Australian mining services company Fleetwood (ASX:FWD) is expecting to generate a minimum of $13.5 million of additional revenue for its Community Solutions division after entering into an accommodation agreement with Saipem Clough Joint Venture (SCJV).
Under the binding agreement for accommodation at the Searipple Village in Karratha, Western Australia, SCJV has secured the supply of rooms from October 2024 for a two-year period on a take or pay basis. A rebate is provided if the rooms are not occupied.
SCJV is the engineering, procurement, and construction contractor for the development of Perdaman Industries’ multi-billion-dollar urea fertiliser plant that lies on the Burrup Peninsula, 20km northwest of Karratha.
Searipple Village, which is owned and operated by Fleetwood, will continue to be underpinned by mining giant Rio Tinto’s (ASX:RIO) long-term take or pay accommodation agreement until 20 April 2027.
Fleetwood, which has a market capitalisation of $194.86 million, has been negotiating with several parties to use any remaining rooms and take advantage of the expected increase in construction activity in the Karratha region.
The contracted room nights for Searipple for this financial year are forecast to increase 72%, which the company expects will result in a further uplift in earnings.
CEO Bruce Nicholson says this agreement continues to build the use of Searipple, which places the company in a “strong” position for the next several years.
“We have a great working relationship supporting our key clients including Rio Tinto and Woodside, but this latest agreement is part of our strategy to layer the room offtake to optimise the asset throughout the cycle,” Nicholson says.
“The performance of our Community Solutions business has improved on the back of increased activity in the region, generating higher occupancy, and we will report a significant uplift in earnings in FY25 against FY24 performance.”
Fleetwood is an Australian company that offers services in the modular, community village, and RV sectors. It has three business units — building, community, and RV solutions.
Write to Aaliyah Rogan at Mining.com.au
Images: Fleetwood
