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.
The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.