Develop Global Ltd (ASX: DVP) is an ASX materials stock that saw its share price jump 4% on Friday after announcing a key contract.
The company operates under a hybrid model as an underground mining contractor and operator of two mining assets: The Woodlawn Zinc-Copper Mine in New South Wales and The Sulphur Springs Zinc-Copper Project in Western Australia.
Key contract win
On Friday, the company announced it has been awarded a A$200 million underground development contract to establish access tunnels at OceanaGold's Waihi North Project in the North Island of New Zealand.
According to Develop Global, the five-year contract at the Waihi North Project will start in the first half of 2026.
Develop Managing Director Bill Beament said:
This contract reflects the strength and depth of our Mining Services division, which includes some of the most experienced underground mining specialists.
We are delighted to be working with such a highly regarded multi-national mining house as OceanaGold and we look forward to combining the skills and experience of our people with a strong local workforce.
Bell Potter adjusts forecast
Following the announcement, broker Bell Potter released an updated report on this ASX materials stock, which included an increased price target.
The broker said it had not included any additional mining services contracts in previous forecasts.
According to the report, revenue generation from this contract over the next 5 years is therefore incremental to its estimates; that is, scaling up to ~$40m per annum by FY27.
Importantly, Bell Potter noted the OceanaGold contract improves DMS' revenue and earnings mix while building an important relationship with a global gold and copper producer that has a portfolio of four operating mines around the world.
The broker upgraded EPS forecasts by +2% in FY26 and +3% in FY27 after incorporating the OceanaGold contract.
Price target upside
Bell Potter has maintained its buy recommendation on this ASX materials stock.
It has also raised its price target to $5.20 (previously $5.00).
Based on Friday's closing price of $4.36, this indicates an upside of 19.27%.
We expect demonstration of earnings and FCF expansion from Woodlawn to drive a re-rate for DVP; spot copper, zinc and silver prices are currently ahead of our FY26 forecasts, presenting upside to valuation and earnings expectations the longer they remain ahead of forecasts.
It said near-term catalysts include Sulphur Springs financing completion and processing plant construction commencement and further external DMS contract wins.
