North American Construction Group Strengthens its Presence in Western Australia with the Acquisition of Iron Mine Contracting, a Diversified Mining Services Contractor

Executive Summary

• North American Construction Group Ltd. (NACG) entered a definitive share purchase agreement to acquire Western‑Australian mining services contractor Iron Mine Contracting (IMC) for an estimated CAD $115 million.
• The transaction is financed 65% by senior‑secured bank debt, 35% by vendor debt, with an upfront CAD $40 million drawn from NACG’s revolving credit facility and a CAD $35 million equipment financing assumption; the balance will be paid via earn‑out/deferred mechanisms over four years.
• The acquisition is projected to be ~20% accretive to 2026 EPS, representing 2.5× 2026 EBITDA (pre‑synergies), and expands NACG’s exposure to rare‑earth/critical minerals in Western Australia from 5% to ~15% of earnings, positioning the combined entity as a Tier 1 Australian contractor.

Key Details

• Consideration & Valuation
• Total purchase price: CAD $115 million (≈2.5× expected 2026 EBITDA).

• Expected EPS accretion: ~20% increase in 2026.

• Financing Structure

• Senior‑secured bank financing: 65% of purchase price.
• Vendor‑provided debt: 35% of purchase price.
• Upfront cash payment: ≈CAD $40 million from revolving credit facility.
• Assumed secured equipment financing: CAD $35 million.

• Remaining CAD $40 million to be paid via structured earn‑out and deferred payments over four years.

• Strategic Rationale

• Geographic & commodity diversification – Western Australia’s rare‑earth/critical mineral market share rises from 5% → 15% of total earnings.
• Creation of a nation‑wide Tier 1 Australian contractor when combined with MacKellar Group.
• Accelerated growth in higher‑margin, low‑capital unit‑rate contracts across Australia.

• Access to IMC’s strong order book (> CAD $1 billion) including a three‑year lithium mining contract.

• Closing Conditions & Timeline

• Subject to customary regulatory and closing conditions.

• Expected close: Q1 2026.

• Advisors

• Financial advisor: National Bank Capital Markets.

• Legal advisors: Fasken Martineau DuMoulin LLP (Canada) and MinterEllison (Australia).

• Infrastructure & Fleet Update (Business Outlook)

• Infrastructure initiatives target 25% of combined revenue from this segment by 2028; progress on northern Canada, U.S. civil earthworks, defence construction, and critical‑minerals infrastructure.

• Fleet optimization: sale of 26 Caterpillar 400‑ton trucks (book value) and purchase of eight Komatsu 240‑ton trucks in Queensland; net CAD $20 million reduction in PP&E & net debt.

• 2026 Financial Outlook (Pro forma, including IMC)

• Combined revenue: $1.5 – $1.7 billion.
• Adjusted EBITDA: $380 – $420 million.
• Adjusted EPS: $2.85 – $3.15.
• Sustaining capital: $150 – $170 million.

• Free cash flow: $110 – $130 million.

• 2027 Guidance

• Anticipated adjusted EPS > $4.00 driven by steady base operations, IMC growth (15% standalone increase), and expected infrastructure contract wins.

Notable Quotes

• Joe Lambert, President & CEO, NACG: “IMC represents a natural and strategic extension of our business into the Western Australian market… This acquisition provides a great foundation to fast‑track our Western Australia growth strategy.”
• Clinton Keenan, CEO, IMC: “Partnering with NACG and the MacKellar Group is a strategic accelerator for IMC… we look forward to immediately leveraging NACG’s balance sheet and extensive equipment fleet.”