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Diversified mining services company Ausdrill has entered into a binding agreement to acquire one of Australia’s most well recognised underground hard rock mining contractors.

The acquisition of Barminco will create Australia’s second largest mining services company, transforming the Ausdrill Group.

The comany will acquire all of the equity and equity-like instruments in Barminco in exchange for 150.7 million fully paid ordinary ex-dividend Ausdrill shares and $25.4 million in cash. This is equivalent to an equity acquisition price of $271.5 million and an enterprise value of $697.0 million.

At completion of the transaction, Barminco vendors will own approximately 22.1% of the enlarged Ausdrill, held by a range of entities.

Says Executive Chairman, Ian Cochrane:

“Given Barminco’s strength in underground mining, the acquisition will enable Ausdrill 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.

“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.

“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,” adds Barminco CEO Paul Muller.

The transaction is subject to several conditions precedent, including Ausdrill shareholder approval (given the number of shares to be issued to Barminco vendors, and former MD Ron Sayers’ 15% indirect shareholding in Barminco), no material adverse change to Barminco or Ausdrill, a favourable independent expert’s report, continuation of material contracts and required change of control consents.

Ausdrill shareholders will have the opportunity to vote on the proposed acquisition at Ausdrill’s AGM which is currently scheduled for 25 October 2018.