During its annual general meeting yesterday, the mining services provider forecast operating EBITDA for the six months to December 31 of A$115-118 million.

That compares to operating EBITDA of $246.1 million for the 2020 financial year.

"As anticipated, the business has been impacted by the softening coal prices over 2020, however we have seen strength in the hard rock metals commodities, predominantly in our WA operations - both in open cut and underground," Emeco managing director Ian Testrow told shareholders.

"This has resulted in significant growth in gold revenue, which we expect to represent 38% of group revenue in 1H21, up from 12% in 1H20.

"Metals (including gold) are forecast to contribute 58% of group revenue in 1H21, up from 38% in 1H20."

Sustaining capital expenditure for the half is expected to be $55-60 million, with $10-12 million of growth capex required to support subsidiary Pit N Portal's underground mining services contract for Mincor Resources' Kambalda nickel operation.

"A further $5-7 million of capex will be required in 2H21 for this project," Testrow said.

"This contract is a significant win by Pit N Portal and indicative of the growth potential of this newly acquired business."

Pit N Portal also recently won its first open cut mining contract for Red 5's Great Western project.

Testrow said despite global challenges, Emeco's longer term outlook remained unchanged.

"Gold and iron ore have been exceptionally strong in the Western Region, as evidenced by the growth in gold revenue," he said.

"This business has also been supported by increased fully maintained projects and strong demand for equipment and mining services."

The company's Eastern Region business remains challenging as a result of off-hire notices, which are expected to impact earnings by 10-20%.

"However, the business has stabilised and, with high bidding activity levels, we expect to redeploy fleet throughout 2H21 with growth into calendar 2022," Testrow said.

Emeco has its strongest balance sheet since its 2006 listing, with gross debt of $280 million, net debt of $224 million and net leverage of 0.91x on a pro-forma basis following a capital restructure launched in August.

"We now have a capital structure that appropriately supports what is a very strong business with great opportunities for growth," Testrow said.

"This creates an exciting challenge for management and the board as we prudently allocate the free cash the business generates, while fast tracking our strategic evolution."

Given the current operating uncertainty, Testrow said the Emeco board saw it as prudent to maintain higher than normal liquidity.

"However, the board does consider that our share price does not reflect fair value, and to the extent this persists, as operating conditions stabilise, we will consider appropriate capital management initiatives including the resumption of dividends as well as share buy-backs," he said.

"We are acutely aware of our shareholders return expectations and are working hard to deliver on those expectations."

Emeco shares closed at 94c yesterday, the highest since August. It gives the company a market value of $511.4 million.