Australia is home to some of the largest mineral deposits in the globe, which include approximately 22 billion tonnes of iron ore and 3.5K tonnes of gold. Majority of the mining companies in the country are engaged in exploration activities of commodities such as gold, lithium, manganese and cobalt. The sector comprises several largest companies such as Rio Tinto Limited and BHP Group Limited.
Moreover, on the Australian Securities Exchange, the metals & mining sector accounts for the largest number of companies, which are involved in activities across 100 countries. In the recent past, mining companies delivered fantastic returns to investors, owing to which, the metals & mining segment secured significant interest from investors over the last one-year period.
Let’s have a look at Perenti Global Limited, part of the metals & mining sector, which delivered an excellent return of 81.42 per cent on a year to date basis and a 42.86 per cent in the last six months, as on 11 November 2019.
About Perenti Global Limited (ASX: PRN)
Perenti Global Limited, headquartered in Canning Vale, Western Australia, is engaged in diversified mining operations. The company, which was established in 1987, was officially listed on the Australian Securities Exchange in the year 1994. PRN is engaged in activities including exploration and production drilling, blasting, mine development, production and reclamation, and underground mining. Perenti Global employs a staff of more than 8,000 people and has operations and offices across 13 countries. The company recently changed its name from Ausdrill Group to Perenti Global Limited.
Update on Burkina Faso Security Incident
On 11 November 2019, the company gave a further update on activities in the aftermath of the security incident at the mine site in Burkina Faso. The number of fatalities remains unchanged at 19 with 26 staff injured. The company is ensuring to provide the best possible care to all the injured people with counselling services established for families and employees.
Moreover, the company reported regarding the ongoing evacuation process for all the employees still at the mine location. Meanwhile, the company’s operations remain suspended at the mine location.
The 6 November 2019 security incident approximately 40 kilometres from Semafo’s Boungou mine site in Burkina Faso, involving members of the company’s workforce from African Mining Services (AMS) was reported by PRN on 7 November 2019. A convoy of five buses, with local staff of the African Mining Services and employees and other suppliers of Semafo, came under the attack. The buses were escorted by military police.
On 23 October 2019, the partnership between the company and Hockeyroos was further boosted, as the two parties renewed a contract for a two-year period. The partnership comprises a range of other benefits, apart from valuable funding. Ausdrill provides career enhancement, employment opportunities and educational programs to help Hockeyroos players during and post-playing the game.
Underlying EBIT Up 15.4 Per Cent during FY2019
On 28 August 2019, the company released full-year results for the FY2019 period ended 30 June 2019.
- Proforma revenue of the company increased by 14.2 per cent to $1,970 million compared to the corresponding period year (PCP);
- Underlying EBIT (Proforma) went up by 15.4 per cent to $217.0 million;
- Underlying net profit after tax stood at $103.1 million, up on guidance of $98.0 million;
- Statutory net profit after tax reached $181.3 million;
- Strong cash conversion with EBITDA cash conversion of 89 per cent;
- Net leverage of the company stood at 1.3x and gearing of 27.4 per cent;
- The company declared a fully franked final dividend of 3.5 cents, bringing the full-year dividend to 7.0 cents per share;
- The company made a successful acquisition and integration of leading mining contractor, Barminco;
- Perenti implemented the 2025 Group Strategy with three main service offerings - Investments, Surface mining and Underground Mining.
- PRN entered FY20 with $7.0 billion in order book;
- The company is targeting FY20 NPATA (underlying) of around $140 million, assuming positive markets and favourable global and regional conditions;
- The company is also expecting capital expenditure to increase to around $295 million in FY20 to support the business growth and delivery of recent awarded contracts.
- PRN is also targeting a pipeline of $8.5 billion of potential work across more than 40 projects.
The company’s Managing Director, Mark Norwell, commented:
Barminco Secures Five-Year Service Contract
The company’s subsidiary, Barminco, which is a hard-rock underground miner, won a five-year underground mining services contract. Khoemacau Copper Mining (Pty) Limited awarded the contract, which is for the Zone 5 Mine in Botswana, targeted towards developing a new, safe, large-scale and long-life mine development project.
Under the contract worth approximately $800 million, Barminco would be engaged in several activities.
- Development of the mine;
- Establishment of the mine infrastructure;
- Diamond drilling;
- Mine production with 3.6 million tpa of copper ore (initial rate);
- Several expansion opportunities.
As part of the deal, Barminco is set to start mining services in the last month of the calendar year 2019.
The stock of PRN settled at $1.980 on ASX on 11 November 2019, down 3.415 per cent from its previous close. The company has approximately 686.32 million outstanding shares and a market cap of $1.41 billion. The stock’s 52 weeks low and high value is $1.042 and $2.400, respectively. The stock has generated a positive return of 11.72 per cent and 42.86 per cent in the last three months and six months, respectively.
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