Barminco won a contract extension at AngloGold Ashanti’s Sunrise Dam to continue to the provision of services for an addition five years. Credit: Calistemon.

Diversified mining services company Ausdrill has closed the $197.2m transaction to acquire underground hard-rock mining contractor Barminco in order to strengthen its position.

Representing an enterprise value of $697m, the transaction was announced in August and enables Ausdrill to become the second largest mining services company in Australia, by revenue.

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According to the deal, Ausdrill purchased all of the equity and equity-like instruments in Barminco by offering 150.7 million shares and $18.44m in cash.

Ausdrill managing director Mark Norwell said: “Barminco is a complementary business to Ausdrill, with a leading market position in underground hard-rock mining that establishes the company as a more diverse group with a broader service offering sought by our customers.

“By bringing the businesses together, our future growth opportunities are enhanced globally.”

“Not only is it a strategically and financially compelling deal, but there is also a good cultural fit with the two businesses having worked together in Africa through our African Underground Mining Services (AUMS) joint venture for over a decade now.

“Importantly, both companies are expecting earnings growth in FY19 and by bringing the businesses together, our future growth opportunities are enhanced globally.”

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Barminco shareholders now own 22.1% of the ordinary shares in Ausdrill.

Barminco recently signed contract extension agreements for mining projects in Western Australia, including a five-year A$700m ($503.43m) extension at AngloGold Ashanti’s Sunrise Dam, two four-year contracts at Gold Fields’ Agnew gold mine worth around A$335m ($238.55m).

The company was also awarded an A$240m ($169.95m) contract extension at Independence Group’s Nova nickel-copper-cobalt operation. The extension requires the company to deliver contract services at the mine for an additional four years.

Ausdrill and Barminco operate African Underground Mining Services (AUMS) in a 50:50 joint venture.