The Con­trac­tors

“We have de­liv­ered oper­a­tionally in FY18 and the Barminco trans­ac­tion would broaden our strate­gic foot­print to be Aus­tralia’s clear #2 min­ing ser­vices com­pany.”

The Australian Mining Review - - CONTENTS - REUBEN ADAMS NA­TIONAL

AUS­DRILL’s “com­pelling” $271.5 mil­lion ac­qui­si­tion of un­der­ground min­ing con­trac­tor Barminco would cre­ate Aus­tralia’s sec­ond largest min­ing ser­vices com­pany.

Aus­drill will ac­quire Barminco – its cur­rent part­ner in the lu­cra­tive African Un­der­ground Min­ing Ser­vice (AUMS) joint ven­ture – in ex­change for 150.7 mil­lion Aus­drill shares and $25.4m in cash; equiv­a­lent to an eq­uity ac­qui­si­tion price of $271.5m.

Once the trans­ac­tion is com­pleted, Barminco ven­dors will own about 22.1 per cent of the en­larged Aus­drill, with ex­pe­ri­enced com­pany di­rec­tor and cur­rent Barminco non-ex­ec­u­tive chair­man Keith Gor­don join­ing the Aus­drill board.

The ac­qui­si­tion an­nounce­ment ac­com­pa­nied a set of out­stand­ing full year re­sults from di­ver­si­fied min­ing ser­vices com­pany Aus­drill, in­clud­ing a year-on-year net profit in­crease of 95.7 per cent to $61.1 mil­lion.

This strong re­sult was un­der­pinned by re­peat min­ing clients and new con­tracts, with more than $500m in con­tract ex­ten­sions and new work se­cured over the past year.

“We have de­liv­ered oper­a­tionally in FY18 and the Barminco trans­ac­tion would broaden our strate­gic foot­print to be Aus­tralia’s clear #2 min­ing ser­vices com­pany and set in place a bal­ance sheet with the ca­pac­ity to achieve sus­tain­able and prof­itable growth,” Aus­drill ex­ec­u­tive chair­man Ian Cochrane said.

Based on the level of work cur­rently in hand and ex­pected con­tract re­newals, Aus­drill was tar­get­ing 20 per cent to 30 per cent un­der­ly­ing profit growth for FY19, be­fore taking into ac­count the pro­posed ac­qui­si­tion.

The new-look, post-ac­qui­si­tion Aus­drill was ex­pect­ing es­ti­mated an­nual rev­enue of $1.8 bil­lion across a more di­verse range of cus­tomers and ge­ogra­phies.

Barminco chief ex­ec­u­tive Paul Muller said Barminco and Aus­drill were a great fit, with the busi­nesses pro­vid­ing com­ple­men­tary ser­vices and hav­ing worked to­gether for a decade through the AUMS joint ven­ture.

“By bring­ing these two busi­nesses to­gether and cre­at­ing Aus­tralia’s sec­ond largest min­ing ser­vices com­pany, we will be able to pro­vide a broader range of ser­vices for our cus­tomers and gen­er­ate ad­di­tional op­por­tu­ni­ties for our em­ploy­ees,” he said.

“Barminco had a strong 2018 fi­nan­cial year and our fo­cus is to con­tinue safely de­liv­er­ing re­sults for our cus­tomers.”

For the year ended 30 June Barminco re­ported a $50.665m profit; a huge turn­around from a $93.771m loss the year prior.

The trans­ac­tion is sub­ject to sev­eral con­di­tions prece­dent, in­clud­ing Aus­drill share­holder ap­proval.

Com­ple­tion is an­tic­i­pated for 31 Oc­to­ber 2018, but this date is sub­ject to change.

Im­age: Barminco.

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