The Ausdrill Limited (ASX: ASL) share price has had an impressive start to the week.
At the time of writing the mining services company’s shares are up 8% to $1.70.
Why is the Ausdrill share price storming higher today?
Investors have been fighting to get hold of Ausdrill shares today after it announced the award of a major new contract for its Barminco business.
According to the release, the leading hard-rock underground miner has been awarded a five-year underground mining services contract at the Zone 5 Mine in Botswana from Khoemacau Copper Mining. Management estimates that the contract is worth a total of approximately A$800 million.
Khoemacau’s Zone 5 operation is a new, large, and long-life mine development project located in the highly-prospective Kalahari copper belt in Botswana.
Barminco’s scope of services will include mine development, establishment of underground mine infrastructure, diamond drilling, and mine production at an initial rate of 3.6 million tonnes per annum of copper ore with multiple expansion opportunities.
Subject to closing of the Khoemacau Project funding, which is due shortly, Barminco expects to commence mining services in December 2019.
Ausdrill’s managing director, Mark Norwell, said: “We are very pleased to have been awarded this significant contract in Botswana, a highly desirable country to do business in Africa. This contract award is further endorsement of our acquisition of Barminco and its strong contribution to our international growth strategy.”
Khoemacau’s chief executive officer, Johan Ferreira, spoke positively about Barminco.
He said: “We are delighted to partner with Barminco at Zone 5 to create a safe, largescale, highly productive and fully mechanised mine, delivering high quality employment and sustainable skills development and employment outcomes for Botswana citizens.”
This is the latest in a series of contract wins for the diversified mining services company. Last month it announced that its earthmoving parts and equipment subsidiary, BTP, had been awarded a three-year extension worth A$126 million to its existing contract with Peabody Australia.
And in March its African Mining Services business was awarded a contract extension with Ghana Manganese Company worth A$123 million over two years.
Ausdrill’s strong gain makes it the best performer on the ASX 200 index today ahead of Technology One Limited (ASX: TNE) and Domino’s Pizza Enterprises Ltd (ASX: DMP) which are both up around 3%.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.