Macmahon secures $50m BHP contract

BHP Billiton's approval to proceed with further expansion works at its Pilbara iron ore operations has proved to be a boon for Macmahon Holdings, which today secured a $50 million contract with the miner.

The contract forms a part of BHP's Rapid Growth Project 5, which will increase iron ore output by 50 million tonnes to 205mt each year, withfirst production expected in the second half of the 2011 calendar year.

Under the deal, Macmahon will provide preliminary construction work to facilitate dredging at Finucane Island.

Shares in Macmahon were up one cent to 53.5c at 13:27 AEDT, while shares in BHP were down 95c to $30.05.

Macmahon's announcement is pasted below:

Macmahon Holdings Limited (ASX:MAH) announced today that it had been awarded a contract for construction work at Port Hedland in Western Australia by BHP Billiton Iron Ore.

The work has an estimated contract value of $50 million and forms part of BHP Billiton Iron Ore's recently announced Rapid Growth Project 5 (RGP5).

The contract involves preliminary construction work to facilitate dredging at Finucane Island, including:

- seawall construction including the placement of 750,000 cubic metres of armour rock; and

- new containment ponds for the dredge material.

Chief Executive Officer, Nick Bowen, commented that the award of this contract demonstrates Macmahon's strong position in the Pilbara iron ore region and its long association with BHP Billiton Iron Ore's expansion projects.

"We look forward to executing this important piece of work on RGP5 as BHP Billiton continues to expand its iron ore operations in the Pilbara," he said.