The Cimic (ASX:CIM) share price is down 2% lower today. Here’s why

The Cimic Group Ltd (ASX: CIM) share price has fallen almost 2% lower today despite positive news of a contract extension.

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The Cimic Group Ltd (ASX: CIM) share price is treading lower today despite the company announcing another positive release to the market. Just yesterday, the group advised its affiliate, Ventia, won two significant contracts. Today, its minerals processing company, Sedgman was granted an extended contract award.

However, the upbeat news is still not enough to lift the Cimic share price today, which is 2.04% down to $24.96 at the time of writing.

What did Cimic announce?

In early afternoon trade, Cimic advised the market that Sedgman has secured an extended contract with Mach Energy. The agreement will see the latter perform operations and maintenances services at the Mount Pleasant mine in New South Wales.

Mach Energy provides energy management solutions for commercial real estate property managers, operators, engineers, and owners. The company looks after some of Australia’s most iconic buildings, with properties across the country.

Terms of the deal

Sedgman will operate and maintain Mach Energy’s Mount Pleasant coal handing and preparation facilities for an additional 3-year period. The company completed construction of the facility in 2019 and has been operating ever since

The contract extension is estimated to generate revenue of around $120 million to Sedgman based on work volumes. This will bring the total revenue from the entire contract to $200 million.

Management commentary

Commenting on the alliance, Cimic group executive chair and CEO Juan Santamaria said:

Sedgman and the CIMIC Group have a strong history with MACH Energy which we’re pleased to continue. Sedgman’s leadership in minerals processing will ensure maximum resource recovery for our long-term client.

Sedgman managing director Grant Fraser said the contract was testament to the partnership forged with MACH Energy, and the integration of its engineering and operations capability.

How has the Cimic share price performed in 2020?

The Cimic share price has lost more than 24% of its value since the start of 2020. Although COVID-19 played a part in the overall downturn across Cimic’s industries, its share has yet to fully recover.

The Cimic share price reached a 52-week high of $35.75 in January before falling to a 52-week low of $11.87 in the months after.

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