Reporting Season: Primero secures contracts with Rio Tinto
Name: Primero Group
Market Cap: $64.1 million
Last Closing Share Price: 44.5 cents
Engineering design, construction and operational services to the minerals, energy and infrastructure group Primero Group (ASX:PGX) has secured important new contracts with long-standing client, Rio Tinto (ASX:RIO).
Primero provides these services to a diverse client base, ranging from mid-sized companies through to international mining and energy houses.
The Rio contracts include the award of two new design and construct projects for infrastructure works at Brockman 2 and Brockman four projects in the Pilbara region of Western Australia, which are expected to complete in 2019.
The company’s energy business has also secured an award for works on Varanus Island, for the design and refurbishment of Quadrant Energy’s condensate storage tanks.
Work is expected to commence immediately and is scheduled to complete in December 2018.
Primero has previously been engaged for ongoing tank modifications and this new award continues to develop the relationship with Quadrant Energy.
Multiple client awards in mineral processing
Promising news also comes from the company’s minerals processing segment with the division securing new contract awards and renewals with several clients including, Galaxy Resources, Tawana Resources, Savannah Resources, Piedmont Lithium and Sigma Lithium.
The contracts cover projects at various stages of the development cycle across a number of jurisdictions.
The range of projects and operations across the development cycle is consistent with Primero’s strategy to add significant value to clients through the study/design phase, construction and ultimately in an operating environment.
$95 million in contracted revenue in fiscal 2019
In total, the new awards and renewals bring Primero's current order book to over $120 million of work in hand, with $95 million in contracted revenue expected to be derived in the 2019 financial year.
What this revenue figure amounts to is yet to be determined so seek professional financial advice and consider all facts before making an investment decision.
Managing Director Cameron Henry commented, “We are pleased to build on our relationship with our core long term clients and welcome new clients to Primero.
“It is very encouraging to have secured a strong order book at this early stage of FY19 which has Primero well positioned to deliver into FY19 market guidance, which is a core value of our growing business.”
Management is forecasting that the company will generate a pro forma net profit after tax of $4.7 million in fiscal 2018.
The contract with Rio, along with others that were announced on Friday, triggered a 7.2 per cent share price increase on the day.
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