NRW Holdings receives $60m Core Lithium contract

By Market Index
Mon 10 Oct 22, 2:54pm (AEST)
Mining services
Source: Unsplash

Key Points

  • NRW Holdings subsidiary, Primero, has won a $60m contract with Core Lithium
  • Today's contract with Core follows a recent string of contracts in WA and Qld
  • Macquarie recently upgraded the company to Outperform from Neutral, with the target price rising to $2.50

Undermined by today’s broader market selloff, with the ASX 200 down around -1.5% in early afternoon trading, Perth-based mining and construction contractor NRW Holdings (ASX: NWH) was down around -2% after announcing that its subsidiary, and resources engineering specialist Primero, has won a $60m long-term (O&M) contract with Core Lithium (ASX: CXO).

Following on from its current engineering, procurement and construction work for Core’s flagship Finniss project near Darwin - which recently received major project status by the federal government - Primero’s new five-year operations and maintenance agreement covers the project’s processing plant and its tailing storage facilities and includes an option to extend.


NRW Holdings CEO Jules Pemberton believes the diversification of the Primero business into longer term operational contracts like Core showcases the depth and operational knowledge of the group, especially within the battery minerals sector.

“The capability to develop and operate assets of this nature is well aligned with the group’s strategy over the coming years and will continue to evolve with build, own, operate and equity style investments in projects,” Pemberton said.

Recent developments

Today’s contract with Core follows a string of recent contracts in WA and Qld, which spurred Macquarie to upgrade the stock to Outperform from Neutral, with the target price rising to $2.50 from $2.10.

Macquarie’s recently adjusted valuation methodology for mining services companies, in-line with metrics reported by the industry, resulted in the broker's earnings forecasts for NRW Holdings increasing 9% for the medium-term to reflect higher margins.

Included within recently won contracts are:

  • $900m worth of new contracts through subsidiaries Golding Contractors and DIAB Engineering.

  • $60m contract extension for the Gina Rinehart-owned Atlas Iron Mt Webber project in the Pilbara region of WA.

  • $52m contract to build a 19km rail loop for the Olive Downs coking coal project in Qld.

  • $400m in funding from the state and federal Governments for the construction of the Bunbury Outer Ring Road project in WA.

What happened at the full year?

At FY22 NRW Holdings reported earnings (EBITA) of $157.0m representing an upgrade compared to previous guidance range of $150m to $155m and 30.1% higher than FY21, while revenue of $2.4bn was up 4.6% and consistent with guidance.

Total dividend payment for FY22 was 12.5 cents, payable 12 October.

The value of work secured for FY23 is $2.3bn which is either in the order book, or is expected as repeatable business in Urban, RCRMT and DIAB Engineering.

Full year revenue for FY23 is expected to be between $2.6bn to $2.7bn.

Earnings for FY23 (EBITA) are expected to be between $162m and $172m.

Consensus on NRW Holdings is Strong Buy.

Based on Morningstar's fair value of $2.95 the stock appears to be undervalued.

NRW Holdings share price over 12 months.


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