Australian mining services firm Ausdrill has signed an agreement to acquire all of the equity and equity-like instruments in underground hard-rock mining contractor Barminco Holdings for around A$271.5m ($197.2m).

The transaction, which represents an enterprise value of $697m, also involves assumption of Barminco’s debt.

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“We will be able to provide a broader range of services for our customers and generate additional opportunities for our employees.”

Under the terms of the deal, Ausdrill will offer 150.7 million fully paid ordinary ex-dividend Ausdrill shares andA$25.4m ($18.44m) in cash.

Furthermore, the company will undertake an equity raisingto clear debt.

Following the completion of the transaction, Barminco shareholders will hold 22.1% of the ordinary shares in Ausdrill.

The companies are currently 50:50 joint venture partners (JV) of African Underground Mining Services (AUMS), which recently secured a contract with Roxgold in Burkina Faso.

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Barminco CEO Paul Muller said: “Barminco and Ausdrill are a great fit, with the businesses providing complementary services and having worked together for a decade through our AUMS JV.

“By bringing these two businesses together and creating Australia’s second largest mining services company, we will be able to provide a broader range of services for our customers and generate additional opportunities for our employees.

“Barminco had a strong 2018 financial year and our focus is to continue safely delivering results for our customers.”

Barminco’s revenue for FY2018 stood at A$731.9m ($531.6m), while earnings before interest and tax (EBIT) were A$90.6m ($65.8m), and a net profit after tax was A$38.6m ($28.03m).

The transaction is conditional on a range of factors, including shareholder approval.

Established in 1987, Ausdrill has operations across Australia, Africa and the UK.

With a workforce of more than 5,000, the company offers services in contract mining, grade control, drill and blast, exploration, mineral analysis, and procurement and logistics.