Tag Archives: Mastermyne

Metarock set to leverage competitive contractor advantage

Mastermyne’s contract mining growth ambitions became very clear in September when it proposed a buyout of contractor PYBAR Mining Services in a deal valuing PYBAR equity at A$47 million ($35 million).

The deal, which has just completed, sees Mastermyne, up until this point a company focused on the Australian coal sector, expand into the domestic hard-rock space through exposure to PYBAR’s gold, copper, zinc and lead-related revenues. In the process, it has been restructured under Metarock Group Limited.

The transaction is expected to create a leading Australia-based diversified mining services business with material scale, Mastermyne said, adding that the combined group will have a A$1.7 billion-plus order book and an active tender pipeline of A$2.7 billion-plus after completion. PYBAR will continue to operate as an independent business unit within the group with the existing management team.

Tony Caruso, Managing Director of Metarock (pictured), said the company had identified some time ago the need to diversify into “adjacent markets” to ensure its business retained “resilient and sustained earnings”.

“To be clear, we are very supportive of the coal industry, and we will continue to grow our coal business,” he told IM. “What we do know from 30 years of experience of operating in this market is it is very cyclic.”

When coal prices are strong, it is a great market to be a contractor, Caruso explained. Yet, when prices come down, contractor workforces or scope reductions often follow as mine owners look to cut their “flex costs”.

A diversified Metarock would be able to better cope with such a market dip.

“The theory (behind the PYBAR acquisition) is that when coal is down, other commodities will be up,” Caruso said.

In addition to increased commodity diversity, there are also a huge number of synergies that could be realised with the combination of the two companies.

PYBAR offers raiseboring services that can be used in coal, while Mastermyne offers ground support services (through its recently acquired Wilson Mining business) that can be used in the hard-rock space.

Both have registered training organisations that could share industry best practice across sectors, too.

What Mastermyne learned in the coal boom when it developed the “clean skin” training program, using a simulated underground coal mine with a bespoke program to train people for working in an underground coal mine, may have relevance in the hard-rock sector given the recent ‘boom’ perceptions, according to Caruso.

There are also more specific technology synergies that could benefit both hard-rock and soft-rock customers.

PYBAR has embraced automation and digitalisation with, for example, teleremote loading operations at the Dargues gold mine in Western Australia (pictured below, credit: PYBAR) and the use of Digital Terrain’s Simbio data entry and processing solution on its mining fleet.

Mastermyne has been running a similar project where real-time data is “taken off” machinery and, through proprietary software, converted into real-time dashboards for the operators to track performance against operational targets. Mastermyne used such a system with great success at the Narrabri underground operation, owned by Whitehaven Coal.

Caruso said on the latter: “We were looking at building out that software into other areas of our business – we used that in our production machines when we were cutting coal, but we were starting to look at bringing that across to a lot of the other support services we provide to customers as well.”

Should PYBAR come on board, Simbio could end up being used on its coal development machines, according to Caruso.

It works the other way round, too, with Mastermyne’s proximity detection expertise in coal having applications in the hard-rock space.

“Not only are these solutions OEM-agnostic; they are sector-agnostic,” Caruso said. “The same technology is applicable for coal and metalliferous markets.”

The benefits of the business combination do not stop here.

Growth in the coal space has mostly been tied to sustaining capital projects – the overall production levels have remained flat, if slightly increased – whereas, in the hard-rock sector, brownfield and greenfield projects have been the order of the day, catalysed by higher prices and projections of increased demand.

This means the pressure dynamics around skilled labour are slightly different between the two.

Mastermyne has, to this point, benefitted from the ongoing trend of majors exiting their thermal coal businesses to deliver on ambitious ESG targets, with smaller companies taking on these assets and outsourcing work to contractors. Mining contracts at Crinum (Sojitz Blue Pty Ltd) and Cook (QCoal) in Queensland are two examples of the company taking advantage of this trend.

This type of sustaining growth capital expenditure in the coal sector is very different to the greenfield growth witnessed in 2010-2012, Caruso said. “The significant volume increase in greenfield expansion, which drove real pressure on labour, is not there,” he said.

In the hard-rock space, the dynamic is much more reminiscent of that boom a decade ago.

“There are a lot of new projects in Western Australia opening up so there is a lot more pressure on resources because the demand is far outstripping the supply in the hard-rock labour pool,” he said.

While there has not, typically, been a transfer of labour between the coal and hard-rock contracting sectors, if Metarock is able to facilitate such a shift, it could gain a competitive advantage over peers scrabbling for talent that are focused wholly on the hard-rock mining space.

“We have a workforce of 2,000-2,500 people at the moment, and we want to have a fluid workforce that can move across sectors,” Caruso said. “This will enable us to send our best people to projects to make sure we replicate good performance at these operations, regardless of where they are, geographically, or what type of work they are doing.”

Not only could this provide Metarock with the ability to shift employees between sectors, but it could also allow them to offer employees long-term security beyond the current Australian coal demand horizon.

Mastermyne looks for hard-rock exposure with PYBAR Mining buy

Mastermyne has accelerated its hard-rock mining strategy with an agreement to acquire PYBAR Mining Services in a cash and share deal that comes with an expected equity purchase price of A$47 million ($35 million).

The acquisition for PYBAR Holdings, owner of PYBAR Mining Services, will see Mastermyne, a metallurgical coal-focused contractor, exposed to PYBAR’s gold, copper, zinc and lead-related revenues, it said.

The deal is expected to create a leading Australia-based diversified mining services business with material scale, it said, adding that the combined group will have a A$1.7 billion-plus order book and an active tender pipeline of A$2.7 billion-plus after completion.

To reflect the changing make up of revenues, Mastermyne is proposing to change its name to Metarock Group Ltd.

Mastermyne MD and CEO, Tony Caruso, said: “The PYBAR acquisition is highly complementary to Mastermyne’s existing underground business and expands the combined group’s addressable markets to support ongoing growth, in addition to increasing the earnings resilience of the group by diversifying our commodity exposure.”

PYBAR Mining Services was established in 1993 and has gone on to become one of Australia’s largest underground mining contractors, serving the likes of Glencore (Black Rock mine), Diversified Minerals (Dargues gold mine), Gold Fields (Hamlet North mine), Evolution Mining (Cowal gold mine), OZ Minerals (Carrapateena) and more.

It has a large fleet of equipment, which includes Sandvik DD421 and DD421i series drills, a fleet of Cat R1300, R1700, R2900 and Sandvik LH621i LHDs, Cat AD45V-AD60 sized trucks and several Sandvik TH663s haul trucks. It provides services such as mine development, raiseboring, mine production, shotcreting, cable bolting and production drilling.

Mastermyne says PYBAR will continue to operate as an independent business unit within the group with the existing management team should the deal go through.

Subject to Mastermyne shareholder approval and the satisfaction or waiver of other conditions associated with the transaction, Mastermyne anticipates the deal completing by the end of the year.

Mastermyne to take on ‘Whole of Mine Operations’ at Sojitz’s Gregory Crinum

Mastermyne Group says it has been awarded the Mining Services Contract to operate the Gregory Crinum underground mine in Queensland, Australia, owned by Sojitz Blue Pty Ltd.

The contract term is seven years, including re-establishment, with the value coming in at A$600-660 million ($464-510 million), the company reported.

During 2020, Sojitz appointed Mastermyne to undertake a feasibility study focusing on the development of a high productivity bord and pillar mining operation. In parallel, Mastermyne was also engaged as the Mine Operator to undertake the re-entry process. The underground mining area was successfully re-entered in late October 2020, with no issues encountered, according to the contractor. Mastermyne continued as the Mine Operator while Sojitz finalised internal approvals.

The re-establishment project scope includes the re-establishment of the underground infrastructure including conveyor systems, ventilation, associated mine services, remediation works and surface infrastructure, all of which is expected to take around six months. Following these works, the mine will immediately transition into production with a staged ramp up to three bord and pillar mining units.

The underground mine is expected to produce around 11 Mt run of mine over the life of the project, with mining production planned to commence later this year.

At full production, the underground mine is expected to employ 180 full-time personnel. Mastermyne will provide underground mining equipment from its current fleet, including three bord & pillar miners, multi bolters and shuttle cars along with a range of ancillary production equipment to support the operation. The contract is expected to deliver on average A$80-100 million of revenue per year once in full production, Mastermyne says.

“Initial funding for the project establishment will be a combination of Sojitz capital and Mastermyne capital with the company drawing on its strong cash position and available funding lines to finance the project,” Mastermyne said. “The company’s capital contribution will primarily fund the overhaul of the mining fleet and ancillary mining equipment, which will be recovered over the term of the contract.”

Mastermyne intends to retain ownership of its mining equipment throughout the project.

Mastermyne CEO, Tony Caruso, said: “The execution of our first Whole of Mine Operations contract is a major milestone for Mastermyne and is significant in transitioning the business into a commercial model that is not only complimentary to the existing contracting model, but will provide an even greater level of earnings certainty over the long term.”

Sojitz CEO, Cameron Vorias, said: “We are delighted to have Mastermyne as our highly regarded partner for this development and it will support our strategic plans for the growth of high quality hard coking coal from the area.”

Mastermyne’s Aquila coking coal contract extended by Anglo

Anglo American has extended the stay of Mastermyne Group at its Aquila coking coal project in Queensland, Australia, with the ASX-listed contractor set to continue development of the underground mine for at least the next 12 months.

Mastermyne has been engaged since August 2019 to undertake roadway development in the mains and gate roads, and all outbye related services for the establishment of the new longwall operation at Aquila.

The contract variation will extend the current contract to March 2022 and includes the operation of an additional roadway development unit.

Mastermyne currently employs 178 full-time personnel under the contract, with a further increase of around 60 full-time personnel required for the operation of the additional roadway development unit. Up to half of the personnel for this third development unit at Aquila mine will be relocated from Anglo’s Moranbah North coal mine (currently suspended), following the completion of planned activities. Mobilisation of the additional workforce at Aquila will be completed by March 2021.

The contractor says it continues to supply development equipment from its fleet, including a continuous miner and ancillary development equipment for the project.

Total revenue generated from the variation and extension to the mining contract is expected to be approximately A$60 million ($47 million).

Mastermyne CEO, Tony Caruso, said “We have been working to deliver major underground infrastructure and roadways safely and efficiently, and we look forward to continuing our work with Anglo American to deliver their new longwall project, producing premium high-quality hard coking coal.”

Anglo’s 70%-owned Aquila project will extend the life of its existing Capcoal underground operations by six years and continue to use the associated infrastructure at the Capcoal complex as its nearby Grasstree mine approaches end of life, Anglo says. The project is scheduled for first longwall production of coking coal in early 2022.

Mastermyne outbye services contract extended at South32’s Illawarra coal mine

Mastermyne Group says it has won a short-term extension to its existing contract with South32 at the Illawarra metallurgical coal operation in New South Wales, Australia.

The execution of the new contract will see the ASX-listed contractor continue to provide outbye services at the operation, part of the Appin colliery, until June 30, 2020. This extension closely aligns Mastermyne’s outbye services with the roadway development contract also operating in parallel at the mine, it said.

The scope of the agreement provides for a range of services managing outbye processes and supplementary labour in the Appin colliery longwall area.

The contract extension, expected to generate revenue of around A$17 million ($11.6 million) over the seven-month period, also allows the company to use this time to finalise an Enterprise Agreement with its workforce, it said.

South32 completed two longwall moves in the June 2019 quarter and plans to produce 7 Mt of metallurgical coal in the year ending June 30, 2020. This is up from 6.6 Mt in the previous 12-month period. More longwall moves have been scheduled for the current quarter and the March 2020 quarter as South32 looks to support the operation’s return to a three longwall configuration from the June 2020 quarter.

Mastermyne CEO, Tony Caruso, said: “We have worked closely with South32 for some time now, and putting this extension in place means both organisations are able to plan and get set for the longer term requirements at the mine.

“The company has provided contracting services to the Illawarra metallurgical coal operations for over 15 years now and we look forward to assisting South32 with their next stage of underground growth at the Appin colliery.”

Mastermyne gets three more years at Moranbah North, Grosvenor

Mastermyne Group has had its Moranbah Region Umbrella contract with Anglo American’s Metallurgical Coal division renewed for a three-year term, it said.

The contract extends the existing contract at Moranbah North and Grosvenor mines, in Queensland, Australia, and commences from November 15.

Mastermyne said the pact includes an option to extend for an additional two years at Anglo American’s discretion, with work under this contract estimated to contribute revenues of around A$250-$300 million ($170-204 million) over the three-year term.

The scope of work includes design, supply and installation, recovery and maintenance of ventilation structures and devices; installation of secondary support; outbye support and maintenance activities; conveyor belt installations and recovery; and development services.

Moranbah North is an underground longwall coking coal mine that began operating in 1998, while Grosvenor, also a longwall coking coal mine, produced its first longwall coal in May 2016.
Mastermyne said the revenue and earnings from the contract extension have been included in the company’s current 2020 financial year guidance.

Mastermyne CEO, Tony Caruso, said: “The company is very pleased to see the continuation of this long-term relationship, built with Anglo American over the past 17 years. Moranbah North and Grosvenor mines supply high-grade metallurgical coal to the international market for steel production, and we are pleased to support their successful operation.”

Mastermyne back on the road at South32’s Illawarra coal complex

Australia and coal focused Mastermyne Group has been given the nod by South32 to restart roadway development services at the Illawarra coal complex in New South Wales.

The contract, initially awarded back in August 2017, is expected to deliver annual revenues of some $18 million, according to Mastermyne.

South32 requested roadway development be stopped in line with the temporary closure of the Appin mine, part of the Illawarra complex, last year.

Mastermyne said the additional revenue generated through this contract secures the upper end of the 2019 financial year (to end-June 2019) guidance range of A$230-250 million ($165-179 million).

Mastermyne CEO Tony Caruso said: “We are very pleased to have recommenced work on this project and further extend out working relationship with South32’s Illawarra metallurgical coal operations.”

The company already has a contract in place with South32 for the provision of services at the Appin mine. This is primarily process works and supplementary labour in the Appin longwall area.