The Perenti (ASX:PRN) share price is dropping 4% today. Here’s why

The Perenti Global Ltd (ASX: PRN) share price is down more than 4% following an underground incident. Here is what the company announced.

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The Perenti Global Ltd (ASX: PRN) share price is in the red during late afternoon trade. This follows the diversified mining company’s announcement that an underground incident has occurred at Obuasi mine in Ghana.

At the time of writing, Perenti shares are shedding 4.29% to 67 cents. It’s worth noting though that before the update, the company’s share price was flat at 70 cents.

Let’s take a close look and see what Perenti updated the ASX with.

Search effort underway

Investors are selling off Perenti shares in light of the company’s latest news.

In its announcement, Perenti advised that a mining employee from the Underground Mining Alliance (UMA) has disappeared at AngloGold Ashanti CDI’s (ASX: AGG) Obuasi mine.

The UMA is a joint venture between Perenti’s subsidiary, African Underground Mining Services and Rocksure, a local Ghanaian contracting company. The companies hold a 70% and 30% interest, respectively.

According to AngloGold Ashanti’s release, a mining contractor went missing after a fall of ground in one of the operation’s mining stops. The incident took place on 18 May and immediately triggered a search and rescue effort.

AngloGold Ashanti noted that rescue teams have worked around the clock in difficult geotechnical conditions to find the missing colleague.

Relevant authorities have been notified and are providing support to the worker’s family and friends. In addition, UMA is working closely with AngloGold Ashanti during this time.

AngloGold Ashanti emphasised that safety is paramount and as a result, will indefinitely suspend all mining activity at Obuasi mine. Perenti expects the shutdown won’t have any material impact on its FY21 earnings.

An update on the situation is expected to be provided in due course.

About the Perenti share price

Established in 1987, Perenti is one of the world’s largest companies that provides surface and underground mining and support services. The group is headquartered in Australia, and has operations and offices across 11 countries.

Over the past 12 months, the Perenti share price has fallen over 40%, with year-to-date performance also down more than 50%. The company’s shares reached a 52-week high of $1.60 in June 2020 on the back of a positive business update. However, the company’s recent half-year results in February sent its shares south.

On valuation grounds, Perenti presides a market capitalisation of roughly $471 million, with about 704 million shares on issue.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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