Macmahon settlement brings in $19m

Macmahon Holdings has received a $19 million settlement almost two years after its shaft sinking project at Glencore’s CSA copper mine in New South Wales was terminated.

The settlement, which was paid out by CSA miner operator Cobar Management, included a $3 million payment for project-related assets currently held by Macmahon, leaving a $16 million profit margin.

Executive chairman Jim Walker said the cash inflow would be used to repay debt.

“We have been working hard to sell surplus assets with a view to reducing over time the amount drawn under our syndicated banking facility,” Mr Walker said.

“This settlement will provide a significant boost to our financial restructuring program and will help us to further reshape our organisation to become more resilient and sustainable against the backdrop of a challenging market.”

Mr Walker said an independent review of Macmahon’s cost structure had recently been completed and a number of initiatives identified have been swiftly carried out to reduce its overhead cost base from $83.7 million in FY14 to $46 million in FY16.

The news came as Macmahon flagged its underground development services contract at BHP Billiton’s Olympic Dam site would be wrapping up in September.

The company said it wanted an opportunity to provide shotcrete and cable bolting to BHP after completion of the current works.

 Macmahon also provides raise-drilling services at Olympic Dam under two separate contracts, the more material of which will wrap up in June 2018.

Macmahon shares were 16.2 per cent higher to 5 cents a share at 1pm.