North American Construction Group may be diversifying outside of the oilsands market, but it’s also expanding in its core play.
The company has put down a $10 million deposit towards the purchase of Aecon Group’s contract mining business, which primarily provides oilsands overburden removal and environmental reclamation services.
The total cost of the cash transaction is $199.1 million, paid $153.6 million at closing and in three subsequent $11.8-million instalments.
NAGC will acquire Aecon’s fleet of heavy earth-moving assets as while as lighter construction equipment and existing contractual commitments, subject to consents.
CEO Martin Ferron said the added equipment will help NAGC provide its customers with cost savings.
“During the recent severe cyclical downturn in the oil industry we worked extremely hard to be part of the solution to help lower the operating costs of our customers on oilsands mines,” Ferron said in a statement.
“We achieved this by maximizing the uptime and operability of our equipment fleet through innovative maintenance practices and work methodologies. We are therefore now pleased to better serve our customers by applying the same innovations to an expanded fleet, at a time when they are striving to maximize production and efficiency on each mine.”
Aecon CEO Jean-Louis Servranckx said in a separate statement that the capital-intensive contract mining business is outside the company’s core construction actives and focus.
The deal is expected to provide NAGC with over $220 million of additional annual revenue capability.
In late September NAGC announced the acquisitio n of a 49 percent stake in Nuna Logistics, which works in Canada’s conventional mining industries.