Contract extensions and strong order book drive Mastermyne's result

THE extension of key contracts and a record order book have fuelled a strong revenue and earnings performance for underground contracting group Mastermyne in the six months to December 2019.
Contract extensions and strong order book drive Mastermyne's result Contract extensions and strong order book drive Mastermyne's result Contract extensions and strong order book drive Mastermyne's result Contract extensions and strong order book drive Mastermyne's result Contract extensions and strong order book drive Mastermyne's result

Mastermyne's order book is at a record level of $700 million.

During the period Mastermyne delivered record roadway development metres across the most number of development units operated by the company since its inception.

Revenue increased 17% to $136.4 million while net profit surged 37% to $4.3 million for the half year period.

Mastermyne CEO Tony Caruso said the company was successful in securing contract extensions with South 32's Appin Colliery in New South Wales and Anglo American's Moranbah North mine in Queensland.

"The half year result represents an exceptional period for the group, with key contracts extended with our major clients, on-going return to shareholders through dividends, the acquisition and integration of Wilson Mining Services and major project related capital investment to further support margin improvement," he said.

"In addition, we were awarded the Aquila Underground development contract, which is now fully resourced, equipment commissioned and running at full rate into the second half.

"Our order book is at a record level of $700 million, which position's Mastermyne to deliver the strongest ever result for the Mastermyne business."

The company has a net cash position of $4.9 million, excluding lease liabilities.

During the period there was some reduction in net cash primarily due to returns to shareholders through dividends, acquisition of Wilson Mining services and major project-related capital investment to bolster future margins.

As revenue continues to grow, the company is maintaining its disciplined approach to overheads with only minimal escalation to support the increased activities, and subsequently overheads have materially decreased as a percentage of revenue.

Despite costs from the inclusion of Wilson Mining, the company reported an earnings before interest tax depreciation and amortisation margin of 8.4%.

"Stronger margins are expected for the second half with all projects now fully mobilised and operating at full run rate, a strong start to the second half from Wilson Mining, and anticipated scope increases on current projects," the company said.

During the period, $7.3 million in capital was invested to overhaul mining equipment for hire into new contracts, and this has been a strong contributor to the strength in the EBITDA margin.

Workforce numbers have increased over the past 12 months with total workforce numbers at 1153 representing. That is a 20% increase from the end of FY2019.

"While resources have become constrained as demand for mining services has remained strong, the company was able to successfully resource the Aquila and Tahmoor projects with highly skilled and capable personnel," Mastermyne said.

"The company is forecasting workforce numbers to remain at the current level in the second half of the year as all projects are fully resourced and operating at full run rate."

According to Mastermyne, mines continue to look to maintain production output and take advantage of the current coal prices.

"The company is also progressing a pipeline of whole-of-mine opportunities with proponents who are looking to restart operations utilising a contract miner supporting the company's whole of mine growth strategy," it said.

 

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