Primero wins $115m Rio contract

Primero Group has secured three new construction contracts, including a $115 million arrangement with Rio Tinto, while also announcing a capital raising of $7.6 million.

The company’s order book now stands at record levels, with contracted orders for FY2020 around $165 million.

Under the contract with Rio, Primero will design and construct the Mine Infrastructure Area and associated facilities for the iron ore business’s flagship Koodaideri mine, located in the Pilbara.

Design works will commence immediately and are scheduled for completion in mid-2021.

Primero said the project was expected to create more than 150 jobs during its peak.

The company was also awarded its first major project with Northern Star Resources for works on phase two of the processing upgrade at Northern Star’s Pogo gold mine in Alaska, which will predominantly be carried out from Primero’s business in Montreal.

Primero said the upgrade would increase throughput of the current processing facility at the mine from 1 million tonnes per annum to 1.2mtpa by January 2021, with the potential to move to phase three of the contract – increasing throughput to 1.5mpta in the coming years.

Works are set to progress over the next 12 months, including design and equipment procurement, with planning for on-site works commencing mid-2020 and completion expected by next summer.

Primero was also awarded definitive feasibility study works on Neometals’ lithium battery recycling project, with the demonstration plant (developed with SMS Group) located in Canada.

“From the early identification of projects, such as the scale of Koodaideri and the strategic positioning and work completed from budget pricing through to contract award, is another example of how Primero as a business has grown and matured over the years,” Primero managing director Cameron Henry said.

Primero said that contracted works with Wärtsilä Australia on the Barker inlet power station in South Australia were nearing completion.

The company said works under the contract with Wärtsilä, along with increased contract extensions, had resulted in a greater requirement of working capital.

Primero will raise $7.6 million from a share placement to fund working capital requirements for its existing and newly awarded contracts, as well as bolster the company’s net cash position.

It will issue around 22.4 million shares at 34 cents per share, with Canaccord Genuity (Australia) and Euroz Securities acting as joint lead managers to the placement.

Primero said it expected its working capital requirements to normalise during the first half of calendar 2020.

The company has requested a trading halt until December 9.