Norcliffe Mining Services (Norcliffe) is an acquisition vehicle for quality businesses in the fast-growing mining services sector – and it is getting ready to list on the ASX mid-year.
The company has quickly grown into a national business platform for mining services.
“We are a holding company, closing the acquisition of two quality brands in the mining services sector, one East and one West coast based, each with a good quality client base,” managing director, Charlie Massarella, said.
“They are good quality businesses, well run and with solid earnings history and reputation. The combined business leverages synergies across a vertically-integrated national business model in both client delivery and service offering,” he said.
Following completion, Norcliffe is on course for revenue growth of 25 per cent year on year in FY 2021 to $54m, after chalking up revenue of $43m in the FY 2020.
Earnings for the company are forecast at $15.7m for FY 2021, up from $11.4m a year earlier.
Both businesses are focused primarily on production and development drilling for existing resource expansion as well as offering complementary services.
High calibre clients, right commodities exposure
The company is seeing robust demand for the commodities mined by its clients from new growth sectors such as green electric vehicles (EVs) and other new technologies.
“We are exposed to the right commodities in copper, iron ore, gold and zinc and for the next three to four years we are expecting business conditions in the resources sector to be extremely positive,” said Massarella.
This commodities cycle is backed by increased demand for both copper and iron ore, he said.
“Copper is playing a leading role in the green economy, from EVs through to wind turbines and solar panels, and iron ore is backed by real demand, as highlighted by reports that China’s economy is now growing faster than before the COVID pandemic at 6.5 per cent in the December quarter,” Massarella said.
“Few companies are providing our kind of integrated service offering, at scale, to the mining sector,” he said.
The company is sharply focused on exclusively servicing high calibre mining companies with low-cost operations to ensure a strong cashflow for the company throughout the mining cycle.
“It’s always good when there is an upcycle in mining, but we plan for the worst-case scenario and we want to ensure we are exposed to low-cost producers focused on production,” said Massarella.
The company’s business gives it an exposure to $100bn of Australian mining projects.
Norcliffe on the acquisitions trail
Norcliffe is on the look-out for suitable acquisitions to enhance its business offering to the mining sector which is going through another rapid growth spell.
“We want Norcliffe to become a leading provider in mining sector services,” said Massarella.
“Our objective is to retain the management of the businesses we acquire and provide a platform for further growth and to achieve synergies across our client base as we open up new geographical markets for the businesses,” he said.
“These are companies that are already on a strong growth trajectory and in Norcliffe we provide a platform that will facilitate that continued growth,” added Massarella.
The company is already is discussion with acquisition opportunities operating throughout Australia.
IPO and ASX listing for mid-year
Norcliffe is scheduled to list on the ASX in the middle of the year and its management are currently meeting potential investors in Australia’s major cities.
“We have started a pre-IPO capital raise for $9.5m and we are meeting potential investors and looking to an IPO in late May to early June,” Massarella said.
The company has received an “unbelievably positive reception” from excited investors who include high net worth individuals, institutions and stockbrokers.
“Investors are excited to see a quality company with growing earnings and they like the company’s vision, strategy and ambitions for the future,” he stated.
“The timing is very good for us,” he said.
The company is formulating its plans for an IPO and is planning to raise approximately $16m.
This article was developed in collaboration with Norcliffe Mining Services, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.