Macmahon Holdings Limited · ASX:MAH
Macmahon — Merger or Acquisition (May 2017)
24 slides from Macmahon's merger presentation, May 8, 2017
Slide 1: AMNT Transaction
AMNT TRANSACTION 8 MAY 2017
Slide 2: Transaction Overview
Transaction Overview Macmahon will become the life-of-mine mining services provider at the Batu Hijau copper-gold mine in Indonesia and buy relevant mobile equipment with new Macmahon shares .1 ▪ Life-of-mine, alliance-style Mining Services Contract awarded by AMNT (owner of Batu Hijau mine) ▪ ‘Cost
Slide 3: Transaction Benefits (1 of 2)
Transaction Benefits (1 of 2) ▪ FY2018 EBIT guidance to increase from A$30-35 million to A$40-50 million1 A$10-15 IMPROVED million FORECAST ▪ The full benefit of the Mining Services Contract expected to be realised in EARNINGS FY2018 FY2019 following ramp-up to Full Operations EBIT INCREASED ▪ Sig
Slide 4: Transaction Benefits (2 of 2)
Transaction Benefits (2 of 2) ▪ Introduces a new major shareholder in AMC (AMNT’s related company) SUPPORTIVE ▪ AMC and AMNT will support existing strategy MAJOR ▪ AMC and AMNT will assist Macmahon in securing further opportunities in Asia and SHAREHOLDER Australia ▪ Right for AMC to appoint 2 nomin
Slide 5: AMNT Assets & Development Opportunities
AMNT Assets & Development Opportunities Batu Hijau ▪ Large, open pit, owner-mined, porphyry copper-gold deposit located on Sumbawa Island, Indonesia ▪ Second largest copper-gold mine in Indonesia (behind Grasberg) SUMBAWA ISLAND ▪ AMNT acquired 82.2% in late 2016, primarily from Newmont and Sumitomo
Slide 6: About Batu Hijau
About Batu Hijau ▪ Production at Batu Hijau commenced in 2000 with remaining LOM production of approximately 1.5Mt of Cu and 3.5Moz of Au anticipated over 14 years (excluding potential development opportunities at Elang and Nangka) ▪ Resource of 3.0 billion lb Cu / 3.5 million oz Au and reserve of 2
Slide 7: Mining Services Contract
Mining Services Contract Macmahon has agreed an expected US$2.9 billion life-of-mine, alliance-style mining services contract at Batu Hijau1. ▪ Life-of-mine mining services contract ▪ US$2.9 billion expected revenue over the 14 year LOM2 ▪ US$1.8 billion expected revenue over the first 5 years from
Slide 8: Mobile Equipment
Mobile Equipment ▪ Macmahon will acquire certain existing mobile equipment from AMNT (Mobile Equipment). Majority of equipment has been maintained by Trakindo (local Caterpillar dealer) and subject to close inspection by Macmahon. Mobile Equipment has been independently valued at US$145.6 million ▪
Slide 9: Strategic Alliance
Strategic Alliance AMC Singapore (AMC) (AMNT’s related company) will be issued a 44.3% shareholding in Macmahon as consideration for the Mobile Equipment. ▪ AMC intends to support delivery on Macmahon’s current strategy and for Macmahon to continue operating with a majority independent board ▪ Parti
Slide 10: Subscription Price and Premium to Historical Trading
Subscription Price and Premium to Historical Trading The AMC subscription price of A$0.203 is at the top end of the recent IER valuation range 1, a 27% premium to the 1-month VWAP2 and a 40% premium to CIMIC’s recent A$0.145 takeover offer 3. +31% +31% +27% +32% +38% +40% 0.203 0.155 0.155 0.160 0.1
Slide 11: Impact on FY2018 Guidance
Impact on FY2018 Guidance FY2018 Revenue – Key Movements Updated Guidance and Assumptions 800 700 Tropicana Telfer Batu Hijau Other ▪ FY2017 and FY2018 guidance (excluding AMNT 600 transaction) remains in line with prior guidance provided 500 Feb-17 A$m 400 ▪ Assuming AMNT transaction completes: 300
Slide 12: Execution of Existing Strategy
Execution of Existing Strategy The announcement of Byerwen Coal Mine preferred contractor status and the AMNT transaction are consistent with Macmahon’s strategic roadmap. Strategy ▪ Developing deeper client relationships and expand international presence ▪ Focus on execution of existing projects, w
Slide 13: Forecast FY18 Revenue: Pre & Post Transaction
Forecast FY18 Revenue: Pre & Post Transaction Customer (%)1,2 Commodity (%)1,2,3 11% AMNT TRANSACTION 21% 10% EXCLUDING 47% 16% 78% 16% AngloGold Newcrest Unsecured New Other Gold Coal Other 9% AMNT TRANSACTION 16% 8% INCLUDING 36% 12% 25% Cu 59% 12% 25% AngloGold AMNT Newcrest Unsecured New Other
Slide 14: Map of Operations
Map of Operations Macmahon’s existing operations are spread across multiple projects in Australia and South East Asia, with the proposed Batu Hijau project to build on existing experience and presence in Indonesia. Batu Hijau Sumbawa Island, Indonesia PT AMNT Cadia New South Wales Byerwen Newcrest M
Slide 15: Timeline to Completion
Timeline to Completion Unanimous support from Macmahon Directors who believe that the transaction has the potential to deliver substantial value for Macmahon’s shareholders. The Directors unanimously recommend that shareholders support the Transaction in the absence of a superior proposal and subjec
Slide 16: Investor & Media Contacts
Investor & Media Contacts Christian Sealey General Manager – Investor Relations & Corporate Affairs Macmahon Holdings Limited T: +61 8 9232 1876 E: csealey@macmahon.com.au 16
Slide 17: Appendix
APPENDIX
Slide 18: FY2018 Guidance Assumptions (1 of 2)
FY2018 Guidance Assumptions (1 of 2) Assumptions underpinning FY2018 guidance excluding the Batu Hijau contract: In FY2018, Macmahon is anticipating substantially improved financial performance with revenue increasing to between $470 million and $510 million and EBIT to increase to between $30 milli
Slide 19: FY2018 Guidance Assumptions (2 of 2)
FY2018 Guidance Assumptions (2 of 2) Assumptions underpinning FY2018 guidance relating to the Batu Hijau contract: The key assumptions underlying the FY2018 guidance in relation to Batu Hijua are set out below. These assumptions should be reviewed having regard to the sensitivity analysis and risk f
Slide 20: Guidance Summary
Guidance Summary FY2018 H1 FY2018 H2 FY2018 FY2018 Guidance Summary Excluding AMNT AMNT Including A$m FY2017 AMNT Transaction Transaction AMNT FY ending 30 June Transaction Impact1 Impact1,2 Transaction Revenue 350.0 – 370.0 470.0 – 510.0 20.0 140.0 620.0 – 680.0 Earnings EBITDA 30.0 – 35.0 67.0 – 7
Slide 21: Earnings Guidance – Sensitivity Analysis
Earnings Guidance – Sensitivity Analysis The FY2018 anticipated revenue and EBIT are inherently uncertain and the following table summarises the key sensitivities in both revenues and EBIT both excluding and including the AMNT Transaction. FY2018 FY2018 Excluding AMNT Transaction Including AMNT Tran
Slide 22: Risk Factors Relevant to Earnings Guidance (1 of 2)
Risk Factors Relevant to Earnings Guidance (1 of 2) Macmahon shareholders should be aware that there are a number of risks including those outlined below which could materially affect the future operating and financial performance of Macmahon. 1 ▪ There can be no guarantee that the guidance in this
Slide 23: Risk Factors Relevant to Earnings Guidance (2 of 2)
Risk Factors Relevant to Earnings Guidance (2 of 2) ▪ Guidance is partly based on current contracts in hand and Macmahon derives a significant proportion of its revenue from providing services under large contracts. A client could terminate services on short term notice and as a result, there can be
Slide 24: Important Notice and Disclaimer
Important Notice and Disclaimer DISCLAIMER AS TO FORWARD LOOKING STATEMENTS This presentation contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. These forward looking statements are based on, among other