Sedgman on a contracts roll

MAY 2010

TWO Brisbane companies have joined forces in Botswana, with Discovery Metals Limited (DML) enlisting the services of Sedgman Limited (SDM) for engineering, procurement and construction (EPC) of its Boseto copper project.

The $102 million contract adds to $150 million worth of EPC contracts for Sedgman in the last two months, while managing director Mark Read is upbeat about the market atmosphere.

“We have a positive feeling at the moment, give or take the odd resource super profits tax, with more studies going on in general – we’re at record levels in terms of our test studies,” he says.

“Our Johannesburg office has grown considerably and we have two headline strategies, to continue to be a world leading brand in coal, while growing from a low base with our metals division – this is a good example of that.

“We have been particularly encouraged by the number of studies the metal division is currently working on, supporting our view that the metalliferous sector is starting to mirror the signs of the strong recovery now evident within the coal sector.”

Early last month Sedgman signed $50 million worth of contracts with Riverside Mining Limited’s (RIV) Benga coal handling and preparation plant in Mozambique, following a $13 million contract signed in December, while in April it signed a $50 million deal with Narrabri Coal Operations Limited (NCO).

Read says the latest contracts will give the company a positive outlook for 2011.

“We expect to continue to grow our order book by capitalising on the increasing number of project opportunities both in Australia and abroad,” he says.

“Having achieved market leadership in Australia, we are now winning significant international projects in our targeted regions.”

He says Sedgman is focused on a $5.5 billion global pipeline of targeted projects, with studies and projects in the Americas, China, Europe, southern Asia and Africa.

WHTM Corporate Finance recently upgraded Sedgman’s 12-month target price from $1.80 to $2.10.