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Perenti Global share price on watch after Barrick Gold contract update

The Perenti Global Ltd (ASX: PRN) share price will be on watch on Monday after the release of an update on its Barminco business this morning.

What did Perenti Global announce?

According to the release, its leading hard-rock underground mining business, Barminco, has received a letter of intent from Canadian gold mining giant Barrick Gold for underground contract mining services.

The letter of intent relates to Barrick Gold’s Hemlo Mine, which is located in the Marathon mining district of north western Ontario, Canada.

The proposed three-year mining services contract is estimated to be worth upwards of $200 million to Perenti.

It will see Barminco bring industry-leading technology and productivity to Hemlo in support of Barrick Gold’s goal of modernising and improving the performance of the mine. It hopes this will establish it as a tier two asset within its group.

Barminco will undertake mine development, production, and haulage by utilising mining equipment provided by Barrick Gold. Management anticipates employing more than 300 people at the operation, with works due to commence in April.

Perenti’s managing director, Mark Norwell, believes the contract is another significant step in its international growth strategy to enter attractive and stable mining jurisdictions.

He said: “This is Barminco and Perenti’s first significant contract in North America and builds on our regional growth capabilities, after expanding into Botswana last year with an $800 million contract. We look forward to supporting Barrick to deliver outstanding results at Hemlo.”

Underground Chief Executive Officer, Paul Muller, added: “We are thrilled to be in a position to support Barrick to improve the performance of the Hemlo mine.”

“We intend to work very closely with Barrick and all key stakeholders, including the incumbent workforce at Hemlo, the Pic River and Pic Mobert First Nations people and the Marathon community more generally to deliver a sustainable improvement in performance, thereby assuring the future of Hemlo,” Muller concluded.

The Perenti share price sank to a 52-week low of $1.22 on Friday. Shareholders will no doubt be hoping this news is the catalyst to ending this poor share price performance.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.