How De.mem’s $3M Core Chemicals Buy Unlocks Gold Mining Growth
De.mem Limited has acquired Core Chemicals Ltd for approximately $3 million, significantly expanding its footprint in the Australian gold mining sector and enhancing its pro-forma EBITDA to $1.6 million.
- Acquisition of Core Chemicals Ltd for ~$3 million
- Core Chemicals generated $4 million revenue and $730k pre-tax profit FY25
- Pro-forma adjusted EBITDA for combined group reaches $1.6 million
- Cross-selling and geographic expansion opportunities across Australian gold mines
- Oversubscribed $3 million placement at 10.5 cents per share to fund acquisition
Strategic Acquisition in a Surging Sector
De.mem Limited (ASX – DEM), a specialist in decentralised water and wastewater treatment, has taken a decisive step to deepen its exposure to the booming gold mining sector through the acquisition of Core Chemicals Ltd. This Western Australia-based specialty chemicals supplier services gold mining operations, helping clients maximise gold recovery and manage mining wastewater challenges.
The acquisition, valued at approximately $3 million, brings Core Chemicals’ $4 million in annual revenue and $730,000 pre-tax profit into De.mem’s fold. This deal is more than just a financial transaction; it strategically positions De.mem to capitalise on the sustained strength in gold prices and the sector’s growth trajectory.
Financial and Operational Synergies
On a pro-forma basis, the combined adjusted EBITDA for De.mem and Core Chemicals is estimated at $1.6 million for the 12 months ending June 2025, nearly doubling De.mem’s standalone EBITDA. The integration is expected to yield cost synergies of around $100,000 annually through consolidation of operations and overheads in Perth.
Moreover, the acquisition opens significant cross-selling opportunities. De.mem’s existing mining clients will gain access to Core Chemicals’ specialty products, while Core Chemicals’ customers will benefit from De.mem’s advanced membrane-based water treatment technologies. This complementary product and service offering enhances the group’s value proposition to the gold mining industry.
Expanding Reach Across Australia and Beyond
Core Chemicals currently operates primarily in Western Australia but has clients in Tasmania, Queensland, and Papua New Guinea. The acquisition provides De.mem with a platform to expand geographically into Eastern Australia and the broader Pacific region, where gold mining activity is robust but currently underserved by either company.
With approximately 142 gold mines in Australia alone, many of which are not yet serviced by De.mem or Core Chemicals, the combined entity has a substantial runway for growth. The average revenue per mine currently stands at around $222,000, highlighting the potential scale of opportunity.
Capital Raising and Leadership Confidence
To fund the acquisition, De.mem completed an oversubscribed $3 million placement at 10.5 cents per share, a premium to the recent trading price, signaling strong investor confidence. The company’s chairman and senior management also participated in the placement, underscoring their commitment to the growth strategy.
Core Chemicals’ founder and operations manager, Kit Chia, will remain with De.mem to support integration and growth initiatives, ensuring continuity and leveraging his expertise in the gold mining chemicals sector.
Riding the Wave of a Bullish Gold Market
The timing of this acquisition aligns with a bullish outlook for gold prices, which recently surpassed US$4,000 per ounce for the first time in history. Analysts, including Goldman Sachs, forecast further gains, potentially reaching US$4,900 per ounce by the end of 2026. This strong gold price environment enhances the revenue potential for De.mem-Core Chemicals, as mining companies increase spending on recovery and processing chemicals.
De.mem’s CEO Andreas Kroell highlighted the strategic fit, emphasizing the creation of a comprehensive one-stop shop for water treatment and specialty chemicals tailored to the gold mining sector. This acquisition not only diversifies De.mem’s revenue base but also leverages sector tailwinds with limited downside risk.
Bottom Line?
De.mem’s acquisition of Core Chemicals marks a pivotal expansion into gold mining, setting the stage for accelerated growth amid a surging gold price environment.
Questions in the middle?
- How quickly will De.mem realise the projected cost synergies and cross-selling benefits?
- What is the potential impact of gold price volatility on the combined entity’s revenue streams?
- Will De.mem pursue further acquisitions to consolidate its position in the mining chemicals sector?
