Macmahon wins $500m BHP contract

Perth-based engineering firm Macmahon Holdings and joint venture partner Leighton Holdings has secured a $500 million BHP Billiton contract for work on the miner's Rapid Growth Project 5 at the Pilbara iron ore operations.

The JV is on a 50:50 basis and work will begin immediately.

The contract includes the construction of more than 1,000 camp rooms, the duplication of 220 kilometres of the Mt Newman rail line and the installation of 840 kilometres of fibre optic cable.

Late last week, Macmahon entered a trading halt pending the release of details regarding a "large" contract.

This afternoon, shares in the company jumped 30 per cent or 15.5 cents to an intraday high of 67 cents before closing at 58 cents.

Shares in Leighton closed down $2.18 to $21.07.

The announcement is below:

Macmahon Holdings Limited (ASX: MAH), in joint venture with Leighton Contractors, has been awarded a contract valued at more than $500 million by BHP Billiton Iron Ore for the double tracking of sections of the Mt Newman rail line, which forms part of the Rapid Growth Project 5 (RGP5).

Macmahon, and its subsidiary MVM Rail, will be providing project management personnel, operating labour and equipment to the fully integrated joint venture team. The Macmahon share of the joint venture is 50 per cent.

The contract requires the joint venture partners to duplicate 220 kilometres of the existing railway line, between Port Hedland and Shaw Siding on the Mt Newman Line, in the Pilbara region of Western Australia.

The contract works include:

- construction of more than 1,000 camp rooms complete with kitchens and recreation facilities;
- 1.2 million cubic metres of earthworks;
- construction of 10 new dual track bridges;
- laying of all required track to duplicate the existing 220 kilometre railway line; and
- installation of 840 kilometres of fibre optic cable.

Work will begin on site immediately and is expected to be completed during the second half of 2010, with the joint venture encouraging a high level of indigenous participation on the project.

Chief Executive Officer, Nick Bowen, said that the Macmahon Leighton joint venture team were looking forward to working together on this large and exciting project.

"This contract win builds on the positive working relationship we have developed as a result of the Memorandum of Understanding signed with Leighton Holdings last year.

"The award of this contract further demonstrates the strong relationship we have developed with BHP Billiton over the years. We are very pleased to work on this significant project which will provide BHP Billiton with additional capacity in the Pilbara region," Mr Bowen said.