Macmahon up on $19m windfall
UPDATE 2.35pm: Shares in Macmahon have risen on news it would receive $19 million from the settlement of a dispute with Cobar Management over a NSW mine contract.
The settlement relates to the termination of a shaft-sinking contract at the CSA mine in 2013.
Under the terms of the settlement, Cobar Management has agreed to pay Macmahon $19 million, which includes $3 million for project-related assets held by Macmahon.
Macmahon said it would recognise a $16 million profit from the settlement this financial year.
Executive chairman Jim Walker said the settlement represented a great outcome for the business, adding that the $19 million cash injection 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," he 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 a broad ranging independent review of Macmahon's cost structure had recently been completed, identifying a number of specific cost reduction initiatives.
"We have moved quickly to implement these initiatives and as a result we expect to see a step reduction in our overhead cost base from $83.7m in full-year 2014 to about $46 million in full-year 2016 and beyond," he said.
"We are continuing to look at every aspect of the way we operate in an effort to further improve our productivity and reduce costs, which is essential given the state of the market," he said.
Mr Walker said revenue for the 2015 financial year was expected to be within guidance of $600-$700 million.
The company also announced today it would wrap-up its underground contract with BHP Billiton at Olympic Dam at the end of September as planned.
It said the completion of the work would have no impact on its full-year results.
Macmahon shares were up 0.7 cents, or 16.28 per cent, to five cents at the close of trade.
