Shaft Sinkers : Revision to Impala 17 Contract

22 April 2014

Shaft Sinkers Holdings plc

("Shaft Sinkers" or "the Group")

Revision to Impala 17 Contract

Shaft Sinkers Holdings plc (LSE: SHFT) announces that it has renegotiated its contract with Impala Platinum Limited ("Impala") relating to work at the Impala 17 project ("the Project"). 

As previously announced Shaft Sinkers has been in discussions with Impala over potential changes to the Project's rates based contract in order to more equitably share risks. Under the revised terms of the contract Shaft Sinkers will be compensated for labour and materials based on an agreed rate and will have the opportunity to be paid an additional bonus element based on achieving certain performance criteria. Under the previous contract terms Shaft Sinkers incurred losses of GBP0.6 million in 2013 and GBP0.9 million in the current financial year to March. These losses have had a negative effect on cash flows in South Africa and the revised terms are expected to improve the financial performance of this contract. The liquidity in South Africa remains tight and this situation has been further exacerbated by the lack of revenues from the strike-affected projects.

The revised contract, which became effective from 15 April 2014, is for the period up to 15 September 2014, after which date it will terminate if not renewed. Impala is retendering the contract and Shaft Sinkers will be participating in the retender process.

The change in the terms of the contract will reduce the Company's order book by GBP13.9 million. The order book at 31 December 2013 stood at GBP278 million.

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Shaft Sinkers specialises in the sinking of particularly deep and large diameter vertical and decline shafts and the development of underground infrastructure, used primarily in mining and hydropower applications.

The Group is a world leader in vertical shaft sinking with a focus on particularly deep and/or wide vertical shafts. It has the capability to sink shafts through all types of rock strata. The Group works principally for established mining and infrastructure companies.

Historically, the Group has completed projects in over 20 countries worldwide across Africa, Europe, South America, the Middle East, Asia and Australia. The group is on record for sinking one of the deepest shafts in South Africa used for conveying men and material to a depth of 3,131 meters below surface.