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SRG Global Grabs An Umbrella Agreement With Evolution Mining For $115 Million

  • April 05, 2019 09:51 PM AEDT
  • Team Kalkine
SRG Global Grabs An Umbrella Agreement With Evolution Mining For $115 Million

On 5 April 2019, SRG Global (ASX: SRG) announced that it had secured an Umbrella Agreement with Evolution Mining Ltd (ASX: EVN) for extending the terms of its drill as well as blast operations at the Cowal, Mt Rawdon and Mt Carlton operations. The duration of the contract is three years with an option to extend for a further two years.

Gold MTF non-AMP

Evolution Mining Ltd is an ASX listed gold producer, and it ranks second in Australia. The company is the 100% owner of five gold mines in Queensland, New South Wales and Western Australia. It also has an economic interest in the Ernest Henry copper gold mine situated in Queensland.

The works included as per the agreement are expected to generate revenues of approximately $115 million over a period of five years. During the period of the contract, the required assets will be utilized from the existing fleet of the company and will require minimal growth capital.

David Macgeorge, the Managing Director of SRG Global considered this agreement as a significant achievement of the company and also the mining services team. This agreement will strengthen the strong working relationship between SRG Global and Evolution. It also emphasizes the confidence which the tier one mining companies have on the ability of the company as a leading drill and blast contractor.

On 26 February 2019, the company declared its half yearly results for the period ended 31 December 2018.

In September 2018, SRG Global Limited got established with the completion of the merger of equals between SRG Limited and Global Construction Services Limited.

During the period, there was an increase in the revenue by 122% to $232.568 million. SRG made a net profit after tax of $6.793 million, up by 183% as compared to the previous corresponding period. SRG declared an interim dividend of 1 cent per share. The balance sheet for the period reported an increase in the net asset base as a result of growth in the total assets. The period also reported a rise in the reserves of the company. By the end of the 1H FY2019, the net cash and cash equivalent increased by $23.812 million. The net cash and cash equivalent at the end of 1H FY2019 were $53.398 million.

In the Euroz Conference presentation, the company apart from the financial highlights provided its outlook where it highlighted that the company has work in hand of worth $520 million. It has a strong pipeline of $4.5 billion in positive growth sectors. As per the FY2019 guidance range (12 months SRG and ten months GCS), the EBIT will be in the range of $22 million to $27 million, and EBITDA in the range of $32 million to $37 million. In the second half of FY2019, the company will try to secure targeted large construction projects. It will also continue to position the business to the recurring revenue stream and drive the business towards profit growth in FY2019.

In the last six months, the stock has generated a negative return of 57.05%. However, in the past five days, the stock has given a positive return of 4.92%.

By the end of the trading duration on 5 April 2019, the closing price of the stock was A$0.355, up by 10.938% as compared to its previous closing price. SRG Global Limited has a market capitalization of A$ 140.93 million with approximately 440.42 million outstanding shares and a PE ratio of 6.1x.


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