Barminco earnings up, revenue down

Mining contractor Barminco has posted a small increase in underlying earnings in the March quarter, as cost reductions and efficiency measures offset a dip in quarterly revenue to $123.9 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by $2 million to $25.8 million for the March quarter, lifting the company's EBITDA margin to 20.9 per cent.

Chief executive Peter Stokes said the results reflected a solid quarter for Barminco, with good progress at its new contracts and efficiency improvements across the business that delivered stronger earnings and better margins.

“The improved earnings and enhanced margin reflects the success of Barminco’s targeted efficiency improvements that were implemented in response to challenging market conditions in the resources sector and are providing productivity gains for Barminco’s clients,” the company said in a statement.

For the nine months to March, Barminco’s revenue fell by 12 per cent to $361.1 million, while EBITDA was down to $72.1 million.

Its net result after tax was a loss of $44.2 million, which includes net financing costs of $82.3 million.

This amount is inflated by non-cash interest costs on the preference shares and loan notes provided by major shareholder Gresham Private Equity in place of normal equity.

Barminco said it was awarded a three-year extension contract, with AngloGold Ashanti for work at the company’s Sunrise Dam gold mine.

“The contract extension, valued at $270 million, secures work at Sunrise until mid-2019 and adds to the more than $430 million in contract wins and extensions awarded to Barminco in FY15,” the contractor said.

“Barminco has been at Sunrise since inception of the underground mine and this extension is a great reflection of the quality of our operations people who are on site,” Mr Stokes said.

Barminco also reported that its 50:50 joint venture with Ausdrill (African Underground Mining Services) performed well in the third quarter of FY15, with EBITDA up by nearly $10 million to $12 million, despite revenue falling by nearly $30 million to $55.8 million.

In the year-to-date, AUMS revenue fell from $228.6 million to $140.1 million.

Barminco is currently working at Sirius Resources’ Nova nickel mine, with the contract scheduled to be completed by the third quarter of FY17.

It is also providing underground mining services at Western Areas’ Flying Fox and Spotted Quoll projects.