McAleese warns of hefty earnings dive

Transport contractor McAleese has
warned of a massive earnings drop due to the impact of its altered contract
with Atlas Iron.

The company, which hauls ore
from Atlas’ mines to port, announced underlying
full-year earnings were expected to fall to about $70 million from $85.3m in
2013-14.

This is $20 million lower
than the group’s February forecast of $85m
and $90m in underlying earnings this financial year.

The company suffered a 49.4
per cent drop in the price of its shares yesterday on the back of the news and closed at 8.1c.

The trouble started
for McAleese when Atlas decided to close its Pilbara mines in April in light of the falling iron ore price.

Just
three days later, McAleese called a trading halt amid reports the company
expected the contract with Atlas to make up around 40 per cent of its 2015
earnings.

Since then McAleese has
struck a deal with Atlas which will see it continue to haul ore from the Abydos and Wodgina mines during May.

This will allow Atlas to keep
mining, but will mean a lower base haulage rate for McAleese with profit share
dependant on the price of iron ore.

McAleese said discussions around
the potential recommencement of mining at the Mt Webber mine were ongoing.

The company also announced a
review of its heavy haulage and lifting division was ongoing, with a non-cash
impairment likely.

“The expected non-cash
impairment reflects low activity levels and a reduced pipeline of capital
projects in the resources and infrastructure sectors across Australia,”
McAleese said.

McAleese has
appointed financial advisers 333 Group to
provide an independent review of its financial performance.

“This review has commenced and will assist with developing
robust and sustainable plans beyond the immediate initiatives,” the company
said.

McAleese wins Norton Gold Fields haulage contract

McAleese has won a four year, $65 million haulage contract with Norton Gold Fields.

The contract will start next month and see McAleese haul around 3.6 million tonnes of gold ore annually, and also includes the provision of road maintenance for Norton.

Mark Rowsthorn, McAleese CEO, said “we are pleased to have reaffirmed our long standing partnership with Norton by successfully re-tendering for their Kalgoorlie Goldfields work”.

“To complement its existing fleet of maxi-quad road trains first introduced in 2012 and to deliver even greater haulage capacity, McAleese Resources will invest in additional quad road trains that utilise eight wheel drive prime movers coupled with larger capacity quad trailers,” he said.

“McAleese has also introduced several key safety features and operational system improvements across the Resources business, including the introduction of IVMS (In Vehicle Monitoring Systems), and EBS (Electronic Brake Safety Systems) in all of its trailling equipment.”

McAleese employs more than 150 people in Kalgoorlie and operates 45 unites across the WA Goldfields.

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