Forge awarded $35m in contracts for African mining firms

Como-based construction company Forge Group Ltd subsidiaries Cimeco Pty Ltd and Webb Construction (West Africa) Ltd have been awarded $35 million in contracts for work on African mine sites, the company has announced.

The full text of a company announcement is pasted below

Further to our request for a trading halt on Friday 19th October 2007 the Company wishes to announce the award of contracts with a combined value totaling $35m to its wholly owned subsidiaries Cimeco Pty Ltd and Webb Construction (West Africa) Ltd.

The contracts have been secured with subsidiaries of international gold mining majors Gold Fields and Newmont and Canadian producer Golden Star Resources Ltd's Ghana operation Bogoso Gold.

Whilst the scope of work differs slightly between the contracts, primary construction activities include the erection of structural steel and CIL tanks, mechanical installation of processing equipment and other works associated with the construction of gold mining plants.

The company has significantly expanded its operations in Ghana West Africa in line with the stated objectives contained within the Prospectus dated 15th May 2007. The award of these contracts justify this strategy and provide confidence to the directors and management to further expand into the African market place, in countries where sovereign risk can be managed and profit and cash flow assured. With over 15 years experience in construction in Ghana and other countries including Tanzania and Vietnam, the company is confident of its ability to venture into other African countries, particularly in support of the many Australian companies who are now looking to build processing plants for the treatment of their various ore bodies.

A recent reconnaissance trip to Johannesburg to meet with local engineering houses has confirmed that a significant market exists for construction services on the African continent and that Cimeco and Webb Construction are highly regarded to provide such services. As testament to this position the contract award of the Gold Fields project was due to the recommendation by South African based The Aveng Group subsidiary E+PC Engineering & Projects Company Ltd who have been awarded the engineering, procurement and construction management (EPCM) contract for the same Gold Fields Tarkwa CIL Expansion.

With the bulk of the contract's value accruing in the current financial year together with other orders recently announced, normal client workload and other prospects in the pipeline Forge is forecasting an increase in annual revenue from $74m to over $100m and a commensurate increase in earnings for the 12 months ending June 2008. The company believes it will be in a position to provide more detailed earnings guidance at the forthcoming Annual General Meeting of shareholders.