MACA will proceed with an acquisition of Downer EDI’s surface contract mining business, Mining West, for $175 million, taking over $1.1 billion worth of contracts.
The business comprises four large Western Australian contracts: Fortescue Metals Group’s Eliwana iron ore mine and rail project; Ansteel’s Karara iron ore project; Citic Pacific’s Sino iron project; and Gold Fields and Gold Road Resources’ Gruyere gold project.
MACA’s proposed acquisition will also expand its fleet as it welcomes 126 items of Downer’s mobile mining equipment, providing the company with an increased capacity to deliver to a broader range of projects.
The fleet includes 14 excavators and shovels, 65 dump trucks, 11 surface drills and 36 other ancillary machines.
MACA chief executive Mike Sutton said the acquisition provided the Perth-based contractor with a meaningful addition of a large-scale mining fleet that was engaged across four life-long projects.
“All (projects are) with quality customers that are well known to me and other key members of MACA’s management team,” he said.
“With the inclusion of Mining West, MACA now has total contracted work in hand over $3.4 billion, that provides a robust revenue base well past (the 2025 fiscal year).”
MACA expects the acquisition to improve its position as the leading provider of surface contract mining services to the Western Australian resource sector.
It will also diversify MACA’s current gold project work, with the introduction of iron ore to its portfolio of secured works.
MACA has secured a number of major contracts since the start of the 2021 financial year, including Atlas Iron’s Corunna Downs project, Capricorn Metals’ Karlawinda project, Fenix Resources’ Iron Ridge project and Red 5’s King of the Hills EPC (engineering, procurement and construction) project.
The contractor will obtain a $130 million loan and raise $75 million in capital to fund the Mining West acquisition, which is valued at 2.5 times the valuation of Mining West’s net income for the 2020 financial year.
MACA will pay $109 million in cash once the acquisition is completed, followed by 12 monthly payments of $5.5 million each. It expects to receive $390 million in revenues from Mining West’s contract works in the current financial year.
Downer chief executive Grant Fenn said the sale of Mining West marked another important step in the implementation of Downer’s urban services strategy.
“An important part of our urban services strategy is to exit our capital-intensive mining business,” he said.
“The sale of open cut Mining West follows the sale of Downer Blasting Services, the Snowden consulting business and our share in the RTL Mining and Earthworks joint venture. The proceeds received from these four transactions is in line with the carrying value of these businesses.
“We remain in active discussions with a number of interested parties in relation to the other parts of the mining portfolio namely open cut Mining East, underground and the Otraco tyre management business.”
MACA stated that there would be no change expected in day-to-day operations at any of Mining West’s four projects, nor to its existing contracts. All Mining West project employees will join MACA.
The proposed transaction is expected to complete early next year.
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MACA will proceed with its acquisition of Downer EDI Mining and take over contracts with Fortescue Metals Group, Ansteel, CITIC Pacific, Gold Road Resources and Gold Fields Limited.
MACA will proceed to acquire Downer EDI’s surface contract mining business, Mining West, for $175 million, taking over $1.1 billion worth of contracts. View on Facebook
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