Mining, engineering services step up

Resource stocks are not the only ones to be profiting from the burgeoning environment in Western Australia, with companies in the mining services and property sectors also welcoming significant returns.

While iron ore, uranium, coal, copper and silver companies still dominate the Total Shareholder Return list, some of the state’s leading mining and engineering services firms are notable additions this year.

The top-performing stocks included engineering services company RCR Tomlinson and mining services firm Ausdrill, which have experienced five-year returns of 93 per cent each.

RCR Tomlinson’s after-tax profit of $15.8 million earlier this month was good news for shareholders, with the announcement of a 60 per cent increase in dividends to four cents a share.

The profit was about $400,000 more than the figure quoted in the unaudited results released mid July, while sales increased by 67 per cent to $272.2 million and earnings per share increased to 83 per cent on last year’s figures.

At the time, RCR Tomlinson acting chief executive officer John Noord-hoek said the outlook for engineering services sector remained strong, with RCR targeting further growth through acquisition opportunities.

The company has been acquisition hungry for some time, with purchases including the $4.8 million buyout of Geraldton site maintenance firm JG Engineering.

Mining services firm Ausdrill Ltd’s return of 93 per cent in the past five years comes after it won a number of big international contracts, including the Damang Open Cut Mining Contract extension in Ghana and drilling services and grade control work for the KCGM Super pit.

Earlier this year, the company raised $32 million through a private placement and an underwritten share purchase plan, with the funds raised to meet increased growth, to fund future capital expenditure and further expansion opportunities.

Ausdrill is currently trading around $1.49, slightly off its 12-month high of $1.93.

The ongoing property boom has been good to listed property investment and management firms such as Aspen Group, which made its debut in the top 10 with a 104 per cent return over five years.

The group, which currently has five funds under management, recently raised $50 million via a conditional placement of shares within the institutional sector. The funds were used primarily in the $67 million acquisition of an office building in Adelaide.

The group, through its Aspen Parks Property Fund, has also recently acquired a holiday park in South Australia for $6.15 million. Its shares are currently trading at $1.51, 10 cents shy of its 12-month high of $1.61.

Property developer Port Bouvard has also posted strong returns and has indicated it intends to pursue a number of other suitable residential broadacre acquisitions in WA to be developed via syndication or joint ventures.

The company is currently working to a 12-month program of receiving approval, developing and marketing the proposed lots, and is still evaluating other opportunities.

Port Geographe developer Axiom Properties has also graced the list and has recently injected $5 million into the $260 million Century City development, run by its new majority shareholder Pivot Group, in return for 50 per cent of net profits.

The move comes after the Peter Laurance-chaired Pivot injected $5 million into Axiom in April, taking $28 million in long-dated options and a 61 per cent controlling stake in the company.

An interesting inclusion at number three this year with a return of 108 per cent is investment entity Orion Equities, formerly Central Exchange, which has the majority of its funds invested in a portfolio of listed Australian and international companies and Australian property.

The stock is currently trading around 82 cents, slightly off its 12-month high of 87 cents of late July.

Heading the five-year returns list are top stock regulars Paladin Resources and Fortescue Metals Group.

Paladin, despite its share price trading well below its 12-month high of $5.54, has witnessed its return increase to 169 per cent from 160 per cent last year.

In July, Paladin announced a $174 million takeover offer for mining company, Valhalla Uranium Ltd.

Meanwhile, its Langer Heinrich uranium project in Namibia is on schedule for a September start of commissioning with project completion and hand over from GRD Minproc, the project managers, in late December.

Despite a considerable fall in its five-year shareholder returns, from 192 per cent to 133 per cent, FMG remains a top two performer in terms of market value growth.

FMG recently completed a $3.2 billion capital raising to fund construction at its Pilbara Iron Ore project.

Coal and iron ore explorer Aquila Resources once again finds itself the top 10 list with a return of 89 per cent, while Anvil Mining’s return was 84 per cent.