Tag Archives: Macmahon Holdings

Macmahon Holdings to bolster civil infrastructure business with Decmil buy

Mining mergers and acquisitions, Mining services, , ,

Macmahon Holdings Limited has entered into a Scheme Implementation Deed (SID) under which it will acquire 100% of the issued share capital of Decmil Group Limited for an implied enterprise value for Decmil of A$127 million ($81 million).

Decmil provides multi-disciplinary project delivery across the infrastructure, resources and renewable energy sectors, and has been in operation for over 40 years. It also provides an established and scalable foundation to accelerate growth in Macmahon’s civil infrastructure business, diversify earnings and improve overall returns on invested capital through its lower capital intensit, the company says.

On completion, Macmahon intends to operate Decmil as a wholly owned subsidiary and to maintain the Decmil branding, with the existing Macmahon civil business to integrate into the subsidiary. Decmil will continue to be led by its current Chief Executive Officer, Rod Heale.

Michael Finnegan, Managing Director and Chief Executive Officer of Macmahon, said: “The acquisition of Decmil is a significant milestone in Macmahon delivering on its long stated strategy to diversify its earnings and deliver a more resilient, scalable business enabling greater returns to shareholders.

“Decmil provides an established, well credentialed platform to allow Macmahon to better pursue the large opportunity pipeline of resource civil infrastructure and rehabilitation opportunities while diversifying earnings towards renewables and infrastructure, which are both expected to have an increased level of spending in the next decade.

“I look forward to the transaction successfully completing and welcoming Decmil into the Macmahon team.”

The acquisition of Decmil is consistent with Macmahon’s strategic focus of achieving continued earnings growth while diversifying earnings into the less capital intensive civil infrastructure business, it says. The transaction offers a strategic fit, enhances and accelerates earnings diversification, with financial metrics that are compelling for Macmahon shareholders.

It added: “Decmil has a complementary service offering to Macmahon, providing integrated civil construction and infrastructure solutions to the resources, infrastructure and renewable industries across Australia. Its core operations add increased exposure for Macmahon to both the renewable and government infrastructure sectors which have a steady growth trajectory. The Decmil business has established robust processes and operating systems, including holding the licences to carry out a full range of road and bridge projects throughout Australia. Macmahon will leverage these to accelerate growth towards its long-term civil infrastructure
revenue target of $1 billion per annum, or one third of group revenue.”

The acquisition adds circa-A$6 billion to Macmahon’s existing civil pipeline of A$4 billion, and contributes an order book of circa $450 million (as at 31 December, 2023). This creates a more resilient business with less concentrated resource commodity exposure and provides a natural hedge to the cyclicality of contract mining.

This gives access to non-mining civil construction, including renewables and government infrastructure projects, broadening our east coast presence in Victoria and Queensland with an opportunity to expand into including New South Wales and South Australia.

It is anticipated that Decmil shareholders will be given the opportunity to vote on the schemes at the scheme meeting which is currently anticipated to be held in early August 2024.

Macmahon Holdings extends stay at PT Agincourt’s Martabe mine

Explosives and blasting, Mine operation news, Mining services, Precious metals, , , , , , , , , ,

Macmahon Holdings says it has extended its appointment by PT Agincourt Resources (PTAR) as the mining contractor for the Martabe gold project in North Sumatra, Indonesia.

Macmahon has been working to support PTAR at the Martabe mine site since 2016 and, in that time, its workforce on site has grown to over 600. The scope for Macmahon on the next stage of development will involve open-cut mining activities including drilling, loading, hauling and mine site development.

The contract extension commences on April 1, 2023, for a seven-year period with the option to extend for a further two years. It is expected to generate revenue of A$350 million ($234 million) in the first seven years, adding to Macmahon’s secured order book.

Macmahon will continue to integrate safety, environmental and social considerations into its operations at Martabe and looks forward to continuing this work in partnership with PTAR and
the local communities on all these areas, it said.

The contract value of the successful extension at Martabe and other recent contract awards in financial year 2023 total approximately A$2.5 billion, which exceeds Macmahon’s financial year 2023 order book run-off. As a result, the company is better positioned to strategically pursue low-capital intensity opportunities.

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are delighted to be re-appointed by PTAR as the mining contractor for its Martabe gold project and believe this reflects the significant efficiencies delivered on the project. Since 2016 we have built, and continue to build, a strong relationship with the PTAR team and look forward to being part of the further successful development of the mine. I would like to thank our Macmahon team at the Martabe project in Indonesia. Their continued dedication and support are what makes this project successful.”

Macmahon and PT Amman Mineral Nusa Tenggara close in on Batu Hijau Phase 8 contract

Base metals, Explosives and blasting, Mine operation news, Mining equipment, Mining services, Precious metals, , , , ,

A subsidiary of Macmahon Holdings has entered into final agreements to carry out the Phase 8 scope of work at PT Amman Mineral Nusa Tenggara’s Batu Hijau copper-gold mine in Indonesia.

PT Macmahon Indonesia and PT Amman Mineral Nusa Tenggara (AMNT) currently have an alliance-style mining and leasing services agreement in place for Batu Hijau, a large open-pit, porphyry copper gold deposit on Sumbawa Island in Indonesia. This is a cornerstone project that underpins Macmahon’s long-term outlook, the contractor says.

Given the success of the Batu Hijau mining contract to date and AMNT’s expected outlook for copper and gold prices, AMNT has made the decision to expand the Batu Hijau mine by undertaking a further cutback of the pit, known as Phase 8. Under the revised Batu Hijau Mine Plan, it is expected to extend in-pit mining to approximately June 2028.

In keeping with the life-of-mine nature of the existing contract between AMNT and Macmahon Indonesia, AMNT intends to maintain the engagement of Macmahon Indonesia as Head Mining Services Contractor for the Phase 8 expansion. Accordingly, AMNT and Macmahon Indonesia have entered into a new Mining and Leasing Services Contract under which (subject to Macmahon shareholder approval) Macmahon Indonesia will carry out the Phase 8 scope of work and continue with Phase 8 works currently underway, on updated commercial terms.

Macmahon explained: “Factors relating to the Phase 8 expansion made it difficult to apply the current commercial framework under the existing mining and leasing services contract (executed in 2017 and amended in 2018) to the additional Phase 8 works. In particular, the original $145 million of equipment on site at Batu Hijau acquired in 2017 has been depreciated to nil over a five-year term.”

The written-down value of all Macmahon-owned equipment on site is an important driver of return for Macmahon given that Macmahon receives part of its remuneration as a return on capital employed.

Under the new arrangements, Macmahon Indonesia will acquire from AMNT certain Caterpillar equipment (including dozers and trucks) with an independently-assessed market value of not more than $35 million, for use in performing the Phase 8 works and as security for the third-party financier. Macmahon Indonesia will also have the right (but not the obligation) to fund certain budgeted rebuilds or refurbishments of, and new components for, some of AMNT’s plant and equipment, along with other capital expenditure (which may include new trucks or other new plant and equipment).

Macmahon Indonesia will recover its capital investment on the assets acquired from AMNT and the amounts funded on rebuilds, refurbishments and new equipment through monthly depreciation charges paid by AMNT over the expected useful life of each item (with the asset to be transferred back to AMNT once Macmahon Indonesia has recovered its full capital investment). Macmahon Indonesia will also earn a monthly return on capital fee equivalent to a 15% return on the average written down value of its capital investment.

In addition, Macmahon Indonesia will have the opportunity to earn key performance indicator (KPI) fees (of up to $5.1 million per six-month period) based on overall project performance against project KPIs (although there is no certainty that any such KPI fees will become payable to Macmahon Indonesia).

Macmahon Indonesia also intends to implement third-party funding arrangements under which Macmahon Indonesia would recover a portion of its capital expenditure immediately from a financier, and would then repay the financier via monthly repayments that approximate the monthly depreciation charges recovered from AMNT. The financier would, of course, charge a fee for this arrangement, but Macmahon Indonesia would only seek to obtain finance where the costs of the financing are significantly less than the return on capital fee payable to Macmahon Indonesia in respect of the financed equipment.

Replacing the existing mining and leasing services contract will result in the current Macmahon Indonesia mining fleet (which has now been fully repaid by AMNT and depreciated to nil) being transferred to AMNT in accordance with the termination provisions of the existing contract. Because AMNT is a substantial shareholder in Macmahon, these transfers, and some of the other arrangements noted above, require Macmahon shareholder approval.

A notice of meeting setting out further details in relation to the new arrangements and seeking shareholder approval will be released to the ASX following this announcement.

The new commercial framework will, once approved, deliver a number of benefits to Macmahon, it say, including:

  • Confirmation of increased tenure at Batu Hijau given the Phase 8 expansion and resultant extension of mine life;
  • Furthering the relationship with AMNT, enhancing Macmahon’s ability to pursue opportunities at Elang and other growth opportunities; and
  • An ability for Macmahon Indonesia to provide a sustainable investment in equipment and/or major rebuilds at Batu Hijau which will permit Macmahon Indonesia to generate a return on capital fee.

Macmahon’s Managing Director and CEO, Michael Finnegan, said: ”AMNT has a world-class asset and our relationship with them at Batu Hijau is highly valued. Phase 8 is an important opportunity to continue our relationship. Pleasingly, with the support of AMNT, we have been able to simplify the contract to remove zero margin revenue which will enhance operating margin, reduce working capital investment and improve our return on capital during the expected 5.5-year life extension.

“During the term of the contract, we also have flexibility to discuss how much capital to invest and with the agreed return of 15% on capital invested, this determines how much earnings are generated. This extension will generate improved project earnings, cash flows and financial returns that support our capital allocation and investment when compared to the existing contract.

“We look forward to continuing our relationship with AMNT at their highly productive, world-class Batu Hijau operation and with a partner who values technology and ESG. I would also like to thank our team, in particular our Chief Financial Officer, Ursula Lummis, for their efforts in positioning Macmahon to win the Phase 8 expansion work.”

Macmahon confirms mining gig at Greenbushes lithium project

Energy minerals, Mine operation news, Mining services, , , , ,

Macmahon Holdings says it has now finalised a load and haul services contract with Talison Lithium Australia Pty Ltd for the Greenbushes lithium project in Western Australia.

This follows Macmahon’s selection as the preferred load and haul contractor for the project, announced last year.

This contract involves open-pit mining activities of load and haul, and crusher feed, which will commence on July 1, 2023, for a seven-year period with an option to extend for up to two years. The contract is estimated to generate revenue in excess of A$1.1 billion ($768 million) over its initial seven-year term.

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are delighted to finalise this contract with Talison Lithium for its Greenbushes lithium project. This contract will add approximately A$1.1 billion to our order book, which delivers on our commodity diversification strategy into future-relevant commodities. We have built a strong relationship with the Talison Lithium team and look forward to developing this project with them.”

Talison Lithium is a Western Australia-based mining company which is 51%-owned by a joint venture comprising Tianqi Lithium Corporation and IGO Limited, and 49%-owned by Albemarle Corporation.

Together with its predecessor company, Talison Lithium has been producing lithium concentrates at Greenbushes since 1983, which are ultimately used in lithium batteries. The Greenbushes project, directly south and adjacent to the town of Greenbushes in Western Australia, is a major supplier of lithium mineral concentrates.

Macmahon Holdings to take on load and haul duties at Greenbushes lithium mine

Energy minerals, Mine operation news, Mining services, , , , , , , ,

Macmahon Holdings says it has received a Notice of Award from Talison Lithium Australia for the load and haul mining works at its Greenbushes lithium project in the southwest of Western Australia.

Talison Lithium is a Western Australia-based mining company which is 51%-owned by a joint venture comprising Tianqi Lithium Corporation and IGO Limited, and 49%-owned by Albemarle Corporation.

Together with its predecessor company, Talison Lithium has been producing lithium concentrates at Greenbushes since 1983 which are ultimately used in lithium batteries. The Greenbushes project, directly south and adjacent to the town of Greenbushes in Western Australia, is a major supplier of lithium mineral concentrates.

The scope of works on the Greenbushes project includes open-pit mining activities of load and haul, and crusher feed.

Subject to final documentation of certain in-principle agreed terms and signing within 30 days, the contract will commence on July 1, 2023, for a seven-year period and has an option to extend for up to two years. The contract is estimated to generate revenue in excess of A$1.1 billion ($731 million) over its initial seven-year term.

Key mining equipment required for commencement will be from deployment of Macmahon’s existing available mining fleet with minimal impact to capital expenditure in the 2023 financial year, Macmahon says. The maximum remaining capital expenditure required to support this project is spread from the 2024 to 2028 financial years (inclusive) and totals approximately A$128 million. The five-year spread of this capital spend enables Macmahon to maintain a strong balance sheet and enhance return on average capital employed performance, and a number of opportunities exist to optimise this further.

Macmahon said: “The Greenbushes project is in an attractive location, has an existing long-term and loyal workforce with many based in the area. We are eager to engage with them and other people to discuss employment opportunities on the project to build a world-class team. Engaging with the on-site team is a priority for us upon award given the high level of performance we have noted on the project.”

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are delighted to have received the Notice of Award from Talison Lithium for load and haul mining services at its Greenbushes lithium project and look forward to finalising the contract. We very much value the relationship we have forged with Talison Lithium and will continue to build on it. The award of this contract delivers on our commodity diversification strategy into future relevant commodities.”

Macmahon books A$600m of work with Newcrest, AngloGold and Vale

Base metals, Mine operation news, Mineral project development, Mining equipment, Mining services, Precious metals, , , , , , , , , , , ,

Macmahon Holdings has bolstered its order book with a number of contract extensions involving the Tropicana and Telfer gold operations, in Western Australia, and the Hu’u copper-gold project, in Indonesia.

At the Tropicana mine, a joint venture between AngloGold Ashanti Australia Ltd (70% and operator) and Regis Resources Ltd (30%), Macmahon has been providing mining services since open-pit mining started in July 2012 under a life of mine alliance contract.

The additional work for Macmahon follows the completion of a detailed final cutback study of the Havana pit and subsequent confirmation of the optimal method to mine the deeper ore in the Havana ore body. Macmahon has now been provided with the scheduling detail for the cutback, which will add 155 Mt to the material to be mined from 2024.

The final cutback of Havana will extend the open-pit mine life by four years, from 2023 to 2027, and is expected to generate additional revenue of approximately A$470 million ($340 million), it said.

Macmahon has also extended its life of mine contract with Newcrest for the Telfer mine.

On August 12, Newcrest announced it will proceed with the West Dome Stage 5 cutback at Telfer. This new scope of work is expected to generate revenue of circa A$138 million and will extend Macmahon’s work on site to September 2024. This new work has been negotiated on updated rates, which are forecast to achieve the company’s internal financial hurdles, Macmahon explained.

In Indonesia, Macmahon has received a letter of award to construct an 11 km access road at the Hu’u copper gold exploration project on Sumbawa island. This work is valued at approximately A$18 million and is a further step in the company’s strategy to increase its revenue from mining support services.

Subject to finalisation of contract documentation, the project is forecast to commence in September 2021 and employ approximately 150 people. The Hu’u project is 80% controlled by Vale SA. Vale has previously said the project could produce more than 250,000 t of copper and more than 200,000 oz of gold.

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are pleased to have secured this additional work which adds approximately A$600 million to our order book. A key highlight is the extension of our long-term alliance contract at Tropicana, which has been a cornerstone of our surface mining business in Western Australia for many years and has recently expanded into underground mining.”

Macmahon defies labour tightness to bolster contract mining order book

Coal technology, Mine operation news, Mining services, Precious metals, , , , , , , , , , , ,

Macmahon Holdings Ltd has added around A$1.35 billion ($988 million) of work to its order book with the signing of three previously flagged contract mining gigs, plus announced the addition of surface mining work at Northern Star Resources’ Julius gold project in Western Australia.

The three projects making up the A$1.35 billion of contract mining works are the 5-year agreement with St Barbara Ltd at the Gwalia gold mine, a three-year pact with Anglo American at Dawson South and a five-year contract with Red 5 Ltd at King of the Hills.

The contract with Northern Star Resources at Julius is expected to deliver revenue of A$25 million over the next 12 months. Production from the Julius deposit is expected to complement output from NSR’s Jundee operations.

In addition to these projects, Macmahon says it is well progressed in finalising the commercial arrangements for Phase 8 of its Batu Hijau copper-gold project in Indonesia, an operation owned by PT Amman Mineral Nusa Tenggara.

Macmahon commented: “While Macmahon has observed a tightening of the labour market in Australia over the past year, it can confirm that the Gwalia, Dawson South and Julius projects have commenced operations by the times required in those contracts.

“Macmahon has existing strategies for responding to challenges in the availability of labour, and believes it is well placed to continue to manage this operational issue into the foreseeable future, and to continue to deliver value for its clients.”

Commenting on today’s announcement, Macmahon CEO and Managing Director, Michael Finnegan, said: “Macmahon is continuing to build on its track record for delivery and to advance its growth strategy.

“It is very satisfying to have secured significant new work during financial year 2021, which provides us with a strong order book and excellent earnings visibility for FY22 and FY23. The underground work at Gwalia and King of the Hills also adds scale to our underground business, which is an important step in our strategy to diversify Macmahon.”

Felix equips Macmahon with tools to manage supply chain risk

IoT, Mining equipment, Mining maintenance, Mining services, Mining software, , , , ,

Felix Group Holdings Ltd has been awarded a three-year enterprise software contract with Macmahon Holdings for its Vendor Management and Sourcing solutions that, it says, is intended to be rolled out across the contract miner’s global operations.

Felix’s enterprise solution enables organisations to create efficiencies and manage supply chain risk by transforming and digitising the way they manage and engage with their third-party suppliers and subcontractors, it says.

The resources sector Macmahon operates in is an important part of Felix’s strategy as it continues to expand its platform into sectors beyond engineering and construction.

The contract is effective from July 1, 2021 and will run for 36 months, Felix says.

Felix CEO, Mike Davis, said: “We are very pleased to have won this contract with Macmahon, a market-leading mining services contractor. While not financially material, this represents an important milestone for Felix as we continue to expand our platform into new sectors.

“Macmahon undertook a comprehensive process to select a suitable solution to digitise their source-to-contract processes and create efficiencies across their operations. We look forward to partnering together and delivering sustainable value to Macmahon.”

Macmahon to start mining Anglo’s Dawson South met coal mine

Coal technology, Mine operation news, Mining services, Steel and iron ore, , , , , , , ,

Macmahon Holdings says it has been selected to provide surface mining services at Anglo American’s majority-owned Dawson metallurgical coal mine in Queensland, Australia, starting from July.

The work at the Dawson South operations, which forms part of the Dawson Mine, an open-pit met coal mine owned in a joint venture between Anglo American and Japan’s Mitsui Group, will generate around A$200 million ($153 million) in revenue over the three-year term, Macmahon said.

Signing of the mining services agreement is expected to occur in the near future, the company added.

Macmahon’s CEO and Managing Director, Michael Finnegan, said: “We are very pleased to be selected for the Dawson South operation by Anglo American, a leading global mining company. We look forward to working very closely with our new client to ensure a smooth transition period and continuity of safe operations. This new project further strengthens our growing east coast presence.”

Macmahon lines up open-pit/underground work at Red 5’s King of the Hills gold project

Mine operation news, Mining services, Precious metals, , , , , , ,

Macmahon Holdings Ltd has been awarded its second major contract in as many weeks in the Goldfields region of Western Australia, receiving a letter of intent to carry out contract mining services at Red 5 Ltd’s King of the Hills (KOTH) gold project.

The KOTH project is an open pit and underground gold deposit with a projected mine life of over 16 years. This could see the company produce 176,000 oz/y of gold over the first six years, according to a recent feasibility study.

Red 5 has commenced the construction of the camp and processing facilities on site and is planning for mining to commence in early 2022. First gold production is expected to occur in June 2022.

Just last week, Macmahon was appointed the underground mining contractor at St Barbara’s Gwalia gold mine at Leonora Operations in Western Australia.

Following a detailed tender process for both the surface and underground mining activities, Red 5 has issued a letter of intent to Macmahon for a proposal combining both scopes of work. Under the agreement, the parties are working to finalise the documentation by which Macmahon will provide all surface and underground mining services to the project over a five-year contract term, commencing in the March quarter of 2022.

Macmahon expects this documentation will be completed by June 2021 and that the contract will add over A$650 million ($497 million) to the company’s order book.

Macmahon’s CEO and MD, Michael Finnegan, said: “We are delighted to be in advanced discussions with Red 5 for its King of the Hills gold project in Western Australia. We have a strategy to expand our presence across the mining services value chain, and this project highlights the benefits of being able to offer a combined surface and underground mining solution from the outset. We look forward to continuing our relationship with the Red 5 team and supporting their development of this important project.”