cent of the company.