Perenti has entered into an agreement under which it will acquire 100% of the issued share capital of DDH1 Limited, a surface and underground mining contractor, subject to satisfaction of conditions.
DDH1 brings significant capability across a range of specialised surface and underground drilling services that complement Perenti’s existing service offering, Perenti says. This will see it benefit from increased scale, and the ability to leverage the operational and financial strengths of both companies. This will enable improved margins and increased free cash flow, which will accelerate the delivery of our FY25 financial targets.
Following the completion of the transaction, which is subject to DDH1 shareholder approval and other conditions, Perenti will become one of the largest drilling services companies globally, increasing growth opportunities for the business and its people, it says.
Perenti estimated that it would create the ASX’s leading diversified contract mining services company, with a pro forma market capitalisation of circa A$1.3 billion ($868 million, pre-synergies and potential re-rate), positioning Perenti for potential ASX200 inclusion. Perenti added that 85% of its revenue base will be from production and resource definition (rather than exploration), with the company holding a modern fleet with over 190 rigs from DDH1 and 99 from Perenti – one of the largest drill fleets globally.
Mark Norwell, Managing Director & CEO of Perenti, said: “This is a compelling transaction that represents an exciting next step in delivering on Perenti’s purpose, to create enduring value and certainty, by building a portfolio of complementary high quality businesses.
“Perenti has a long history in drilling from its Ausdrill heritage and Barminco Diamond Drilling business and understands the attractiveness of the market.
“The long-term outlook for a sustained production cycle needs increased drilling spend to ensure mining reserves are not diminished, and drilling is becoming more complex, resulting in larger programs and demand for specialist services.
“DDH1 is a highly respected Tier 1 global operator, with significant capabilities across a complete range of specialised surface and underground drilling services, that are complementary to our existing clients and service offering.
“We have a clearly articulated framework against which we assess all investment opportunities, with this transaction addressing our key assessment criteria in relation to strategic attractiveness, fit within Perenti and value creation potential.”
Following the transaction, the DDH1 business will form part of a newly created Drilling Services Division, which will also comprise Perenti’s existing Ausdrill business. Sy Van Dyk (current Managing Director & CEO of DDH1), will be appointed as President of the newly created division. Each of the four existing DDH1 brands, DDH1 Drilling, Ranger Drilling, Strike Drilling and Swick Mining Services, will be maintained and led by their existing leadership teams, with a focus on providing a consistent offering and customer continuity.
Perenti hopes to close the deal in October based on its indicative timetable.
