Mining services companies are flying, and experts think the environment is ripe for M&A

• Contractors have performed well this year, with top ASX names posting big gains in recent times
• With deleveraging across the sector, Grant Thornton says the environment is ripe for M&A in the mining services space
• Profit sharing models also growing as high gold prices lead to win-win deals between junior miners and contractors

Take a basket of the ASX’s top mining services providers and the gains they have made in recent years have been stark.

Perenti (ASX:PRN) is up 78% YTD, Macmahon Group (ASX:MAH) is +37%, Emeco Holdings (ASX:EHL) +27.5%, MLG Oz (ASX:MLG) +53% and NRW Holdings (ASX:NWH) +21%, just to take a few as a sample.

Previously laden with debt, mining services contractors are starting to look a lot healthier as the gold bull run promises to drag the mining sector back towards the boom times.

It has experts thinking M&A is on the agenda in the space and financial advisory firm Grant Thornton have pulled together some statistics to show why a ramp up in corporate activity could be on the cards.

In a report to be released Thursday titled ‘Balancing risk and opportunity in contract mining’, Grant Thornton corporate development advisor – mining Will Kendall and national head of energy and resources Tom Williams say that despite a drop in EBITDA margins this year, capital efficiency is improving with the sector increasingly deleveraging.

Net debt to EBITDA ratios have fallen from 1.3x in 2022 to 0.7x in 2025, with return on equity rising steadily from a low of 3.6% in 2021 to 9.3% last year and 10.2% in 2025.

That’s a fertile environment for M&A to increase.

“It’s an industry that’s had quite a bit of a history of M&A and consolidation … it’s pretty normal,” he told Stockhead.

“It’s just that now with stronger balance sheets there’s obviously a bit more appetite to do those acquisitions.”

Distressed assets and diversification

It’s not all sunshine and roses, with crimped margins in the coal mining sector in Queensland hitting the bottom line of some contractors focused in that market.

Kendall says distressed assets could be a focus of acquisitions, while other contractors will look to diversify while they have cash on the balance sheet to protect against low points in the mining cycle.

“The second driver is around diversification,” he said.

“A lot of these mining contractors now are not just doing contract mining, they’re also moving into mineral processing, civil, drill and blast – vertical and adjacent type businesses.”

Aside from local mergers like Perenti and DDH1 Drilling and movements into civil contracting by the likes of NRW and SRG Global (ASX:SRG), recent years has also seen the introduction of international players to Australian shores.

“We also think that international players will participate in that as well. In recent years you’ve had, particularly from Indonesia, a company like Buma come in and their acquisition of the Downer East contracting business a couple of years ago,” Kendall said.

“In the last couple of years we’ve had Mackellar from Canada come into the market as well. So I think M&A is going to come from that area as well.”

They’re not the only international players with skin in the Australian contracting game.

JCHX Mining Management out of China are backing Australian contractor Terra Mining Pty Ltd, while PT Petrosea and PT United Tractors out of Indonesia have also been showing an interest Down Under.

Mackellar owner North American Construction Group out of Canada is also said to have taken a stab at a $555m acquisition of Emeco.

“I can’t really comment on Emeco specifically, but if you go back a year, the (ASX) contractors were trading at probably a bit of a discount,” Kendall said.

“Compare that to what NACG was trading on the New York Stock Exchange, the multiples there are much higher than what the Australian guys were trading at.

“That could drive it, but bear in mind too that in the last six months the share prices at the Australian mining contractors have gone up.”

Profit sharing deals

The other big deal driver appearing on the horizon is a profit sharing model.

That’s been driven by new, smaller contractors looking to both take advantage and help juniors miners take advantage of sky high gold prices.

Bullion has doubled since the end of 2023 on the back of safe haven investing and central bank buying, making even small gold operations profitable.

Kendall says it provides a source of capital for small miners, with the interests of both the contractor and resource owner serviced in one deal.

“At the end of the day, (for) the contractor to get a return is through the profits of the mine, which is the same as the miner,” he said.

“So the interests are aligned and I think that’s a great benefit. You don’t have a contractor who’s just focused on moving dirt to get a return.”

At least three prominent contractors have put their foot into this game in WA in the past couple years.

BML Ventures helped start the trend with JV deals on mines owned by Brightstar Resources (ASX:BTR) and Auric Mining (ASX:AWJ).

They proved to be major enablers, setting Brightstar on the path to develop larger mines in WA’s Northern Goldfields that will produce around 30-40,000ozpa at current rates.

The snowball effect will see Brightstar use those cashflows to help fund an expansion to 75,000ozpa with the full-scale development of its Laverton hub, then 200,000ozpa once it eventually brings its Sandstone assets into production.

More recently, Indian-backed MEGA Resources has emerged as a major player. Its profit-sharing model has pulled in a host of junior miners as partners, including Rumble Resources (ASX:RTR) at its Western Queen project near Wiluna and Star Minerals (ASX:SMS), which raised $1.5m recently to bankroll a Q1 2026 start to mining at its Tumblegum South project in the Bryah Basin.

Further to the south MEGA also has agreements in place with Javelin Minerals (ASX:JAV) to develop the Eureka gold mine near Kalgoorlie, Everest Metals Corporation (ASX:EMC) for its Mt Dimer project, Riversgold (ASX:RGL) at its Northern Zone gold project near Kalgoorlie, Legacy Iron Ore (ASX:LCY) at the Mt Celia gold project and Nelson Resources (ASX:NES) at its Yarri gold project.

Mineral Mining Services, led by former Rox Resources (ASX:RXL) CEO Rob Ryan, has taken a similar route.

It’s moving from contracts with larger miners like Black Cat Syndicate (ASX:BC8) and Westgold Resources (ASX:WGX) to sign strategic development agreements with smaller players.

They include with Goldarc Resources (ASX:GA8) over its Leonora South gold project – starting with a drill for equity deal before moving into a mine development JV – and with Astral Resources (ASX:AAR) at its Think Big project, a smaller 85,200oz deposit the company wants to use to generate cashflow for its 1.4Moz Mandilla gold project development.

At Stockhead, we tell it like it is. While Astral Resources, Goldarc Resources, Javelin Minerals, Everest Metals Corporation, Riversgold, Star Minerals and Brightstar Resources are Stockhead advertisers, they did not sponsor this article.