K2Fly shares jump after another marquee signup, CEO expects more deals to come
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Mining software company K2Fly (ASX:K2F) has scored another big-name client, this time inking a deal with mining giant Rio Tinto (ASX:RIO).
The company announced today that it’s signed a five-year contract with Rio valued at $1.45m, for the use of its RCubed reporting software.
The platform allows companies to run a more automated compliance program that standardises their reporting requirements across different jurisdictions.
This morning’s announcement follows similar agreements that K2F has signed with other mining multinationals in recent months, including Glencore in August and Newcrest Mining (ASX:NCM) in September.
Speaking with Stockhead, K2Fly CEO Brian Miller said the recent run of deals was evidence that SaaS-based business models and automated software platforms were beginning to make headway in the resources sector.
And Miller said the company was optimistic about a pipeline of more good news-flow, ahead of scheduled reporting changes for US mining companies.
Effective from 2021, US regulators will require mining businesses to make an assessment of their mineral resource for reporting purposes, in addition to reserves. Currently, disclosure around the mineral resource is only required in limited circumstances.
“The new rules have to be in place by Jan 2021, which isn’t very far away in mining terms,” Miller said.
“And it’s not a negotiable date — that’s when companies have to be set and ready. So that’s where I think we’re well positioned because RCubed has become something of an industry standard now.”
“We’re in negotiations with some other big miners and I expect in the next few months there’ll be a fairly regular flow of news.”
Shares in K2F jumped sharply and have held their gains in afternoon trade. The stock is now trading at 2019 highs of 21.5c — up from around 12c in June.
In discussing the practical application for RCubed, Miller said the proprietary software provided an updated solution for global miners to streamline their reporting systems.
“Let’s say there are 20 mine sites across different jurisdictions, they will produce operational numbers which are signed off by a competent person on site,” he said.
“Beyond that though, it gets pretty complicated. Data from all those mines need to roll up to a consolidated parent entity. So our software details that increased level of granularity and companies have a simple audit trail to see who’s done what.”
“There’s different commodities, different jurisdictions and different rules, but the software is doing all that work for them.”
The Rio deal will see K2F’s RCubed compliance software rolled out across 20 sites within the company’s global portfolio. It follows a $170k deal with Brazil-based Nexa Resources in late-October.
The $1.45m Rio contract is comprised of initial implementation fees and annualised recurring subscription revenue over the term of the five-year contract.