Tag Archives: Michael Finnegan

Macmahon Holdings renews ties with Vault Minerals at Daisy Milano gold mine

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Macmahon Holdings Limited says it has been awarded a two-year contract extension by Vault Minerals (formerly Red 5) at the Daisy Milano gold mine within its Mount Monger operation in the Kalgoorlie region of Western Australia.

Macmahon has been providing underground mining services at Daisy Milano since acquiring the contract earlier this year as part of the takeover of the Pit n Portal (PnP) underground services business from Emeco Holdings Ltd, including mine development, production charging and load and haul services.

The two-year contract extension to October 2026 is expected to add approximately A$90 million ($58 million) of revenue towards Macmahon’s secured orderbook and will utilise
existing fleet as required for the project.

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are delighted to continue working with the team at Daisy Milano and building on our valued relationship with Vault Minerals. We are focused on continuing to drive safety and performance outcomes for our client.”

In the 2024 financial year, the Mount Monger operations delivered total gold sales of approximately 97,000 oz at an all-in-sustaining-cost (AISC) of A$2,176/oz. The three mining centres – Daisy, Mount Belches and Aldiss – produced approximately 657,000 t of ore at an average grade of 3.9 g/t Au from underground sources and approximately 67,000 t of ore at an average grade of 0.93 g/t Au from open-pit sources.

Macmahon’s Decmil to upgrade logistics links for Mount Holland lithium project

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Macmahon Holdings Limited subsidiary, Decmil, has been awarded a A$123 million ($83 million) road upgrade contract by Covalent Lithium Pty Ltd on the Mount Holland lithium project in Western Australia.

The scope of works includes upgrading the logistics link between the Great Eastern Highway and Covalent’s Mount Holland site, with approximately 113 km of road upgrades to take place.

Decmil commenced work on the project in August 2023 following receipt of a Limited Notice of Award in July 2023. Approximately A$59 million of works had already been completed during the 2024 financial year. Work under the full contract award is expected to directly create 220 jobs at its peak and be completed by April 2025.

The remaining value of the project works adds a further A$64 million in revenue to Macmahon’s secured order book supporting the 2025 financial year revenue guidance range of A$2.4-2.5 billion.

Macmahon’s CEO and Managing Directo, Michael Finnegan, said: “Decmil is off to a strong start in converting our A$11.6 billion tender pipeline having now secured approximately A$240 million of new work since Macmahon acquired the business in August 2024.

“The contract award at the Mount Holland Lithium project is the team’s second major road upgrade project since joining Macmahon, demonstrating Decmil’s strong credentials in this area, and I look forward to the successful delivery of the project for Covalent.”

Covalent has developed and is now operating the Mount Holland project, which, it says, is a unique, fully integrated producer of battery-quality lithium hydroxide in Western Australia. The company says it is targeting 75% recovery of spodumene in its concentrator and expects to produce more than 380,000 t/y of spodumene concentrate.

Macmahon to carry out mining activities at CPM’s Poboya gold project

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Macmahon Holdings Limited says it has been selected by PT Citra Palu Minerals (CPM), a subsidiary of PT Bumi Resources Minerals Tbk, as the mining services contractor for the Poboya gold project in Sulawesi, Indonesia.

The scope for Macmahon will include open-cut mining activities including drilling, loading, hauling, equipment maintenance and mine site development. Macmahon will also work with CPM to explore various options to develop its mines in the future.

The contract has commenced and is expected to complete in September 2026, adding approximately $54 million to Macmahon’s secured order book, with minimal capital expenditure expected to be incurred during the period.

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are delighted to be selected by CPM as the mining contractor for its Poboya gold project in Indonesia which will add to our secured work in hand. Indonesia presents a great landscape for us to grow, given our existing relationships and strategy to work with preferred partners that have world-class projects. I would like to thank the Macmahon team who have worked closely with our client over the past 12 months to build a strong relationship and support the development of their Poboya gold project. We are excited about the future growth prospects of this project.”

Macmahon Holdings to carry on contracting at Anglo’s Dawson South

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Macmahon Holdings says it has been reappointed as the mining contractor at the Dawson South project, in Queensland, Australia, three years after initially getting the gig.

The Dawson South project forms part of the Dawson Mine, an open-pit steelmaking coal mine 180 km west of Gladstone, which is owned by Anglo American.

Macmahon is the incumbent mining contractor at the Dawson South project and will continue to provide open cut mining services using the current Macmahon workforce, including load and haul, and equipment maintenance under the new contract.

The contract commences on July 1, 2024, for a period of up to three years, adding approximately A$130 million ($87 million) annually to Macmahon’s secured order book.

The capital expenditure requirements and capital intensity of this project over the new term is significantly lower following the sale of Macmahon’s Dawson South equipment fleet earlier this year, which will continue to be used on the project. Macmahon announced the sale of assets to the market on April 12, 2024, which it said at the time was expected to result in net cash inflows of approximately A$44 million to be collected during its 2024 and 2025 financial years.

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are delighted to be reappointed as mining contractor for the Dawson South project where we have worked to build an excellent relationship with our client. Macmahon recently sold a substantial portion of the Dawson South equipment fleet which will continue to be used at the mine. I believe the new contract structure benefits our client, is aligned with Macmahon’s capital light strategy, and improves ROACE (return on average capital employed) performance, where we recently increased the target from 15-20%. I would like to thank the Macmahon team that has worked closely with Dawson Mine to deliver this solution.”

Macmahon Holdings to bolster civil infrastructure business with Decmil buy

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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

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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

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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

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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

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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 Holdings finalises Calidus Warrawoona gold project contract

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Macmahon Holdings Ltd says it has now finalised a mining services contract with Calidus Resources Ltd for the Warrawoona gold project in Western Australia.

The news follows Macmahon’s selection as the preferred contractor for the project in 2020.

This contract involves the development of a new open-pit mine in the Pilbara region, with the scope of work for Macmahon expected to include all open-pit mining activities until December 2026. Macmahon anticipates the contract will generate revenue of approximately A$210 million ($154 million).

This contract is in addition to the early-stage civil works Macmahon is currently undertaking on site with 65 personnel. The company expects the main mining equipment to arrive on site in the March quarter of 2022, with the project to eventually employ around 120 Macmahon personnel.

Macmahon CEO and Managing Director, Michael Finnegan, said: “We are delighted to finalise this mining contract with Calidus Resources for its Warrawoona gold project, which follows on from the civil work we are currently undertaking on site. This contract will add approximately A$210 million to our order book and is a welcome addition to our growing portfolio of Western Australian gold projects. We have built a strong relationship with the Calidus team since we commenced on site earlier this year and look forward to developing this project with them.”