Mastermyne maintains margins with new equipment and cost discipline

INVESTMENT in operating equipment and a focus on cost management has helped underground contractor Mastermyne secure a 9% margin for the six months to December 2020 despite falling revenues due to reduced coal mining activity.
Mastermyne maintains margins with new equipment and cost discipline Mastermyne maintains margins with new equipment and cost discipline Mastermyne maintains margins with new equipment and cost discipline Mastermyne maintains margins with new equipment and cost discipline Mastermyne maintains margins with new equipment and cost discipline

Mastermyne has a long-term strategy to move into contract mining operations.

Mastermyne CEO Tony Caruso said there was no doubt the lower coal price had an impact on the company's first half results as clients and customers responded to the price weakness.

"But what is very pleasing for us is how again our operating model has us set up to respond quickly and appropriately in these cycles and despite lower revenue our margins were able to be maintained and improved,"  he said.

Caurso said Sojitz's Crinum underground project in Queensland was well progressed and the company had been appointed as the mine operator.

During the first half Mastermyne successfully re-entered the underground mine workings in conjunction with Queensland Mines Rescue to re-establish ventilation and verify the underground conditions.

The mine is in a period of care and maintenance awaiting the final investment decision to begin underground production. That decision is expected during the second half of FY2021.

"This project will be a significant milestone for the business and will be the realisation of a long-term strategy to move into contract mining operations and we look forward to a successful outcome," Caruso said.

Mastermyne's recent appointment of a hard rock general manager ensured the focus on diversifying the business was lost.

"Through the period we have seen a number of hard rock tender opportunities flow through the business and our confidence is growing that we will be successful in winning work in this area," Caruso said.

"Alongside our organic growth strategy is growth by acquisition and we continue to explore opportunities in this regard."

Anglo American's Aquila project in Queensland has ramped up to full run rate expected under the original contract with Mastermyne.

"The work scope and contract has subsequently been expanded and the company expects to see additional revenue generated from this project as the mine moves towards longwall operations in 2022," Caruso said.

"The investment in the equipment fleet for the project has delivered improved margins and is providing a competitive advantage on the project.

"The company was also successful during the period in securing contract extensions at Glencore's Integra Mine, BMA's Broadmeadow Mine and SIMEC's Tahmoor Mine.

"The recent scope increases and contract extensions are signalling that our clients are gaining confidence in the price outlook and will rely on contractors through this period of recovery."

The company's order book, which is heavily weighted to metallurgical coal projects at more than 95%, stands at $595 million with $117 million to be delivered 2HFY21, $201 million in FY2022, and $278 million in FY2023 and beyond.