05:20 PM EST, 03/05/2024 (MT Newswires) -- North American Construction Group Ltd. ( NOA ) Tuesday announced that the MacKellar Group has been awarded a five-year contract extension by a major metallurgical coal producer in relation to a mine in the state of Queensland, Australia.

"We are excited about this extension and look forward to continuing the relationship we have with our customer at this site," said Joe Lambert, President and CEO of NACG, in a statement. "This is the first material contract we have signed in Australia since the acquisition of MacKellar and are very proud of how well the first five months have gone... We believe this 'locking in' of fleet is indicative of the strong demand for heavy equipment in the Australian mining sector. In light of this demand, and bolstered by long-term contracts, we have begun to take steps towards prudently increasing fleet size in Australia, including potentially transferring underutilized Canadian fleet into that market with the goal of maximizing overall utilization."

The award extends the expiry date from June 6, 2025 to June 30, 2030 and qualifies as contractual backlog given minimum hour commitments in the agreement. Rental scopes are estimated at $100 million per year resulting in a total value from this extension of $500 million.

The contract requires the addition of two loading units and one service truck, for between $20 and $25 million, which will be purchased in 2024 Q4 and bring the total dedicated fleet at this site to approximately seventy heavy equipment units.