Macmahon signs HOA with AMNT
Friday, March 3 2017 - 01:30 AM WIB
ASX-listed Macmahon Holdings Limited said that it has signed a non-binding Heads of Agreement (HOA) with Indonesia?s gold and copper mining firm PT Amman Mineral Nusa Tenggara (AMNT).
The company said in a statement on Thursday the HOA outlines the key commercial terms under which Macmahon would acquire certain assets from AMNT, AMNT would become a significant shareholder in Macmahon and Macmahon would be awarded a life of mine contract to provide certain earthmoving and mining services at AMNT?s copper-gold mine in Indonesia.
?The Macmahon directors believe that the proposed transaction has the potential to be transformational for Macmahon and to deliver substantial value to Macmahon?s shareholders,? the company said in the statement.
Macmahon said if completed, the proposed transaction will increase the scale, operational diversity, revenue and order book, profitability and growth prospects of Macmahon in the medium term.
Prior to this announcement, the proposed transaction had not progressed to a stage where it was capable of being announced or included in Macmahon?s target's statement, the company said.
In essence, the HOA contemplates that the following agreements will become effective at completion:
- Macmahon and AMNT will enter into a life of mine, alliance style mining contract for the Batu Hijau copper-gold mine in Indonesia (Mining Contract). The initial scope of work (for Phase 7 of the Batu Hijau open-pit) is expected to have an order book2 of approximately US$2.7 billion over the life of the Batu Hijau operation (with approximately US$2.0 billion occurring over the first 5 years from 1 January 2018). In addition, the work may be extended to include the development of the Elang deposit (located approximately 60km east of Batu Hijau) and the Nangka prospect which are controlled by AMNT;
- Macmahon will acquire certain existing equipment at Batu Hijau from AMNT (including loading equipment, trucks, ancillary and support assets and usable inventory) (Sale Assets) based upon an independent valuation (Sale Assets Valuation). Based on Macmahon?s preliminary internal estimates the Sale Assets have an estimated value of approximately US$150 million, but this is subject to variation as the independent valuation has not yet occurred; and
- In consideration for the acquisition of the Sale Assets, Macmahon will issue AMNT with new Macmahon shares equivalent to between 40% and 50.1 percent of Macmahon?s expanded share capital post completion (Consideration Shares). The number of Consideration Shares will be determined by dividing the Sale Assets Valuation by an agreed subscription price of A$0.203 per Macmahon share. The subscription price represents the high end of the Independent Expert?s valuation range included in Macmahon?s target statement released to the ASX on 27 February 2017, or a 40 percent premium to CIMIC?s offer price of A$0.145 per share.
The proposed transaction is subject to a range of conditions as outlined further below, including the approval of Macmahon's shareholders in a general meeting. Importantly, one of these conditions is that there be no change of control to Macmahon as result of CIMIC?s offer, which is defined as CIMIC acquiring greater than 40 percent voting power in Macmahon. The expected benefits of the proposed transaction will therefore not be available if CIMIC?s shareholding in Macmahon increases to more than 40 percent.
Editing by Reiner Simanjuntak