NRW Holdings (ASX: NWH) shares finished more than 10 per cent higher at $2.90 yesterday on news it had been awarded a $137 million contract in the Pilbara by mining giant Rio Tinto, as the mining services and contractors sector continues to attract investor interest and attention.
NRW Holdings (ASX: NWH) shares finished more than 10 per cent higher at $2.90 yesterday on news it had been awarded a $137 million contract in the Pilbara by mining giant Rio Tinto, as the mining services and contractors sector continues to attract investor interest and attention.
The shares reached a high of $2.96 during the day.
The Koodaideri rail formation south earthworks contract involves construction of 73km of rail embankment and drainage and other associated works, including roadworks at level crossings, rail signalling pads and permanent rail maintenance access.
NRW will also build a 44km mine access road along the rail alignment connecting Koodaideri to the Great Northern Highway.
The contract comes on top of NRW performing site earthworks for the Koodaideri plant in a contract worth about $65 million, and the formal award of a circa $62 million contract for Stage 1 earthworks, roadworks and drainage works at Fortescue’s Eliwana Rail Project.
NRW CEO Jules Pemberton said NRW had a long history of civil construction expertise in the Pilbara and had been involved in the delivery of numerous Greenfield and Brownfield projects for Rio since 2002.
“Since then NRW has also constructed more than 900kms of rail formation across the Pilbara providing work for thousands of Australians and supporting local industries, traditional landowners and suppliers,” Mr Pemberton said.
The contract award follows renewed interest in mining services contractors. A recent research note from Argonaut said small cap contractors were likely to benefit from improved conditions in WA, on the back of resource and infrastructure spend.
It said small cap stocks best positioned to see growth from resources and infrastructure spend included Monadelphous Group (ASX: MND), NRW Holdings, Decmil Group (ASX: DCG) and Southern Cross Electrical Engineering (ASX: SXE).
Argonaut said construction spend in the iron ore space is likely to pick up in the next couple of years, with FMG’s Iron Bridge Project and BHP’s South Flank project generating work for contractors. Rio Tinto’s West Angeles iron ore mine this week won environmental approval in WA.
In March, Monadelphous announced its second construction contract at South Flank, taking the total value of work secured by Monadelphous at South Flank to $212 million. Monadelphous shares closed up 27 cents at $18.97 yesterday, and have risen from less than $13 since December last year.
In the LNG sector, Argonaut points to Woodside (ASX:WPL) and its long-term vision for creating a Burrup Hub – with gas from the Scarborough, Pluto and Browse fields feeding into Pluto LNG and NWS Karratha Gas Plant LNG facilities. Ultimately, this could see a second LNG train at Pluto, more than 1,300km of pipelines and offshore development at Scarborough and Browse.
Hartleys has buy recommendations on diversified contractor Decmil, engineering and project management business Lycopodium (ASX: LYL) and mining equipment hire firm Emeco Holdings (ASX: EHL).
