METS

Macmahon scores $19M payment

MACMAHON Holdings has scored a $A19 million payment from Glencore’s Cobar Management and confirmed underground development work at BHP Billiton’s Olympic Dam mine will finish in September.

Andrew Duffy
Macmahon scores $19M payment

The payment comes after a settlement over the termination of Macmahon’s shaft sinking contract at the CSA Mine in New South Wales in 2013.

Macmahon said $3 million of the payment would go towards project assets it currently held and a final profit of $16 million would be recognised in the current financial year.

Executive chairman Jim Walker said the money would be used to pay down debt.

“We have been working hard to sell surplus assets with a view to reducing over time the amount drawn under our syndicated banking facility,” he said.

“This settlement will provide a significant boost to our financial restructuring program and will help us to further reshape our organisation to become more resilient and sustainable against the backdrop of a challenging market.”

Walker said a review of the company’s cost structure had recently been completed and had identified a number of areas for improvement.

“We have moved quickly to implement these initiatives and as a result we expect to see a step reduction in our overhead cost base from $83.7 million in financial year 2014 to $46 million in FY16 and beyond,” he said.

“We are continuing to look at every aspect of the way we operate in an effort to further improve our productivity and reduce costs, which is essential given the state of the market.”

Walker said revenue for FY2015 was expected to hit guidance of $600-700 million.

In other updates, Macmahon said it would finish underground development services at Olympic Dam at the end of September, in-line with the current contracted term.

While underground development work is scheduled to finish up, the company will still provide raise drilling services under two separate contracts for slot drilling and surface holes.

Macmahon said it also had the opportunity to continue to assist with specialist services including shotcrete and cable bolting.

Macmahon shares were up 16% to 5c.

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