Why the NRW (ASX:NWH) share price is edging higher today

NRW’s shares received a boost today following an upcoming contract…

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The NRW Holdings Limited (ASX: NWH) share price is edging higher during early morning trade. This comes after the company announced it has been awarded a letter of intent (LOI) from Karara Mining Limited.

At the time of writing, the diversified service provider’s shares are swapping hands for $1.545, up 2.66%.

What’s pushing the NRW share price higher?

Investors appear pleased with the company’s latest update, sending the NRW share price higher in mid-morning trade.

According to its release, NRW advised it has been selected for mining services works at the Karara Iron Ore mine.

The works to be performed include load & haul, drill & blast and Run of Mine (ROM) re-handling with the drill & blast component. Works will be undertaken by NRW’s wholly-owned subsidiary, Action Drill & Blast.

Once the agreement has been formally executed, NRW will begin procurement of key mining equipment. In addition, site mobilisation and establishment will begin during the months leading up to the scheduled works commencing March 2022.

NRW is anticipating to spend around $170 million on the equipment over the life of the project. This includes the purchase of three 600 tonne Face Shovel Excavators and a fleet of 220 tonne trucks.

The entire contract will run for a period of 5 years, and is expected to generate roughly $702 million in revenue for NRW.

More on Karara Iron Ore mine

Located in the Gascoyne region, Karara is the largest mining operation and one of only two operating magnetite mines in Western Australia. The large open-pit mine produces high-grade concentrate product for export to Chinese state-owned offtake partner, Ansteel, for steelmaking.

Karara has grown the project to a multi-billion tonne mineral resource. The mine has an expected mine life of more than 30 years.

Management commentary

NRW CEO, Jules Pemberton welcomed the upcoming deal, saying:

I am delighted that NRW has been selected by Karara as its preferred contractor for mining services.

… With a strong local presence in the area through our Geraldton based DIAB Engineering business and our Mining contract with Gascoyne Resources at the Dalgaranga mine site, we look forward continuing to support the existing and highly experienced workforce on site through this transition, as well as creating employment opportunities for the Gascoyne region community.

Karara CEO, Changjiang Zhu went on to add:

NRW is an established West Australian-based mining and civil contractor with extensive open cut mining experience gained through a number of successful mining operations in the state. Offering new prime equipment, NRW has the capability to undertake the entire Karara scope of work comprising a broad range of mining, construction and engineering services. We look forward to negotiation of an agreement with NRW and commencement of mining services early next year.

The NRW share price has fallen by more than 46% in 2021, and is down 19% since this time last year.

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