Here’s why the Perenti share price is rocketing 18% today

A male ASX investor sits cross-legged with a laptop computer in his lap with a slightly crazed, happy, excited look on his face while next to him a graphic of a rocket shoots upwards with graphics of stars scattered around itA male ASX investor sits cross-legged with a laptop computer in his lap with a slightly crazed, happy, excited look on his face while next to him a graphic of a rocket shoots upwards with graphics of stars scattered around it

The Perenti Global Ltd (ASX: PRN) share price is rocketing higher today, up 18% in late morning trade.

Shares of the Western Australia-based global mining services group closed yesterday at 70 cents and are currently trading for 82 cents, having hit a high of 86 cents earlier in the day.

Here’s what’s driving ASX investor interest today.

What did the mining services company report?

The Perenti share price is off to the races after the company announced it had been awarded a contract for all of the underground development and production works for Evolution Mining Ltd’s (ASX: EVN) Cowal Underground project, located in New South Wales.

Perenti’s Barminco underground mining business will carry out the work. The division is already conducting diamond drilling services at Cowal alongside other works, with the new contract reported to “significantly expand” its scope at the project.

Commenting on the contract award from ASX 200 gold miner Evolution Mining, Perenti CEO Mark Norwell said:

The Cowal contract represents one of the largest underground mining projects in Barminco’s history, generating revenue of nearly $520 million with an initial term of four years, from a contract commencement date in early July 2022.

This contract award represents not only a significant expansion and continuation of our first underground contract in New South Wales but is also a fantastic opportunity for Perenti to build on our strong working relationship with Evolution, one of Australia’s premier gold mining companies.

Judging by the soaring Perenti share price, investors appear to agree.

Norwell said Perenti would begin investing capital in the project shortly with the company seeing increased revenues and earnings in the 2023 financial year (FY23). He still expects leverage for FY22 to be in line with the company’s previous forecasts.

“The project represents a significant improvement to our Australian underground earnings base and will generate strong project cash flows and returns in support of our capital allocation and investment,” Norwell added.

Perenti share price snapshot

With today’s big intraday gains factored in, the Perenti share price is up 23% over the past 12 months. That compares to a full-year loss of 2% posted by the All Ordinaries Index (ASX: XAO).

The post Here’s why the Perenti share price is rocketing 18% today appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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