Macmahon Holdings has signed a “potentially transformational” deal with Indonesia’s PT Amman Mineral Nusa Tenggara that will boost its revenue and earnings and make the Indonesian company its biggest shareholder.
Under the deal, Macmahon will provide earthmoving and mining services for AMNT’s Batu Hijau copper and gold mine in Indonesia.
Macmahon says the contract for the life of the mine is expected to generate revenue of $US2.9 billion and materially improve earnings in the 2018 financial year.
It now expects earnings before interest and tax for the 2018 financial year of between $40 million and $50 million.
Under the deal, Macmahon also will acquire $US145.6 million of mining equipment from AMNT and pay for it by issuing about 954 million of its shares to AMNT’s subsidiary, Amman Mineral Contractors, at a price of $A0.203 per share.
That will make AMC Macmahon’s biggest shareholder, with a stake of 44.3 per cent.
The deal is subject to approval from Macmahon shareholders.
Macmahon on Monday said that all of its directors believe the deal could be transformational for the company and could position it as a leading force in mining services.
It said the deal would give it a regional profile and scale, and could lead to other work in Indonesia.
Its directors unanimously recommend that shareholders support the transaction.
“If completed, this transaction will see Macmahon’s scale significantly increase and that brings with it a number of benefits which will assist us in the execution of new and existing projects,” Macmahon chief executive Michael Finnegan said in a statement.
“It will make us a stronger and more robust business, and will provide us with a supportive and strategically aligned major shareholder which should help us to grow even further.”
Macmahon shareholders are expected to meet in July to consider the deal.
Shares in Macmahon were steady at 15.5 cents at 1129 AEST.