Press releases

Trading statement

14 November 2008

The Board of MDM Engineering today provides an update to the market on current trading and operations ahead of the publication of its interim results for the six months to 31 September 2008, to be released later this month.

The Company has more than US$17m in cash and cash equivalents on its balance sheet and continues to generate consistent positive monthly cash flows. The Board believes that the Company is sufficiently well capitalised to weather the current market turmoil. Staff utilisation rates are still very high and the Board expects to continue to grow cash resources through the Company’s active projects.

Earnings disclosed in the interim results will be broadly in line with market expectations. However, the Board of MDM Engineering believes that the Company’s earnings for the year to March 2009 will be materially below current market expectations. This is due to certain clients taking the decision to delay the commencement of execution projects. The delays are attributed to the current global economic turmoil and the exposure to the decline in commodity prices which MDM Engineering’s clients have experienced. In addition, the Rand has depreciated by more than 30% to the US dollar since September which will have a direct impact on reportable figures.

MDM Engineering has completed Bankable Feasibility Studies on a proposed new sinter plant for Kalahari Resources Inc and is currently engaged in contract negotiations with them for the full EPCM execution contract. If successful the Board believes that MDM Engineering will generate revenue from this contract through to mid 2011.

The delay in the commencement of execution projects will result in a significant portion of the income for the projects which the Board had expected to be recorded for the financial year to March 2009 to now be recorded across the following financial years.

Enquiries:

MDM Engineering Group Limited

Grant Lowman/George Bennett
Tel: +27 11 886 7981

Numis Securities Limited

John Harrison (Nominated Adviser)
James Black (Corporate Broker)
Tel: +44 (0) 20 7260 1000

Pelham Public Relations

Candice Sgroi
Tel: +44 020 7743 6376

Chelsea Hayes
Tel: +44 020 7743 6675

KEY INFORMATION

MDM Engineering Group Limited is a minerals process and project management company that provides services to the mining industry. The Company 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 Company’s clients have largely been junior and mid-tier mining corporations with operations in Africa.

The Company 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 Company 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. In May 2008, the Company successfully listed on the AIM market of the London Stock Exchange. The Company 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 Company with an attractive and visible revenue stream to drive the Company’s growth in the future.

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