Why the price of the NRW share (ASX: NWH) is rising today
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The NRW Holdings Limited (ASX: NWH) The stock price rises during early morning trading. This comes after the company announces that it has received a Letter of Intent (LOI) from Karara Mining Limited.
At the time of writing, the diversified service provider’s shares are trading for $ 1.545, up 2.66%.
What is driving the price of the NRW share up?
Investors are satisfied with the company’s latest update, which drives the price of the NRW share up in morning trading.
According to its press release, NRW has announced that it has been selected for mining services in the Karara iron ore mine.
The work to be performed includes Load & Haul, Drill & Blast and Run of Mine (ROM) rehandling with the drilling and blasting component. The work is carried out by the wholly-owned NRW subsidiary Action Drill & Blast.
After the formal conclusion of the agreement, NRW will begin to procure key equipment for the mining industry. In addition, the mobilization and establishment of the site will begin in the months leading up to the planned work from March 2022.
NRW expects to spend around 170 million US dollars on the equipment during the project period. This includes the purchase of three 600-tonne shovel excavators and a fleet of 220-tonne trucks.
The entire contract has a term of 5 years and should bring NRW around 702 million US dollars in sales.
More about Karara iron ore mine
Located in the Gascoyne region, Karara is the largest mining operation and one of only two operating magnetite mines in Western Australia. The large open-cast mine produces high-quality concentrate products for export to the Chinese state purchase partner Ansteel for steel production.
Karara has expanded the project to a mineral resource of several billion tons. The mine has an expected mine life of more than 30 years.
NRW boss Jules Pemberton welcomed the upcoming deal with the words:
I am delighted that Karara has selected NRW as the preferred contractor for mining services.
… With a strong local presence in the region through our DIAB Engineering business based in Geraldton and our mining contract with Gascoyne Resources at the Dalgaranga mine location, we look forward to continuing to support the existing and very experienced local workforce in this transition and creation of job opportunities for the Gascoyne community.
Changjiang Zhu, CEO of Karara added:
NRW is an established mining and construction company based in Western Australia with extensive open pit mining experience acquired through a number of successful mining operations in the state. NRW offers new first-class equipment and is able to take over the entire range of services from Karara, which includes a wide range of mining, construction and engineering services. We look forward to negotiating an agreement with North Rhine-Westphalia and the start of mining services at the beginning of next year.
The price of the NRW share fell by more than 46% in 2021 and has fallen by 19% since then last year.