4th May 2010
Update on Ezulwini Project
MDM Engineering Group Limited ("MDM" or the "Group") announces that it has settled a dispute with First Uranium Corporation Limited ("First Uranium") Gold and Uranium Ezulwini Project south west of Johannesburg, South Africa (the "Project").
The Project was completed and commissioned during the second quarter of 2009 and consisted of the design and construction of two process plants - gold and uranium. MDM completed the gold plant, but experienced a delay in the completion and commissioning of the uranium plant. As a result of this delay, First Uranium claimed a reduction in the performance margin payable to MDM. Given that MDM completed the overall plant within an adjusted budget, albeit with a delay on the uranium plant, both parties agreed on a mediation process to resolve the dispute as opposed to arbitration or litigation.
During April 2010, both parties worked towards reaching an amicable resolution for full and final settlement on the Ezulwini dispute. The impact of this settlement is a reduction in the Group's profit for the year to March 2010: MDM confirms that its profit before taxation for that year is expected to be between 25% and 30% less than the current forecasted number of $9.2 million.
As previously announced, management changes have recently been made to strengthen MDM's execution capability. A new CEO, Martin Smith and General Manager (Projects), Mark Clarence have been appointed with substantial experience in both the execution and construction of projects to further strengthen the Group's internal controls.
MDM is actively working with First Uranium on preparing a revised Capital Budget Estimate for Mine Waste Solution Phase 2 project, within a strong and productive relationship.
The Directors have made no revision to their internal estimates of income or profit for the year ending 31 March 2011.
Enquiries:
MDM Engineering Group Limited
Martin Smith (CEO) Tel: +27 11 993-4300
George Bennett (Executive Director)
Numis Securities Limited
John Harrison (Nominated Adviser) Tel: +44 (0) 20 7260 1000
James Black (Corporate Broker)
KEY INFORMATION
MDM Engineering Group Limited is a minerals process and project management company focused on the mining industry. The Company provides a wide range of services from preliminary and final feasibility studies, through to plant design, construction and commissioning. To date, the Company's clients have largely been junior and mid-tier mining corporations with operations in Africa.
In May 2008, the Company successfully listed on the AIM market of the London Stock Exchange. The MDM Engineering core technical team has a 22 year track record of completing a wide range of studies and execution projects across a variety of minerals, including precious metals, base metals, ferrous and non-ferrous metals, uranium and diamonds.
The Company has adopted an approach to project execution based on an open-book Engineering, Procurement, Construction Management ("EPCM" or "cost-plus") basis. With a core focus on Africa, MDM Engineering is setting the benchmark standard for best practice in the mining services industry through its commitment to providing the highest quality services and actively engaging with clients to ensure maximum transparency.