Macmahon Holdings (ASX:MAH) has acquired mining services specialist Pit N Portal from mining equipment rental business Emeco Holdings (ASX:EHL) via a $10 million asset sale arrangement.
Macmahon, which has a $377.12 million market capitalisation, says the acquisition comprises the purchase of Pit N Portal contracts and assets, including the novation of client contracts and transfer of Pit N Portal employees, as well as related site infrastructure assets, inventory, and light vehicles.
Pit N Portal is the underground business of Emeco.
The contract also includes a strategic rental partnership between Macmahon and Emeco that ‘facilitates growth flexibility and enhances free cashflow generation’ for Macmahon, according to the company.
Under the rental agreement, Emeco will become Macmahon’s preferred equipment rental provider for both surface and underground activities.
Also included in the transaction are Pit N Portal’s operations at private Perth company Wyloo Metals’ Durkin and Cassini mining projects, which are anticipated to be put on care and maintenance from 31 May 2024.
Macmahon notes that the ‘significant’ skilled employee base that it will add to its workforce amid a tight Australian labour market is an ‘important’ element of the transaction.
Nevertheless, Macmahon says the acquisition will not impact its 2024 financial year revenue and underlying EBIT(A) guidance, which remain unchanged at $1.7 billion to $1.8 billion and $130 million to $140 million, respectively.
Emeco Chief Executive Officer (CEO) and Managing Director Ian Testrow says the company’s exit from underground contracting allows it to focus its full attention on its core business of surface and underground equipment rental.
“Our mid-life asset model, supported by our Force workshops capability, enables us to source, rebuild, and refurbish machines at a significantly lower cost than new assets, driven by our scale and engineering capabilities. This cost and quality advantage drives Emeco’s industry-leading margins and returns in rental.
The preferred rental agreement with Macmahon enables us to support the growth of one of Australia’s leading contract miners in both surface and underground. By supporting Macmahon and our other contracting customers, we can continue to grow our core rental business, supported by our Force workshops’ maintenance and rebuild capabilities.”
“The preferred rental agreement with Macmahon enables us to support the growth of one of Australia’s leading contract miners in both surface and underground”
Pit N Portal is a mining services company that offers full-service underground and surface sector options to help maintain project control.
Macmahon Holdings is an ASX-listed mining services provider offering a package of services to miners throughout Australia and Southeast Asia.
Write to Adam Drought at Mining.com.au
Images: Macmahon Holdings and Pit N Portal
