Ausdrill riding high on Barminco acquisition as expansion push continues

Ausdrill has reaped the benefits of last year’s Barminco acquisition with a number of new contracts and improved financial performance.

The mining services company has secured more than $2 billion in new contracts and contract extensions since July last year.

Ausdrill became Australia’s second largest mining services company after it purchased Barminco in a $271 million deal in October 2018.

The acquisition was a primary factor in Ausdrill’s 42 per cent employee count increase in the last six months from 5278 people to 7502 people.

Since the acquisition, Barminco has won several high-profile contracts including underground mining services contracts with Regis Resources in Western Australia and Hindustan Zinc in India worth a collective $213 million ($113 million for the former and $100 million for the latter).

Barminco is also a 50:50 joint venture (JV) partner with African Underground Mining Services (AUMS) at AngloGold Ashanti’s Obuasi project in Ghana.

Ausdrill also included proforma results showing the estimated impact of Barminco had the company purchased it at the start of the half year period. This would have resulting in proforma revenue of $971.7 million and net profit after tax of $55.2 million, a  speculative increase of 51.7 per cent and 38.6 per cent on the current underlying figures respectively.

The company is now on track to meet its guidance for the 2019 financial year, according to Ausdrill managing director Mark Norwell, who said that the group would continue to divest businesses that don’t fit with the company’s strategy while expanding into new markets.

Ausdrill announced that it would continue to grow its underground prospects in Australia and Africa, as well as its surface mining operations in Africa, as the resources sector continues to improve its outlook in these core hubs.

“Ausdrill has done a great job in growing into a multi-national mining services company but with the acquisition of Barminco and a refreshed structure, we have the opportunity to ensure the new Ausdrill has the best standards, a leading safety culture, and a constant focus on efficiencies to deliver for our customers, shareholders, communities and our 7500 committed employees,” Norwell said.

The Barminco acquisition is also expected to deliver $11 million a year in synergies from the 2020 financial year.

In its half-year results, the company posted underlying revenue of $640.2 million and net profit after tax of $39.8 million. These results included the contribution of two operational months of the Barminco acquisition.

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