IMDEX LIMITED - M&A Activity 2011

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25 July 2011

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Company Announcements O f fice ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2001

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Dear Sir/Madam

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Imdex to strengthen its position in Latin America via the proposed acquisition of System Mud, Brazil

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Attached is an announce m ent in relation to the above mentioned subj e ct for release to the market.

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Yours faithfully Imdex Limited

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Paul Evans Company Secretary

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25 July, 2011

ASX and Media Announcement

Imdex to strengthen its position in Latin America via the proposed acquisition of System Mud, Brazil

Imdex Limited (Imdex) is pleased to announce that it has executed a conditional Heads of Agreement to acquire System Mud Industria e Comercio Ltda (System Mud).

Imdex Managing Director, Bernie Ridgeway, said the acquisition would strengthen the Company’s position in Latin America in relation to the manufacture and sale of drilling fluids and chemicals.

Acquisition highlights

The proposed acquisition:

Is consistent with Imdex’s focused strategy to grow the Company’s core operations in key markets;
Strengthens Imdex’s market position in Latin America – System Mud is the leading independent drilling fluids and chemicals supplier in Brazil;
Is complementary to Imdex’s Drilling Fluids and Chemicals Division;
Has significant potential to expand the business given its complementary nature to Imdex’s current operations; and
Will be immediately EPS accretive.

Bolt on acquisitions that delivers on Imdex’s focused growth strategy

System Mud is a bolt on acquisition consistent with Imdex’s focused strategy to grow the Company’s global presence in its core operations.

System Mud was established in 1999 and is based in Itajai, Santa Catarina, Brazil. System Mud is ISO 9001 accredited, manufactures its own products and has become the leading independent drilling fluids supplier to the minerals business in Brazil.

System Mud is focused on manufacturing and marketing drilling fluid systems primarily for the mining and exploration market in Brazil.

Commenting on the strategic fit and alignment of the two businesses, Imdex Managing Director, Mr Bernie Ridgeway said:

“System Mud is a natural fit for Imdex given the strong alignment of the company’s products and markets. It’s a strong business that will enhance further expansion of Imdex’s Drilling Fluids and Chemicals Division.

“In addition, System Mud’s Brazilian focus is complementary to Imdex’s existing geographic footprint. The business will sit well within our existing Latin America regional operation that has been growing strongly given the substantial growth of the minerals industry in that region.

“The acquisition of System Mud further supports Imdex’s aim of becoming a significant drilling fluids and chemicals supplier to the mining and water well industries globally.”

Acquisition overview

Under the conditional Heads of Agreement, Imdex will pay approximately $9.0 million for System Mud as follows:

$4.0 million in cash at settlement;
$3.84 million by the issue of 1.6 million Imdex shares at an issue price of $2.40 per share, to be escrowed for 12 months; and
$1.155 million by the issue of 330,000 Imdex shares at an issue price of $3.50 per share. If the share price on the two year anniversary date is below $3.50, there is a cash top up of the difference. However, in the event that the Imdex share price reaches $3.50 at any time within the two year period, the potential cash top up falls away.

The proposed acquisition is expected to be effective from 1 August, 2011 and will be wholly funded from Imdex’s cash resources and banking facilities.

Earnings accretive

System Mud’s forecast revenue for CY11 is $7.5 million at a projected EBIT of approximately $1.4 million. With additional growth available in the Brazilian market via Imdex’s global customers as well as normal industry growth, System Mud’s revenue under Imdex’s ownership is expected to grow further in the ensuing years.

The transaction is expected to be immediately earnings per share accretive in FY12 with significant opportunity to grow System Mud’s revenue and earnings in the future.

About Imdex

Imdex is a Perth based public company listed on the Australian Securities Exchange (ASX: IMD), whose core business is the supply of drilling fluids and chemicals and down hole instrumentation in Australia and internationally to the oil & gas, mining, water well, horizontal directional drilling and civil industries.

For further information, please contact: Bernie Ridgeway , Managing Director; Paul Evans , Chief Financial Officer and Company Secretary Tel 08 9445 4010

AI assistant

IMDEX LIMITED M&A Activity 2011

65119_rns_2011-07-24_a0ecbea2-381e-41fb-bf5c-f0148b2c8dfd.pdf

Imdex to strengthen its position in Latin America via the proposed acquisition of System Mud, Brazil

ASX and Media Announcement

Imdex to strengthen its position in Latin America via the proposed acquisition of System Mud, Brazil

Acquisition highlights

Bolt on acquisitions that delivers on Imdex’s focused growth strategy

Acquisition overview

Earnings accretive

About Imdex

AI assistant

IMDEX LIMITED — M&A Activity 2011

65119_rns_2011-07-24_a0ecbea2-381e-41fb-bf5c-f0148b2c8dfd.pdf

Imdex to strengthen its position in Latin America via the proposed acquisition of System Mud, Brazil

ASX and Media Announcement

Imdex to strengthen its position in Latin America via the proposed acquisition of System Mud, Brazil

Acquisition highlights

Bolt on acquisitions that delivers on Imdex’s focused growth strategy

Acquisition overview

Earnings accretive

About Imdex

More from IMDEX LIMITED

IMDEX LIMITED M&A Activity 2011