In the media

MDM to add two more construction projects

12 May 2008

Source: www.miningmx.com

By: Allan Seccombe

MDM Engineering plans to have two more construction projects on its books by the end of the year as it uses proceeds from a £4.4m share placement to reward staff and bring in new teams for additional work, George Bennett, an executive director, said on Monday.

Bennett, who founded the company out of the financial ruins of MDM Ferroman at the end of 2006, started off with 20 staff and has grown this to 105. Another 25 to 35 people will be recruited in coming months.

“That will be our optimum staffing level for the next couple of years,” Bennett told Miningmx in an interview on the day of the company’s admission to London’s Alternative Investment Market (AIM).

MDM has four projects on its books worth $400m and will add another two before the end of the year, he said. MDM is building a gold plant and a uranium plant for Ezulwini, a copper plant for Metorex at Kinsenda in DRC and a gold and uranium tailings treatment plant for Chemwes in South Africa.

“We have four execution projects we are busy with and by the end of the year we’ll have another two starting,” Bennett said.

“We see big demand for projects north of South Africa. We are currently involved in feasibility studies north of the border and we’ve been awarded another one that we’ll be making an announcement on soon,” Bennett said.

The feasibility projects are a copper project in the Democratic Republic of Congo, a gold project in the Ivory Coast and a uranium study, which is likely to become a project in Zambia. There is a nickel study in Malawi. The other studies are in South Africa. The value of these projects, if they go into execution, is $1bn.

The new feasibility project is thought to be a uranium study in Tanzania.

MDM has a conversion rate of about 90%, bringing feasibility studies into construction projects, he said. This is, he added, an abnormally high rate for the industry.

“With the current gold price and demand for uranium I foresee a lot of projects coming over the next few years by way of being approved and developed,” Bennett said.

“We get two or three approaches a month. We can’t take them all on. We take on those where there is a real chance we will end up executing the project, which is where we make our money.”

MDM will retain its focus on Africa. The difficulties Bateman has with its project in India serves as a warning to be careful about spreading skills too thinly or too widely, he said.

“There’s so much money being spent on projects in Africa and it’s on our door step… We have experience and been successful in building projects in Africa so we’ll stick with that for the foreseeable future,” he said.

MDM has about $4m in cash and the further injection of cash will add strength to its balance sheet.

“We are not in desperate need of cash, but it will strengthen our balance sheet to take on a couple of big projects we have coming on board in the short term,” Bennett said.

“More importantly, I will use some of that money to target teams of guys that we need. We’re not really going to look to buy other businesses. They’re very difficult to integrate, I’ve found,” he said.

One of the other primary reasons for listing was for the share option schemes MDM has and which reach 90% of the staff and could well explain the low turnover rate Bennett says the company has.

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