Shares in mining services group, Ausdrill plunged yesterday, wiping more than a quarter of their value at one stage after the company revealed doubt about the value of two key contracts.
The company slashed the value of a previously announced contract with lithium miner, Pilbara Minerals and downgraded expectations from a contract with Kalgoorlie Consolidated Gold Mine Super Pit where there was a recent wall collapse.
The share price dropped more than 27% at one stage to $1.69 before rebounding slightly to end at $1.90, for a loss on the day of 20%.
Investors were shocked at the news from the company that the value of the Pilbara Minerals contract is now expected to be half the $180 million announced at the start of February.
More understandable was the estimate that the value mine wall collapse at the Superpit gold mine had cut the value of the contract by around 35%.
Ausdrill said it expected the value of drill and blast work at Mineral Resources’ Wodgina lithium project to be about half the previously-announced $180 million over three years. It said contract negotiations with MinRes subsidiary Process Minerals International were continuing.
KCGM has already warned of job losses and has imposed a hiring freeze after the wall slips in the huge pit on May 14 and 15.
Mining is being carried out on the southern side of the pit while the damage from the falls is being evaluated.
“Our scope of works has currently reduced by 35 per cent while the client reviews the longer-term mine planning,” Ausdrill told the ASX in the update.
“At this stage, it is difficult to provide a definitive timeframe for the reduction and we continue to work closely with KCGM as they develop their future plans.”
Ausdrill also had better news from West Africa where subsidiary African Mining Services has advised operations at Hummingbird Resources’ Yanfolila gold mine in Mali were back at full capacity and development works have commenced at the Komana West deposit.
At least three people died late last month in a clash between security forces and people opposed to the mine expansion.
No financial details about the impact on earnings and revenue were provided by Ausdrill in its statement to the ASX yesterday.
