Press releases

First day of dealings

12 May 2008

MDM Engineering Group Limited is a minerals process and project management company that provides services to the mining industry. The Group provides a wide range of services, from preliminary and final feasibility studies through to plant design, construction and commissioning, to mining companies. To date the Groupís clients have largely been junior and mid-tier mining corporations with operations in Africa.

MDM Engineering is pleased to announce that it has raised £4.4 million of new funds (net) via a placing of 3,450,000 New Common Shares with a range of institutional investors. Admission of a total of 37,459,107 New Common Shares to trading on AIM has been sought. Dealings are expected to commence at 8.00am today. MDM Engineeringís market capitalisation at the Placing Price is £54.3 million.

MDM Engineering will trade under the symbol “MDM”.

Numis Securities Limited is both Broker and Nominated Adviser to the Group.

Placing Price145p
Total number of New Common Shares being issued pursuant to the Placing3,450,000
Number of Common Shares in issue immediately following Admission37,459,107
Percentage of enlarged issued share capital subject to the Placing9.2%
Estimated net proceeds of the Placing receivable by the Group (exclusive of applicable VAT)£4,403,100
Market capitalisation at the Placing Price on Admission£54,315,705

Grant Lowman, Chief Executive of MDM Engineering, commented:

“We are very pleased with the level of interest the Group has received, and we look forward to the next stage of growth for MDM Engineering. We are positive about the opportunity that exists in Africaís burgeoning natural resources industry and believe that an AIM listing and the proceeds of the Placing will significantly help to achieve our long term goals in an expanding market. We are well positioned to execute on our growth strategy and are confident that MDM Engineering will emerge as a market leader in the mining services industry in Africa.”

Further details, including the Admission Document in downloadable form, are available at www.mdm-engineering.com.

Enquiries:

MDM Engineering Group Limited
Grant Lowman
Tel: +27 11 886 7981
George Bennett
Tel: +27 11 886 7981

Numis Securities Limited (Nominated Adviser & Broker to the Group)
John Harrison
Tel: 020 7260 1000
Stuart Skinner

Pelham Public Relations
Chelsea Hayes
Tel: 020 7743 6675
James MacFarlane
Tel: 020 7743 6375

KEY INFORMATION

MDM Engineering Group Limited is a minerals process and project management company that provides services to the mining industry. The Group provides a wide range of services from preliminary and final feasibility studies, through to plant design, construction and commissioning, to mining companies. To date, the Groupís clients have largely been junior and mid-tier mining corporations with operations in Africa.

The Group was established in November 2006. In February 2007 the Group purchased out of liquidation certain of the intellectual property and fixed assets of MDM Ferroman (Pty) Limited (“MDMF”), a mining services company with an established track record of providing services to the African mining industry. The Group subsequently employed a number of the technical staff of MDMF, and implemented an approach to project execution based on a transparent, open-book Engineering, Procurement, Construction Management (“EPCM” or “cost-plus”) basis. The Group now has what the directors consider to be a strong portfolio of current studies and execution projects and a strong outlook of prospective work, which the directors believe provides the Group with an attractive and visible revenue stream to drive the Groupís growth in the future.

The Group has an order book totalling four confirmed or active projects and seven scoping and feasibility studies. The aggregated Project Value of the confirmed or active projects is approximately US$400m and the aggregated Project Value of the projects expected to result from the scoping and feasibility studies is approximately US$1bn (although there is no guarantee that the studies will become active projects). Historically, the Former Business had a successful track record of securing the project contracts where the Former Business had previously undertaken the original feasibility study. In over 90% of cases where such studies resulted in a project being undertaken, the project was carried out by the Former Business. The Group has continued to convert a significant proportion of bankable feasibility studies into project contracts and the directors are confident that this trend will continue as the Group expands.

Reasons for the Offer and Use of Proceeds

In the opinion of the directors, Admission will assist in the Groupís development by enhancing its profile within the global mining industry, enabling access to capital where necessary to fund opportunities for growth and facilitating the provision of equity incentive programmes to attract and retain high quality personnel.

Dividend Policy

The directors believe that the cash generative nature of the Groupís business will enable the Group to distribute approximately 50% of profit after tax in the form of dividend payments each year. However, the payment of dividends will always be subject to the financial performance of the Group and the Groupís financial position and capital requirements.

ADDITIONAL INFORMATION

Definitions:

“Admission”: admission of the issued and to be issued Common Shares (including the New Common Shares) to trading on AIM becoming effective in accordance with the AIM Rules;

“AIM”: the AIM market operated by the London Stock Exchange;

“Common Shares”: common shares of US$0.01 each in the capital of the Group;

“Former Business”: the mining engineering and services business of MDM (Pty) Limited and MDMF as carried on prior to the liquidation of MDMF;

“London Stock Exchange”: London Stock Exchange plc;

“MDMF”: MDM Ferroman (Pty) Limited (in liquidation) an RSA incorporated corporation;

“New Common Shares”: the 3,450,000 new Common Shares to be issued pursuant to the Placing;

“Placing”: the conditional placing by Numis as agent for the Group of the New Common Shares at the Placing Price and pursuant to the Placing agreement; and

“Placing Price”: 145p per New Common Share

Technical Glossary:

EPCM or engineering, procurement, construction and management: a form of contract whereby the contractor is paid on a reimbursable basis for all costs incurred in producing the end product, including corrective costs

Project Value: the total capital cost of an execution project to the client

Scoping Study: project viability assessment and scope of work development for next phase study

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