GR Engineering increases US footprint with Arizona acquisition, wins contract to develop local battery graphite facility

GR Engineering Services ASX GNG Hanlon Engineering & Associates EcoGraf
GR Engineering will acquire Hanlon Engineering & Associates Inc. which was established in 1999 and employs around 40 people.

Perth-based GR Engineering Services (ASX: GNG) has announced plans to expand its US footprint with the acquisition of Arizona-based multi-disciplinary services firm Hanlon Engineering & Associates.

Hanlon has been providing provides engineering, procurement and construction management services to the mining sector in North America since 1999.

In that time, it has completed 1,500 projects at a constructed value of more than $2 billion.

GR Engineering managing director Geoff Jones said the Hanlon acquisition aligns with GR’s growth strategy and would increase its footprint across America.

“Hanlon has a strong local brand with an excellent safety record and long-standing relationships with major mining clients,” he said.

“The firm has an experienced management team [who will help us] take advantage of numerous growth opportunities which exist in the US region.”

Based on Hanlon’s workflow and identified growth prospects, as well as GR Engineering’s existing pipeline of US work, Mr Jones anticipates the acquisition will immediately contribute to GR Engineering revenue figures and become EPS accretive in the financial year ending June 2021.

The acquisition is scheduled for completion next month.

Battery graphite agreement

Closer to home, GR Engineering this week signed a letter of intent with EcoGraf (ASX: EGR) for the development of a $104 million battery graphite manufacturing facility near Kwinana, 40 kilometres south of Perth.

The 20,000 tonnes per annum facility will sit on 6.7 hectares of industrial land and be built in two stages – the first will be based on an upfront capital cost of approximately $33 million for an initial 5000tpa of battery graphite, while the second will require a further $71.25 million to expand production to 20,000tpa.

The completed facility is expected to generate a pre-tax net present value of $204 million, an annual 36.6% internal rate of return and $35 million earnings before interest, tax, depreciation and amortisation.

EcoGraf (formerly Kibaran Resources Limited) said it had received strong interest from prospective customers as it moves towards formalising product sales and offtake agreements.

According to industry research, global demand for battery graphite is expected to increase by over 700% this decade as significant investment continues in Europe to transition towards clean renewable energy for vehicle and industrial applications.