Macmahon has locked in an agreement that would see it become the mine services contractor for PT Amman Mineral Nusa Tenggara (AMNT) at the Batu Hijau copper-gold mine in Indonesia.
Earlier this year Macmahon entered a non-binding heads of agreement (HOA) which involved it acquiring assets from AMNT, which in return would become a major shareholder in the Perth-based contractor.
If the transaction is executed, Macmahon will become the life of mine services contractor, providing earthmoving and mining services for the mine. It will also acquire certain existing mobile mining equipment from AMNT to conduct the mining contract.
Macmahon believes the transaction “has the potential to be transformational” for the company.
It listed a number of benefits of the transaction including improved earnings for the 2018 financial year – with its guidance updated to $620-680 million revenue and $40-50 million earnings before interest and taxes (EBIT). The company also cited improved growth prospects with the transaction, with the potential for future works at the Elang deposit and the Nangka prospect should AMNT decide to develop them.
Macmahon CEO Michael Finnegan said the company was “thrilled” at the prospect of working with PT AMNT at Batu Hijau.
“If completed, this transaction will see Macmahon’s scale significantly increase and that brings with it a number of benefits which will assist us in the execution of new and existing projects,” he said.
“It will make us a stronger and more robust business, and will provide us with a supportive and strategically aligned major shareholder which should help us grow even further.”
The transaction is subject to a number of conditions including Macmahon securing an independent expert to determine whether it is fair and reasonable to its shareholders and AMNT acquiring title to any parts of the mobile equipment currently held by the existing maintenance provider.
Macmahon is set to receive shareholder approval in July this year.