Clough secures $440m contract extension

Clough Ltd's Indonesian subsidiary, PT Petrosea Tbk, has extended its long-term contract with a coal firm by a further 60 months, valuing the new deal at $440 million.

Clough's 82 per cent owned Petrosea has been providing stripping works for Muara Pahu since late 1999, and will commence the new contract, with no interruption, from the start of next year.

The contract is valued at $US300 million ($A440 million).

Shares in Clough climbed 5c to 35.5c at 14:57 AEDT.

Below is the announcement:

Clough Limited (ASX:CLO) today announced that its 82% owned Indonesian subsidiary, PT Petrosea Tbk has signed a new contract for a US$300 million, 60-month extension to its long-term coal overburden stripping contract adjacent to Muara Pahu in East Kalimantan on improved terms and conditions.

The work for PT Gunungbayan Pratamacoal (GBP), a subsidiary of the recently publicly-listed Bayan Resources Tbk, was first awarded to Petrosea in November 1999 and at that time it was one of Petrosea's largest contracts in its 27 years Indonesian operations.

This new contract with GBP is set to commence from 1 January 2009 and will follow on, with no interruption, from the previous contract.

John Smith, CEO Clough Limited said, "Securing this long-term extension of the GBP contract provides a very solid base for Petrosea's continued mining operations over the next five years and continues the strong relationship it has with GBP. It will also provide operational flexibility for the deployment of equipment."

By the end of 2008 which is the end of the current contract, Petrosea's work for GBP will have generated revenues of over US$250 million and seen the movement of more than 230 million cubic metres of material over the past nine years.

The GBP Mine in the Muara Pahu District of East Kalimantan is an important source of high quality, medium sulphur coal for the Bayan Group. The resource is exported to Asia and Europe through Balikpapan as high calorific value coal (HCVC).