North American Construction Group Announces Major Five-Year Contract
North American Construction Group Ltd. (“NACG” or “the Company”) (TSX:NOA/NYSE:NOA) has announced that the MacKellar Group has secured a significant five-year contract with a prominent metallurgical coal producer in Queensland, Australia. This new agreement builds on a previous contract, transitioning from a dry rental fleet to a fully maintained fleet.
Contract Details and Financial Impact
This newly awarded five-year contract includes a minimum hour commitment, contributing to the contractual backlog. The scopes for fully maintained equipment and related services are expected to generate a total value of approximately $375 million. It is anticipated that the contract scopes will be fully operational by mid-2025, enhancing both operational scale and efficiency.
Growth Strategy and Investment
To meet the increased commitments associated with this contract, an on-site maintenance facility will be necessary, along with twenty additional units. This growth will require a capital investment estimated between $50 million and $55 million, primarily allocated for construction and purchases by MacKellar in the fourth quarter of 2024.
Leadership Insight
Joe Lambert, President and CEO of NACG, expressed his appreciation to the client for their ongoing trust and confidence. He stated, “We are committed to being their preferred, safe, low-cost contractor for decades to come.” Lambert emphasized that about one-third of the additional fleet needed for this contract will be sourced from Canada, highlighting the collaborative efforts of NACG’s teams to efficiently deliver solutions for their client.
Market Demand and Strategic Relationships
This contract represents the second major long-term award for NACG in Australia this year, indicating a strong demand for equipment in the region. It also reflects the solid client relationships that MacKellar has built and the compelling value proposition provided by NACG's Australian team and fleet. With this new agreement, NACG's total contractual backlog has now surpassed $3.0 billion, giving operations personnel the consistency required for efficient operations.
About the MacKellar Group
Founded in 1966 and a wholly owned subsidiary of NACG since 2023, MacKellar has established a strong reputation in Australia for its performance and reliability. The company specializes in heavy earthmoving equipment solutions and has a notable history of participation in significant mining and civil earthwork projects.
About North American Construction Group
NACG is one of the largest providers of heavy construction and mining services in Canada and Australia. With over 70 years of experience, NACG has consistently delivered services to the mining, resource, and infrastructure construction sectors.
Contact Information
For more information, interested parties can contact Jason Veenstra, CPA, CA, Chief Financial Officer, by phone at 780.960.7171 or via email at ir@nacg.ca.
Frequently Asked Questions
What is the value of the new contract awarded to NACG?
The new five-year contract awarded to North American Construction Group is valued at approximately $375 million.
Who is the client for the contract awarded to MacKellar?
The client is a leading metallurgical coal producer in Queensland, Australia, with whom MacKellar has an existing relationship.
When is the new contract expected to ramp up?
The contract scopes are expected to be fully ramped up by mid-2025.
How much capital investment is required for the contract?
The growth capital required for the contract is estimated to be between $50 million and $55 million.
What is NACG's current contractual backlog?
NACG's total contractual backlog now exceeds $3.0 billion following this contract award.
