Macmahon has executed an equipment sale agreement pursuant to which Macmahon has agreed to sell a substantial portion of its mobile equipment fleet at the Dawson South project. The Dawson South project is located in Queensland and forms part of the Dawson Mine, being an open cut steel making coal mine.

The mobile equipment was sold at market rates which were at or above book value, for cash consideration, and is expected to result in net cash inflows of approximately A$44 million to be collected during FY24 and FY25.

Macmahon is currently the mining contractor at the Dawson South project with the existing contract due to end on June 30,  2024. The parties are in negotiations on the terms of the new contract, which is expected to commence on or before July 1, 2024. Macmahon expects to retain its incumbent workforce of approximately 210 employees.

No new capital expenditure is expected over the new term due to the divestment of a large portion of the Dawson South equipment fleet, which will be utilised on the project. Macmahon says it “is focussed on its strategy of improving the cash-backed return on average capital employed in the business and is pleased to deliver a solution that meets the client’s needs, is in line with the company’s strategy, and improves sustainable free cash flow generation.”

Macmahon reaffirms that it expects to deliver FY24 revenue of between A$1.8 billion to A$1.9 billion and underlying EBIT(A) of A$130 million to A$140 million. Managing Director and Chief Executive Officer Michael Finnegan said: “I’m pleased we have been able to sell a substantial portion of the Dawson South fleet and progress Macmahon’s capital light strategy to improve ROACE performance – where our target was recently increased from 15% to 20%. I would like to thank the Macmahon team who have worked closely with our client to deliver this solution.”