RNS Number : 9425Y
Bateman Engineering N.V.
11 July 2008
Bateman Engineering N.V.
("Bateman Engineering" or the "Company")
Bateman Engineering provides for financial exposure from Lumwana fire and advises
additional cost provisions on Moma project
Lumwana Project
Further to the announcement on 8 July 2008 regarding the fire at the Lumwana Copper
Project, Bateman Engineering announces that it has
provided for an increase in project costs that will result in a USD10 million reduction in
operating profit for the year ended 30 June 2008.
The quantum of the provision is based upon management's conservative estimate for the
total impact on project costs and Bateman
Engineering does not currently anticipate the need for any further provision.
The fire, in which no one was injured, damaged the main 20MVA transformer and adjacent
11kV substation, which forms part of the process
plant facility currently being commissioned by Bateman Engineering and its joint venture
partner Ausenco for Equinox Minerals Limited.
The Board advises that all efforts are being made to expedite the replacement of damaged
equipment in order to minimise the delay in
achieving project completion. Commissioning work is in the meantime continuing in other areas
of the plant.
The transformer and substation were commissioned without any problems and have been
operating for a number of weeks before the incident
occurred. An investigation into the incident is underway with experts being appointed to
inspect the damage and investigate the possible
cause.
The Ausenco / Bateman joint venture has commenced a review to assess the possibility of
mitigating the additional costs.
Moma Project
As a result of an end of period contract review associated with anticipated project
completion and ongoing preparations of the year end
results, Bateman Engineering also announces, for reasons set out below, that the Company has
to reconsider its forecast costs to completion
in relation to the Moma project, a significant LSTK contract undertaken for Kenmare Resources
in Mozambique,, which is in the process of
completing and has been the subject of a number of ongoing issues for the Company since 2006.The newly identified issues principally relate
to:
* the handover of the roaster which is likely to be delayed by approximately three
months due to defective workmanship which only
came to light during the current handover process; and
* process concerns arising from the operation of the wet concentrator plant and the
mineral separation plant which will require
additional work before performance testing can commence.
Based on the current information available to management a further provision has been made
that will result in a USD 8 million reduction
in the operating profit for the period ended 30 June 2008.
The total impact from the provision related issues arising in relation to both Lumwana and
Moma is a net reduction in operating profit
of USD 18 million for the year ended 30 June 2008.
Bateman Engineering Chairman Rick Menell said:
"Whilst the increase in project provisions means that Bateman Engineering will now not
meet the Board's expectations for the year ended
30 June 2008, we believe it is the correct and prudent approach to follow until our commercial
position has been fully assessed and
clarified.
The Board is confident that the new management team is fully focussed on managing the
risks arising from LSTK contracts, optimising
project delivery and execution and continuing a strategic move towards lower risk hybrid /
reimbursable contracts"
ENQUIRIES:
11 July 2008
Bateman Engineering
Eddie Du Rand, CEO Designate +31 20 502 2370
Pieter du Plessis, CFO +41 55 451 9010
Dresdner Kleinwort
Chris Treneman +44 20 7623 8000
Alex Metherell +44 20 7623 8000
Andrew Hollins +44 20 7623 8000
College Hill
Nicholas Potter +44 207 457 2037
Adam Aljewicz +44 207 457 2025
Further information on Bateman Engineering is available at: www.batemanengineering.com
Note for editors:
Bateman Engineering is a technology-driven engineering-project house serving the minerals
and metals industries worldwide. Bateman
Engineering's shares (BATE.L) are traded on AIM, a market of the London Stock Exchange.
This information is provided by RNS
The company news service from the London Stock Exchange
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