MACMAHON (MCHHF)

[genlou]

Macmahon Holdings will buy back up to 10 per cent of its shares on issue over the next year as it looks to counteract a steep fall in its share price.

The mining contractor said the buyback was part of its capital management "at a time when the company’s shares are trading at a significant discount to their net tangible asset value".

Over the past 12 months, Macmahon shares have fallen more than 37 per cent, though year-to-date, they are only down 4 per cent. The share price rallied in June and July, pushing as high as 8.5c, but has since dropped around 20 per cent.

Investors have responded well to the buyback, however, sending shares 13.43 per cent higher to 7.6c, against a benchmark index lift of 0.33 per cent.

"The board believes the current share price does not reflect the fair value of the company, particularly in light of the company’s current cash reserves," Macmahon said in a statement today.

"The board therefore considers a share buy-back to be a sound use of available capital."

The buyback does not require shareholder approval and the earliest Macmahon will be able to purchase stock is October 21.