Mastermyne Group Limited (MYE) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Mastermyne Group Limited Acquisition of PYBAR Mining Services Presentation. [Operator Instructions] I would now like to hand the conference over to Mr. Tony Caruso, Managing Director. Please go ahead.

Good morning, everybody, and welcome to our call this morning, and we're very excited to be able to announce today that we've reached agreement to acquire a leading underground hard rock specialist in PYBAR Mining Services. Turning to Page 5 of the presentation. So to talk about the acquisition highlights, this is a highly complementary business to Mastermyne. And by bringing these 2 businesses together, we've become a diversified mining service businesses -- a diversified mining service business specializing in the underground resources sector, providing services that are linked to production. The deal is immediately accretive, and we believe, represents great value for our shareholders, and it's been structured in such a way that it's a cash and scrip deal with the cash payments paid over 2 tranches, and importantly, that will be funded from our own balance sheet. For some time, we've been working to diversify our business into this adjacent underground hard rock sector, and this acquisition really accelerates that strategy, exposing Mastermyne now to a much broader range of commodities and shifting us away from that single-commodity exposure business. And this makes the business much more diverse and stronger through the commodity cycles. PYBAR, as I said, a very complementary contracting business. And as we take you through this presentation, you'll see that the business has many similar features to the Mastermyne business. And whilst PYBAR's mining methods may differ in the hard rock space, the underlying contracting business model is very similar to the Mastermyne business model, and that gives us confidence that this is a business that we understand and can add value to. The PYBAR business has a very strong management team with many years of experience, and it's well led and well managed, and we look forward to working alongside the PYBAR team as we realize the best of these 2 very strong businesses. This deal materially increases the scale of the Mastermyne Group, and the larger business has a significantly larger addressable market with a very strong group of people now sitting within it. The acquisition of PYBAR transforms Mastermyne across a number of metrics, but the headline is that this deal creates a material mining services business with a very strong specialization in underground with exposure across a broad range of commodities and, importantly, very linked to production. Turning to Page 8. Just hand over to Brett to take us through the transaction summary.

So as we step through -- now step through the transaction summary. So as mentioned, the Mastermyne -- this acquisition of PYBAR accelerates our expansion to the hard rock mining market. Stepping through the acquisition details. So Mastermyne has entered into an agreement to acquire 100% of the shares for PYBAR Holdings Pty Ltd, which, in turn, owns a subsidiary of PYBAR Mining Services. The transaction implies an acquisition enterprise value of $99 million with an expected equity purchase price of $47 million once the debt items are considered. The debt being assumed on this acquisition is $52 million. The enterprise value assumes that FY '21 EBITDA multiple of approximately 3.5x and an enterprise value to '22 of 3x presynergies. So no, we have not included any synergies in the calculations to date. Acquisition is expected to be 21% EPS accretive, and, again, based on our FY '22 presynergies basis. Completion is scheduled approximately early November, subject to shareholder approvals, which we'll mention as we progress through, which will provide 8 months of economic benefit to the group for FY '22. Overview of PYBAR, we'll step through in more detail in terms of the scope of services. But PYBAR, a nationwide provider of mining services with core competencies in the underground hard rock mining markets. Established in 1993, has grown into one of the largest contractors -- mining contractors in Australia with operations in multiple states in Australia and a track record of securing ongoing contracts. Forecast revenue for '22 for the PYBAR business is expected in the range of $270 million to $290 million and an EBITDA of $31 million to $34 million. They currently have an order book of approximately $600 million plus and an active tender pipeline of $400 million plus and currently have in excess of 1,100 employees across multiple states in Australia. Strategic rationale, as we'll talk through a little bit further, accelerating into the expansion of the hard rock market as it's been one of our strategies highlighted in the past couple of years; also, around it creates a leading Australian mining services business. So a diversified mining group with an exposure to coal but also significant exposure to the metals market commodities as well; and diversification benefits, as I mentioned, moving into a much broader client base and commodity base. Stepping further forward into the -- further transaction summary. So financial impact. We mentioned the accretion is 21% presynergies. Post completion, we expect pro forma for the group for FY '22 of revenues of approximately $590 million for the combined group and an EBITDA of $62.5 million. It expands our order book to $1.7 billion and an active tender pipeline of $2.7 billion for the combined group. Leverage for the group for FY '21 net debt position is about 0.9x on completion. Whilst leverage has increased from the group -- from the Mastermyne group to the combined group, we do believe we've got significant headroom in our balance sheet position with significant free cash. The Mastermyne Group has maintained over the past 12 months. As part of our capital management strategy was to build that war chest for exact acquisitions or opportunistic acquisitions such as this. And we've got a significant balance sheet capacity and funding facilities to be able to fund future growth and our current projects in our pipeline. And as I mentioned, we've got $60 million in undrawn facilities available between both groups to fund that future growth. And we mentioned that the total equity purchase price is $47 million. That will be funded as $23.5 million, so 50% in cash, and 50% will be in Mastermyne shares. Of the cash, 50% is due at completion, so $11.75 million. The balance will be due in 12 months anniversary of the completion date. The shares will be issued to 3 shareholders, to Paul Rouse, Brendan Rouse and Andrew Rouse at completion. And these will be subject to an escrow period for 12 months. Existing debt facilities that we will be assuming up to $52 million of debt from the PYBAR business, this will increase our overall debt position the combined group to $57 million but post transaction supported by current funding facilities. Our cash consideration to be funded from our current balance sheet given our suitable free cash position that we've generated. Ownership impact. The issuance of the Mastermyne shares, Mastermyne existing shareholders will own approximately 83% of the combined group on completion. The timetable and conditions, there are subject to suitable conditions precedent. One of those is the shareholder approval process, which will be combined with our AGM, which is expected to be on the 2nd of November, and suitable notice of meeting materials will be sent out forth with. Yes. So completion scheduled for early November and again mentioned around 8 months of economic benefit in FY '22. [indiscernible].

So with this significant transaction, we're proposing to reshape the branding to reflect a more diversified group with a broader commodity exposure. And with that, we will seek shareholders' consent to rename the group holding company from Mastermyne Group to Metarock Group to form a commodity-agnostic overarching brand, which allows the PYBAR and Mastermyne brands, which are both highly recognized and strong brands in their respective markets to remain focused on those respective markets. So the regrouping -- sorry, the rebranding of the group assisting sort of clearly articulating to stakeholders, the structure and the operating model of the 2 brands working side by side under that holding group of Metarock. And as I say, shareholder approval will be sought as part of the extraordinary meeting in November. Just to talk to the group revenue now by segment. And as you can see, we've been communicating for some time now that the business has fundamentally changed from a single-source revenue stream, which was predominantly through our contracting business to several key identifiable revenue streams, which this slide clearly articulates. So our mine operation, which we recently announced the Cook and Crinum projects is a very different revenue stream. And as I say, underpinned with these first 2 projects, which are now mobilizing and both expected to be producing coal at the back end of this calendar year. The key feature in these projects are that they're much larger recurring revenue streams where the client relies heavily on our equipment and our expertise as the mine operator to mine the product in their assets. And this really closely tied us to our clients and forms a long-term strong partnership on these projects. Alongside our mine operations is our coal contracting business. And this has really been the cornerstone of the Mastermyne business for 25 years, and we enjoy a very strong market share as we work alongside some of the country's largest low-cost miners providing contracting services that are inextricably tied to production and more specifically, long wall production. Our other services are more opportunistic and complementary to the main contracting business and provide either risk mitigation or a simply strong synergistic with their other services and really round up the service offering to our customers. And then clearly, the section we're talking about today, the hard rock segment, which continues to bring that diversification and reduces our single commodity exposure. So like the Mastermyne contracting model, the PYBAR model is closely tied to production. It's supported by a large fleet of equipment, and it's working alongside some of the country's most well-regarded organization. So in summary, a very production-orientated underground specific business backed by large specific fleets of equipment with revenue driven from providing services that essentially keep product coming out of the ground. To talk specifically about the PYBAR business, so this is, as we said, a nationally -- a contracting business with a national footprint specializing in the underground hardrock mining segment based out of Orange in New South Wales and been operating for 28 years, founded by Paul Rouse. And with Brendan and Andrew also coming into the business. The business has grown significantly over that 28 years to now employ 1,100 people across the entire business. Large order book is $600 million, and that order book is quite diverse and spread across base metals and precious metals. The business is currently tendering significant work in New South Wales, Western Australia and Queensland. And with the ongoing strong commodity pricing, that -- sorry, that tendering pipeline continues to grow. And that's really driven also by the number of mines that are continuing to move into underground. So we're seeing, as assets get exhausted from open-cut mining, there's more opportunities opening up in the underground space. But in summary, 15 active projects, a tender pipeline of $400 million, an order book of $600 million and 160 units of heavy equipment. And the recordable injury rate of the safety, I'll talk to a little bit further on. I'm on the next slide to talk more specifically about the capabilities of the business. It sort of revolves around these 5 core scopes. Mine development, which is largely around accessing the ore. So this is the development of the roadways to access the ore; the raiseboring segment, which is the -- continuing to drill the shafts to allow for ventilating and to allow escape ways out of the mines; the mine production, which is actually collecting the ore from the underground and removing it from the underground to the surface; and then the supporting functions there around shotcreting and cable bolting. So all these services are provided in various forms to all of the customers. Some operations are the complete, end-to-end package from mine development right through to those supporting scopes, where other contracts for some of those services provide specifically alongside the mine operation. In the equipment overview, so the acquisition includes a quite a large, modern fleet of highly valued hard rock mining equipment with a book value of about $57 million in fleet. So when you combine that with the Mastermyne fleet, which is about $67 million, it creates a group fleet of about $124 million of very specific underground mining equipment. And 40% of that fleet has been purchased in the last 3 years with the average age of the fleet in that sort of 4- to 5-year range. Very generic fleet. So like the Mastermyne fleet, the fleet has suitability to all aspects of the mine development and production but can work across a number of different sites as well, which makes the -- which keeps the availability quite high on this equipment. As I mentioned, it also includes a diverse range of raiseboring equipment. And whilst the PYBAR business has focused heavily on the hard rock sector to date, we do see opportunities to use some of that raise forward drilling equipment in the coal space as well. And probably just largely there, just the well -- you can see the brands of the equipment. So it's all well regarded brands supported by Australian OEMs. So a very large fleet of equipment to support the operation. We talked about the safety that we would talk to that. And pleasingly, the safety performance at PYBAR is shaped around the very similar values and culture to the Mastermyne business, so a very strong, risk-based approach supported through that legislative compliance. And it's all about focusing on the risks and making -- or particularly the critical risks in these operations and making sure that we've got good controls and that those controls are working across the business. Combined with that is that strong leadership, safety leadership from management, which influences the behavior on the ground. And all of that combines to ensure that people go home safe every day at the end of their shift. So as of the end of June '21, the PYBAR TRIFR rate runs at about 14.2. On the operating sites, we mentioned that it's a very East Coast-based business, which was one of the features from an acquisition that we were specifically looking for. And you can see here quite a strong presence on the East Coast. The business has worked on the West Coast as well and continues to work on the West Coast with a pipeline of opportunities coming from WA as well. Just to provide a bit more details around the financial overview for the PYBAR business and some financial metrics. Right. Okay. So the -- as we mentioned, diversified client base with a broad distribution of commodity exposures across gold, copper, zinc and lead. And you can see the revenue commodity exposure in the graph in the right bottom corner. Revenue for -- pro forma for 2022 for Pybar is expected to add $270 million to $290 million and $31 million to $34 million, which is approximately about 11.5% EBITDA margin. Of that $270 million to $290 million, approximately $220 million of that revenue is secured revenue for FY '22, so approximately 78%, with some additional recurring work on top of that also to add to that $220 million and their current tendering pipeline to add to get to the $270 million to $290 million range. Capital expenditure for 2022 on pro forma is expected to be $25 million, of which $17 million is sustaining expenditure to continue to maintain their current fleet with an $8 million growth expenditure for expected projects and additional equipment. The 8 months of the forecast capital from November onwards is expected to be $16 million. Depreciation for '21 -- FY '21 was approximately $22 million for the PYBAR Group. It is expected to increase with capital spend incurred in '21 and expected in '22. And the business has a strong working capital position supported through cash generation through its operating activities over the year. So again, just to reinforce the strategic rationale behind this deal. We're creating a diversified mining services business focused on the underground resources sector linked very strongly to production. So that diversification into base metals shifts away our sole exposure to metallurgical coal and incorporates that diversified revenue across a number of different commodities. As we spoke about, we've been talking about the shift into the hard rock strategy alongside our coal business now for some time. So through this acquisition, we're able to accelerate that strategy with a very complementary underground mining services business, very similar to the Mastermyne business, creating a business with substantial scale, which increases the overall size of the business and unlocks a number of new opportunities for the combined businesses and cross-selling into the respective sectors and, importantly, builds some strong management bench strength at a time when there are tight labor markets and shallow talent pools. And as I say, it's a very financially compelling and accretive acquisition with strong EPS and, we think, is great value for our shareholders. When you put the 2 businesses together alongside each other, looking at the full year contribution, you can see that it creates a fairly even mix in terms of revenue and EBITDA contribution, so almost 50% on each side coming from the Mastermyne business and the PYBAR business, but a combined revenue there, as Brett spoke to, of $590 million on a pro forma basis for FY '22 and $62.5 million of EBITDA and quite an impressive $1.7 billion combined order book, which carries the business into the next few years and gives us very strong revenue visibility. Obviously, what this doesn't reflect is the uplift that we get in the Mastermyne business as we take the underground whole-of-mine opportunities, contract mining opportunities through to their full run rate, which will give us a further uplift in FY '23 numbers. So these numbers reflect the startup of both the Cook and Crinum projects, and the business will continue to grow as we realize the full run rate of Cook and Crinum in FY '23. To talk about that underground specialization and how the businesses look pre and post acquisition. So you can see that the combined group revenues are now sort of diversified across the hard rock and contracting operations going forward. And the coal contracting revenue as a proportion of the FY '22 decreases from what was 74% of our order book moving forward to 39% post acquisition. So it really does diversify our coal contracting revenue, diversify the revenue across the business. The hard rock tender pipeline increases from the 13% that was recognized as just Mastermyne alone to now having a total pipeline that accounts for 32% of the pipeline post that acquisition. As I mentioned, the intention of the businesses moving forward is to run the businesses side by side with each of the businesses focusing on their respective sector and sharing support services where it makes sense to do so. And it's a very complementary business with strong management teams that can share and accelerate best practices learned from each sector. On Slide 23, you can really see here the diversification of the commodities, and these are commodities with very strong -- very, very strong outlook. So when you look at the metallurgical coal exposure from the -- pre acquisition to post acquisition, the summary of it is we moved from being 96% exposure to one commodity in metallurgical coal now to a sort of 50-50 split between hard rock and coal. And we just want to remind investors and shareholders that whilst this is great for the business, we still see a very, very strong future for metallurgical coal, and we're building a very strong business around that commodity with our contract mines. And we'll continue to operate in this space and grow our metallurgical coal business alongside now the hard rock business as well. But clearly, you can see the large shift from the one commodity exposure to now a very balanced business with a very strong growth outlook across all of those commodities. I talked a couple of times about the complementary businesses, and that extends also to our customer base. So we share a very similar suite of high-quality clients that are both complementary to Mastermyne and PYBAR -- to PYBAR's customer base. So these are all customers that we've had long-term relationships with across both companies. And whilst there is some overlap in some of these customers, we're also bringing in a whole suite of new customers to the Mastermyne business as well, which, again, provides further diversification and reduces the combined group's reliance on a smaller number of clients. And overall, it shifts the PYBAR business now accounts for 7% of the combined group revenue for FY '22 through that customer base.

Thank you, Tony. The next slide is just to provide a bit more color on the accretion and strong EPS results from the acquisition. So as we said, the accretion level is at 21% on FY '22 and, again, a presynergies basis. And the pro forma revenue is expected to be $590 million and $62 million -- $62.5 million EBITDA. We've also mentioned the leverage profile, and the following slide, I'll mention about debt positions. But the leverage position of 0.9x at completion and assuming $52 million of the debt facility as part of the transaction. We mentioned significant balance sheet capacity is still remaining to fund future growth. As we said, it covers our current projects announced for Crinum and the Cook project and the suitable balance sheet capacity in both facilities to continue to fund future project growth. And the combined pro forma net debt position is $45 million at the end of June, and that excludes the final deferred consideration payment, which is in 12 months' time. The next slide is around the combined group debt profile. So as mentioned, the Mastermyne and PYBAR combined debt on completion will be $57 million, of which is our Mastermyne facility is $5 million and an estimated $52 million incremental facility to come on from PYBAR. And as mentioned, that is purely for equipment finance facilities and backed by equipment assets behind those facilities. The combined group will have approximately $60 million in undrawn facilities, which includes headroom on the equipment leasing facilities for PYBAR and also the current facilities for Mastermyne, which includes an additional equipment finance lease facility and a working capital facility as well. Interest servicing for pro forma 22 is 22.3x and pro forma '21 at 13.6x. And as mentioned, pro forma net debt '21 is -- 30 June '21 is $44.3 million, resulting in a 0.9x debt leverage position. So again, well supported from a debt position and cash position, and the business is quite comfortable where that leverage sits to be able to fund future growth into the future. Moving on to the next slide. So revised 2022 outlook. So the combined group would like to provide guidance for '22. Previously, we provided guidance on the Mastermyne Group, which is shown there. That's unchanged for the Mastermyne Group at $300 million to $320 million revenue, $28 million to $32 million EBITDA and the CapEx range was $30 million to $40 million. We've then included guidance for '22, including the 8 months contribution from PYBAR, which will be in the range of revenue of $475 million to $510 million, EBITDA of $48 million to $54 million and a capital expenditure of $46 million to $56 million, which includes the $16 million we mentioned previously for the capital expenditure for the 8 months. On a pro forma basis, looking at a full year contribution from Pybar on a pro forma basis, we'd expect revenue in the $570 million to $610 million range and EBITDA from $59 million to $66 million and overall capital expenditure from $55 million to $65 million. The next slide is a corporate overview. So basically, what we're showing here is the pre-transaction, post-transaction position. So as we've mentioned, the PYBAR vendor shareholders, the 3 vendors will hold 17.74% post transaction and the impacts there to the remaining substantial shareholders post transaction. The composition post transaction is expected to be 40% retail investors, 28% institutional and the remaining board and management, of which the vendors are included in the board and management calculation.

Just to speak to the Board moving forward. So as part of the transaction, Paul Rouse, Founder of PYBAR, will join the Mastermyne Board as a Nonexecutive Director. So Paul, obviously, being the founder of the PYBAR Group. Paul's background is a mining engineer and, obviously, with extensive experience in the underground mine -- in the underground hard rock area and mine design, planning, production and development. And Paul will add quite a lot of strength to our Board, particularly in the area of hard rock, but clearly has a very strong background in managing good contracting businesses. So we look forward to working with PAUL on the Mastermyne Board moving forward. Moving on to just some further details around acquisition terms and funding. Okay. So acquisition values, as we mentioned, $99 million, which excludes the acquisition and other transaction costs, which is approximately additional $1.1 million. Equity purchase price will be $47 million. Total acquisition consideration. So we mentioned cash consideration of $23.5 million. So 50% of the $47 million with 50% of that cash being paid upfront and 50% on anniversary date in 12 months' time. Scrip consideration of approximately 23.2 million Mastermyne shares will be issued with an implied value of $23.5 million value and an assumed facilities of debt facilities of $52 million. And cash consideration will be funded at existing balance sheet. The shares, as mentioned, will be escrowed for 12 months following completion. The conditions precedent for the deal to proceed. Shareholder approval will be requested for the issue of the additional shares as it increases over the allowed percentage. So we'll be seeking shareholder approval at the AGM on the 2nd of November with completion to occur soon after that meeting with economic value contributing from 1st of November. The next slide is then around --this is the indicative timetable. So we mentioned announcement today. Notice of EGM will come out on early October to allow for the 28-day notice period. EGM will be early November with 2nd of November as the plan with the expected completion a week to 2 weeks after the EGM or final shareholder approval. We'll also be seeking, as part of the EGM process, we mentioned the change of structure in the Metarock Group sitting above the Mastermyne and the PYBAR groups. We will be seeking a change of name only to the Mastermyne Group Limited to Metarock Group Limited, and that will be part of a shareholder approval process with the EGM. So in summary, there's further detail in the back of the slide pack around some of the terms of the transaction. But I guess questions before we move to questions, we just want to really sum up by saying that this acquisition of PYBAR transforms Mastermyne across a number of metrics, but the headline is that this deal creates a material mining services business with a strong specialization in underground with exposure across a broad range of commodities. So on that, we'd like to hand it over to any questions.

[Operator Instructions] There are no queued questions at this time. Pardon me, they've just come through. Your first question comes from Andrew Tan from Bell Potter.

Congratulations on the acquisition. Just a question about synergies. I guess all the accretion is presynergies. So what kind of synergies could you extract from, I guess, the combined business?

Yes. Andrew, there are some obvious synergies around things like insurances and potentially around the financing arrangements and interest rates and the like that we will look to unlock. But we've been very clear in this transaction that we're not banking any synergies in terms of how we operate the businesses. We see that it's quite important that we continue to run these 2 very strong businesses alongside each other. And the last thing we want to do is sort of destroy any value by trying to over integrate these 2 businesses. They're both very strong businesses, very well run, very material management teams. And we think that there's much greater value in continuing to run the businesses alongside each other. So in terms of synergies, we've not accounted for any synergies post the transaction. And I'd say, we feel that there's greater value in ensuring that these 2 management teams are well supported to continue to grow their respective businesses and will create value through that growth and stronger margins.

Okay. And historically, how their margins trended for PYBAR, like it's 11.5%, so slightly above what, I guess, the traditional Mastermyne business has generated. So what the historical EBITDA margin of PYBAR will be looking like?

Yes. Broadly, over the last few years, Andrew, it's probably been running around sort of that within that sort of 9% to 11% range, depending on the year-end conditions. So it's been relatively consistent and in line with the maximum Mastermyne EBITDA margins.

Okay. And historically, I guess, FY '21, the EBITDA was kind of disclosed. But how did they deliver in '19 and '20 like in terms of revenue and EBITDA?

Yes. So they've had a range of revenue outcomes. So they have had a range [indiscernible] $350 million ranging to sort of $270 million, $280 million overall. So they have had a range in revenue streams, which is probably no different to Mastermyne as well in the commodity price and changes. And EBITDA margins have flowed around those revenue outcomes, Andrew.

Your next question comes from John Burgess from RaaS Group.

Yes. Who would you say the competitors are to PYBAR?

Yes. John, look, there's -- I guess there are a few more competitors in the hard rock space than what we see in the coal space. Obviously, at the larger end of the competitor landscape, you have the Byrnecuts and the Barmincos of the world. And then in that sort of mid-tier space where we propose to be operating, you've got competitors like Redpath, AEC, Pit N Portal. So they're sort of there the competitors in that sort of equal size. And then on the lower end, there's a lot of smaller type contractors around, which may have sort of a contract with some kit. So it is, I guess, different to the coal business as we've experienced it in terms of competitors. But it is a much larger market as well. So I made this point this morning to someone that in the underground coal space, there's probably a dozen to 15 underground operating coal mines. In the metal space, that number is probably closer to 150 different underground metallics operations. So -- but to answer your question, they're probably -- the main competitors are Barminco, Byrnecut, Redpath, AEC Mining and Pit N Portal.

And does it help you guys -- like does it help PYBAR now being part of a listed group with the transparency that comes with that, do you think?

Yes. Look, most certainly and what we find in the coal business is that clients do like that transparency. They get a level of comfort from working with organizations that are publicly listed, it gives them good transparency and visibility into the performance of the business. And obviously, the other side of that is the ability to be able to fund growth moving forward. Paul and Brendan have done a fantastic job in getting this business to this size and profile that they've got it to. And now being part of a listed company, I think there's other opportunities that they may not have been able to digest, which are now on the radar. So we're confident that together, as part of a bigger group with a bigger management team and that access to capital, that we'll be able to continue to grow the business -- both businesses for that matter, but particularly the hard rock business.

Yes. And a question for you, Brett. The $22 million thereabouts depreciation for PYBAR looks quite high. Is that all property plant? Or is there some AASB16 in there as well?

Yes. There is some AASB16 value in there. Yes, there is.

Okay. And then I guess the last question, just in terms of your dividend payout going forward. Do you think you're going to hold that sort of 40% to 60% range with all these things going on?

Yes. Yes, John. That -- the intention is to continue to maintain our capital management strategy and to continue to distribute to shareholders at that range. So we will continue to try and maintain that.

Your next question comes from Bruce McLeary from Burrell Stockbroking Wealth Management.

Tony, Brett, congratulations. Just on the, I guess, the contracts that PYBAR currently have. On Slide 13, you've got order book of $600 million, tender pipeline of $400 million on active -- on 15 active projects. Just trying to understand the duration of those contracts. Like what's the duration of most of the contracts that they're on? And how long will it take for that order book of $600 million to flow through the accounts?

Yes. So probably most of those contracts probably range -- depending on the type of project, but really, they can probably average somewhere sort of 2 to 3 years, depending on what the type of work is. Again, some of the raisebore work is probably shorter duration-type work and tends to move around quite a bit of different locations, but most of the contracts are maybe in that 2- to 3-year period. It's probably fair to say that I've had quite a few contract extensions as well on a lot of these contracts where they continue to roll, which is similar to the Mastermyne-type contracts. And also, probably the order book overall is probably, again, some analysis on that in the tender pipeline to occur also. But at the moment, in terms of that flow-out, that's probably over the next sort of 3 years is really where that order book tails out to.

[Operator Instructions] Your next question comes from Daniel Porter from PURE Asset Management.

Yes. Well done on the transaction. That's fantastic. Can I just ask a quick question just in terms of your run rate of EBITDA, just considering your whole mine contracts as well? Just with the ramp-up of the [this largest] contract in Cook, what's included in this year versus what's coming in FY '23, is the business really, realistically a run rate more like the $80 million to $90 million of EBITDA rather than the sort of $50 million to $60 million that you've advised in the presentation?

Yes. For '22, Dan, we flagged in our results presentation that there was approximately $70 million thereabouts of mine operations revenue, whole mine operations revenue coming through in that financial year, which is obviously in the ramp-up period for those 2 projects. So as we move to '23, we would expect there would be -- there is an uplift in that revenue to approximately sort of that $90 million to $100 million per project would be coming through in the '23 year. So we're looking sort of $150 million, $200 million of full run rate revenue for those 2 projects. And EBITDA margins, we've sort of flagged that the mine operations is -- can contribute slightly higher margins, probably 11%, 12%, with the opportunity for upside, but at the moment, flagging around that sort of 11% to 12% for those projects.

Yes. Great. Okay. And just in terms of your total debt now with the assumed debt from the PYBAR side, would you be looking at refinancing that and extending the terms out with Westpac just in terms of your CapEx budget that you've got to spend as well?

Yes. Most definitely, obviously, with this sort of acquisition. There's an opportunity there. We mentioned about synergies and cost savings. There's an opportunity to look to renegotiate and group up the facilities and gain some benefits. So definitely looking to do that once we complete, Dan.

Your next question comes from John Kirby from Burrell Stockbroking.

Can you hear me?

Yes, we can, John.

Good. I'm based in Emerald, the Emerald office of Bureau Stockbroking. And Cook has been a troubled scheme for some time. What do you think you guys are going to be able to do so differently to make that a success?

John, yes, look, the approach we've taken with Cook is very different to what's been used there previously. So the immediate answer to that is we're certainly not looking at any longwall mining operation. So what we're proposing is a board-and-pillar operation. We've done a thorough assessment of the mine, and the areas that we're proposing to mine are quite different to what has been mined previously. So those 2 contributing factors, the fact that we're mining in a different area using a very low-risk mining methodology and board and pillar are the 2 obvious responses to that. The other point to make is that working with QCoal, who's a very established producer in the Bowen Basin, very well capitalized, as everyone knows, presents a very different environment to work with. I think it would be fair to say that previous operators in there have really worked hand to mouth and relied on production to be able to continue to fund the operation where we've gone in with a very different approach, which is about spending the money upfront to get the right equipment, to suit the asset in the new areas that we're going to mine and derisk the project by having the right equipment there at the right time to mine in the right areas. Also, by having that strong capital support through Mastermyne and QCoal, the mine is not being, how I'd say, overestimated in terms of production. So the QCoal has taken a very conservative approach to costs and to -- with that, the amount of production that will come out of the mine. So again, you combine that with the right equipment in the right place at the right time with much lower expectations around productivity, the asset is significantly derisked. Overlaying on top of all of that is our commercial model where we will be mining using a contract arrangement, which is a cost-reimbursable arrangement. So again, Mastermyne recognizes that the asset has had some geotechnical challenges in the past. And with that, we're not taking risk on geology ore production, really. We're just backing our performance. And the commercial model is really -- reflects that, and it's a cost-reimbursable contract with a guaranteed margin and then upside for performance through stronger production output.

So you're comfortable that if you do hit some heavy faults there, that you've got a possibility of renegotiating the contract. And how long is the contract for?

The contracts -- well, the contract is yet to be finally agreed, but we're talking sort of 4 to 6 years in terms of the contract. There is no need to renegotiate the contract. As I said, it's a cost-reimbursable contract. So the costs will be what they are. So if we do hit that bad geology, using -- I'm not sure if you're aware of the board-and-pillar methodology, but it's a much simpler process to basically pull back the gear and move to a different section of the mine. So the cost in doing that is reimbursed through the contract. So yes, we are comfortable with the asset. We understand the asset. A lot of people in our business have worked at Cook and around that operation. We've gone out and canvassed a lot of the people that have operated at the mine previously, so we've got a lot of good information. And for all of those reasons, we're comfortable with taking this opportunity on. And we actually see it as still quite a viable project for Mastermyne.

And [ Bamsi ] actually had a board-and-pillar strategy there as well. Have you had full access to their records as part of the transaction as well?

Yes. We certainly have, John. And we've actually got some of the people that worked in that operation we've consulted through this process. And we recognize that [ Bamsi ] did have a board-and-pillar methodology as well, but take you back to more comments around the equipment. And it's our very strong view, and that's been supported by a number of third-party reviews that the equipment was not the right equipment for the mining methodology. And again, I go back to that -- not being derogatory but hand-to-mouth approach, where they unfortunately didn't have the capital bandwidth to be able to pause and get the right equipment in there to derisk the project, and that's certainly the approach that we're taking. And that's well understood by Mastermyne and QCoal.

So it will still be a continuous mining -- miner operation. Is that what you're saying?

Well, there is no other way to mine it, John. So it's either longwall or by board and pillar, which involves miners. So yes, it will be a continuous miner operation for that asset, yes.

One last question from me. Your TRIFR rate, you say at 14.2. How does that compare with Mastermyne pre the transaction?

So Mastermyne's TRIFR rate in the coal business runs at about 3.5, 3.5. So look, we recognize that the TRIFR rate is not where we would like it to be, and that's certainly recognized by Nick and the team at PYBAR as well. And they've done some tremendous work to improve their overall approach to safety. And with that, they've seen the TRIFR rate come down but also the severity rate of those injuries coming down as well. So they're on a very strong trajectory to decreasing that TRIFR rate. And I think that one of the areas that we can add significant value quite quickly to PYBAR is sharing some of the things that we've done around our safety management processes to help them continue to decrease that TRIFR rate. But I've said that, the PYBAR TRIFR rate is below the industry average for hard rock. So whilst it's -- that's nothing to hang your hat on, by comparison, it is better than the industry rate for hard rock. But nowhere near where Nick and his team want the rate to be and nowhere near where we would be comfortable with it being as well. So there's some work to do there.

There are no further questions at this time. I'll now hand back to Mr. Caruso for closing remarks.

Yes. Look, again, thank you, everyone, for joining us today. And as I say, we're very excited to be able to have brought this transaction to the table. And again, I'll just finish with this is a highly complementary business to Mastermyne. And by bringing these 2 businesses together, we've now become a very diversified mining services business specializing in underground and heavily linked to production. So we're quite excited for what comes next, and we look forward to keeping everybody updated as the transaction progresses through to completion. Thank you very much for your time.

That does conclude our conference for today. Thank you for participating. You may now disconnect.