Valmec awarded new infrastructure contracts with Water Corp and Newmont

Valmec ASX VMX infrastructure services Water Corporation Newmonth Mining Tanami desert
Valmec has bolstered its order book by $23 million with new contracts for Newmont and Water Corp.

Energy services group Valmec (ASX: VMX) has been awarded several new infrastructure projects in Western Australia and the Northern Territory, adding $23 million to its order book.

The company today confirmed the new deals include infrastructure services contracts for WA’s principal water supplier Water Corporation on its Perth Metro Main Renewals program, as well as an additional package of infrastructure works for Newmont Mining Services in the NT.

Newmont Mining Services is a wholly-owned subsidiary of US gold miner Newmont Corporation (NYSE: NEM). This contract comprises infrastructure works on the Tanami Expansion 2 project, an underground gold mine located 540km northwest of Alice Springs in the Tanami Desert.

In addition to the Water Corp and Newmont projects, Valmec said it recently secured more than $5.9 million of compression equipment overhaul and maintenance services contracts for onshore gas customers in Queensland and Victoria.

The company’s current order book now stands at about $65 million.

Valmec said a “number of larger upstream energy and infrastructure projects” are also expected to be committed before the end of June 2020.

Valmec managing director Steve Dropulich said the latest awards by Water Corp and Newmont demonstrate the company’s continued strong trading relationships with both customers and Valmec’s “ongoing ability to diversify and grow its presence” within the greater government utilities and resources sectors.

“Together with Valmec’s current suite of services in onshore gas infrastructure, our latest awarded projects and service contracts are testament to the resilience of our market offerings, even within these challenging COVID-19 economic conditions,” he said.

COVID-19 impact on guidance

In March, Valmec announced it was withdrawing its full year guidance for the 2020 financial year due to uncertainty surrounding COVID-19.

In September 2019, the company had originally anticipated full year FY 2020 revenues of around $130-140 million and earnings before interest, taxes, depreciation and amortisation of $9.1-10.1 million.

“The increasing uncertainty surrounding both the duration and scale of the COVID-19 outbreak has led Valmec to withdraw its previous guidance to the market, predominantly due to both client and supply chain delays,” Mr Dropulich said.

“With Valmec’s current markets including onshore gas and water utilities services as well as gold sector infrastructure, demand for the company’s suite of services is expected to remain robust, whilst also ensuring that Valmec remains ready to capitalise on its growing pipeline of opportunities once conditions stabilise,” he added.