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ASX BRIEFS
MLG OZ LTD (MLG) - How MLG Oz is Connecting Mines to Processing Hubs Across Australia
The mining services landscape in Australia is evolving rapidly, and few companies exemplify this transformation better than MLG Oz Limited. Murray Leahy, Managing Director and founder, joins us to unpack how this Kalgoorlie-based company has grown from identifying a market gap to becoming an integrated powerhouse delivering critical services to Australia's most prominent mining operations.
At the heart of MLG's success is their pioneering hub-and-spoke model, connecting remote mining sites to centralized processing facilities through an intricate network of logistics, crushing, screening, and civil services. What once existed as fragmented offerings from multiple small providers has been reimagined as a seamless, integrated solution driving efficiency across the mining value chain. Murray explains how this approach has secured major contracts with gold producers like Westgold Resources, Northern Star, and Evolution Mining—partnerships characterized by longevity and mutual growth.
Despite posting impressive 20% revenue growth in the first half of FY25, MLG has faced challenges including project delays affecting short-term margins. However, Murray confidently outlines how strategic capital investments in fleet expansion and dedicated Kalgoorlie accommodation facilities are now bearing fruit, positioning the company for stronger profitability in the coming months. Perhaps most fascinating is MLG's innovative approach to the industry-wide skills shortage—their new-to-industry training program has brought 350-400 workers into specialized mining roles over just two and a half years, creating pathways for non-traditional workers while building their workforce capacity. As gold prices reach historic highs and Australia's mining sector continues its expansion, MLG's selective approach to quality partnerships and operational excellence offers valuable insights for anyone interested in the future of mining services.
Andrew Musgrave Host
Welcome back to ASX Briefs, and joining me today is Murray Lay, the Managing Director of MLG Oz Limited, a Kalgoorlie-based integrated mining services provider offering haulage, site services, crushing and screening and civil construction solutions to some of Australia's biggest mining operations. Murray, thanks for joining me today and welcome to the ASX Briefs podcast.
Murray Leahy Guest
No worries. Thanks for having us, Andrew.
Andrew Musgrave Host
Now, Murray, for listeners that may be unfamiliar with MLG, can you just provide a brief overview of the company?
Murray Leahy Guest
Sure can. The MLG business is one that I started back in the early 2000s, and it came out of the identification of, I guess, a hole in the market, particularly on the servicing of mineral processing facilities. So, we identified that there was a series of services around crushing and screening, bulk haulage and site civil works so tails dam management, road construction and so forth that were typically serviced by different service sectors. So, smaller family-run businesses supporting the processing hubs in a very fragmented way. And we worked out that there was shared fleets, shared resourcing and the capacity to be able to consolidate a service offering that would drive efficiency and allow us to sort of build out in a sector that hadn't been previously. And that's really what stands at the core of how MLG came about and is what is core to the service offering we have today.
Andrew Musgrave Host
Okay Now. The company has secured several major contracts recently, including Westgold, Northern Star and Evolution Mining. So how do these contracts align with the company's long-term growth strategy?
Murray Leahy Guest
Good question. I think holistically, if we look across our customer base, we're a business that has multi-commodity exposure, but we do have a large amount of gold exposure and those three customers you just mentioned sort of fit front and centre in that. All of those three scopes of works are all built around the hub-and-spoke model that MLG has developed back in the early 2000s and it's the feeding of remote ore sources through to a centralized processing facility. Obviously, there's been a large amount of growth across those three customers, both in the scale of their processing hubs but the radius of the mines that are feeding them. And the MLG Oz strategy of servicing those processing hubs and linking their remote deposits up with the processing hubs sort of sits at front and centre of the scope of works across all three of these. So, with all of those scopes of works we'll be delivering material from remote sites via both private and public road networks through to a centralised processing hub to allow our customers to continue to grow their ounce profile.
Andrew Musgrave Host
And you've built a reputation for long-term partnerships, particularly with Northern Star, being over 10 years. So, what do you believe is the company's competitive edge in this area?
Murray Leahy Guest
Look, I think it's the fact that we have a very dedicated management team that are sort of guiding our operations teams on a day-to-day basis. We have a unique way of being able to integrate a service offering. So, the interface for our customer is very important, making it as simplified as practically possible from the point of excavation out of the ground be it underground or open pit onto a truck through a haul road network. The permitting that's associated with that, both from a department of mines but also local government when local roads are being used, and then the integration of that into their processing hub, requires a multitude of touch points, both from customers, from other third-party contractors and from local government authorities and regulators. You know the MLG Oz business is very good at being able to ensure that there is full compliance and high standard of delivery across all of those facets and we make that process just seamless for our customer base.
Andrew Musgrave Host
Now. The company delivered strong revenue growth in the first half of FY25 to over $272 million, but profitability declined due to increased depreciation and project delays. So how do you plan to strengthen margins and improve profitability in the coming quarters?
Murray Leahy Guest
Yeah, so some of that came about for, as you say, there was some profitability pressure, predominantly from project delays.
So, one of the challenges that we have we've been a rapidly growing business we require capital and there's long lead time associated with that. We have ordered fleet in preparation for new works coming along and through the first half we've had some delay in projects and obviously we paid for equipment. We had it here in preparation and our clients were taking a bit longer to get going. So, the capacity for that fleet to be able to deliver revenue for the business was delayed somewhat. But we chose to actually to bring that to account and expense, you know, the first part of that fleet. So that resulted in this in a slight reduction in margin. We do see that and have seen that now start to deliver through the second half. So, we expect to see the second half sort of strongly weighted against the first half and that fleet that we'd purchased that had a somewhat negative effect on the first half. Profitability is now delivering, and delivering strongly, and we expect to see that flow through in terms of margin in the second half.
Andrew Musgrave Host
And just touching on capital, you've made significant capital investments, including a $29 million in fleet expansion and dedicated accommodation facilities in Kalgoorlie. So how do these investments position the company for future growth?
Murray Leahy Guest
Very well really. So obviously, particularly from a gold customer's perspective, we've found ourselves in a situation we've seen increasing demand through expansion of processing hubs, particularly around the Kalgoorlie region. We've seen a large investment in both support infrastructure, workshops and so forth, but, more importantly, accommodation as well. One of the biggest issues that the whole of industry faces across the nation now is accommodation. We've got on the front foot there so that the business owns its own support infrastructure, workshops and so forth, but now owns its own accommodation facilities locally in Kalgoorlie. So as the likes of Westgold, Northern Star, Evolution and those guys within the Kalgoorlie region are expanding materially, we've got capacity to be able to meet all their demands and not be reliant on any third-party provider.
Andrew Musgrave Host
Now the gold price is at historic highs, driving strong demand for bulk ore haulage. So how does this impact the company's order pipeline and revenue outlook for FY25 and beyond?
Murray Leahy Guest
It's a good question and I think it's one that probably needed to talk about quality of earnings and where that sits.
The reality of the current gold price is it's driving huge demand, but that demand comes from both high-quality, low-cost producers through to medium-cost producers, through to high-cost producers where our business has been very focused is our existing customer base that has long life, low cost of production assets that we know will deliver through all commodity price cycles.
So, we're seeing material growth and, as you commented on recently, the 20% growth in the first half was driven by that demand via gold price, but it was driven through our high-quality, low-cost customer base. So, we're seeing the business grow exponentially year on year, but not through just taking on any work. We're being very selective in the work that we take on and ensuring that we have the capacity to be able to withstand commodity price cycles. So, the ethos that has been our success over a long period of time has been partnering with businesses that we know that can withstand, you know, variations in commodity price and we're very fortunate that those customers who have supported us and we have supported through that journey are now expanding material and that is driving that growth. We're not reliant upon high-risk production to drive our growth, which puts us in a very good position.
Andrew Musgrave Host
Now your $75 million contract with Westgold Resources includes ore haulage, stockpile management and haul road maintenance. So, what are the operational challenges in managing such a large contract and how does MLG ensure efficiency and safety?
Murray Leahy Guest
It's a comprehensive question with a fair few answers, right. So, look, I think fundamentally that is a hub and spoke operation. So, on top of that, Westgold have also now announced an expansion in their Southern Goldfields operations. So that's going to see that scope grow materially on top of what we announced to the market. So not only are we required to deliver that, but we see it growing materially over the next couple of years as they expand their processing capacity.
From a challenges perspective, I guess that is a task that's operating on public roads, and it happens to be operating on Highway 1, the main highway between the east coast and the west coast of Australia, so there's a high degree of traffic interaction.
We manage that risk within the business through comprehensive GPS and in-vehicle monitoring systems that are reporting back to a centralised monitoring hub on a minute-by-minute basis, basically. So, every one of our operators has connection with our GPS team and capacity to be able to communicate via that platform, and we're using that to ensure that not only do we have on-road compliance, but our people are being kept safe. So that's how we're managing the interface on a day-to-day basis with the general public. In terms of risk mitigation across the operation. Well, that sits across the business's safety management systems and incorporates things such as our critical risk assessment tools and the management team being set up to manage all of those operational risks that come from a day-to-day basis, and that starts with pre-start process at the start of the day, our task planning, our risk assessments for key high-risk activities, be it maintenance-related, be it operational-related.
Andrew Musgrave Host
Okay, and you've got other substantial contracts with Evolution Mining and Norton Goldfields, which once again includes haulage but also civil work. So, is expanding into civil infrastructure part of a broader strategy?
Murray Leahy Guest
So, the business has a large civil division that sort of operates fairly quietly behind the scenes, to be completely honest. But the key thing with that is we're conducting. You know, when you think about civil works in the traditional sense you think about footings for processing hubs or buildings or whatever it may be. So, the civil division within our business pretty well specialises around a key set of service offerings and it's things like haul road construction, tails dam construction, rehabilitation, management of waste dumps and so forth. So, it's a unique set of skills. It doesn't come with a contractual risk of doing footings for a major construction and so forth and it actually dovetails in very well with the wider scope offering that the business has. So as an example for Evolution, we're building a new 20-kilometre haul road that will be sealed. That haulage division of the business will then be utilising to transport Evolutions all over the next 10 years for that project.
Andrew Musgrave Host
Okay, now the labour market remains tight, particularly for road train operators and diesel mechanics. So how is the company addressing recruitment and workforce development to meet operational demands?
Murray Leahy Guest
Look, our business isn't immune to the challenges that are coming from a labour market perspective. I guess, fundamentally, at the core of who I am, I have a view that our people are our most valuable tool, and doing everything that we can to provide an environment that people want to come and work at is front and centre for myself. In terms of what we're doing around investing in people. One of the biggest, I guess, initiatives that we took on sort of two and a half years ago was the development of a new-to-industry training program, particularly for road train operators and mobile plant operators. I think, holistically, the mining industry and logistics industries and we sort of sit across both have been quite poor in providing adequate training pathways for non-traditional skills. I have a personal view that the operation of a, you know, a $1.7 or $1.8 million road train that weighs 300 tonnes is a distinct skill and it should be recognised. However, unfortunately it's not.
We've taken the initiative of developing a program that takes people out of the general freight industry, out of small-scale civil industry, where they're using trucks but they don't have mining experience, and we train them through a pathway of getting them up to a skill level that allows them to operate safely and efficiently within a mining environment and that's delivered sort of circa 350 or 400 people into our business now over the last two and a half years and is really the key pathway that we see for the future of employers coming into our business.
We obviously have a large and loyal workforce that have been with us a long period of time and that creates an opportunity for us to be able to disseminate that knowledge base from those experienced team members through to the new industry graduates as they come out of that program and become, you know, valued members of our team. But as a business we're investing very heavily in training, pathways and opportunity for people that wouldn't normally be given the opportunity. The mining industry is very good at saying, you know, we'll give some opportunity to those people we know, but not very good at creating pathways for people from the general public, and that's really where we've been focused.
Andrew Musgrave Host
Okay, now just to finish up. The second half of FY25 appears strong, with fleet deployment and new contracts driving revenue. So, what are some of the key milestone’s investors can keep an eye out for over the next 12 months?
Murray Leahy Guest
Look, I think it's about getting boring for us. So, we like boring from a point of view of delivering consistency and seeing that margin growth is really where we've been focused. So, we expect to see a bit of top line growth in the second half but, more importantly, bottom line growth is really where we've been focused across the half. The deployment of that fleet that we had sitting idle in the first half has now happened. We're seeing further inbound inquiry from our underlying customer base. That's delivering further from a profitability perspective.
The second half for us is really about finishing the financial year with a strong tailwind and delivering to a more material level over and above that of the last financial year. So, we think we're placed pretty well and the only thing that can really get in our way now, between now and the end of the financial year, to put a hole in that is a bit of wet weather and to date that seems to be holding off, which is great. And outside of that the underlying business is performing very well. It's been delivering consistency, we're seeing profitability growth month on month, and we expect to see the second half finish materially stronger than the first half.
Andrew Musgrave Host
Okay, Murray. Well, it's great to get an overview of the company. So, thanks for your time today and we look forward to further updates from MLG Oz in the upcoming months.
Murray Leahy Guest
Beautiful and thank you for your time. Andrew, appreciate it.
Andrew Musgrave Host
That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on.