Australian company Mastermyne has signed a conditional agreement to buy all shares of Wilson Mining Services (WMS) for an upfront consideration of $7.6m.

The company plans to buy WMS for $3.8m in cash and the remaining will be issued as ordinary shares in Mastermyne.

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The remaining consideration is expected to be supplemented in contingency payments, upon performance of WMS over a preceding three-year period.

Mastermyne CEO Tony Caruso said: “WMS is a highly specialised underground business that has a niche service offering predominately in the longwall ground consolidation area.

“This business pioneered the introduction of phenolic cavity fill and injection products which has greatly improved the safety and productivity of longwalls in Australia.

“WMS and Mastermyne have a long history of working together to provide chemical injection and installation support to the Australian underground coal sector and the acquisition of WMS fits well with our growth strategy of providing niche, value adding underground services to our existing clients.”

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Following the acquisition of WMS, Mastermyne will be able to enhance its suite of services, all of which are essential for the continuation of underground longwall and mining operations.

The acquisition is expected to generate annual revenues of around $30m, at an EBITDA margin in the range of 10-14%.

Mastermyne will fund the cash part of the acquisition from its available cash.

The transaction is subject to satisfaction of conditions and is expected to conclude by the end of this month.

In 2014, Mastermyne signed a deal to acquire Diversified Mining Services (DMS) for $20m.