Macmahon has secured a mining services contract worth A$463m ($287m) from Masmindo Dwi Area (MDA) for the Awak Mas gold project in Indonesia.
MDA is a subsidiary of Indika Energy.
The seven-year contract, with an option to extend for an additional five years, will involve open-pit mining activities, including drilling, loading, hauling, and mine site development.
Operations are set to begin in the first half of 2025, with initial mining equipment to be deployed from Macmahon’s existing fleet.
Approximately A$17m ($10.53m) in growth capital will be invested over the first four years for the major mining equipment required at the commencement. This is in line with the company’s annual growth capital target of A$30m ($19m).
Macmahon has confirmed that its FY25 capital expenditure budget of A$230m, including the A$30m growth capital, remains unchanged.
There will be no impact on the company’s net debt or underlying earnings guidance of A$160m to A$170m for FY25.
Macmahon CEO and managing director Michael Finnegan said: “We are delighted to be selected as the mining contractor for the Awak Mas gold project in Indonesia which presents a great landscape for us given our existing relationships.
“This project will add to our secured work in hand, and we are pleased to have negotiated a low capital solution utilising existing fleet and variable leases.
“I would like to thank the Macmahon team who have worked closely with PT MDA over the last 12 months to build a strong relationship which I am confident we will continue to build on.”
Located in South Sulawesi, the Awak Mas gold project spans 14,390ha in the Luwu Regency. It is expected to be a low-cost, long-life gold mine, producing approximately 100,000 ounces of gold annually over an initial 11-year mine life.
A definitive feasibility study (DFS) completed in October 2018 outlined an upfront capital expenditure of $146m, a post-tax net present value (NPV) of $152m, and an after-tax internal rate of return (IRR) of 20.3%.
The Indonesian gold project’s after-tax payback period is estimated at four years.
In July last year, Macmahon secured an A$390m, three-year mining services contract at Anglo American’s Dawson South project in Queensland, Australia.
