MLG wins new Westgold work

ASX-listed truck haulage contractor MLG Oz has won a five-year, circa-A$40 million-a-year deal to cart ore for Westgold Resources at its Murchison and Bryan Basin gold hubs in Western Australia.

Westgold produces about 270,000 ounces of gold per year from mills processing more than four million tonnes a year.

MLG recently booked a net profit of $4.8m for the 12 months to June 20, 2022, down from $12.5m in FY21, on 12.4% higher FY22 revenue of $289.8m. Earnings before interest, tax, depreciation and amortisation (EBITDA) of $30m for the latest year, down from $42.7m in FY21, was hurt by the loss of a major crushing contract at the end of FY2021 and a “challenging labour market”.

MLG is weighing the sale of its crushing business.

Its shares (ASX: MLG) are down nearly 42% for the year at 50c, capitalising the company at about $74m.

MLG said the Westgold “material win” was expected to contribute about $30m of revenue over the balance of FY23. Services provided include in-pit, off and on-road haulage, and road maintenance and run of mine (ROM) management services.

The gold producer is providing dedicated maintenance facilities at its sites to support MLG operations.

“This is a large opportunity for MLG to establish a long-term relationship with a growth oriented gold miner and Westgold’s faith in MLG represents a significant endorsement of our capabilities,” MLG founder and managing director, Murray Leahy said.

The company said when announcing its FY22 results last month that it was seeing high demand for its services continue, “despite a challenging market in FY2022 which resulted in reduced margins through rising costs and limited availability of labour”.

“Revenue in FY2023 is expected to be higher than FY2022 with $250m of work already committed in FY2023 and [the] EBITDA margin is expected to be in line with or higher than FY2022,” it said.

 

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