The Perenti Global Ltd (ASX: PRN) share price is sliding today, down almost 1%.
This comes after the ASX mining services company reported on a new contract for its subsidiary.
What new contract did Perenti report?
Perenti Global shares are slipping despite the company reporting a significant contract extension for its African mining subsidiary, African Underground Mining Services (AUMS).
The 2-year contract extension, effective immediately, will see AUMS continue with its operations at AngloGold Ashanti's Geita Mine in Tanzania. Perenti reported the new contract will increase its current work in hand by roughly $235 million.
Geita Mine transitioned from an open-pit mine to an underground project in 2016. AUMS has provided its underground mining services since the transition.
Commenting on the renewed contract, Mark Norwell, CEO of Perenti said:
[T]his contract extension includes the addition of Geita Hill, a new underground development within the Geita Complex, which will see a steady increase in our scope of works and revenue run rate as the development ramps up from a single heading decline into multiple work areas and then into production later in 2021.
This contract extension is expected to generate an improved earnings contribution for Perenti over the contract term. Winning new contracts and extending existing contracts is one of our key strategic priorities and we continue to make great progress on the execution and delivery of our 2025 strategy.
The contract will see Perenti transfer 20% of equity in AUMS Tanzania to BG Umoja Services Limited. The newly created mining support services company is an 80:20 JV between Perenti and local company Geofields Tanzania Limited.
Perenti share price snapshot
Over the past full year the Perenti share price is up 22%. That trails the 30% gains posted by the All Ordinaries Index (ASX: XAO) over that same period.
Perenti shares fell hard in February, with the selling likely triggered by a disappointing half year earnings report, which saw the company post a net loss after tax of $63.8 million. So far in 2021, the Perenti share price is down 21%.
