Macmahon Wins Coburn Mineral Sands Project
Macmahon Holdings Limited (ASX: MAH) has revealed on the 3rd of August, that it has won a contract awarded by Strandline Resources (ASX: STA) to begin developing road access and bulk earthworks at Coburn mineral sands project in Western Australia.
The awarded contract stands at approximately AUD23 million which will see MAH construct 43 km of roadworks connecting the Coburn mine with the North West Coastal Highway. Supporting infrastructure, including various site roads, bulk earthwork pads, dams and drainage solutions will fall under the MAH operational scope.
STA will thus gain access to construction pads, accommodation villages, processing facilities, power stations, bore fields, site offices, along with other buildings needed for mineral processing. As such, the two parties have come to an agreement that includes special provisions for the schedule, cost, safety, environment, quality, and indigenous engagement in the area. As a company that has shown four years of increasing sales and revenue, MAH is a stable partner.
Before this announcement, MAH gained a AUD700 million Byerwen contract that affirms the company’s pre-COVID-19 guidance. Following the contract award, MAH response to government advice on COVID-19 saw policies develop involving social distancing, employee support, health management, travel bans and supporting local communities and suppliers.
The effects of these measures included staggering shift start times to reduce the number of people at meetings, providing accommodation alternatives, temperature screenings before FIFO flights, and finally charity donations. Supplier support came through in a case by case fashion.
Thanks to these efforts and the contract at Byerwen, 10 million tonnes of hard coking coal per annum will help support the AUD1.3 to AUD1.4 billion in revenue and AUD85 million to AUD95 million in earnings before interest and tax. As of the 4th of July, FY21 work in hand amounted to AUD1.2 billion, increased from AUD115 million excluding revenue from short term work. New updated and audited figures will be available on the 26th of August when full-year results are released.
Looking at the June quarterly report, investors can see the most current details, which makes MAH attractive to investors. Market Capitalisation came to AUD540 million, across the four sectors: civil mining, surface mining, underground mining, and rehabilitation services.
There is a great exposure to gold which sits to benefit macroeconomically due to COVID-19 effects, with an average of 3 significant contracts awarded per year since 2017. Cash assets for 1H20 came to AUD114.2 million from AUD113.2 million in FY19, with AUD155 million in undrawn facilities, allowing for stable dividends.
Despite the pandemic and global disruptions, Macmahon Holdings continues to strive forward with contracts that support their clients. Meanwhile, investors will benefit from the update set for release on the 26th of August to get a better understanding of the company position.
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