De.mem’s Gold Mining Bet: Can Integration Risks Undermine Growth?

Strategic Acquisition in a Booming Sector

De.mem Limited (ASX – DEM), a specialist in decentralised water and wastewater treatment solutions, has completed the acquisition of Core Chemicals Pty Ltd, a Western Australia-based supplier of specialty chemicals to the gold mining industry. The $3 million deal marks a significant step for De.mem, enhancing its footprint in the lucrative and rapidly expanding gold mining sector.

Core Chemicals, established in 2022, services gold mining clients by providing specialty chemicals that aid in the extraction and recovery of fine gold particles from mining waste streams. This acquisition not only broadens De.mem’s product and service offerings but also opens up substantial cross-selling opportunities between the two companies’ client bases.

Financial Upside and Operational Synergies

On a pro-forma basis, the combined entity reported an adjusted EBITDA of approximately $1.6 million for the 12 months ending June 30, 2025. This represents a meaningful uplift compared to De.mem’s standalone performance, accelerating its EBITDA growth trajectory. The acquisition is also expected to deliver cost synergies of around $100,000 annually through consolidation of head office and warehousing operations in Perth.

De.mem’s strong financial position is underscored by a pro-forma cash balance of about $3.7 million as of September 30, 2025, providing a solid foundation for integration and future growth initiatives. The transaction structure includes a mix of cash and shares, with earn-out components tied to Core Chemicals’ future profitability, aligning incentives for sustained performance.

Leveraging a Bullish Gold Market

The acquisition strategically positions De.mem to capitalise on the surging gold price, which recently surpassed US$4,000 per ounce for the first time in history. Industry forecasts, including those from Goldman Sachs, predict further upside, with prices potentially reaching US$4,900 to US$5,000 per ounce by late 2026. This bullish outlook bodes well for Core Chemicals’ specialty products, which are integral to gold recovery processes.

With approximately 175 gold mines serviced between De.mem and Core Chemicals, and a total of 142 mines in Western Australia alone, the combined group has significant room to expand its market penetration. The acquisition also offers geographic expansion potential into Eastern Australia and the broader Pacific region, where Core Chemicals currently has limited presence.

Management Continuity and Integration

Core Chemicals’ management team, including operations manager Kit Chia, will remain with De.mem to ensure a smooth integration and to leverage their sector expertise. The co-vendors will also provide consultancy support during the transition period, underscoring De.mem’s commitment to maintaining operational continuity and client relationships.

Overall, this acquisition represents a well-timed strategic move by De.mem to deepen its exposure to a high-growth sector while enhancing its financial profile and operational capabilities.