Macmahon gets Mongolian boost

MACMAHON Holdings says the sale of its Mongolian business has left it in a net cash position, with cost cutting and new tenders set to add an extra boost in the tough conditions.

Andrew Duffy

The $US65 million ($A83 million) sale announced this morning is the latest positive update from the company, which also netted $A19 million earlier this year after settling a claim over the CSA mine in New South Wales.

Executive chairman Jim Walker said the positive cash balance was an important step forward for Macmahon following the cancellation of the Christmas Creek contract in the Pilbara.

Walker said the company had worked hard to streamline the business in the tough conditions.

“Our business strategy is simple,” he said.

“Firstly, we are resettling the business by stripping back our cost base. This has helped us to significantly improve our pricing and our competitiveness.

“Secondly, in relation to new work, we plan to diversify our order book by broadening our business development focus to include a greater number of smaller opportunities.”

Looking ahead, Walker said Macmahon was tendering more than a dozen opportunities totalling more than $2.2 billion.

“This work is spread across Australia and internationally, with more than half of the opportunities relating to gold projects that run for three or more years.”

Walker said the work underway would help steel Macmahon against the tough operating environment.

“The mining services sector has recently faced significant headwinds,” he said.

“However, this has always been a cyclical business. We are determined to prove we can generate cash no matter what the market is doing, and be well positioned for the next upturn.”

The Mongolian sale comes at an important juncture for Macmahon, with the company still in discussions with lenders regarding a facility review event triggered in February.

Macmahon said its improved finances would strengthen its negotiating position.