IMDEX LIMITED — Interim / Quarterly Report 2011

Feb 24, 2011

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8 Pitino Court Osborne Park WA 6017

Attention: ASX Company Announcements Platform Lodgement of Market Briefing

25 February 2011

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Imdex Limited MD and CFO on 1H11 results and strategic outlook

Interview with Bernie Ridgeway (Managing Director) and Paul Evans (Chief Financial Officer)

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Imdex announced a record result for its 1H11 earnings. What has been the key driver behind this exceptional result?

Bernie Ridgeway

There are a range of factors that contributed to this strong result, not least of which is considerably improved industry dynamics and a significant increase in global exploration spend.

It was very pleasing to see record mining tool fleet numbers achieved, with rental levels at 31 January 2011 surpassing the previous peak achieved in July 2008 by 33 per cent. Other contributing factors to the strong result include the release of new market-leading technologies and investment in research and product development.

It’s worth noting that although the integration of Fluidstar assisted earnings, growth has largely been organic.

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EBITA margins seemed to decline in Q2 when compared to Q1. What was the reason behind this? Is this trend expected to continue?

Bernie Ridgeway

There were a number of one-off costs totalling around $2 million in Q2 that contributed to this decline, including the Camteq litigation, business acquisition costs, a staff bonus provision, and foreign exchange costs. As these are all one-off costs, margins should be restored in future reporting periods.

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You mentioned Fluidstar. How is the integration tracking, and are the expected synergies being achieved?

Bernie Ridgeway

Fluidstar has performed strongly both in profitability and cash flow terms. The integration of Fluidstar is progressing well and as planned, having been rebranded to AMC on 1 January 2011 and incorporated into the existing business structure of AMC. We expect to see further integration benefits flow through in the second half of the 2011 financial year and beyond.

Market Briefing │Imdex Limited │25 February 2011

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Imdex has also recently announced the proposed acquisition of Mud-Data, and the joint venture agreement with DHS Oil. What is the current status of these initiatives, and what was the strategic rationale behind them?

Bernie Ridgeway

We were pleased to announce the proposed acquisition of Mud-Data on 17 December 2010. Since then we have been conducting a due diligence process and due to some uncertainty as to timing in the main geothermal contract we have been able to renegotiate some components of the deal.

Under the initial deal terms we had negotiated a payment of €3.5 million on settlement [€1.0 million in Imdex shares and €2.5 million in cash]; €1.5m in cash, conditional on contract extensions; and 10 per cent of Mud-Data’s net profit after tax for 2011 to 2015. The new deal terms we have negotiated are €1.3 million cash on settlement; €1.2 million cash and €1.0 million shares conditional on drilling commencement; €1.5 million cash on contract extensions and 10 per cent of Mud-Data’s net profit after tax for 2011 to 2015.

We are very excited about what Mud-Data can do for our footprint in Europe.

In terms of the joint venture agreement with DHS Oil, Flexit’s largest customer and majority owned by Lime Rock, we have agreed to a 50:50 joint venture to use the Flexit Target tool in a services model. Under the terms of the joint venture, high quality gyro surveys will be conducted on a fee for service basis for the global oil and gas market.

This is an exciting opportunity to access a sustainable market that is US$500-600 million per annum in size with significant growth opportunities. The new joint venture will operate independently from Imdex and has its own management. Having said this, Imdex and Lime Rock have equal Board representation.

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Imdex has stated that its strategy is to increase the significance of its Oil & Gas Division. What is the reasoning behind this when the Minerals Division has been performing so strongly?

Bernie Ridgeway

The Minerals Division will always be an important area of focus for the business, but we see the Oil & Gas sector as a large growth area and a logical diversification from the cyclical minerals industry. We’re looking to accelerate the growth of this segment through organic growth in drilling fluids, our joint venture with DHS Oil and the proposed acquisition of Mud-Data.

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Are you comfortable with your current working capital position? Do you envisage working capital constraints as the company continues to expand?

Paul Evans

We’re comfortable with Imdex’s working capital position at 31 December 2010. Revenue and profits are increasing as are cash flows, which is helping our working capital position. We are conscious of the fact that as the business continues to grow there will be a consumption of working capital as we invest in stock points and customers, and are managing the working capital needs of the business accordingly.

Market Briefing │Imdex Limited │25 February 2011

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Imdex declared a dividend of 1.75 cents per share for the first half of 2011. Can you comment on your future dividend policy?

Paul Evans

The Directors were pleased to declare a fully franked interim dividend of 1.75 cents per share, and the Board is committed to the payment of sustainable and growing dividends, while balancing the capital requirements of the company. A larger dividend is not being declared due to the cash investment required for a number of exciting growth opportunities. Our intention is to maintain a dividend payout ratio of between 25 to 30 per cent of earnings per share over the medium term.

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Can you comment on your strategy to gain market share?

Bernie Ridgeway

Our strategy to capture market share globally is three-pronged and includes solids control technology; continued investment in engineering and product development to maintain Imdex’s position as a leader and innovator in quality drilling fluids and advanced down hole instrumentation technology; as well as increased exposure to the oil and gas sector. The results of the past six months reflect the ongoing successful execution of Imdex’s strategy.

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You briefly touched on product development. What is Imdex’s policy towards research and development? What is the planned expenditure for the second half of 2011 and beyond?

Bernie Ridgeway

Our policy is to maintain our market leadership position through R&D. R&D is project-driven and not expressed as a percentage of revenue, therefore it is difficult to forecast planned expenditure. Currently, research costs are largely expensed within our business units, and only where there is material development expenditure do we consider whether to capitalise this expense. For the 2011 financial year, total R&D costs are estimated to be $6 million, with $1 million to $1.5 million expected to be capitalised.

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What is the outlook for the second half of the 2011 financial year? In particular, what is the outlook for the Oil and Gas Division and the Minerals Division, and how will you continue to capitalise on improved industry dynamics?

Bernie Ridgeway

We expect continued growth across our business over the second half of the 2011 financial year. The mining tool rental fleet is at record highs and commodity prices and activity levels in both the minerals and oil and gas sectors are strong. While global economic concerns remain, we are optimistic about the balance of the 2011 financial year.

We expect further organic growth opportunities, the continued smooth integration of our recent acquisitions, and future success with the joint venture, to continue to drive earnings growth. We remain focused on growing shareholder value and are well positioned to generate attractive returns for shareholders.

Market Briefing │Imdex Limited │25 February 2011

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Thank you Bernie and Paul.

For further information, please contact Imdex Limited on +61-8 9445 4010 or visit www.imdexlimited.com

DISCLAIMER : Market Eye Pty Ltd (Market Eye) has taken reasonable care in publishing the information contained in this Market Briefing. The information is provided in summary form, does not purport to be complete, and is not intended to be used as the basis for any investment decision. The reader of this Market Briefing is solely responsible for how they use the information, and Market Eye strongly advises that independent professional advice be sought prior to making any investment decision. Market Eye is not responsible for any consequence as a result of the use of this Market Briefing, including any loss or damage a reader or third party might suffer as a result of that use.

Some of the information contained in this Market Briefing contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Imdex Limited’s (Imdex) current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside the control of Imdex.

Actual results could differ materially from Imdex’s current intentions, plans, expectations, assumptions and beliefs about the future. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks.

Market Briefing │Imdex Limited │25 February 2011

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