Macmahon Holdings Limited · ASX:MAH
Macmahon — Investor Presentation (June 2017)
32 slides from Macmahon's investor presentation, June 2017
Slide 1: Investor Update June 2017
INVESTOR UPDATE JUNE 2017
Slide 2: Contents
Contents Company Overview Investment Highlights Current Operations Expected New Work Strategic Direction AMNT Transaction Guidance Transaction Timeline Appendix 2
Slide 3: Company Overview
Company Overview Macmahon is a leading Australian based mining services provider with both open-pit and underground mining expertise Business Overview Capitalisation Summary3 Pro-forma Macmahon is a pure play ASX-listed company which offers both Unit Ex. AMNT Inc. AMNT open-pit and underground min
Slide 4: Investment Highlights
Investment Highlights FULL SERVICE Diversified mining contractor offering open-pit and underground mining services MINING CONTRACTOR Strong existing relationships with major mining companies Multiple tender opportunities representing $6.4 billion in potential aggregate contract STRONG TENDER v
Slide 5: 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 6: Overview of Key Contracts
Overview of Key Contracts Macmahon’s current key contracts are with tier one global mining companies with a number of key contracts concentrated in the world class mining jurisdiction of Western Australia Project Client Location Commodity Type Comments AngloGold Macmahon’s largest project Ashanti
Slide 7: Summary of Expected New Work
Summary of Expected New Work Macmahon expects to convert the following major new opportunities in the near term, subject to conditions. Project Client Location Commodity Type Comments AngloGold Macmahon has Life of Mine contract anticipated to run to Tropicana Ashanti / 20241 with a further 7 year
Slide 8: 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 9: Tropicana – Expansion Potential
Tropicana – Expansion Potential Tropicana Directional Production1 Operational Update 700 Tropicana is our largest alliance contract and has been profitable since inception 600 Life of mine contract for AngloGold Ashanti and Independence Group’s open-pit gold mine in 500 Western Australia Koz Au
Slide 10: Telfer – Turnaround Strategy
Telfer – Turnaround Strategy Telfer EBIT Guidance Operational Update 30 Telfer is our second largest contract, an open-pit and bulk earthworks mining contract for Newcrest’s Telfer gold-copper mine in Western Australia 20 Expected to achieve Telfer has been incurring significant losses since com
Slide 11: Byerwen Coal Mine
Byerwen Coal Mine Macmahon has been selected by Byerwen Coal Pty Ltd as its preferred mining contractor to establish and then operate the new Byerwen Coal Mine near Glenden in the Queensland Bowen Basin. Asset Overview Macmahon currently exclusively negotiating a 3 year mining contract with possib
Slide 12: AMNT Transaction
AMNT TRANSACTION
Slide 13: 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 14: 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 FY2019 EARNINGS FY2018 following ramp up to Full Operations EBIT INCREASED Sig
Slide 15: Transaction Benefits (2 of 2)
Transaction Benefits (2 of 2) Introduces a supportive major shareholder in AMC (AMNT’s subsidiary) as a strategic alliance partner with agreed protocols for its participation in Macmahon’s SUPPORTIVE decision making1 MAJOR AMC and AMNT will assist Macmahon in securing further opportunities in As
Slide 16: Recommendation and Timeline to Completion
Recommendation and Timeline to Completion Macmahon’s Directors unanimously recommend that shareholders approve the AMNT Transaction by voting in favour of the Resolution to be considered at the shareholder meeting, and all Directors who hold or control shares intend to vote their own shareholdings i
Slide 17: 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 18: 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 years1 (excluding potential development opportunities at Elang and Nangka) Resource of 3.0 billion lb Cu / 3.5 million oz Au and reserve of
Slide 19: 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 20: Strategic Alliance
Strategic Alliance AMC Singapore (AMC) (AMNT subsidiary) 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 Parties have
Slide 21: Subscription Price and Premium to Historical Trading
Subscription Price and Premium to Historical Trading The AMC subscription price of A$0.203 is above the top end of the IER valuation range 1, a 27% premium to the 1-month VWAP2 and a 40% premium to CIMIC’s recent A$0.145 takeover offer 3. Notes: 1. Subscription price is above the Independent Expert’
Slide 22: Impact on FY2018 Guidance
Impact on FY2018 Guidance FY2018 Revenue – Key Movements Updated Guidance and Assumptions 800 700 Tropicana Telfer Batu Hijau Other FY2017 and FY2018 guidance (excluding AMNT 600 transaction) remains in line with prior guidance provided 500 Feb-17 A$m 400 Assuming AMNT transaction completes: 300
Slide 23: 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 24: Macmahon Order Book: Pre & Post AMNT Transaction
Macmahon Order Book: Pre & Post AMNT Transaction Commodity (%)1 Order Book (A$bn)2 6% PRE TRANSACTION 94% 1.2 Gold Other Existing Order Book 2% POST TRANSACTION 1.2 Potential further upside from 49% Cu 49% 4.2x Byerwen and Long Island opportunities 3.8 Gold Copper-Gold Other BH Mining Contract E
Slide 25: Appendix
APPENDIX
Slide 26: 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 $30 milli
Slide 27: FY2018 Guidance Assumptions (2 of 2)
FY2018 Guidance Assumptions (2 of 2) Assumptions underpinning FY2018 guidance relating to the Batu Hijau contract: The key assumptions underlying the FY2018 guidance in relation to Batu Hijua are set out below. These assumptions should be reviewed having regard to the sensitivity analysis and risk f
Slide 28: Guidance Summary
Guidance Summary FY2018 H1 FY2018 H2 FY2018 FY2018 Guidance Summary Excluding AMNT AMNT Including A$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 29: 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 30: 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 31: 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 32: 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
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