Ausdrill is set to acquire underground hard rock contractor and African joint venture partner, Barminco, in a deal worth $271.5 million.
Andrew Broad, Ausdrill’s chief operating officer, told Australian Mining at the Diggers & Dealers Mining Forum in Kalgoorlie-Boulder last week that the mining services company had its sights on growth.
The proposed acquisition of the unlisted Barminco, which has agreed to the deal, is a major step in this direction.
It will create Australia’s second largest mining services company.
Both Ausdrill and Barminco have a strong contracting presence in Australia and internationally.
The companies are JV partners of African Underground Mining Services (AUMS), a company with gold contracts in Ghana, Burkina Faso and Tanzania.
They also have a shared history in terms of roots in the Goldfields of Western Australia.
Ausdrill chairman Ian Cochrane said Barminco’s strength in underground mining would enable the company to diversify and broaden its service offering, as well as being a financially compelling acquisition.
“The combination of surface and underground technical expertise will deliver a mining services business that provides a broad range of services required by our customers, while transforming the Ausdrill Group,” Cochrane said.
“Ausdrill and Barminco have worked together successfully for many years through their joint venture in Africa, AUMS, which provides a comprehensive range of underground mining and mine management services from consulting and feasibility management through to mine development and production.”
Ausdrill expects to complete the acquisition on October 31. It will acquire all of Barminco’s equity and equity-like instruments, and assume the takeover target’s debt in exchange for 150.7 million shares and $25.4 million in cash.
Ausdrill will also launch a $250 million equity raising to repay debt it has due in November 2019.
Barminco chief executive officer Paul Muller said the two companies 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,” Muller said.
The proposed deal gives Barminco an enterprise value of $697 million. Once completed, Barminco’s vendors will own about 22.1 per cent of the enlarged Ausdrill.
Barminco non-executive chairman and director Keith Gordon will also join the Ausdrill board following completion.