Dunedin-based listed company Scott Technology is set to purchase an Auckland company, for less than $1.5 million, further underpinning its niche gold reference materials division.
Scott, which manufactures robotics for the meat industry in Dunedin and has its mainstay appliance assembly line manufacturing division in Christchurch, purchased mining supplier of sampling machines Rocklabs in Auckland in 2008 for $6 million cash and $4 million in shares, bringing a cash-positive boost to its bottomline at the time.
A spin-off from that Rocklabs purchase was an supply agreement with the unnamed company which manufactures certified reference materials for Rocklabs; a product purchased by many overseas laboratories to check and calibrate their own mineral sampling systems in order to gain credibility and system certification.
The reference materials are precisely laced with minuscule but exact amounts of gold or other minerals before being used to test sampling machines.
Scott chief executive Chris Hopkins yesterday said an agreement in principle had been negotiated, and once due diligence was complete, the sale could proceed from October 1.
For Scott's full-year accounts to August 2009, RockLabs appeared to contribute $14 million within the wider group's revenues, including about $2 million reference material sales revenue.
Mr Hopkins expected there would be some "small growth" opportunities arising from the purchase, which like Rocklabs would be earnings-positive once acquired.
Some marketing and sales staff at Rocklabs would relocate to the acquired company.
Both companies are situated in Auckland.
He said the "less than $1.5 million" purchase would be funded by cash-flow or existing bank facilities.
The company has four full-time employees, plus up to 15 casuals at times, Mr Hopkins said.
Rocklabs sampling machines take drill core samples from mining exploration or blast samples and refine them to a powder for final assay analysis.
Scott and Rocklabs have co-developed separate robotic and automated processing line versions of the three-machine process to link up the systems, working towards sales to customers in the Pacific, Nevada and Chile.
