MacMachon agrees to sell Dawson South equipment, nets about $44m

View of the Anglo American sign in Brisbane, Queensland.
View of the Anglo American sign in Brisbane, Queensland.

MacMahon Holdings Limited (ASX: MAH) has agreed to sell a substantial portion of its remaining mobile equipment fleet at Anglo American’s Dawson South project, resulting in about $44m in net cash inflows for the mining services company.

Macmahon was awarded a three-year $200m surface mining contract at the open cut metallurgical coal mine in July 2021, with the parties currently negotiating a new contract to commence on or before 1 July 2024.

Dawson South forms part of the Dawson mine in the southern end of the Bowen Basin in Central Queensland, one of Australia’s longest-established coal mines.

Macmahon managing director and chief executive Michael Finnegan says he is pleased that the company has been able to “progress MacMahon’s capital light strategy to improve ROACE performance – where [its] target was recently increased from 15% to 20%”.

No new capital expenditure is expected over the new term due to divestment of a large portion of the Dawson South equipment fleet, which will be utilised on the project.

The mining services company also expects to retain its incumbent workforce of about 210 employees.

Macmahon expects to deliver FY24 revenue of $1.8b-$1.9b and underlying EBIT(A) of $130m-$140m.