Emeco Holdings looks to have found an entry into the underground contract mining and equipment rental space after having signed an agreement to acquire Pit N Portal in a deal that comes with an enterprise value of A$72 million ($49 million).
The binding agreement would see Emeco acquire Pit N Portal Mining Services and Pit N Portal Equipment Hire, two entities that come with over 100 pieces of specialised underground mining equipment, over 500 pieces of infrastructure equipment and employs more than 300 people across strategic locations in Perth and Kalgoorlie and customer sites across Australia.
Emeco made this announcement on the same day it issued its 2020 financial half year results, which saw the company post revenue of A$246 million (up 10% year-on-year), operating EBITDA of A$119 million (up 16%) and operating EBIT of A$67 million (up 12%). The company has, in the last few years, acquired Force Equipment and Matilda Equipment as it looked to strengthen its equipment rental business in surface mining.
The consideration for the acquisition consists of A$62 million in cash and A$10 million in Emeco shares to the vendors, with the buy expected to be earnings per share accretive on a financial year 2019 pro-forma basis, post transaction.
Emeco Managing Director and CEO, Ian Testrow, said: “Pit N Portal allows Emeco to leverage its current core capabilities and expand into a new market. The underground mining sector is undoubtedly growing, and this represents an attractive adjacency for Emeco, providing Emeco with a solid platform for growth. Pit N Portal also provides us with significant commodity diversification by immediately more than doubling our gold exposure with strong opportunities for further growth in hard-rock projects.”
Established in 2002, Pit N Portal specialises in the provision of hard-rock underground mining equipment and services to the Australia underground mining sector. Core operations include equipment rental as well as mining services and maintenance solutions for underground mines. It operates the largest underground equipment rental fleet in Australia, according to Emeco.
Continued growth in Pit N Portal is expected post-completion driven by new project and scope expansion opportunities, with major projects’ earnings realised in the 2021 financial year.
“Pit N Portal’s key services add to the core of Emeco’s existing business, including equipment hire and maintenance solutions,” the company said. “Pit N Portal also adds a vast array of additional value-added services to its customers, providing a complete mining services offering.”
Steve Versteegen, Co-Founder and CEO of Pit N Portal, said: “I truly believe the combination of the two companies will help accelerate the growth of Pit N Portal and am excited by the opportunity to extend the application of what we do to the broader Emeco business.”
Emeco said the transaction provides a strong platform for Emeco to grow as a provider of underground mining services with a solid tender pipeline, particularly in Western Australia-based gold, nickel and base metals projects. There are also potential operational advantages through Pit N Portal’s strategically located workshops in Perth and Kalgoorlie, it added.
It would also significantly diversify Emeco’s commodity exposure, with gold more than doubling immediately to from 12% to 27% of Emeco’s revenue and becoming the number two exposure.
Pit N Portal is also focused on innovation and technology, with tele-remote and autonomous equipment and delivers a wide range of specialised services, the company said.
