That $6bn TenderBook..., page-234

Pioupiou,

I agree with your comments about trusting NRW to choose prospective avenues for service expansion using RCR. As I mentioned, I've been getting a sense of understanding some of the moving parts of RCR Resources/Mining historically. Probably overkill but I enjoy this sort of activity anyway!

FWIW, the press release for RCR is almost a cut and paste of the Hughes drilling announcement. Not promising too much, incremental services for clients etc. This contrasts markedly with the Golding 'transformation' announcements.

An AFR article (https://www.copyright link/business/manufacturing/rcr-tomlinson-collapse-hits-home-town-of-bunbury-hard-20181130-h18jup) mentioned some work RCR had on the table and from what I can see NRW would retain of it:
- Fortescue Metals Group is weighing options for follow up work associated with the recent installation of a relocatable conveyor at its Cloudbreak iron ore mine. RCR was the lead contractor on the conveyor work.
- BHP is considering its options for RCR contracts which include ...  a five-year maintenance agreement for apron feeders across its Pilbara iron ore mines.

However work such as: "RCR had an active contract as part of Talison's expansion of the Greenbushes lithium mine and was in line to build the second stage of a concentrator at Pilbara Minerals' Pilgangoora lithium mine." was presumably being done by RCR Resources division outside RCR Mining.

All up, some of the larger 'lumpy' contracts that RCR has been awarded over the past 10 years like processing plants will fall outside the NRW acquired divisions. This is probably a good thing - as you say, this work does not fall naturally within reach of the NRW sphere of knowledge and is lumpy and riskier. On the other hand, designing custom materials transport and management machinery (and ongoing maintenance of these customied machines) gives NRW more to offer - like the conveyors project. I'll guess the Heat Treatment came along for the ride to some extent.

Having done this, RCR now becomes a bit like ADB for me - I roughy know what it does and I'll guess NRW will make good use of it but we won't hear of big contracts, just that we'll hear mention of providing and installing conveyors, feeders, crushers etc which we might not have otherwise and come of the wins might be a little bigger. That's my guess anyway.

Unrelated, as we know, there are a few small black clouds which will probably pass or at least get dealt with and may help the share price to pop in the next few quarters:
- FAL, is there any hit to NRW for the sinkhole and delays?
- 2 wobbly clients, GCY and Altura - do they get their production levels to a self sustaining level?

Looking forward to the report and then will have a go again and predicting 2020 earnings. I'm still confident the contract wins will continue through to the end of FY2019.

Cheers
pb