News

“Mining seduces you. You don’t think that you are not going to fall in love with it, with the dust, desolation and heavy equipment. But it pulls you towards it when you realize where the raw product is going and how it impacts of the lives of people who work in it”. Nathan Williams can sound romantic on mining, but in this nearly life long relationship he is no longer starry eyed. He is sanguine and practical on the industry he loves.

Mining comes with a contested legacy. The 21st century version of mining is far more responsible than its earlier iterations. It has to be responsible not just for the company and its shareholders, but also for the environment and communities it operates in.

Williams thinks that it is irresponsible not to do business responsibly.

The area where all can agree on is the area of safety. While heading up safety and sustainability at the Black Mountain mine in the Northern Cape town of Aggeneys, it was fatality free for 3 and a half years. He believes this was not done by enforcement, but through engagement.

The area where he takes the most pride is aversion of a strike at the Black Mountain copper mine in the shadow of the Marikana massacre in 2012. It was done through constructive engagement with the unions. By treating them as partners rather than advisories was the key success.

It is the engagement that changes the relationships, that transforms the culture in mining. He strongly believes that this should be the basis of mine management in the new age, where “Baas and Klaas” are clearly in the past.

“Managers need to look at more than production targets and safety records. We need a whole new form of metrics to measure our success. If we continue on this path we will continue to do the wrong things and marked correctly”

Williams is not just talk. He finished his masters degree in 2010 where he looked at the sustainability of mining. Working on the premise that all mines will close,his dissertation looks at ways to diversify the economic growth of the mining community from the very start. This way it limits the economic impact when mining does withdraw from the community at the end of the mine’s life cycle.

While the industry might be under pressure, it must not stop it from being progressive and forward thinking in the way it does business.

Nathan Williams forms an important part of the next generation of mining. He understands the challenges the industry faces and the nuance and responsibility that comes along with it.

You can read more here: http://www.miningweekly.com/article/nathan-williams-is-new-executive-officer-basil-read-mining-2019-01-07/

Making the first-day covers of the stamp, issued by the government of St Helena and endorsed with the likeness of Queen Elizabeth II, more unique is not only that it celebrates the role construction company Basil Read played in the Build, Operate Transfer (BOT) of the airport, but also that it signifies the end of isolation from the rest of the world for St Helena, says Jimmy Johnston, Project Director of the St Helena Airport Project at Basil Read.

Once the projected construction of the first phase of the airport is completed by Basil Read in February 2016, the travel time from Cape Town to St Helena will be shaved down from seven days, or 168 hours to a mere five hours, says Johnston.

As a consequence, the island whose isolation made it attractive as a place for Napoleon’s banishment after his defeat in 1815 at the battle of Waterloo, and as a ‘home’ for captured Boer Generals during the South African (Boer) War, will rapidly be brought into the 21st century.

For the Basil Read team, the opening of the airport will mark an end to undoubtedly the most complex project ever undertaken by the company. “Although the construction of the airport runway had its engineering challenges, the logistics involved are what made the project extremely daunting,”’ says Johnston.

After being commissioned by the Department for International Development, a British government department, the project, worth about £264 million (R4.7 billion) required that all goods and equipment had to be transferred by ship to the island. This involved Basil Read chartering a 2 500 ton vessel-renamed the Basil Read for the duration of the project.

“About 70 000 tons of goods, including 22 million litres of diesel, 25 000 tons of cement and 5 000 tons of explosives had to be transported to our Walvis Bay bond yard for transportation. Sailing time to St Helena with supplies was a seven-day task, with an overall shipping cycle taking about 22 days.

“The project required skills ranging from civil construction and road works and building, through to opencast mining and marine works, effectively using most of the company’s ‘in-house’ capabilities. Subcontractors with capabilities that varied from environmental impact studies to architecture and bulk fuel installation completed the team.”

The demands of the project also saw Basil Read boosting the population of 4 000 on St Helena with about 600 on-site staff. More than 100 ‘off-island’ personnel were involved in logistics, design and support functions.

In terms of the project, Basil Read will be responsible on a BOT basis for the construction and then full operation of the facility for a total of 10 years. Basil Read will therefore assume responsibility for supplying the necessary services, ranging from air traffic control to training and deployment of firemen, until the project is transferred in its entirety to the St Helena government.

Specialists from South Africa assisting Basil Read with this phase of operations will be teams from Lanseria Airport and the ATNS air traffic company, which supplies air traffic personnel to all major South African airports.

Key activities associated with the permanent works on the project include:

• Drilling blasting and filling eight million cubic metres of rock, and filling to a maximum height of 100 metres to provide a flat airstrip in what was formerly a valley in the rugged interior of the island.
• Building bulk fuel installations for the storage of six million litres of fuel.
• Constructing a 14 kilometre access road to the airport site.
• Constructing a concrete 1950 metre-long runway.
• Building a terminal building, air traffic control tower and other buildings.
• Navigational aids, and;
• Providing fire engines, ambulances, tow units and other vehicles.

“Basil Read will be responsible for ensuring that the necessary certifications are acquired and that the airport is fully fenced and operational. Initially, it is expected that there will be one arrival and departure at the airport every week.

“The value of the project will lie in its ability to enable people who used to live on the island, and still have homes there, to visit more regularly.

“It will also attract tourists who are interested in history, as well as those interested in sports such as scuba-diving who will be able to visit sites that have been virtually undisturbed for many years,” Johnston says.

The first project awarded to Basil Read Civils by Eskom is a contract for further work to be carried out at the Medupi Power Station Project. The contract to be executed over twenty months is for Phases I and II of the excess coal stock yard. The project comprises 965 000 cubic metres of bulk earthworks, 437 000 cubic metres of layer works, 1.1 million square metres of geosynthetic installation and will require 23 000 tonnes of bentonite.

The second project awarded to Basil Read Roads by the South African National Road Agency SOC Limited (SANRAL), is the N8 Kloofeind Haldon contract in the Free State. The project is set to commence on 7 March 2014 and involves the rehabilitation of the N8, section 10 months and includes pavement strengthening with road widening and drainage improvements.

Basil Read executive director of construction, Mr Bruce Morton said, "We are pleased to have secured these important contracts from two of our major clients. We will continue in our endeavour to partner with our clients to deliver critical infrastructure on the continent."

Basil Read Holdings Limited, the JSE- listed construction, mining, development and engineering group, has announced the group’s audited financial results for the year ending 31 December 2012.

Marius Heyns, chief executive of Basil Read said, "The prolonged downturn in the South African building and construction sector has resulted in management concentrating on the day-to-day elements that will secure the ongoing success of the group – project execution, cash reserves, working capital management – as well as the group's long-term strategy. We have refined our strategy to focus on our core business, understanding that this is the foundation of our group and key to our success."

"We have cleaned up the balance sheet and have implemented positive changes to return the company to a clean bill of health to yield financial returns for all our stakeholders," Heyns added.

Financial results FY 2012

Earnings attributable to shareholders for the financial year ending 31 December 2012 declined by 221% to R170,4 million (FY11: R141.0 million). The group recorded an operating loss from continuing operations of R170.9 million (FY11: R205.2 million profit), a decrease of 183%, which translated into an operating margin of (3,1%) (2011: 3.9%).

A headline loss of R163,3 million was recorded (FY11: R172.9 million headline earnings), a decrease of 194%.

Adjustments to headline earnings include the impairment of property, plant and equipment in the engineering division, loss on sale of jointly controlled entities and profit on sale of available-for-sale financial assets.

Substantial losses have been incurred on the following contracts:

• R125 million was incurred on Nata to Pandamatenga road – undertaken by Sladden International in Botswana due to disagreements relating to measurement and other claim entitlements.
• N12 Tom Jones – contract is behind schedule and a loss of R85 million has been recorded in the FY12 due to various problems including shortages of steel and bitumen supply and the strike action in the transport sector. In addition, the following non-recurring items adversely impacted the Group’s performance
• A non-cash IFRS2 charge relating to the recently concluded BBBEE transaction with SIOC CDT
• A non-cash write down of development land relating to the group’s investment in Rolling Hills Estate in Mpumalanga for an amount of R26.6 million.
• A R65 million provision raised during the period relating to the Competition Commission’s investigation into the construction industry. The total provision now stands at R75 million.
• A loss of R27 million incurred on a buildings contract relating to an arbitration process that the group lost.
• A loss of R25 million in respect of a settlement reached with the Free State Provincial Government relating to two roads contracts.

Solid operating performances from the mining and engineering divisions were undermined by the poor results in the construction division.

Despite this the group has maintained its order book at a robust level of R10,2 billion and the cash received in March 2013 from the disposal of TWP Holdings (Pty) Ltd will enable the group to repay debt and recapitalise in anticipation of future organic growth.

Revenue is reported at R5,5 billion (FY2011: R5,3 billion), an increase of 3%. The group recorded an operating loss from continuing operations of R170,9 million (FY2011: profit of R205,2 million), a decrease of 183%, which translated into an operating margin of (3,1%) (FY2011: 3,9%).

Cash on hand as at 31 December 2012 increased to R1,0 billion (FY11: R653.8 million), largely as a result of an inflow of working capital, particularly relating to the receipt of advance payments. Cash balances were further improved due to the receipt of R99.4 million in terms of the BBBEE transaction with SIOC CDT Investment Holdings (Pty) Ltd.

Debt levels reduced moderately to R877,2 million from R1.0 billion in the prior year, resulting in the group returning to a net cash position. The debt equity ratio at the reporting date was 18,0%.

The group once again made a sizeable capital investment in plant and equipment of R501,7 million (FY11:R647,9 million) particularly in the construction and mining divisions. The increase in capex for the construction division is as a direct result of the contract award to construct an airport on St Helena Island and to a lesser degree, the award of the Olifants River Water Resources Development project.

The group experienced moderate balance sheet growth, with total assets at a level of R5,4 billion (FY11: R4.9 billion). The balance sheet at the date of this report has been strengthened by the disposal of TWP Holdings (Pty) Ltd.

Construction
The review period was particularly challenging for the group’s largest division, given subdued market conditions and fierce competition. While the year was again notable for fewer tenders being submitted at lower values, Basil Read secured several key projects, collectively valued at R4.0 billion.

The bitumen supply shortage faced by the construction sector contributed to the losses incurred by the roads division and highlighted the need to secure consistent supply.

Heyns said, “The group’s wholly owned subsidiary, SprayPave, is in the process of establishing a bitumen reactor plant in the Western Cape which will enable us to produce various grades of bitumen, not only to supply our sites, but also to support the sector as a whole.”

The contract to construct an airport on the island of St Helena is performing to expectations and the project team continues to deliver on major milestones. The logistical and procurement risks have been successfully mitigated to date.

Mining
Basil Read Mining remains a stable performer in the group, with ongoing contracts despite a visible decline in both the number and value of mining contracts being awarded in South Africa. As evidenced by widespread illegal strikes in 2012, the domestic mining industry is currently a major concern. Basil Read Mining is already active in Botswana and Namibia. It is well placed to capitalise on business opportunities further afield in Africa and has signed up contracts with Jwaneng diamond mine as part of the Majwe Mining joint venture as well as with Discover Metals to assist with waste removal in its pits.

B&E signed another three-year drilling contract with Venetia mine to supply additional drilling capacity. B&E also placed a drilling team at Voorspoed to assist with ongoing waste stripping at this mine.

Developments

The division continued to focus on several large-scale integrated and affordable housing developments.

The R850 million Malibongwe Ridge development, an extension to Cosmo City, will rehouse the Itsoseng informal settlement and provide housing for over 5 500 families. Funding has been provided for internal services to the first phase as well as for 300 units.

Savanna City, south of Johannesburg, is a 1 462-hectare project valued at R3 billion in partnership with Old Mutual. Savanna City is potentially the largest private affordable urban lifestyle development of its kind in South Africa, surpassing Cosmo City.

Heyns said, “The division has positioned itself in the social and gap housing sector where government expenditure over the next few years is expected to increase significantly. Basil Read Developments has also extended its urban management experience to provide expert services and capacity building functions in this area.”

Engineering

The TWP group performed well in 2012. A number of projects were successfully commissioned by TWP Projects in the year, including the South Deep gold plant upgrade and the SX plant for Chambesi Metals.

A number of new projects were started during the year for clients such as Anglo American plc, AngloGold Ashanti, Rand Gold and Norilsk Nickel.

In its first full year, Basil Read Matomo performed to plan, growing steadily on the back of new work and its ability to offer a turnkey (EPC) service. After the successful delivery of Pan African Resources’ first tailings recovery plant, Basil Read Matomo was awarded its second EPC project with this client.

The company was also recently awarded the EPC contract to construct a new tertiary milling plant at the Two Rivers Platinum mine.

TPS.P Architects was rebranded to LYT Architecture in September 2012, and remains profitable, despite operating in a very tough building market.

Basil Read Energy, a wholly-owned subsidiary of Basil Read, develops, funds, owns and operates utility-scale power generation and energy storage assets in Africa. The company has been developing various renewable energy projects over the past three years.

The review period was significant for Basil Read Energy when the Metrowind Van Stadens wind farm project moved from development to construction phase in November 2012. Construction of this 27MW, R550 million project will take 14 months and the plant is scheduled to begin commercial operation in 2014. Basil Read Energy holds 23% of the equity in the project along with co-shareholders.

Competition Commission

The group continues to engage with the Competition Commission and the outcome is unknown. The group has, however, raised a provision of R75 million. The Competition Commission’s investigation into the construction industry is expected to be finalised before June 2013.

Dividend

The board declared a special dividend of 175 cents per share (inclusive of 15% dividend withholding tax) equating to R230 million.

Prospects

The uncertainty that has characterised the industry for several years is still in place, although some positive indicators are emerging. The South African government recently reaffirmed its commitment to a large-scale infrastructure investment programme which bodes well for the construction division.

A healthy order book is combined with large projects on the radar, satisfactory tender activity and improved margins. In addition, cross-border market activity is improving and we are focusing on specific countries, after careful consideration.

The group’s mining division, a specialist open pit contract mining service provider, has received a letter of intent from Weatherly International plc to perform contract mining services for the Tschudi Copper Project in Namibia, subject to Weatherly securing the requisite funding for the project.

The inflow of funds following the disposal of TWP Holdings which amounted to R877,7 million, will allow the group to significantly reduce debt and improve working capital levels in support of organic growth. The group retains its investment in TWP Investments, LYT Architecture and Basil Read Matomo, an identified growth area for the group.

Human settlements remain a key focus area for the South African government and the developments division is well positioned in this regard, with two new projects breaking ground, Malibongwe Ridge and Savanna City.

The developments division has embarked on a growth strategy to look at opportunities across the African continent. A range of housing development opportunities continue to be explored in Zambia, Rwanda and Kenya with further possibilities being investigated in Ghana and Tanzania.

“A cautious approach is being taken to understand the different markets and to identify suitable opportunities”, said Heyns.

With significant prospects, a strong order book and a recently bolstered balance sheet, Basil Read is optimistic that the building blocks are in place for a successful year ahead and the ongoing sustainability and growth of the group.

The project includes Kensington Secondary, Heideveld Primary and Portia Primary Schools. The basic scope work entails the demolition of the existing permanent structures in stages at each school and the subsequent completion of each associated site works at each of the schools.

The objective is to replace the three existing schools with new school facilities. Occupation of the buildings is anticipated in twelve months time.

Basil Read Chief Executive Officer, Marius Heyns said, “It is rewarding for Basil Read Buildings division to be associated with a project that will ultimately add fundamental and educational value for some of South Africa’s future adults.”

The project which is valued at R637 million has a contract duration of 36 months and will commence on 1 March 2013.

The rehabilitation project entails the reconstruction, including additional pavement layers and passing lanes, of national road R23 from Standerton to Greylingstad in Mpumalanga. The total distance is 56 km, however, the 4 km section of road in the urban area of Standerton has been excluded from this contract resulting in the total length being 52 km.

The existing road is a two-lane single carriageway road with gravel shoulders on either side. The lane widths on the road are generally 3,6m to 3,7m wide while the gravel shoulders vary around 2,5m in width.

The work scope entails the rehabilitation and strengthening of the existing road by means of removing the thick bituminous surfacing layers and adding a new cement stabilised sub-base, crushed stone base and surfacing layers. In some instances the sub-base and selected layer material will be pre-treated with lime to improve the quality of the materials. The entire upper selected layer will be reconstructed. The road will also be widened to accommodate climbing lanes.

Structural works include the upgrading and widening of several bridges and major culverts, due to the widening of the road and to improve the hydraulic capacity of the structures. The vertical alignment of the road will be improved at the structures as well.

Basil Read Chief Executive Officer, Marius Heyns said, “We are pleased to have secured yet another rehabilitation project for this significant client and proud of this major achievement by Roadcrete Africa.”

The R390 million Klipriver Business Park is located on the farm Waterval and comprises a gross land size of 143ha and development land size of 118.9ha with 96 saleable erven which will be developed in four phases.

The new highly visible business node with state-of-the-art facilities will provide a superior high-tech working environment. Phase 1 of the development consisting of 52ha is proclaimed, fully serviced and includes Fibre optic communication systems as well as security.

The Klipriver Business Park covers the entire R59/R550 interchange and is accessible to all major road networks (N1 and N3) and rail network. It is considered to be the new major growth node of Gauteng.

There will be no compromise on the business park’s high quality security standards, which will encompass on-site security, an adjacent police station as well as full access control and perimeter security.

Oakwood Properties, consulting property managers to Basil Read, will be responsible for the management of Klipriver Business Park.
Competitively priced housing opportunities for employees will soon be available nearby at a large scale planned development called Savanna City of which Basil Read Developments and Old Mutual are 50/50 partners for the development.

Bordering on the business node are reputable corporate neighbours including Heineken, BSI Steel, Crystal Pack, Kwikspace, Nampac and Everite.

The Klipriver Business Park node will create a vibrant working node with excellent access to all the major southern suburb areas of Johannesburg including Meyerton, Vanderbylpark and Eye of Africa.

New Hope South Africa is a manufacturer of agricultural food. Their investment in Klipriver Business Park makes it their first branch in South Africa.

Basil Read Developments Managing Director, Des Hughes said, “We are pleased to be associated with New Hope South Africa and we are confident of the superior benefits New Hope South Africa will enjoy at the Klipriver Business Park.”

The contract value is R279 million and the duration of the project is 24 months starting mid-February 2013.

The total length of the road for rehabilitation is 33.4 kilometres, starting east of Vaalpensspruit (excluding the bridge) and terminating west at N1 on/off ramps.

The scope of the road works includes:

• Horizontal re-alignment of three sections
• Crushing of approximately 800 000 tons of G1/G5
• Construction of six new climbing lanes (total length about 19km)
• Upgrading of five important intersections with exclusive right turning lane
• Surfacing of 1.0m of the shoulders on about 80% of the road. Full surfaced shoulders of 2.5m wide on the rest

The project also includes two new major bridges: the Tom Schutte bridge at 8.4 km and Du Plooyspruit bridge at 41 km from Vaalpensspruit as well as the widening of in situ concrete culverts.

Basil Read Chief Executive Officer, Marius Heyns said, “We are pleased with this contract that has been awarded to our Roadcrete division. We are looking forward to strong business activity in our roads division this year.“

The two-phase project is funded by the British Government’s Department of International Development and is valued at about R3,5 billion (GBP 250-million).

“We are delighted to receive this award from Construction World magazine, a year into the construction of the airport.” said Marius Heyns, CEO of Basil Read.

The judges were unanimous in their decision to award top honours in the Civil and Building Contractors (outside South Africa) category was awarded to Basil Read for the St Helena Airport Project.

Among the factors taken into account by the judges, when making the award, were the island’s remoteness, limited skills availability and infrastructure capacity to complete a construction project of this magnitude. Basil Read had to develop a new supply chain from the African mainland. This has involved the chartering of a specialist vessel, constructing of berthing and unloading facilities, setting up fuel storage, constructing temporary accommodation for the workforce, setting up communication links, securing and transporting plant and personnel.

This most ambitious project, which is being spearheaded by Basil Read, is now in its second year of development and is due for completion within 51 months. Phase I was started in December 2011 and completion date is February 2016.

Phase I is well underway with the commencement of the permanent works, which includes:

• 14 km access road from Rupert’s Bay to the airport site
• 750 m long concrete culvert and attenuation dam
• 8 millionm³ bulk fill 100m high
• 1 950 m long concrete runway plus aprons and taxiways
• Bulk Fuel Installation for 6 million litres of fuels
• Airport Fuel Facility
• Terminal Building of 2 500m²

Phase II is the operation of the airport for a period of 10 years commencing in February 2016.

The two-phase project is funded by the British Government’s Department of International Development and is valued at about R3,5 billion (GBP 250-million).

Marius Heyns, Basil Read CEO said, “We are excited about the progress on the project thus far. It is exactly a year since we commenced with the construction of the airport and enormous progress has been made both in terms of the airport site and preparations in general across St Helena.”

Basil Read carried out the first major blasting operation on Prosperous Bay Plain when over 70,000 m³ of material was blasted as part of the final amount of over 8 million m³ that will be required to be moved during the project. Prosperous Bay Plain was closed in the interest of public safety and residents on the island were invited to witness the blast from Millennium Forest area some 2 km away. Basil Read personnel were at hand to talk interested parties through the proceedings.

The project is being undertaken for the St Helena Government and is being funded by the British Government’s Department for International Development (DFID). The airport will provide air services to St Helena, fulfilling the UK Government’s commitment to maintaining access to the island, simultaneously providing St Helena with a real opportunity for economic development through tourism, ultimately leading to financial self-sustainability.

The island’s remoteness, limited skills availability and infrastructure capacity to complete a construction project of this magnitude, meant that Basil Read had to develop a new supply chain from the African mainland. This has involved the chartering of a specialist vessel, constructing of berthing and unloading facilities, setting up fuel storage, constructing temporary accommodation for the workforce, setting up communication links, securing and transporting plant and personnel.

“Although we have experienced some challenges in this first phase of construction, we have managed to overcome them through teamwork. The success of this project will definitely centre on team effort. Our workforce has clocked up 350 000 hours to ensure that the project remains on track.” Mr Heyns concluded.

The total contract value is Namibian $193 million or R193 million. Production will take about 15 months and the project should be completed by February 2014.

The road will be 11 metres wide and comprise one 3.5m lane in either direction with a 0.3m surfaced shoulder and 1.7m unsurfaced shoulder. Some 2 200 tons of cement and 190 000m² of Cape seal will be used in the construction of the 22 km road which will stretch from 11km out of Swakopmunt to Swakop Uranium plant location.

Because of the heavy traffic volumes anticipated on this access road, Cape seal was determined to be the best surfacing for the project. It requires low maintenance and is especially economical to construct in rural environments when compared with the alternative of hot mix asphalt.

The project also includes a 2 000m³ concrete bridge with 8 spans of 20 metres each. The 160-metre long bridge structure will be erected over the Khan River some 14 km from the Husab Uranium Mine.

Basil Read Chief Executive Officer, Marius Heyns said, “We are pleased to be part of the Husab Uranium Mine project, albeit, on a small scale. We are committed to delivering a road that will be economical to maintain and be able to tolerate heavy traffic volumes and the high temperatures of the region.”

About Swakop Uranium’s Husab Project

Located near Swakopmund on the west coast of Namibia, Swakop Uranium’s Husab Mine Project is the largest, highest grade, granite-hosted uranium deposit in Namibia and currently the third-largest uranium-only deposit in the world. The Husab uranium deposit is located about 45 kilometres northeast of Namibia’s main port, Walvis Bay, and within the Erongo region, an area that holds several world-class uranium deposits and mines, including Rössing Uranium and Langer Heinrich mine.

The acquisition of TWP excludes Basil Read Matomo Projects (Pty) Limited, TWP Investments (Pty) Limited and LYT Architecture (Pty) Limited, formerly TPS.P Architects Limited. The excluded companies will continue to operate autonomously and as wholly-owned subsidiaries of Basil Read.

Marius Heyns, chief executive officer of Basil Read commented, “We are pleased to announce the acquisition of TWP by WorleyParsons. We believe the transaction creates value for our shareholders and fits perfectly into our evolving strategy of increased focus on EPC business”.

Mr Heyns added, “We will be able to concentrate on our core business with increased emphasis on our special projects. In addition, we will focus on positioning Basil Read for organic growth, reduce our debt levels, and have sufficient cash reserves to start investing in resources for the planned local infrastructure roll-out which we believe will build momentum during 2013.”

Basil Read will pursue its growth into value-added EPC services through its continued ownership of Basil Read Matomo. Basil Read Matomo will lead the growth strategy of the Group’s current focus in the energy and renewable sectors, among others.

The agreement with WP makes provision for TWP executives currently seconded to Basil Read Matomo projects to complete these projects on arms-length terms. The agreement also specifically allows for Basil Read Matomo to provide Engineering, Procurement and Construction Management (EPCM) services within the scope of its existing activities and consistent with its growth strategy.

Marius explains, “Basil Read Matomo, which is excluded from the transaction, was established during the three-year relationship with TWP, leading to the creation of the EPC business which now has a pipeline of projects in excess of R1billion.”

The purchase consideration is payable in cash by WP on the implementation date. The implementation of the proposed transaction is subject to the fulfillment of a number of conditions precedent common to a transaction of this nature, including Competition Commission approval and approval by Basil Read shareholders.

The cautionary announcements released by Basil Read on the Securities Exchange News Service remain in effect until the pro forma financial effects of the proposed transaction on the reported financial information of Basil Read, as well as the salient dates and times relating to the implementation of the transaction are announced.
-Ends-

Enquiries

Basil Read Limited: 011 418 6300 – Marius Heyns, CEO

College Hill: 011 447 3030
Amelia Soares: 082 610 1156
Jacques de Bie: 082 691 5384

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NOTE TO EDITORS

About TWP

TWP, a wholly owned subsidiary of South African incorporated and JSE Limited listed Basil Read, is a resource and infrastructure focused engineering project entity providing a full range of engineering, procurement and construction management (EPCM) solutions to the mining and minerals industries, and the infrastructure environment. TWP has offices in South Africa, Mozambique, Australia and Peru.
www.twp.co.za

Basil Read

Basil Read is a JSE-listed company and a leader in the South African construction sector. It has a proven track record in offering best-in-class design solutions and the most cost effective construction techniques. Its subsidiary companies are active in the areas of civil engineering, road construction, building, mixed integrated housing developments, property development, bitumen distribution, opencast mining, blasting operations and engineering design, procurement and construction management. The Group operates throughout Africa, Australia and South America.
www.basilread.co.za

About WorleyParsons

WorsleyParsons is an Australian company, listed on the Australian Stock Exchange Limited. The company is a leading provider of professional services to the energy, resources and complex process industries. WorleyParsons has a complement of 40 800 employees in 41 countries, including seven offices in South Africa. Its service capability spans the entire project lifecycle from identifying the opportunity to the operating phase. WPL has a market capitalisation of more than AUD$6 billion and contributes about 0.55% of the S&P/ASX 200 Index.
www.worleyparsons.com

Construction and engineering company Basil Read has withstood another year of difficult trading conditions and global economic volatility, returning a satisfactory set of results for the period to 31 December 2011 and, overall, faring relatively well.

The board noted that while the economic recovery would be protracted and exacerbated by the marked slowdown in infrastructure projects in South Africa, the Basil Read group’s strong order book and its equally strong relationships with clients, suppliers and subcontractors would enable it to manage these conditions effectively. That would be accompanied by stringent working capital management and fiscal discipline.

The year was characterised by fierce competition in the construction sector in the face of fewer projects and of lower value, widespread postponement of allocated contracts and a surplus of resources following the completion of numerous projects associated with the 2010 FIFA World Cup. However, the group was starting to see significantly more activity in power generation, mining and infrastructure and roads tenders were increasing as provinces were tasked with urgently improving the condition of South Africa’s roads.

The group ended the year with its strongest order book in nearly six decades, at a level of R12.5 billion (2010: R7.8 billion), and secured several major contracts during the year. By the reporting date, the order book had risen to R14 billion (2010: R8.5 billion).

It reported revenue of R6.2 billion (2010: R5.4 billion), an increase of 15.6%. Operating profit decreased by 24% to R280.9 million (2010: R369.5 million), which translated into an operating margin of 4.5% (2010: 6.9%). Headline earnings were R172.9 million (2010: R259.1 million), a decrease of 33.3%. Adjustments to headline earnings include the impairment of goodwill relating to the acquisition of Sladden International (Botswana) (Pty) Limited, following a disappointing performance in the year under review and unsatisfactory forecasts. Earnings for the year decreased by 45.9% to R141.0 million (2010: R260.8 million).

Cash on hand on 31 December 2011 decreased to R653.8 million (2010: R978.7 million), as working capital levels rose, mostly due to a significant increase in trade and other receivables as a result of delayed payments from clients.

Despite a net repayment of debt to the value of R174.9 million (2010: R320 million), the group’s debt levels increased by 30.4% to R1.0 billion (2010: R802.7 million), largely due to an increase in instalment sale agreements to fund expansionary capital expenditure on property, plant and equipment. Of the total capital expenditure of R647.9 million (2010: R422.8 million), R436 million (2010: R199.4 million) was financed with the remaining R211.9 million (2010: R223.4 million) being funded out of cash resources, further impacting the group’s cash balances. Replacement capital expenditure for the 2012 year is budgeted at R200 million.

Under the domestic medium-term note programme, the group refinanced its maturing note of R125 million through the further issue of a R150 million note, maturing in July 2013. The group raised a further note of R100 million which, together with an existing note for R125 million, matures in June 2012 and has been classified as part of the short-term portion of interest-bearing borrowings. The group’s debt equity ratio is currently at 29.7% (2010: 21.3%).

The group experienced moderate balance sheet growth, with total assets at a level of R4.9 billion (2010: R4.4 billion).

The board noted also that the group was still engaging with the Competition Commission and that the outcome was unknown. The group has, however, raised a provision for a possible penalty.

At the reporting date, the group had issued guarantees in the amount of R2.0 billion (2010: R2.0 billion). These guarantees arose in the ordinary course of business and it was not expected that any loss would arise out of the issue of these guarantees.

Basil Read (Pty) Limited and TWP Projects (Pty) Limited, the group’s main South African operating companies, attained a level 3 BBBEE contributor rating, meaning that companies were entitled to recognise 110% of the amounts spent with these companies in calculating their procurement spending. The two companies were further rated as value-added suppliers, which afforded a further 25% benefit.

In construction, the group’s largest division faced fierce competition. With fewer tenders on offer, and significant pressure on margins, the challenge was to secure new work and keep resources occupied. Given depressed local conditions, there was a natural progression from South Africa to other parts of Africa, where the need for quality construction groups was high, the board said.

Basil Read was now exploring niche markets with long-term prospects in infrastructural spending in Africa. With secured contracts in Botswana, Namibia, Zimbabwe, Democratic Republic of Congo and offices established in Mozambique and Zambia, the group was actively tendering for projects in Africa.

Results in the construction division were overshadowed by a number of unprofitable contracts in the roads division, resulting in end-of-site losses of R115 million for the year under review, primarily relating to a railway construction project in the Northern Cape, a roads contract in the Free State and a roads contract in Botswana. The group had claims against certain of these losses, but due to the uncertain nature of the outcome, no provision had been made for any potential recovery.

The division secured a number of contracts during the period, including the R3.1 billion multi-disciplinary contract to construct and operate an airport on the island of St Helena and the recently awarded phases 2C and 2H in terms of the Olifants River Water Resources Development Project for the Trans-Caledon Tunnel Authority, valued at R1.2 billion.

Basil Read’s mining division remained a stable performer, with continuing contracts locally and in Botswana. This division plays an important role in the group by balancing fluctuations in the construction sector.

Rising commodity prices have boosted mining production significantly in the past year, resulting in a plethora of goods contracts for capable service providers.

Despite recent conditions in the South African mining industry, the division maintained its base of expertise by carefully managing its people and their deployment. This pool of specialist skills was a decided advantage in an industry characterised by a shortage of core skills and intense competition, the board said.

Basil Read Mining joined forces with Australian-based Leighton International and local Botswana company, Bothakga Burrow to form the Majwe Mining Joint Venture. Majwe was awarded a five year multibillion-rand mining-service contract with Debswana in Botswana where there were various growth opportunities on the horizon.

In a joint venture, the division secured a three-year contract at Assmang’s Beeshoek mine. Mobilisation started in November 2011.

Blasting & Excavating again recorded an acceptable performance for the year, given sharply higher competition and price sensitivity. This company, with its established track record, was well placed to participate in South Africa’s planned infrastructure upgrade.

Basil Read Developments has entrenched its reputation for developing sustainable communities, reflected in its Gauteng flagship project, Cosmo City – the first mixed-use, fully integrated sustainable human settlement in South Africa.

Given the government’s commitment to eradicating informal settlements, this division was of strategic importance to the group, but despite the improved results, the year under review proved to be a frustrating one for the division. The affordable housing development sector was constrained by slow progress among provinces and municipalities in allocating and spending resources on projects in which the division had invested or for which it tendered. Added to that, the banks have tightened their lending criteria.

The engineering division had a slow start in the first two months of 2011, but the workload ramped up significantly in most TWP companies and performance for the year surpassed expectations. The division employed more than 300 professionals in the year under review, taking the total staff complement to 1 200. The increased workforce reflected a deliberate strategy to maintain capacity during the downturn, sacrificing short-term profitability for long-term gains, the board said.

TWP continued to expand locally and internationally in the mining and infrastructure sectors, with its Peru office recording a profit in its first year of trading.

Within South Africa’s borders, TWP was managing a considerable number of shaft projects, including its flagship – Impala 17 shaft – the biggest shaft-sinking project under way in the world.

International operations were steadily gaining momentum. The branch in Australia, now 50% owned in joint venture with WSP (Pty) Limited, returned to profitability during the year, while the Peru office secured a number of new projects – including a gold plant in Colombia – and increased its staff complement to more than 120 people.

Basil Read’s integrated growth strategy saw the group increasing and diversifying its products and services with a streamlined approach that extends to some of TWP’s newer initiatives. For this reason the group made several investments and divestitures in 2011.

In January 2011, the group disposed of 100% of Basil Read Contracting (Pty) Limited for a consideration of R94 million, realising a profit on disposal of R4.5 million.

The group acquired a 35% share in Metrowind (Pty) Limited, a provider of alternative energy sources, for R10 million. Metrowind was announced as a preferred bidder for the supply of alternative energy by the Department of Energy and was in the process in developing a wind farm in the Nelson Mandela Bay Metropolitan area, which should realise a R450 million EPC contract for the group.

In June 2011, the group disposed of 30% of its stake in Newport Construction (Pty) Limited to a local BEE partner for R2.0 million and resulted in the recognition of a gain on transactions with non-controlling interests of R0.4 million.

In September 2011, the group bought the remaining 12.5% of TWP Australia (Pty) Limited for no consideration, realising a loss on transactions with non-controlling interests of R3.2 million. Subsequent to this acquisition, the group disposed of 50% of the company to WSP (Pty) Limited for a sale consideration of R5.7 million. Due to the recovery of previously recognised losses, the group recorded a profit of R33.1 million and the renamed entity, TWSP (Pty) Limited, was reclassified as a jointly controlled entity. The group’s new partner, WSP (Pty) Limited is one of the world’s largest design, engineering, environment and energy consultancies with 9,000 staff in 200 offices across 35 countries.

In December 2011, TWP disposed of its 74% share in TRG Trading (Pty) Limited for no consideration, realising a loss on disposal of R13.1 million.

Basil Read’s robust safety/health/environment/quality system was being integrated across the group after a period of rapid organic and acquisitive growth. In the preceding year, risk management was incorporated into the safety, health and environment division, aligning its governance processes with the recommendations of King III and reinforcing the group’s commitment to an integrated approach focused on zero harm.

In the past three years, the disabling-injury frequency rate has dropped from 0,58 in 2009 to 0,4 in 2011. While this falls short of the target set at 0,3 for the review period, it is consistent with results for 2010.

Looking ahead, the board noted that while the economic uncertainty of the past couple of years prevailed, the government’s commitment to infrastructural spending boded well for the sector. Given the delays in the roll out of projects, the group was “cautiously optimistic”.

Fundamentals in the construction sector remained challenging with a real recovery only expected from 2013. Against this background, Basil Read remained committed to continued expansion, underpinned by a strong order book. As a sector, operating performances in construction were likely to continue to be affected by high cost increases and greater competition. To counter the difficult conditions, the group was concentrating on retaining skills, maximising efficiencies and maintaining capacity for the eventual turnaround, the board said.

The group would continue its pursuit of contracts on the African continent within its defined set of risk parameters, which include the certainty of committed funding for the contract in question and upfront payments.

The mining industry should remain buoyant through 2012, the board said. Demand was outstripping supply in most commodities and, compounding this, many projects had to be executed to replace mining output, let alone increase it. South America, Africa and Australasia should all record significant growth over the year, it said, and infrastructure development, on the back of mining activity, is expected to be significant, particularly in developing countries.

Key to Basil Read’s continuing success will be the effective management of working capital and a commitment to the reduction of debt. Delayed payment from mostly government clients put pressure on cash flow, but the group was working closely with these clients to resolve issues.

Favourable factors included an order book of R14 billion at the reporting date, a resurgent mining sector on the back of high commodity prices and judicious acquisitions in high-growth sectors such as renewable energy. The group was also investing in future projects in the alternative energy sector and had submitted a Renewable Energy Feed-in Tariff (Refit) phase two bid for a solar powered development in Beaufort West, in conjunction with the BW Energy Corporation, which if successful, could translate into a further R1.5 billion construction contract.

The board was confident that the building blocks were in place for continued growth as the local construction industry recovered and international expansion initiatives gained traction.

Client contact: Donny Gouveia 011 418 6300
PR contact: Loll Thomson 011 467 2133

The design phase of the R2.7-billion project is scheduled to commence immediately, and construction is estimated to take place over a 48-month period. The scope of work entails a 1 850 m quality concrete runway with taxiway and apron to cater for aircraft up to the size of an Airbus A320 and Boeing 737-800, approximately 8 million m³ rockfill embankment through which a 750m long reinforced concrete culvert will run, an airport terminal building of 3 500m² and support infrastructure, air traffic control and safety, bulk fuel installation for 6 million litres of diesel and aviation fuel, a 14 km airport access road, , and all related logistics.

After construction, the operations phase of the airport contract will continue in partnership with Lanseria Airport for a further period of ten years at an estimated contract value of R450-million.

Located approximately 1 900 km from Africa, with Ascension Island as its nearest neighbour over 1 000 km away, the island of St Helena, measuring 16km by 8 km, is one of the world’s most remote locations. Home to a population of just over 4 000, the island’s only lifeline to the outside world has been the RMS St Helena, the only regular ship to call at St Helena. As a community that has no internal resources or industry to support its economy, the British government has been providing extensive financial support to the island, the majority of which is spent on maintaining and operating the RMS St Helena. It is hoped that the new airport will address some of the socio-economic difficulties on the island, and boost the prosperity of islanders through tourism and help stop the exodus of its already small population seeking work in Britain.

The Basil Read group’s order book following this award is valued at R12.5-billion.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of Basil Read

Editorial contact: Loll Thomson (011) 467 2133
Client contact: Jenny Smith (011) 418 6466

The Protea Parkways Consortium, consisting of lead construction partners Basil Read, Group Five and Bouygues, will enter into a Public-Private Partnership (PPP) agreement with SANRAL, whereby the consortium will finance the construction, maintenance and operation of the roads through toll collection and be required to hand over the roads to SANRAL after a 30-year period. The Basil Read Group wishes to congratulate its PPP/Special Projects team for its consistent effort in helping the Basil Read Group to become a major part of this prominent contract.

The CRF Institute is an international research and media group, specialising in HR, strategy and leadership research. For over 20 years CRF has worked with Blue Chip and Fortune 500 clients from around the globe, helping them deliver on their employer brand and communicate their strides as an employer of choice effectively.

In order for an organisation to be awarded this accolade, the CRF Institute administer a survey into the formal and informal policies and practices currently used within the organisation and benchmark these against a body of international research.

This survey is completed by the HR executive team. The organisation’s ultimate goal is to achieve the CRF certification of those policies and practices which make up the framework under which staff are managed and led.

Basil Read elected to go through an HR management and policy audit and has earned the certification as a Best Employer because over 100 policies and practices either measure to, or are superior to, the International Standards of Best Practice.

The CRF International Employer Brand certification aims to assist companies in identifying their unique employer proposition so as to develop a brand and design employment experiences around their specific business challenges and opportunities.

The CRF Institute supports Basil Read as it celebrates this achievement with the purpose of delivering a superior employment offering and experience to staff to better align to the organisation objectives, improving productivity and margins, securing the profitability and sustainability of the organisation in the years to come.

Proactive career development at Basil Read

The Basil Read Centres of Excellence focus on remuneration and reward, talent management and development, performance management, transformation and employee relations and are tasked with developing best-in-class processes.

The Centres of Excellence allow the company to better understand, manage and enhance its people capability and map out a career path for individuals. Technical development is a particular focus of the centre of excellence for Talent and Development.

Adjacent to the Basil Read Campus in Boksburg, a state-of-the-art multifunction training centre is currently under construction. The centre will also offer real-time training to the sites to drive training down to site level (both virtually and through e-learning).

All executives are due to participate in executive training during 2011. In addition, the company supports employees who chose to further their technical education or project-management qualifications. Furthermore, all technically qualified staff are encouraged and supported to attain their professional status.

A performance-management system is in the process of being rolled out which focuses on outputs as well as competencies and perso¬nal development.

Employees have the opportunity to be seconded to any one of Basil Read’s numerous subsidiaries and can also move between divisions within the company. Movement of professional staff is important to enable them to obtain their professional registration and obtain experience that places employees in line for promotion.

Basil Read’s ability to attract and retain talent is in large part due to the fact that it offers employees a career within the group. The perception that we’re just a construction com¬pany is disappearing.

Basil Read offers competitive remuneration packages in addition to generous bonuses for high performers.

In addition, Basil Read aims for less than 10% staff turnover (and is in fact way below the five percent mark). An alumni club has recently been introduced.

The company recently introduced E-Serve, an employee and manager self-service system which will allow employees to have easy access to payslips, leave applications, updating personal details and an online performance-management system. Managers will also be able to search a database for particular skills and experiences, have access to a dashboard containing critical people metrics as well as access to team calendars, salary, performance and talent information, as well as being able to consolidate information across the group from one system. Cognisant of the fact that a significant number of its people are onsite are without access to computers, salary information can be received via sms and queries raised through E-Serve via sms. The company is able to track turnaround on queries and requests.

Furthermore the contract will involve loading and hauling aggregate and tailings from stockpile into main pit. This contract valued at R42 million is expected to last 12 months but may be extended. This is the first contract awarded to the Mining Division in South Africa, since the end of the Eastern Platinum Contract in 2006.

The second contract awarded to Roadcrete Africa is the reconstruction and reseal of National Route N2 Section 33 from KZN/MP border to Piet Retief. Reconstruction of the 59km route involves the complete rehabilitation of the old road. It commences in August and is estimated to take 14 months to complete the R114 million contract.

This Engineering, Procurement and Construction Management (EPCM) Services contract was awarded by Ashanti Goldfielfds KILO S.A.R.L – a DRC based company. Following successful board approval in August 2011, phase 2 will commence with the first gold pour planned for July 2013. The scope includes the mine, the mine infrastructure, services and a full gold plant.

Basil Read Oil & Gas was awarded a contract for the execution of a pre-feasibility study for Exxaro’s Biodiesel Project. The value of this contract is R2 634 100

These shifts total more than 8,500,000 hours of work.

It is indeed a satisfying moment when a milestone in one of the most important goals of a project is achieved, the one of safety.

Well done to the extended team for the continued efforts in safeguarding all the persons working at Impala 17 shaft and in doing so, allowing everyone to return to their families every day.

This is a unique achievement for a shaft sinking project and sends a positive message to the Mining World that South African companies can meet and better global safety statistics and achieve the new stringent safety targets set by the South African mining industry.

TWP, part of the Basil Read Group, provides a full range of innovative engineering and project management solutions to the mining and minerals industries. It is the biggest EPCM organisation of its kind in Africa, with a group staff complement exceeding 1 000 multi-disciplinary professionals and support personnel.

The largest subsidiary in the TWP Holdings group, TWP Projects is the foremost mining industry EPCM service provider in southern Africa. Services offered include project management, safety management, resource identification, mine design and planning, engineering design, process plant design, architectural services, due diligence studies, environmental services, feasibility studies, ore body assessment, mineral processing, project finance, procurement, refrigeration design, risk management,  underground mining services and construction management.

TWP has, and continues to be involved in projects for most minerals including platinum, gold, diamonds, nickel, copper, uranium, chrome, cobalt and coal.

The Group’s safety track record is exemplary and with the addition of key business wide risk management skills, TWP is the leader amongst its peers in the field of safety. Quality and safety are key deliverables and TWP has full ISO 9001, ISO 14001 and OHSAS 18001 quality, environmental and safety management systems’ accreditations from the world renowned German DEKRA body.

TWP Holdings became a public company on 1 December 2004 and listed on the JSE in November 2007. Basil Read acquired all the TWP shares in December 2009 and TWP became a wholly-owned subsidiary of Basil Read. The merger has effectively created a force to be reckoned with in South Africa’s EPC (engineering, procurement and construction) arena. While both companies continue to operate as separate entities in their own sectors, a new company called Basil Read Turnkey Projects has been formed, combining TWP’s design and project management abilities and Basil Read’s construction capability to offer a fast-track turnkey offering including full design and construct service over virtually the entire spectrum of engineering.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of TWP
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Errol Hopton (011) 218 3000
Date: 6 May 2011

TWP’s involvement with Wesizwe spans back to 2006 when it conducted the pre-feasibility study. A full Bankable Feasibility Study (BFS), which was started in February 2007 and completed in June 2008,  indicated the Frischgewaagd-Ledig Complex has the resources to sustain a 35 year life-of-mine (LOM), with a total PGM production of
330 000 oz per annum. TWP is currently wrapping up the first phase of the EPCM project scope which entailed access routes, fencing, the Eskom terrace, the Phase 1 pollution control dam, the Main and Ventilation Shafts terraces (excavating the box-cuts on both shafts), surface drainage and the environmental berm as well as earthworks.

“The first blast represents a momentous milestone for Wesizwe,” says Wesizwe CEO, Mr Arthur Mashiatshidi. “It is not common for exploration companies to take a project of this magnitude from exploration to production. Usually a mining major will take over the production after the exploration phase is concluded. In the case of Frischgewaagd-Ledig, Wesizwe will develop it into an operating mine, and the first blast signals the start of the long-awaited execution phase.”

Attended by executive representatives from Wesizwe, TWP and Scribante Construction, the first blast to establish the box cuts of the Main and Ventilation Shafts took place on
5 April 2011. BENCO Engineering conducted the blasting using underground emulsion charging units to open the ground. 460 detonators were positioned at a depth of 10m at the Main Shaft, and 135 detonators in 6m holes at the Ventilation Shaft. The two blocks were electronically detonated at the same time. Blast monitoring was conducted by Blast Management & Consulting with readings taken as the blasts were set off to measure the strength of any shock wave transmission from the point of detonation to the nearby houses and structures. This was to ensure that data was captured accurately to confirm the blast performance, aimed at minimal or no damage to any structure outside the blasting circle, as determined by the blasting specialists.

“The next step is to begin with civil works – collaring on the box cuts to stabilise the top 10m on the shafts, before the start of the pre-sink activities in nine months’ time,” says TWP project manager Jacob Mothomogolo. “The sinking will be one of the largest ticket items of the project, with an estimated 17-18% of the total capital allocated to it. The pre-sink or slow sink on the shafts will be developed at a rate of 0,5m a day for up to six months, until a depth of about 80m is reached. At that time, we will switch over to a permanent set-up, including the installing of sinking winders, sinking headgears and establishing a power connection with Eskom. The sinking of both the Main Shaft and the Ventilation Shaft will be conducted simultaneously, with the former reaching a depth of 1 140m, and the latter a depth of 980m. The shafts will be 120m apart and will interconnect at certain levels,” says Mothomogolo.

The sinking phase, including equipping and commissioning of shafts, is expected to be completed within 62 months, at which time production build-up will begin and the capital footprint established. This will involve infrastructure development, tunnels, ore passes and any other excavation necessary to open up the resource block. The build-up period will also see TWP preparing for client handover with the establishment of a full mining operations team and personnel, and skills transfer by contractors to the permanent mine workforce. The mine will require approximately 3 200 people at full production. With the mine located in an established mining region, a skills survey indicated that there is currently a requirement to train local employment seekers if the mine is to meet its SLP commitment to sourcing most of its employees from the host and surrounding communities. Certain specialist skills may have to be brought it from the active mining sector outside the region.

It is expected that the mine will reach steady state production of 230 000 tonnes of ore per month (180 000 tonnes of Merensky reef / 50 000 tonnes UG2 reef) within four to five years’ time from start of build-up period.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of TWP
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Jacob Mothomogolo (011) 218 3000
Date: 3 May 2011

Project Team

Basil Read / Stocks & Stocks JV (50% / 50%)

Client

Eskom

Contract Value

R 1 632 321 742 (Ex. VAT)

Contract Duration

62 Months starting 20 April 2011

Scope of Work

The project includes all building work for the Kusile Power Station consisting of approximately 70 buildings

Congratulations to all involved in securing this contract!

I don’t believe it is a case of fragmentation. I am seeing quite a bit of consolidation however, where large multinationals are buying smaller regional entities to gain geographic footprint.

Larger clients are trying to secure key resources, to serve their project pipelines, by entering into partnership agreements with larger ‘tier 1’ suppliers. Smaller players, by virtue of their size, do tend to focus on specific markets or commodities. There will always be a place for existing and emerging smaller players, as the larger companies cannot be all things to all people at all times. Joint ventures are used periodically to potentially benefit from the size and specific market focuses of the respective JV partners.

How does the tendering process for an EPC/EPCM project normally work? Do the competing groups have to present detailed plans as to how they would go about delivering the project or is it initially done on price? How important are previous references?

Capability and capacity are considered. Generally a strong track record is required  in the specific market area to demonstrate capability. Price will always be a facture, but this is often a secondary factor, particularly in the front end loading phases of a project.

I am familiar with most of the “Western” groups, but are there also Chinese/Indian/Brazilian players in this market now looking to compete in this area, especially in the case of the Chinese for mining projects owned by Chinese groups?

I have no doubt that the BRIC countries are developing strong capabilities in the EPCM arena, but to date, we have not had any direct competition from them in our market sector. That said, many of the ‘Western’ EPCM players are outsourcing certain functions to lower costs centres, which include the aforementioned nations.

How do you expect the mining EPC/EPCM market to involve in the future? More groups taking a joint venture/consortium approach? Mining houses working exclusively with one EPCM player across all projects (a kind of strategic alliance?)

As the skills shortage strengthens, there will be continued efforts to JV to use available skills to serve industry requirements. Strategic partnerships will also become more prevalent. I will not be surprised if a few new players emerge as well, particularly from the East.

Is it also the case that some large groups that previously specialised in oil/gas or other heavy industry are now  looking to “get into” mining? Here I am considering groups such as Technip and KBR

There is definitely a trend from these multinationals to enter the minerals market. Commodity prices continue to climb as the world’s resource demand continues to grow. That said, certain groups, such as AKER, have found mining a difficult environment and have disinvested in the market.

What is the relationship between EPCM/EPC companies and “consultancy” or “contracting” groups, and is the line between the two sometimes blurred ie there are some consultants that purport to offer EPCM services for smaller projects, likewise is it often the case that a consultancy/contractor may be sub-contracted by the main EPCM contractor to carry out a particular part of the project? Such as bringing in a raise boring specialist to conduct a shaft sinking job or an SX-EW specialist to build that plant specifically?

The lines between the fabricator, erector, consultancy, finance, operational and project management companies are definitely becoming less defined. Much of this is driven by different client circumstances and needs. There is a continuum of options from the well-established client, who wants a large degree of control, who only needs specific consultancy input – right through to the newer player, who does not have capital, who requires a company to finance design, build and operate a mine.  TWP, and its parent company Basil Read, have strategically positioned themselves to provide most of these services along this continuum. Our client have the flexibility to pick their required services, all to use all of them.

Is the market more or less competitive now than it was would you say? Given that a lot of projects were put on hold during the GFC, which are now being advanced again – plus a large number of new projects – would you say that there is now actually a shortage of EPCM/EPC resources in the market (or certainly a shortage of those with mining specific experience?)

The number of competitors has increased, but there is a strong sense that the size of the market has increased more. The interruption in the global project pipeline, as a result of the GFC, has simply delayed most projects’ implementation, which as putting a huge demand on resources now to make up the backlog.

What would you say were TWP’s current focus areas in terms of what you can offer in terms of EPCM services to mining? And as requested above can you provide any short summaries of recent EPCM work in mining, and some relevant images if you can?

TWP is currently managing a project portfolio with a capital value of more than $ 25bn. We have technical and project management expertise in most areas of the mining value chain, in many commodities. TWP projects, the main operating company, have a number of divisions that focus on specific market areas. These include, mining and mining infrastructure, process plants, energy and  bulk infrastructure. TWP Projects is currently managing 13 deep level shaft projects. TWP has a large Architectural practice, TPSP, as well as a plant operating company. TWP’s geographic focus includes Africa, South America and Australia. TWP has offices in a number of African Countries as well as Peru (Lima) and Australia (Perth).
In conjunction with Basil Read, TWP has the ability to tackle projects in the mining, infrastructure and energy markets using EPCM as well as EPC / Turnkey contracting models.

Recent work includes:

• TWP Projects, in partnership with Basil Read, has been appointed by Beacon Hill Resources Plc to complete the definitive feasibility study for the Minas Moatize Coal Mine in Mozambique. The stage one agreement includes the design of the coal handling and preparation plant, and the open-cast mine.
• TWP Projects is the EPCM contractor on the Styldrift Project, an extension of the Bafokeng Rasimone Platinum Mine (BRPM) in South Africa which involves developing a main shaft and services shaft and other surface infrastructure.
• In 2010, TWP Projects successfully completed phase one of the Konkola Deeps Mining Project in Zambia, a four year project which has culminated in one of the largest steel headgears in the world for the mine’s new No. 4 Shaft, standing at 81,5 m.
• In March 2010,  Red5 Limited awarded TWP Australia the EPCM contract for the Greenstone Resources Siana Gold Project in the Philippines. The project scope is for a 1.1 mtpa carbon-in-leach gold processing facility, including utilities, services and infrastructure.
• Continental Coal, a South African thermal coal producer, selected TWP as the consultants for the DeWittekrans feasibility study which started in January 2011, and will be completed mid-2011.
• Impala Platinum awarded TWP the contract for a feasibility study on the No. 18 shaft, which will be Impala’s deepest shaft to date, at over 1km.
• Mauritius-based Mimosa Investments has awarded the Mimosa mine phase six project in Zimbabwe to TWP. Scope of work includes the engineering, design and planning to extend the life of the mine.
• TWP is also working on a life-of-mine study at coal miner Anglo Thermal Coal’s New Vaal colliery, investigating the life extension of the mine, and will undertake the long-term planning for the mine.
• TWP’s infrastructure division has secured a 3-5 year contract at Kumba’s Sishen Mine for infrastructure and housing.

Work Package Description

Engineering, Procurement and Construction Management (EPCM) Services

Location

Approximately 89km north of Bunia in the north east of the DRC

Client

Ashanti Goldfielfds KILO S.A.R.L – a DRC based company owned by AngloGold Ashanti

Project Description

Matomo Projects has been appointed to start with the feasibility optimization of this project. This is Phase 1 and is estimated to take 3 months. Following successful board approval in August 2011, phase 2 will commence with the first gold pour planned for July 2013. The scope includes the mine, the mine infrastructure, services and a full gold plant.

Congratulations to all involved in securing this contract!

“With the drilling programme and construction of the geological model of the coal mine complete, BHR is in a position to commence with the feasibility study, which will be undertaken by TWP Australia,” says TWP executive chairman Nigel Townshend.

The scope of the study encompasses site visits and gap analysis; assessment of the geological model and resource modelling provided by BHR; geotechnical modelling; design implementation recommendations; mine design, planning and scheduling; process plant design; infrastructure design; Capex and Opex estimates; and Life-of-Mine financial evaluation / techno-economic modelling. Upon completion of the study, Basil Read Turnkey Projects will build the plant, and Basil Read Mining will carry out the opencast mining.

BHR is an AIM-listed resource company focused on the acquisition and development of assets in commodities relating to the steel production industry. The company has two primary assets: Tasmania Magnesite NL in Tasmania, and the Minas Moatize Coal Mine in Tete, Mozambique. Following the appointment of Basil Read and its subsidiary TWP, BHR intends to increase the mine’s production to 4 Mtpa ROM coal by 2012, from its current production of approximately 8 000 tpm.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of TWP
Editorial contact: Loll Thomson(011) 467 2133
Client contact: Nigel Townshend (011) 218 3000
Date: 12 April 2011

“This award will bring the company’s order book following this award to just under the R10-billion mark,” says Basil Read’s CEO Marius Heyns. “This award also confirms our positive attitude about the current economic climate and our strategy of pursuing the mining and engineering space.”

The contract is for the Cut 8 Phase 2 services at the Debswana diamond mine in Jwaneng, Botswana, which includes mine scheduling, drill and blast, truck and shovel waste removal and limited ore mining. MAJWE will move a staggering 156 million cubic metres of material over the full term of the contract, which commences in June 2011.

Debswana is a partnership between the Government of the Republic of Botswana and De Beers Centenary AG, and is the world’s largest diamond producer by value. It has mining operations at Jwaneng, Orapa, Letlhakane and Damtshaa in Botswana. Jwaneng is one of the richest diamond mines in the world, while the Orapa pipe is the world’s second largest diamond-producing kimberlite pipe. Debswana plays a fundamental role in Botswana’s economy, producing over 70% of the country’s export earnings and 30% of its GDP.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of Basil Read
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Jenny Smith (011) 418 6466
Date: 6 April 2011

Construction company Basil Read has reported a 16% increase in revenue for the financial year to 31 December 2010 in what the company describes as a satisfactory set of results, considering the challenging trading conditions during the year under review.

Revenue rose to R5,4-billion from last year’s R4,7-billion, it said, with gross operating profit up 15%, from last year’s R713,3-million to R820,4-million, though margins came under pressure. The Group reported a sharp increase in overhead costs of 23%, primarily due to under-recovery of staff costs at its recently acquired subsidiary, engineering project house TWP.

“Much of the year ahead will be focused on efforts to contain these costs,” said Basil Read Group CEO Marius Heyns.

The company noted that while construction activity levels were high in the first half of the year when final preparations for the 2010 FIFA World Cup were taking place, confidence waned in line with sharply decreased activity across most sectors as it became clear that the economic recovery would be protracted. These conditions were exacerbated by the strength of the rand against those of South Africa’s major trading partners.

Margins came under pressure as a result, with the gross operating margin down slightly from 15,3% in 2009 to 15,1% for the 2010 financial year. That translated into a decrease in the net operating margin from 8,8% in the 2009 reporting period to 7,0% for the 2010 financial year. Net margin was 4,7% (2009: 5,8%) for the period.

Earnings decreased by 4,9% to R260,8-million (2009: R274,3-million). Earnings per share decreased by 33,6% from 317,15 cents in 2009 to 210,63 cents in 2010, which was due to the issue of 37,3 million shares to fund the acquisition of TWP in December 2009.

The Group declared a final dividend of 30 cents per share (2009: 42 cents per share)

The purchase consideration and purchase price allocation for TWP was finalised during the 2010 financial year, resulting in a revised allocation to the fair values of assets, liabilities and goodwill.

The Group also finalised the consideration for the acquisition of P. Gerolemou Construction / Mvela Phanda Construction, which led to a revised amount of goodwill.

To account for the acquisitions, the Group restated its statement of financial position and statement of cash flows as though these changes had occurred at the acquisition date. These changes did not affect the income statement, statement of comprehensive income and statement of changes in equity.

Mr Heyns said that with the sentiment in the mining industry becoming more positive, he expected TWP’s performance to improve. “We are already seeing an improvement in staff utilisation and recovery ratios for the 2011 financial year.”

The results were also affected by the amortisation of intangible assets which, at R39,3-million, was almost double the amortisation charge of R20,5-million reported in 2009.

The group had R1,0-billion cash on hand at the reporting date (2009: R1,2-billion), with cash flow from operations at a satisfactory R200,0-million (2009: R252,9-million). The decrease in operating cash flows was largely as a result of an increase in working capital requirements to accommodate extended terms for debtors affected by the tough economic environment.

A significant portion of the Group’s cash was tied up in its property portfolio, which comprised land held for both residential and industrial development. Mr Heyns said that while the residential sector had been slow to recover from the economic crisis, momentum was gathering in the industrial space and that the Group expected to realise a portion of that cash in the foreseeable future.

The Group repaid R320,1-million of debt in the year under review, decreasing total borrowings to R802,7-million (2009: R890,2-million). The Group’s gearing ratio was 0% (2009: 0%) at the reporting date.

Prospects

Basil Read expects conditions in the construction sector to remain challenging in the year ahead, despite the gradual economic recovery, as costs rise and competition increases. The sector typically lags a recovery in the general South African economy because of the long lead times required to plan and execute large projects.

The Group nevertheless remains committed to its expansion policy, both organic and acquisitive, locally and internationally. Although no major acquisitions have been planned for the year, the Group will remain alert to opportunities.

In South Africa, delays in the roll-out of government projects have created timing uncertainties that are likely to continue for most of the year, though big projects are still being planned in power generation and water supply, the Group said.

In the rest of Africa, foreign capital inflows have created construction opportunities, which the Group said it will pursue within its defined set of risk parameters, including funding certainty and upfront payments.

Improving sentiment in the mining sector during the second half of last year (2010) boded well for the Group’s mining and engineering divisions. TWP secured a significant amount of work on new engineering projects, most of which lay beyond South Africa’s borders.

Although these were strongly positive indicators, the Group said it would remain cautious about the year ahead and continue to be prudent in managing uncertainty and volatility.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of Basil Read
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Amanda Wightman (011) 418 6352
Date: 24 March 2011

The new premises presented an ideal opportunity for Basil Read to exercise its commitment to energy efficiency and environmentally responsible building practices, demonstrated by the installation of a photovoltaic solar system at its previous premises in Lillianton, Boksburg, which provided up to 20% of the head office’s energy requirements, thus reducing its need for energy obtained from fossil fuels.

A number of ‘green’ building initiatives were incorporated into the design and building:

Position on site

The building has been positioned to maximise exposure to North Rand Road and to increase the landscaped space behind the building. The building itself shields the entertainment area from the road providing privacy.

Green building design considerations

The inclusion of a basement level reduces the amount of surface parking and increases landscaped and green spaces around the building. This has in turn reduced the amount of hard surfaces; reducing solar radiation and storm water runoff that enters the municipal storm water system, and also visually softens the surrounding areas. Indigenous plants have been used for all landscaping which will decrease the overall water consumption required for the landscaped areas and increases the bio diversity of the area. In addition, rainwater from the roof and ground water from the sub soil drainage system is collected in storage tanks in the basement and used for irrigation purposes, thereby alleviating pressure on the municipal water supply.   

The buildings have a north – south orientation to maximise the use of natural light. Glazing has been limited to the eastern and western facades to minimise solar heat gain into the building, reducing the loads on the air conditioning system. 

High performance double glazing has been installed in the building. Double glazing outperforms single glazed systems from a solar protection point of view and also greatly reduces the noise levels in the buildings from outside sources.

Energy efficiency

The building was designed to be more energy efficient than standard commercial office buildings by making use of the following methods and technologies:

1. High ratio of external glazing to reduce dependency on artificial light
2. Large overhangs to shade glazing as far as possible
3. Motion-operated light censors to switch lights on only when required
4. Energy efficient light fittings making use of CFLs and LEDs

Water Saving

1. All W/Cs are fitted with dual flush systems
2. Taps are electronically operated to supply only water that is needed and to limit waste
3. Landscaping is irrigated using collected water from roofs and the sub soil drainage system.

Recycling

Coffee and copy stations are designed to accommodate recycling bins.

Building aesthetics

The design of the building was strongly influenced by architecture of the modernist movement, and follows clean, contemporary lines and forms to create a contemporary and timeless style. This architectural approach was selected to reinforce and communicate ideals of progressiveness and dynamic thinking.

A limited palette of color and materials create interesting contrasts in color and texture to diversify the building aesthetics and to highlight the contrast between finished and unfinished walls (off-shutter concrete, stone work and Marmoran walls).

Building layout
A double volume lobby leading from the main entrance to the entertainment area on the northern side of the building creates a sense of volume and space. The design has been ordered on a central circulation corridor that consolidates the primary circulation areas into one area, therefore allowing more flexibility in the general office spaces and contributing to the feel and aesthetics of the building.

All main public facilities are centralised on the ground floor with easy access from the lobby, allowing visitors and public to move freely without having to enter access controlled areas, thereby contributing to an open and friendly environment.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of Basil Read
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Jenny Smith (011) 418 6466
Date: 23 March 2011

Contractor

Basil Read Phambili Pipelines Joint Venture

Client

Rand Water

Contract Value

R35,465,298

Contract Duration

11 Months, commencing 15 March 2011

Scope of Work

Construction of an 800mm dia and 250 dia steel welded pipelines from Zuickerbosch pumpstation to Panfontein Reservoirs (pipes and valves are all free issue) as well as the construction of a 2000 square meter concrete lined dam with various reinforced concrete chambers on the pipeline and in the Zuickerbosch works itself.

Congratulations to all involved in securing this contract!

Since 2006, when the contract at Rossing Uranium Mine commenced, the labour force has gone on numerous wild cat strikes or illegal stoppages for a number of different reasons. In spite of monthly meetings where issues are discussed, the union has on several occasions embarked on illegal industrial action when no agreement is reached. Since February 2009 there have been six illegal stoppages, including the current illegal stoppage, in spite of the fact that the union is well informed regarding the due processes of dispute resolution, and having agreed and signed the Recognition and Procedural Agreement with Basil Read Mining.

Basil Read Mining is committed to resolving the issues and to this end delegated senior management from both Namibia and South Africa to assist. In addition they initiated meetings with senior government officials including the Deputy Labour Commissioner, Tuulikki Mwafufya-Shikongo; the Labour Commissioner, Bro-Matthew Shinguadja; and the MUN General Secretary, Jonas Lumbu. It has also held extensive meetings with the governor of the Erongo region, the Honourable Mr Cleophas Mutjavikua. The company was left with no choice but to apply for a court interdict against the illegal action which was granted by the Labour Court of Namibia.

Although an agreement was tabled and negotiated in the presence of the Honourable Mr Cleophas Mutjavikua, who guided the parties to resolution, no agreement was reached. Basil Read Mining has shown respect to all relevant government institutions and has exhausted talks at the highest levels within the Labour Department. Unfortunately, the unilateral and non negotiable demand from the union for a four panel shift arrangement has detrimentally affected negotiations.

The current three panel shift arrangement has been in operation for the past five years during which time Basil Read has reached just less than 2,5 million LTI (Lost Time Injuries) free man hours as at August 2009. In addition, the company has been commended on its safety procedures and records to date. Basil Read Mining is ISO 18001 and OSHAS 9000 compliant.

After consultation with an international expert, the company proposed a reconfiguration of the three panel shift which was subsequently rejected by the union in spite of the fact that this suggested pattern would address all issues raised by the union pertaining to extra time off, fatigue and safety.

The union’s claim relating to payment for hours not worked has been referred to the Labour Commissioner as a formal dispute as these differences are not reconcilable. Basil Read Mining maintains that it has fulfilled its contractual obligations to pay all monies due to workers, including overtime and housing allowance. Similar allegations have been made by the union in the past and in spite of an inspection by the Labour Department, no evidence corroborating these allegations could be found.

To date, Basil Read Mining has made a significant contribution towards corporate social investment and upliftment both in the vicinity of Rossing Uranium Mine and throughout Namibia. More than N$6 million has been spent on bursary students, the Democratic Resettlement Community, Assure Kapere pre Primary School in Arandis, the Rossing Foundation in Arandis, a sustainable development project, various churches in Swakopmund, sports institutions, Namibian Institute of Mining and Technology (NIMT) apprentices were obtained for practical exposure on site, the Rossing Foundation/Arandis Town Council Sports Field Development, sponsorship of Arandis old age pensioners, transport which is provided for local citizens to community gatherings, the Karibib Small Miners Forum, the residence of Okatjali Constituency in the Oshana Region, and the Basic Income Grant Coalition.

In conclusion, Basil Read Mining categorically rejects the claim made by Mr Titus Geingob, Branch Executive Committee (BEC) Chairman of MUN, that its Rossing Project Manager, Andre van der Westhuizen, made any derogatory or disrespectful statements about the Namibian Government. The BEC has on numerous occasions demanded that Basil Read Mining remove Andre van der Westhuizen from his position and the company considers this yet another attempt to undermine him.

Client

Zimbabwe Platinum (PVT) Ltd

Contract Value

R 150,595,556

Contract Duration

12 Months

Scope of Work

Main Civil Engineering Works, including:

• Primary Crusher
• Stockpile Structure (including reclaim tunnel)
• Stockpile Feed Conveyor
• Crusher Feed Conveyor
• Fan Foundations
• Raise Bore Foundations
• Overland Conveyor (6000m)
• 15000t Portal Silo
• 6000t Mill Silo
• Mill Feed ConveyorMill Foundation
• Float Foundation
• 40m Concrete Thickener
• 50m Penstock Tower (x2)

Congratulations to all involved in securing this contract!

Following a restructure of the JV in 2009, a new company was formed, Royal Bafokeng Platinum (RBPlat), which holds a 67% majority interest in the JV. The Styldrift Merensky Phase 1 Project entails a twin vertical shaft system; the Main Shaft reaching a depth of 740 m, and the Services Shaft reaching 705 m. Full production of Phase 1 is expected to be achieved by 2017, which will increase BRPM’s production to 430 000 tonnes per month.

The Main Shaft and Services Shaft headgears were designed by Anglo Technical Division and METS respectively, and were manufactured and pre-assembled on pads; the Main Shaft headgear in three sections, and the Services Shaft headgear in four sections. The erection of the headgear was undertaken by Louwill Engineering.

The total weight of the two headgears amounts to an estimated 1 200 t, with the maximum single lift at 160 t. “The headgear centre tower and A-frame sections were assembled on concrete pre-erection pads and frames, and placed into position using a 1 000 t lattice boom crawler rig type crane from Sarens, one of the biggest cranes in South Africa,” says TWP’s project manager Pieter Louw. Assembly of the main shaft headgear, an A-frame steel tower structure reaching a height of 58,6 m, commenced a few months ago and the erection commenced on 31 January 2011 with the last lift taking place on 18 February 2011. The Services Shaft, a 41,3 m high steel prop tower, also took a few months to assemble and approximately one week to erect, with the final lift on 12 February 2011.

“As the project managers, it was our responsibility to ensure the smooth assembly of the headgears whilst slow deep sinking activities were still in progress prior to the main deep sinking phase deadline. With a current workforce of approximately 400 on site, this was by no means an easy undertaking, but made possible with the co-operation between all the contractors,” explains Louw. The original programme would have been to stop operations, build the headgear and then commence with sinking, which would have adversely affected the overall schedule and programme. The sinking of the shafts, undertaken by Shaft Sinkers, was able to commence in October last year.

TWP currently has 13 different shaft systems on its books, some in the design phase and some under construction.

Issued by Serendipity Events, Promotions & Exhibitions on behalf of TWP
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Pieter Louw (011) 218 3000
Date: 9 March 2011

Read article p.46

http://www.twp.co.za/images/pr/april2010twpcorporateprofileengineeringnews.pdf

“BRTP was formed following the merger between construction company Basil Read and engineering project house TWP, with the intention of leveraging on TWP’s EPCM capacity and Basil Read’s construction expertise to provide clients with an ‘entire’ offering,” says BRTP’s commercial director Gavin Chamberlain, who has been with TWP for 10 years in a project management capacity, specifically with regards to construction and mining projects. “The combination of Basil Read’s experience in building, civil engineering, roads and opencast mining in South Africa and the rest of the continent, its international purchasing power and strong balance sheet, together with TWP’s world-class project management and technical skills, and its international presence in Australia and South America, places BRTP in the advantageous position of being able to offer a highly competitive EPC or turnkey service anywhere in Africa, or indeed throughout the world,” continues Chamberlain.

BRTP will essentially draw on each company’s core capabilities and resources, and the best of their business systems, such as Basil Read’s site-based controls in terms of safety and quality, and TWP’s design and management controls. Basil Read’s Level 4 BBBEE status and its CIDB for ME, GB and CE gradings of 9 will also be applicable to BRTP. In addition, the company can call on Basil Read Corporate Finance to facilitate the funding of projects if this service is required.

The company will focus on three areas: developing new mines and process plants; general infrastructure relating to marine works, waste water treatment, reverse osmosis and desalination, water purification and mines; and energy-related projects including wind, solar, hydro power, biomass and renewable energy, as well as HFO and diesel power generation.

“Through the various Basil Read Group companies, such as TWP Infrastructure and TWP Energy, BRTP has access to specialised skills and expertise,” says Chamberlain. “Basil Read has extensive marine experience in constructing, whilst TPS.P Architects, which also falls under the Basil Read Group umbrella, has designed several port infrastructures. We have however adopted a flexible business model and will tap into external technical and construction resources to set up professional and construction teams best suited to a specific project, and will look at bringing in international skills and technology suppliers if necessary.”

In line with Basil Read’s overarching objective of focusing on larger, more technical projects, and in response to the need for an EPC offering in Africa, BRTP will expend most of its energies on bigger turnkey projects in Africa worth more than R250-million. A small projects division has been specifically set up to handle local turnkey projects under R100-million, whilst projects between R100 – R250-million will be undertaken by Matomo Projects, a TWP group company specialising in process design and project execution offering both EPCM and turnkey services. Working with TWP’s Polokwane design office, BRTP has already secured its first project, worth R18-millon – installing an emergency stockpile conveyor for Anglo Platinum at the Mototolo mine on the eastern limb of the Bushveld complex in Mpumalanga, a joint venture between Anglo Platinum and Xstrata.. “As was to be expected of a first job, a few teething problems were experienced, however, as the team shifted from an engineering perspective to a delivery focus, BRTP is managing to overcome the obstacles and plans to deliver the plant on time on 11 February 2011,” says Chamberlain.

Within the broader African context, BRTP has submitted proposals for turnkey projects in Uganda, Eritrea, Namibia, Burundi and Botswana, and is hoping to secure its second project in Tanzania. There is also potential for turnkey work in Sierra Leone, where Basil Read is currently building roads for a mine. In conjunction with sister company TWP OPS, BRTP can also offer a design, build and operate service.

“Although we anticipate securing a number of significant projects during 2011, our intention is to maintain a small team focusing on tendering, commercial and technical management, to provide innovative turnkey solutions that will save time and money downstream,” concludes Chamberlain.

Issued by: Serendipity Events, Promotions & Exhibitions on behalf of Basil Read Turnkey Projects

Editorial contact: Loll Thomson (011) 467 2133
Client contact: Gavin Chamberlain (011) 218 3211
Date: 7 February 2011

Coal projects portfolio manager, Brad Rip, says although mineral projects have been a shrinking market in the wake of the global economic crisis, TWP Projects has actually managed to grow its coal projects’ market share in the last year.

“We attribute this not only to our reputation for consistent delivery of superior work, on time and within budget, but also to the creation of a specialist coal projects team populated by people with proven coal industry-specific skills,” says Rip. “This unit enhances our hard-won standing as world-class EPCM consulting engineers. People know that when they come to us they will get a quality project that meets the owner’s objectives. The new specialist commodity business unit allows us to utilise our skills resources optimally, which benefits both the client and our company.”

Rip says TWP Projects has developed a particularly strong long term client/consultant relationship with Total Coal SA, based on several successful EPCM projects. These include the Forzando South boxcut and pit-head arrangements in 2007 and the Tumelo boxcut and pit-heat arrangements for the Mmakau Mining/Total Coal joint venture in 2008.

“We’re pleased that this relationship will continue into 2011 with the recent award of the Eloff Feasibility Study to TWP Projects,” says Rip.

Commencing in January 2011, the 18-month Eloff Feasibility Study will cover a large coal resource in the Delmas area of the Witbank coalfields, with the potential to produce an export product as well as power station feedstock. This Feasibility Study is expected to be complex, with some significant challenges, as the resource has multiple seams which will be exploited via a combination of open cast and underground mining in an environmentally sensitive area.

“Rio Tinto became a new client when TWP undertook the Chapudi Coal Project Pre-feasibility Study for Rio Tinto Energy in 2009 / 2010,” says Rip.  This project was part of an Independent Power Producer Project which investigated a supply of energy coal. This project has subsequently been sold to Coal of Africa to increase its portfolio of assets in the Limpopo Province.”

During 2010 TWP Projects also completed a Feasibility Study on the Penumbra Project for Mashala Resources, which was subsequently acquired by Continental Coal Limited, a RSA registered subsidiary of an Australian listed company. This project will be a medium sized underground operation in the Ermelo coalfields, which is expected to produce export grade coal by the end of 2011.  Late last year Continental Coal awarded TWP Projects another Feasibility Study — the De Wittekrans Project in the Hendrina region — for completion by June 2011. De Wittekrans will target the export and Eskom markets, exploiting the coal via both opencast and underground mining.

Outside of South Africa’s borders, the company is currently undertaking a Feasibility Study on the Ncondezi project in the Tete Province of Mozambique for London-listed resources concern, Ncondezi Coal Company.  This project, part of current major coal developments in the Tete region and the Moatize Coal Basin, is in the exploration phase and is being considered a priority energy coal producer with the potential to produce coking coal.

In November 2010 Anglo American Thermal Coal awarded TWP Projects a Pre-feasibility Study on the New Vaal Lifex project being developed to ensure the longer term  supply of 10-million tons per year of coal to Eskom’s Lethabo power station for a further 20 years. Coal will be resourced from deposits adjacent to the New Vaal Colliery. The study will be completed by September 2011.

“We secured this Pre-feasibility Study based on our Tier 1 EPCM supplier status for Anglo American’s mining projects throughout Southern Africa,” says Rip. “Tier 1 involves supplying EPCM services at the highest level for major mining projects and we were granted this prestigious status following a stringent extended pre-selection process in line with Anglo’s global initiative to transform its procurement and supply chain operations.”

He said providing EPCM services via a framework agreement such as this will allow TWP Projects greater insight into Anglo’s long term project pipeline, giving the company sufficient time to allocate the best available skills resources to these projects.

Issued by: Serendipity Events, Promotions & Exhibitions on behalf of TWP
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Brad Rip (011) 280 3000
Date: 27 January 2011

This follows a stringent pre-selection process in line with Anglo’s global initiative to transform its procurement and supply chain operations. Tier 1 involves supplying EPCM services at the highest level for major mining projects. TWP Projects, a part of the Basil Read Group, is one of only three EPCM service providers to be selected for this region.

The framework contract was signed in London on 3 November 2010.

“We are very excited and honoured by this mark of approval from one of the world’s largest mining companies,” says TWP Holdings CEO Digby Glover. “This kind of framework agreement allows strong partnerships to develop in a far more effective way than through the traditional per-contract agreements. It’s an extension of a concept pioneered by Vhumbanani Projects, our 50/50 joint venture business with DRA Minerals Projects, which was established to service Anglo Platinum’s concentrator plant expansion programme.

“TWP has a long track record with Anglo American, especially with Anglo Platinum. It is understood that the ‘One Anglo’ initiative will allow TWP greater exposure to other areas of the Anglo American portfolio, such as coal and iron ore work. This is very positive, as it is important to broaden the scope of this agreement as much as possible to allow for the sustainable workload required to build a stable and effective team”, continues Glover.

“Providing EPCM services via a framework agreement such as this will give us greater insight into Anglo’s long-term project pipeline, affording us sufficient time to allocate skilled resources to these projects.”

The largest subsidiary in the TWP Holdings group, TWP Projects, is the foremost mining industry EPCM service provider in southern Africa. TWP Projects comprises four key divisions: Mining and Infrastructure, Process, Energy and Regional Offices, with two new divisions recently established: Infrastructure, and Oil and Gas. TWP provides a full range of innovative engineering and project management solutions to the mining and minerals industries, and general industrial and commercial concerns.

Issued by: Serendipity Events, Promotions & Exhibitions on behalf of TWP
Editorial contact: Loll Thomson (011) 467 2133
Client contact: Digby Glover (011) 280 3000
Date: 19 January 2011

Historically Basil Read’s strength has been in road construction and civil engineering. These divisions led the dramatic recovery of the company in recent years. “When Basil Read was founded in 1952, it was a road building company. It always has been. We have a reputation in the market in terms of quality and meeting completion dates. The jury is still out on who the leader in road building in South Africa is, but suffice to say that we have a good name in terms of quality, meeting the end date and competitive pricing. These three things have led to us securing work. In addition, our clients have not had a bad experience with us in terms of quality and backing up. This stands us in good stead,” says Chris Erasmus, executive director of EPC.

The Roads Division is currently working on projects awarded by the South African National Roads Agency Limited (SANRAL), the Departments of Public Works of both the Free State and Mpumalanga while cross border projects are seen by Basil Read as the only logical option for growth. “The size of the roads industry market in South Africa is more or less ring fenced – it is not going to grow dramatically,” says Erasmus. “The provinces and SANRAL have their budgets – the status quo here will continue. Growth is going to come from outside South Africa,” he continues.

Local projects

While Basil Read’s work for SANRAL is a significant portion of their work, the division has been awarded two contracts in the Free State by the Free State Department of Public Works. “The first is through Roadcrete AfricaOne contract to Roadcrete Africa and the other through to Basil Read,” explains Erasmus. Roadcrete Africa is a subsidiary of Basil Read and the project involves the repair, design and rehabilitation of the 18,2 km road between Bultfontein and Wesselsbron. The second is for the design, rehabilitation and repair of 72,8 km of road between Vredefort and Kroonstad.

In Mpumalanga, the division has been awarded two projects. “The provinces have generally been a mess. To make matters worse there have has been political change in some of them. Furthermore, there is corruption with the awarding of tenders and that is why there has been a slowdown in the public works tenders,” says Erasmus. The provinces have been affected by political change which has slowed down the roll out and award of tenders. In contrast SANRAL manages the National Roadas programme very professionally which is why “The lion’s share of the national roads is managed by SANRAL. It is are a parastatal and a professional body (the former Department of Transport) and that is why that side of the business is still very buoyant. They are very competent in putting out tenders for their annual R10-billion budget and awarding these. There is no corruption in their tender procesThe tender process is controlled s: if you have the lowest price, and you meet all the criteria, you will be awarded the tender,” adds Erasmus.

The Basil Read Roads Ddivision has built up a strong relationship with SANRAL over the years. “We were involved in the Maputo Corridor, the first PPP road project, and our relationship has continued ever since.”

Basil Read’s Roads Ddivision is currently working on two packages directly linked to the Gauteng Freeway Improvement Plan and a third package which is part of the greater GFIP. “Basil Read was awarded packages D1 and D2 package toand the value of that is R2,1-billion. It was awarded as one. Package D1 involves the upgrading of 10 km of the N1 from the Brakfontein interchange to the R21 interchange and involves the widening of six bridges and the realignment of five culverts. It also involves the construction of four new bridges and culverts and will be completed in April,” Erasmus explains.

Package D2 is the N1 section from the Atterbury interchange to the Proefplaas (N4) interchange. This project entails new roadworks, various bridge constructions and building of structures such as noise attenuation walls.

“Package K, part of the wider GFIP is scheduled for completion in December and runs from the Jan Smuts interchange on the R21 to the Tom Jones interchange and involves the adding of lanes in each direction. On this project continuously reinforced concrete pavement and ultrathin reinforced concrete pavement were used,” he adds.

Cross border

Erasmus says that cross border opportunity in Africa for South African contractors is massive. Basil Read Roads’ current projects include a rail project (it was initially a road project) in Sierra Leone to the value of R250-million. They are doing this project on the back of their local client. “They handled the logistics, shipping of equipment, clearing through the port, and have arranged the permits. This has made it a lot easier for us to operate there,” says Erasmus.

“In Gobabis, Namibia where we are busy with the rehabilitation of 160 km of road to the value of R270-million, we do have a local partner in joint venture with local a partnership,” he says.

They do not always partner with a local contractor though. “During the first half of 2010 we acquired the Sladden International roads and civil engineering company based in Botswana. It is through this acquisition that we are doing a road project. It involves the upgrading of an existing 140 km of road. This contract is valued just under R500-million,” says Erasmus. Partnering with a local contractor, according to Erasmus, is dependent on whether there is a commercial advantage. “Otherwise we do it on a mission basis,” he says.

“Our workload outside South Africa is currently worth R1-billion. We also tendered for three road projects in Tanzania where we had the lowest tender. The client was supposed to award it in December, but has extended the validity to February. The total of these three contracts is a further R1-billion,” says Erasmus. This work was priced on a standalone basis.

The Ddivision is also pursuing opportunities in Angola and Malawi. “We have priced a toll road in Zambia where we were the only bidder. The problem with this project is that Zambia’s current legislation does not allow for tolling. This needs to be sorted out before the project can become a reality. The value of the work is about R1-billion and should start by midd 2011 depending on legislation changes for tolling,” adds Erasmus.
“Africa has an increasing number of projects – both general and mining infrastructure,” says Erasmus.

Flagship

“Currently our forecast indicates that the Roads Division will make up 45% of the Group’s turnover for 2011. The Roads Division is the lion’s share of our business. In terms of secured turnover we have 80% of the forecast for the year in hand,” says Erasmus. “In terms of contributor to profit the division is responsible for about 50% of group profit. So it is very much the flagship of Basil Read.”

This figure can increase. The division has tendered for projects in South Africa where they have been the lowest and two where they were the second lowest for the tender. “We are optimistic that projects, on which we had tendered, will be awarded. These amount to R1,5-billion and will be awarded within the next two months,” says Erasmus.

“Outside South Africa we have the aforementioned Tanzanian contracts which are worth R1-billion. So besides the fact that we have 80% of our turnover secured, we are sitting on the possibility of being awarded another R2,5-billion worth of roadworks. We should meet or beat the budget,” says a confident Erasmus.

He is realistic about working in Africa. “We have, like many other contractors, paid our school fees there, but also see it as the biggest opportunity. The growth for road construction is going to come from outside South Africa,” he says.

The division is, however cautious in terms of where they are looking for opportunities. “Southern Africa is obviously a logical area as it is easier to work closer to home. We do not have too much of an appetite for Mozambique as we had an unpleasant experience there previously. Most of the countries that we are focusing on have English as a second language,” explains Erasmus.

In addition to Africa, he mentions that they are currently in discussions to expand into Australia by means of an acquisition. In addition to Africa, the group is looking to expand its footprint to Australia. Erasmus furthermore states that Basil Read is building in-house skills to tackle a projects from an EPC (Engineering, Procurement and Construction) perspective basis or construction basis. “We acquired TWP 13 months ago and we are building infrastructure capacity within TWP. This allows us to offer a client a purely construction solution, or an EPCM solution. We also see an opportunity north of our borders to offer roadworks as design and construct solutions,” he says.

Better positioned

The South Africa construction industry is reeling from the effects of the economic crisis. The government’s delay in implementing their infrastructure development plan has not helped. “But,” says Erasmus, “with 45% of Basil Read’s annual turnover coming from roads, and roads not being a depressed sector within construction, the company as a whole is not going to take that much pain strainunder pressure as we are not that exposed to the building side,” says Erasmus. Only aboutLess than 15% of their annual turnover comes from their building division. “The market has slowed down and has become very competitive. Margins have dropped and companies want to fill order books. We are in a fortunate position where we have already filled 80% of our order book which means that we do not have to take on too much work at lower margins. Civils is responsible for about 15% of our annual turnover and has a relatively full order book. The balance comes from TWP and open cast mining – the latter’s order book for the year is secured,” he concludes.

The Chinese threat

“Generally Chinese construction is a lot cheaper than South African contractors because they are partially state- owned and get subsidised. In the project that we priced up in Tanzania, the Chinese tender was third. We were the lowest and an Indian company came inwas second,” says Erasmus.

“They have a bad reputation in terms of quality and meeting completion dates. Some of our clients have had bad experiences with them and are looking for competitive alternatives to the Chinese contractors. But they are a threat in Africa and are going to be there – up to a point,” he warns. “They are not shutting out the South African contractors entirely because of bad experiences clients have had with them,” he adds. The Chinese will always be a threat but we have been competitive in pricing against them in Tanzania. By providing quality work on time with a competitive price we can compete with the Chinese in Africa