RocketDNA Terminates Contract with Calidus Resources Subsidiary Amid Receivership
RKT (RKT) Share Update July 2024 Thursday 11th
RocketDNA Terminates Contract with Calidus Resources Subsidiary
RocketDNA Ltd (ASX: RKT), a global drones-as-a-service provider, has announced the termination of its contract with Keras (Pilbara) Gold Pty Ltd, a subsidiary of Calidus Resources Limited (ASX: CAI), following the appointment of receivers and managers to Calidus.
Instant Summary:
- RocketDNA terminates contract with Calidus Resources subsidiary.
- Receivers and managers appointed to Calidus Resources Limited.
- RocketDNA's exposure is less than $40,000 for unpaid invoices.
- Contract was for daily surveys and imagery using xBot® solution.
Background
On 11 July 2024, RocketDNA Ltd (ASX: RKT) announced the termination of its three-year contract with Keras (Pilbara) Gold Pty Ltd, a subsidiary of Calidus Resources Limited (ASX: CAI). This decision follows the appointment of Richard Tucker and John Bumbak of KordaMentha as receivers and managers to Calidus Resources and two of its subsidiaries, including Keras (Pilbara) Gold Pty Ltd.
RocketDNA had entered into the contract on 26 March 2024 to provide daily surveys and imagery to Calidus through its autonomous xBot® solution, which commenced operations in June 2024. However, recent developments have led RocketDNA to reconsider its position.
Reason for Termination
RocketDNA learned through media reports that KordaMentha has placed the Warrawoona gold project into care and maintenance. As a result, RocketDNA has decided to issue a notice to terminate the contract with Keras (Pilbara) Gold Pty Ltd.
According to RocketDNA's preliminary assessment, the company's exposure is less than $40,000 for unpaid invoices for services provided to Calidus prior to 28 June 2024. This announcement was authorized for release by the Board of RocketDNA Ltd.
About RocketDNA
RocketDNA Ltd (ASX: RKT) is an ASX-listed multinational drone-based data service and technology solutions provider for the mining, agricultural, and engineering industries. The company offers services such as aerial surveying and mapping, security and surveillance, and blast monitoring and fragment analysis through a fully outsourced service with AI and fast data turnaround.
RocketDNA generates revenue through multi-year recurring revenue contracts and short projects, which also have the potential to become recurring. Key customer contracts include tier 1 and tier 2 miners, such as South32, Newmont Mining, Red 5, and Seriti Coal. The company's operations are focused on Australia and Africa, with regional offices in Perth, Johannesburg, and Accra.
The termination of the contract with Keras (Pilbara) Gold Pty Ltd is a setback for RocketDNA, but the financial exposure is relatively minimal, estimated at less than $40,000. This decision reflects RocketDNA's proactive approach to mitigating risks associated with the financial instability of its clients.
While the immediate financial impact is limited, the termination could affect investor sentiment, particularly regarding RocketDNA's ability to secure and maintain long-term contracts. However, the company's diversified client base and focus on multi-year recurring revenue contracts should help cushion the impact.
Investor Reaction:
Analysts have noted that RocketDNA's swift action to terminate the contract demonstrates the company's commitment to managing its financial exposure. Investor reactions have been mixed, with some expressing concerns about the potential for similar issues with other clients, while others appreciate the company's risk management strategy.
Conclusion:
Investors should monitor RocketDNA's future announcements and assess the company's ability to secure new contracts and maintain existing ones. The termination of the contract with Keras (Pilbara) Gold Pty Ltd highlights the importance of due diligence and risk management in the volatile mining industry.