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Mining services company, Ausdrill Limited (ASX:ASL) made an announcement on 26 February 2019 stating that its wholly owned subsidiary, African Mining Services (AMS), has been awarded a contract extension with Ghana Manganese Company (GMC).
As per the companyâs announcement, the contract has been extended for a term of two years, extending the existing equipment hire contract with GMC to February 2021. It is expected that the extension of the contract will bring in revenues of around US$88 million (AUD$123 million) over the course of two years.
Under the contract, AMS provides load and haul equipment to Ghana Manganese Company, and all the equipment are fully maintained by AMS only. The contract is an hourly hire service agreement and with minimum hire hours applicable to all major equipment on site.
While commenting on the extension of the contract, Ausdrill Managing Director, Mark Norwell told that the management is very pleased to announce this contract extension, which is a testament to the good working relationship AMS has established with GMC over the years. He further told that the GMC contract extension will continue to meet the companyâs clientâs requirements for on-demand load and haul equipment while also providing the company with committed utilization of its existing fleet.
Recently, Ausdrill Limited reported strong H1 FY 2019 results, following the transformational acquisition of Barminco which made Ausdrill the second largest mining services company in Australia. The company reported Statutory net profit after tax of $217.0 million in 1H FY 2019. In H1 FY 2019, the company maintained its balance sheet strength, with net leverage of 1.4x. At the end of H1 FY19, the company had cash reserves of $198.9 million. During the half year period, the credit ratings of the company upgraded to BB by S&P and Ba2 by Moodyâs.
While commenting on the outlook of the company, Mr. Norwell told that the management expects to see continued strength in the companyâs core markets, particularly underground. He further informed that the Company is on track to deliver its FY19 guidance of $98 million underlying net profit after tax.
The Board has declared a fully franked interim dividend of 3.5 cents per share for H1 FY19 with payment date of 27 March 2019 and record date of 13 March 2019.
On the price-performance front, the stock of Ausdrill Limited is trading at $1.687 and with a market capitalization of $1.16 billion as on 26 February 2019 (AEST 1:29 PM). The stock has generated a YTD return of 49.56% and posted a return of -2.64% over the last six months. It has a 52-week high price of $2.872 and a 52-week low price of $1.042 with an average trading volume of 4,515,171. It is trading at PE multiple of 3.150x with an EPS of AUD 0.482 and with an annual dividend yield of 2.96%.
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