Thank you for standing by. Welcome to the Metarock investor update. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Jon Romcke, Executive Chair. Please go ahead.
Good morning, everyone, and thanks for joining us this morning. I've got Jeff Whiteman, our CEO and Managing Director, with us today, and we're going to talk about our announcement yesterday that we made that Metarock has gone into an agreement with Thiess to sell the PYBAR business for AUD 65 million. Just a bit of background: we were approached by Thiess, who see really strong strategic value in the underground hard rock space and believe that PYBAR will bring them the ability to really focus on gaining traction in that space. We believe that it'll be good for the PYBAR business. It'll certainly grow, enable that business to grow, and strengthen, and will be good for our employees within that business to join a larger group than the Metarock Group.
The outcome for us is very much a pretty positive cash flow story where we bring in approximately AUD 36 million after deducting PYBAR outstanding debts and the transaction costs, and it'll really bring to fruition the turnaround plan that was started in December 2022. Board and management believe the transaction is compelling value for our shareholders given the current market cap, and we've got strong support from our major shareholder M Resources as well. Jeff's going to cover a bit more of the technical aspects of the deal and explain the benefits in some more detail. Thanks, Jeff.
Yes, thanks, John. So yes, the enterprise value for the deal, the headline purchase price of AUD 65 million, represents a multiple of 2.8 times the first half FY2024 EBITDA and 4.7 times the FY2023 normalized EBITDA. And importantly, it's also a premium to the KPMG valuation in the independent expert report that was prepared in April last year. The post-transaction Metarock will still have continuing business units with its traditional Mastermyne business, Wilson Mining, in strata support and MyneS training. Those businesses together contributed 63% of total Metarock revenue in the first half and 61% of total EBIT in the first half. Through selling PYBAR with the debt, that takes about AUD 27 million of debt out of the group. And with those cash proceeds, AUD 36 million, effectively that takes us back to a net cash position at completion expected to be on the 30th of April.
Also, we will be repaying the deferred consideration that's been sitting on our balance sheet since we acquired PYBAR just over two years ago, and also the M Resources shareholder loan that was put in place September last year as well. So it really does clean our balance sheet up. And that leaves us with the strength and flexibility to really have a good go, but the AUD 2.2 billion pipeline of growth opportunities that we referred to in our recent half-year results. And those opportunities are spread across our three continuing business units. The transaction does build on the turnaround and effectively closes out the turnaround plan we've been going through for the last 15 months. Metarock ends up completely recapitalised with net cash, and on top of the AUD 25 million equity placement that we did in May last year, basically gets us right back on our feet again.
All PYBAR employees are going to transfer with the business, and they benefit from Thiess' planned investment in that space. And certainly from the Metarock and Mastermyne perspective, so it really enables us to look at growth and sorry, I just lost my voice there. It enables Mastermyne to look at the growth opportunities that we're seeing with typically the change in ownership of some of the coal assets on the East Coast. With that, I'll just hand back to Jon quickly.
Yeah, I think that's an important point, Jeff, that we're presented at the moment with a number of opportunities where major coal mining companies are progressing to develop new underground mines and to restart underground mines, as well as the M Resources team making strategic investments in Illawarra coal, as well as having an interest in Stanmore coal with their acquisition of Eagle Downs. So we're positioning ourselves to take advantage of all those opportunities and being ready to support those developments. And having a strong balance sheet is going to be important to be able to make best value out of those transactions. I guess that's an overview from us. We'd be happy to go through a Q&A type session and answer any particular questions. We don't intend to read the whole announcement.
It's there on the ASX platform, and I'm sure most people online will have already read it, but happy to fill in any blanks that people want to query us on and where we can share some of the detail. We have got a detailed transition plan that's going to happen with Thiess. We're meeting this afternoon, in fact, and it'll detail the wheres and why and how this transition's going to occur. We'll have a formal agreement. Costs are covered with the transition agreement such that we help each other as we move through over the next couple of months. As you've read, the target certainly is the 30th of April, and we want to be able to close it out at the end of April at month end. And that's our goal. Okay, open to questions.
Rachael, if you'd like to pass some questions through to us, we're happy to take them up.
Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from John Burgess, RAAS Group. Please go ahead.
Well, good morning. Could you give us an idea, perhaps, on the pro forma Mastermyne likely depreciation charge, property, plant and equipment balance post the sale of the PYBAR equipment, and CapEx?
Thanks, John. I think if you look at the half-year segment reporting, that gives us an idea on the depreciation charge. Certainly, I would say the bulk of the CapEx looking over the next 12 months in our forecast is really related to PYBAR. I think in terms of Mastermyne, certainly the CapEx with Mastermyne looking ahead is a far smaller number. Our current business is fairly capital light. It does depend a bit on the opportunities. As Jon highlighted, there are quite a range of different opportunities in front of Mastermyne, and there could well be some CapEx involved with those opportunities. But that'll be considered at the time and is really growth CapEx. Certainly, the sustaining CapEx in Mastermyne is a pretty small number.
The PPE, what sort of property plant equipment would you have now post PYBAR in dollars, roughly?
So the pro forma, if you look at Annex B in the.
Announcement.
Announcement, you'll see there's a pro forma in there with. I'm sorry, I've seen you've got equipment finance facilities. I'll have to get back to you on that one, John. But essentially, probably about AUD 40 million of our fixed assets would relate to PYBAR. So that would come out of the mix. And that would account for the bulk of the depreciation charge.
So you will remember, John, that part of the turnaround plan was that we needed to monetize a lot of the assets that were associated with the contracts that we got out of last year. So Mastermyne's been through a fairly aggressive sell-down of assets that were not in use and not making us money. And that's reduced out, certainly, our book value considerably on the Mastermyne side of the business. We weren't nearly as aggressive in the PYBAR side of the business because the majority of the assets were working and earning and part of our key contracts.
So it was sort of quite a different treatment, and that left the assets on the books in PYBAR and the finance associated with those assets contributing to that debt position that will transfer with the transaction from Metarock to PYBAR as Thiess picks up the entity, the full entity of PYBAR. So the main assets we've got left are quite a number of LHDs, Sandvik LHDs within the Mastermyne business, and ancillary bits of equipment that hang off those LHDs, and a mix of other assets that are parked up waiting for major overhauls. So we'll look at the possibility of spending some capital on those major overhauls where we are entering into discussions, serious discussions with potential customers for these expansion opportunities. But that's pretty much the story.
How many full-time employees now does Mastermyne have in its PYBAR?
How many? Sorry, you're just a bit quiet there, John.
How many full-time employees would you now have pro forma?
It would be around about 700.
Just lastly, do you lose any synergy that you may have gained by merging with PYBAR over the last 18 months?
Not really. I think a combination of things. I think probably initially, the opportunity for synergies was probably optimistic. The two businesses do run quite separately. And I think as well, with the challenges that the group has been through the last couple of years, that the level of integration just wasn't really processed, and so those synergies didn't really come together. There's a tiny bit on some procurement side of things, but nothing material.
Okay, that's it for me. Thank you.
Thanks, John.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. I'll just pause momentarily for any more questions to enter the queue. The next question comes from Cameron Bell with Canaccord. Please go ahead.
Thanks. Guys, just, I guess, two questions for there. Firstly, following on from Virjo's question. So the way you're talking about your kit and your PP&E and this investment, is it better to say the sale prices? I've just done some back-of-the-envelope numbers. Is it just north of your NTA in this deal?
With the transaction, no, I think if you I mean, the best way to actually understand the valuation of PYBAR is probably to look back at the KPMG report that was prepared last year that sets out the assets, which have not changed dramatically in that timeframe. And obviously, the earnings have improved since then, which you can get from a half-year report. So it's probably the best way to try and look at it.
Yeah, okay. And then maybe could you just make a few comments on the competitive process of this?
The arrangement with Thiess very much was they came to us and very much wanted the deal. Before we entered into serious discussions, we did canvas through our advisor, Grant Samuel, on comparative transactions and really looked back over 18 months to maybe 2.5 years on a measure of what these sorts of contracting businesses are trading at. And we used that as a guide to evaluate where we ended up. So we didn't run a process, but that process I've just described was enough to convince us that the sort of multiples that we've achieved in here are fair and, in fact, are better than most. So we proceeded on that basis.
Yeah, that sounds fair. And then maybe just a couple of broader comments. How are you guys seeing the labor market at present?
Oh, it's still there. It's a tight market. Everyone's certainly looking for people. A lot of businesses continue to have vacancies, and that's one of the differentiators for Mastermyne in that we do have a lot of people on our books, and we do have very high retention rates, people being employed by us. Some of our major clients see that as a major advantage to do business with Mastermyne.
Yeah, okay, sure. Then just the final question from me. Just how have you seen the weather this half so far?
I didn't understand that question. Sorry again.
Oh, just how you've seen the weather. January kind of started out crazy, and then we've had, well, bits and pieces of positive and negative read-throughs around weather. And I was just wondering what you've seen on that front from rain.
We're not too badly affected at most sites we're at. We're underground, so we're protected from the effects of the surface rain. There's a couple of times during the last year where access to some of the sites that we work at in central Queensland has been affected, particularly around the Cloncurry area. But I think it's just a natural cycle, and we'll get a dry spell soon. But at the moment, it's still raining outside.
Yeah, all right. Thanks, guys.
Okay, mate.
There are no further questions at this time, and I'll hand back for closing remarks.
Thanks, everyone, for your interest in the company. I think just reiterating, our board and our management believe that this transaction is in the best interests of both companies and being the Mastermyne business, which includes our Wilson Mining subsidiary and our MyneSight subsidiary. So that'll enable Mastermyne and that group of companies to move forward. But from a PYBAR perspective, it also means that they're joining a group with a much larger balance sheet than Metarock and some very aggressive growth aspirations for that group. And they're very keen. We did calls with all our employees yesterday, and the feedback that we have is quite positive. So I think given that, it's a win-win for both groups, and we're looking forward to the future. And we'll get back to you when we've got the next exciting thing to announce. Thanks, everyone. Thanks, Rachael.
It does conclude our conference for today. Thank you for participating. You may now disconnect.