Macmahon in deal with Indonesian miner

Macmahon Holdings has been chosen by an Indonesia-based company to asses options to expand a copper-gold mine, and has been named preferred contractor under a three-year term if plans to expand go ahead.

Perth-based Macmahon, which is being targeted for a takeover by Spanish-controlled CIMIC Group, has signed a memorandum of understanding with Amman Mineral for the preferred contractor status and will work with the client to speed up production at its Batu Hijau copper-gold mine on Sumbawa Island.

“The parties will also explore options to potentially develop additional deposits in the same mining area,” Macmahon said in a statement.

As part of the preferred contractor status, Macmahon said, the two companies would negotiate terms for Macmahon to provide earthmoving and mining services if Amman chose to expand production, or if it saw fit that mining works could be better carried out by a contractor.

Macmahon chief executive Michael Finnegan said the agreement was a step forward in expanding the company’s presence in Indonesia.

“We are thrilled to be chosen by Amman to assist it in relation to Batu Hijau, which is one of Indonesia’s largest copper-gold deposits,” he said.

“This MOU is a positive development in one of a number of opportunities Macmahon is pursuing in the near term in Australia, Indonesia and elsewhere internationally.”

As part of the agreement, Amman has the right to terminate the MOU early if there is a change in control or management of Macmahon.

Macmahon shares were 3.3 per cent lower to 14.5 cents each in early trade.