Western Australia Forum

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Western Australia Forum 10 OCTOBER 2017 WESTERNFor personal use only AUSTRALIA FORUM OCTOBER 2017 MACQUARIE CONNECTIONS 1 COMPANY OVERVIEW Macmahon is a leading Australian based mining services provider with both open-pit and underground mining expertise Business Overview Capitalisation Summary Pro-forma • Macmahon is a pure play ASX-listed company which offers both Unit open-pit and underground mining contracting services Inc. AMNT 1 • Established track record spanning more than 50 years Share price A$/share 0.237 Fully paid ordinary • Headquartered in Australia with a growing presence and focus in m 2,155 shares South-East Asia Market Cap. A$m 510 • Employs 1,600 FTE’s (excluding Batu Hijau) Net Cash A$m 54 • Owns and operates a large fleet of mobile equipment including >120 excavators and loaders, >200 dump-trucks, >50 drill rigs and world- Enterprise Value A$m 456 class maintenance facilities Net Tangible Assets A$/share 0.17 per Share2 Key Services Directors and Senior Management Jim Walker Non-executive Chairman Mine planning & management, drill and blast, Open Pit bulk & selective mining, crushing & screening, Vyril Vella Non-executive Director Mining equipment operation & maintenance Eva Skira Non-executive Director Giles Everist Non-executive Director Total mine management, underground Alex Ramlie Non-executive Director Underground development, underground production, portal Mining establishment, raisedrilling, cablebolting, Arief Sidarto Non-executive Director shotcreting, remote shaft lining, shaft sinking Michael Finnegan Chief Executive Officer José Martins Chief Financial Officer For personal use only Plant Commissioning, shutdown & maintenance Maintenance management, water management, tailings dam Greg Gettingby General Counsel/Company Secretary & Engineering services, plant modification, fittings & fabrication Source: Company filings. 1. As at 9 October 2017 2. Based on Balance Sheet as at 30 June 2017 and adjusted for issue of shares to AMNT on 8 August 2017 MACQUARIE CONNECTIONS – WA FORUM 2 MAP OF OPERATIONS INC. MAJOR FLEET Map of Operations TELFER BYERWEN BATU HIJAU Loading Fleet Loading Fleet Loading Fleet • 2x 6060 BH* • 1x 9800 1 • 5x 4100 Rope Shovel • 1x EX3600* • 2x 996 • 1x 2800 Rope Shovel Trucking Fleet • 2x 9350 • 2x EX5500 • 17x 793C* Trucking Fleet • 1x EX3600 • 9x 793D* • 9x MT4400* Trucking Fleet • 2x 789C • 9x 793F • 111x 793C • 2x 793C • 5x 789C SURFACE Batu Hijau FLEET Sumbawa Island, Indonesia SUMMARY PT AMNT TROPICANA Loading Fleet Excavators • 2x 6060 BH • 1x 6060 FS • 1x 800t • 1x 6050 BH • 7x 600t • 2x 6040 BH • 3x 500t • 1x EX3600 • 6x 400t Trucking Fleet ST IVES • 3x 300t • 19x 793F Loading Fleet For personal use only • 4x 793D • 2x EX3600 Byerwen • 4x 789C Queensland Trucks Trucking Fleet Byerwen Coal • 11x 789C • 180x 220t • 2x 785C • 22x 190t * Denotes client owned/ rental fleet 1 One 996 provided by the client MACQUARIE CONNECTIONS – WA FORUM 3 INVESTMENT PROPOSITION FULL SERVICE • Diversified mining contractor offering open-pit and underground mining services MINING • Strong existing relationships with major mining companies CONTRACTOR STRONG TENDER • Multiple tender opportunities representing >$5 billion in potential aggregate contract value PIPELINE LEVERAGED TO • Mining services sector activity expected to improve driven by: RESOURCES – Reinvestment by mining companies in existing operations, particularly for reserve extensions RECOVERY – Increased levels of bank financing available – Increase in tendering opportunities • Improvement in financial performance in FY18 driven largely by Telfer turnaround and the commencement of Batu Hijau and Byerwen projects • Recently finalised a transformational transaction with AMNT providing scale and stability to the business STRONG • Strong net cash of $54.1 million at year end, provides flexibility to pursue growth options BALANCE SHEET • Net Tangible Assets (“NTA”) per share of $0.15 per share FOCUSED • Major focus on cost reductions, productivity and growing order book STRATEGY • Focus now shifting to executing current base load of work For personal use only STRONG • Experienced management team in place with significant Tier 1 contracting backgrounds MANAGEMENT • Ongoing commitment to operational discipline, cost management and corporate governance TEAM MACQUARIE CONNECTIONS – WA FORUM 4 PEOPLE Group Employee Numbers Employees by Division Surface Corporate 3,495 International 2,467 Underground 1,295 1,529 1,659 2013 2014 2015 2016 2017 FY17 highlights: • Several senior appointments including GM Underground and Surface Operations Manager - bolstering leadership capacity • Development of new Short Term Incentive Scheme for FY18, for all permanent Australian based staff providing greater alignment of employees with business goals • Implementation of new Company-wide employee communications App, designed to improve workforce engagement and improve information flow throughout the organisation • Chosen among the Top 25 of Randstad’s Most Attractive Employers for 2017 clearly reinforcing Macmahon’s brand as an attractive place to work • Continued working closely with our clients to keep their operations efficient and productive For personal use only • Further development of simple people-orientated processes to enhance the employee work environment MACQUARIE CONNECTIONS – WA FORUM 5 SAFETY Group Safety Performance KEY MILESTONES 10.1 8.6 • The lowest LTIFR in the last five 5.4 5.6 4.4 years 1.1 0.9 0.9 1.1 • 2017 Kanthan, Malaysia operating 12 0.4 years LTI free Frequency Frequency rate 2013 2014 2015 2016 2017 • 2017 Lhok Nga, Indonesia operating (per million (per million hours worked) TRIFR (Total Recordable Injury Frequency Rate) 8 years LTI free LTIFR (Lost Time Injury Frequency Rate) • 2017 Underground Drilling and Ground Support operating 8 years LTI Free FY17 highlights: • Total of 2 Lost Time Injuries (LTI) recorded in the FY17 • Maintenance of ISO Certification to • No permanent disabling injuries or fatalities recorded across the Company’s ISO18001 and AS/NZS 4801. operations • 93% of all Macmahon projects remained LTI free • * Graph excludes the impact of the Nigerian incident • 66% of all projects were both LTI and Total Recordable Injury (TRI) free For personal use only • Ongoing commitment to building strong and effective relationships with clients and alliance partners MACQUARIE CONNECTIONS – WA FORUM 6 INNOVATION AND TECHNOLOGY Guiding principles For personal use only MACQUARIE CONNECTIONS – WA FORUM 7 KEY CONTRACTS For personal use only MACQUARIE CONNECTIONS – WA FORUM 8 OVERVIEW OF KEY CONTRACTS With the exception of Telfer, which is on track to report a break even result in FY18, Macmahon’s project portfolio is performing on or above tendered expectations. Project / Client Location Commodity / Comments Current Status Type • Alliance model has resulted in reduction in unit cost by • Performing in line Tropicana WA Gold roughly 37% from 2015 levels with expectations AngloGold Ashanti / Australia Open-pit • Possibility of mine life extension pending the Long Island Independence Group study • Maintenance expenditure largely complete • On track to Telfer WA Copper-gold • Progressively moving into more profitable dig areas achieve Newcrest Australia Open-pit • Positive discussions with client well advanced breakeven result • On track to report a break even result for FY18 for FY18 • Contract performing well • Performing in line St Ives WA Gold • Possibility of extending operations beyond the current with expectations Goldfields Australia Open-pit contract term North • Joint venture continues to perform well • Performing in line Martabe Gold Sumatra, • Performance in line with tendered expectations with expectations PT Agincourt Resources Open-pit Indonesia • Project exceeding diversity and community targets • Mining services business continues to secure repeat, • Increased focus Various Underground sustainable work on securing long- Australia Mining • Increased focus on bolstering leadership capability – new GM term development Various Services appointed contract Sumbawa • Currently operating under a cost plus arrangement • Phase 1 going Batu Hijau Copper / Gold Island, • On track to transition to phase 2 (mining services) by 1 March according to plan Open Pit PT AMNT Indonesia 2018 For personal use only • Ramp-up going according to schedule • Performing in line Byerwen QLD Coal • First major digging fleet has been successfully commissioned with expectations Byerwen Coal Pty Ltd Australia Open-pit • First dig occurred in August 2017 MACQUARIE CONNECTIONS – WA FORUM 9 TROPICANA GOLD MINE Macmahon was been awarded a Life-Of-Mine mining services contract at the Tropicana Gold Project in 2012. Project Overview • The Tropicana Gold Project is part of the joint venture between AngloGold Ashanti Australia Pty Ltd (70%) and Independence Group NL (30%) • The project is located 330km north-east of Kalgoorlie on the edge of Western Australia's Great Victoria Desert. • Tropicana is Macmahon’s second largest contract (after Batu Hijau) and has been profitable since inception • Successful alliance style contract in place since 2012 • Current mine life anticipated to run to 2024 with a further 7 year extension anticipated (subject to Long Island Study) * Source: Anglogold Ashanti 2017 Diggers and Dealers presentation • Studies underway re Long Island and other deposits, which, if approved, could potentially extend the life of mine at Tropicana through to 2027-2030 • Tropicana Reserves increased by +58% to 3.8Moz gold Product Gold Mine Type Open cut For personal
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