SRG Global’s Geotech Business Secures $18-MN Contract With KCGM Joint Venture

SRG Global’s Geotech Business Secures $18-MN Contract With KCGM Joint Venture

SRG Global Limited (ASX: SRG), headquartered in Subiaco, Australia, provides engineering-led construction, maintenance and mining services through the entire lifecycle of an asset primarily in Australia. In March 2018, SRG Limited acquired the Auckland, New Zealand -based TBS Group, an asset and infrastructure maintenance contractor, following which SRG and Global Construction Services Ltd merged to form SRG Global in September 2018.

On April 9th, 2019, the company informed the market that its Geotech business had been awarded an ~ $ 18-million contract for ground support works with Kalgoorlie Consolidated Gold Mines (KCGM), a joint venture owned by Newmont Australia and Barrick Gold Corporation in Western Australia. SGM has performed a range of services at the mine since 1997 and has developed a highly specialised plant to meet the demands of the unique Super Pit environment. The contract covers both in phase ground support, rock fall mitigation and rock face remediation.

In the same month, the company signed an initial three-year term contract with gold company Evolution Mining Ltd (ASX: EVN) to extend the terms of its drill and blast operations at the Cowal, Mt Rawdon and Mt Carlton operations for a further two years. The works under this umbrella agreement are expected to generate revenues of around $ 115 million over the five-year term (if the two-year option is exercised) and will require minimum growth capital due to SRG Global’s existing fleet.

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Evolution Mining is one of the leading gold producers in Australia with five wholly-owned gold mines located in Queensland, New South Wales and Western Australia and also an economic interest in the Ernest Henry copper-gold mine in Queensland.

The company’s Director, Mr David Macgeorge, recently presented at the Euroz Conference on Rottnest Island. The presentation covered their global business model, a corporate snapshot financial review for the first half of 2019 along with an outlook for the future.

SRG Global reported an impressive financial performance for the half-year ended December 31st, 2018. The revenue from ordinary activities recorded a 122% increase from $ 104.94 million in the previous corresponding period (PCP) ended December 31st, 2017, to $ 232.57 million. The profit from ordinary activities also rose to $ 6.79 million by 183% from $ 2.404 million in PCP.

As per the segment-wise results, the revenue from Construction amounted to $ 128.939 million while Asset Services and Mining Services generated revenues of $ 60.047 million and $ 43.582 million respectively, all reporting stellar improvements over PCP. The net cash and cash equivalents at the end of the period stood at $ 53.39 million.

SRG Global has a current market valuation of $ 158.55 million with ~ 440.42 million outstanding shares. Recently the company’s Director, Mr Peter McMorrow acquired 100,000 new fully paid ordinary shares of the company. Besides, the Commonwealth Bank of Australia and IOOF Holdings Limited also increased their shareholding to 6.72% (from 5.74%) and 14.86% (from 11.370%) respectively.

On April 9th, 2019, the SRG stock price settled the session at AUD 0.360 with ~ 1.18 million shares traded through the day.

Going forward, SRG Global has a pipeline of $ 4.5 billion in positive growth sectors with $ 520 million of work in hand. The Underlying FY19 Guidance range for EBIT is $ 22 million to $27 million and for EBITDA is $ 32 million to $ 37 million.


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