Bateman Engineering N.V. ("Bateman Engineering or the “Company")

 14 July 2008  (London)

Bateman Engineering provides for financial exposure from Lumwana fire and advises additional cost provisions on Moma project

Lumwana Project

Further to the announcement on 8 July 2008 regarding the fire at the Lumwana Copper Project, Bateman Engineering announces that it has provided for an increase in project costs that will result in a USD10 million reduction in operating profit for the year ended 30 June 2008.

The quantum of the provision is based upon management’s conservative estimate for the total impact on project costs and Bateman Engineering does not currently anticipate the need for any further provision.

The fire, in which no one was injured, damaged the main 20MVA transformer and adjacent 11kV substation, which forms part of the process plant facility currently being commissioned by Bateman Engineering and its joint venture partner Ausenco for Equinox Minerals Limited. 

The Board advises that all efforts are being made to expedite the replacement of damaged equipment in order to minimise the delay in achieving project completion. Commissioning work is in the meantime continuing in other areas of the plant.

The transformer and substation were commissioned without any problems and have been operating for a number of weeks before the incident occurred. An investigation into the incident is underway with experts being appointed to inspect the damage and investigate the possible cause.

The Ausenco / Bateman joint venture has commenced a review to assess the possibility of mitigating the additional costs.

Moma Project

As a result of an end of period contract review associated with anticipated project completion and ongoing preparations of the year end results, Bateman Engineering also announces, for reasons set out below, that the Company has to reconsider its forecast costs to completion in relation to the Moma project, a significant LSTK contract undertaken for Kenmare Resources in Mozambique,, which is in the process of completing and has been the subject of a number of ongoing issues for the Company since 2006.  The newly identified issues principally relate to:

• the handover of the roaster which is likely to be delayed by approximately three months due to defective workmanship which only came to light during the current handover process; and

• process concerns arising from the operation of the wet concentrator plant and the mineral separation plant which will require additional work before performance testing can commence.

Based on the current information available to management a further provision has been made that will result in a USD 8 million reduction in the operating profit for the period ended 30 June 2008.

The total impact from the provision related issues arising in relation to both Lumwana and Moma is a net reduction in operating profit of USD 18 million for the year ended 30 June 2008.

Bateman Engineering Chairman Rick Menell said:

“Whilst the increase in project provisions means that Bateman Engineering will now not meet the Board’s expectations for the year ended 30 June 2008, we believe it is the correct and prudent approach to follow until our commercial position has been fully assessed and clarified. 

The Board is confident that the new management team is fully focussed on managing the risks arising from LSTK contracts, optimising project delivery and execution and continuing a strategic move towards lower risk hybrid / reimbursable contracts”

ENQUIRIES:

Bateman Engineering
Eddie Du Rand,CEO-designate Pieter Du Plessis, CFO		+31 20 502 2370 +41 55 451 9010
Dresdner Kleinwort
Chris Treneman		+44 20 7623 8000
Alex Metherell		+44 20 7623 8000
Andrew Hollins		+44 20 7623 8000
College Hill
Nicholas Potter (Analysts)			+44 20 7457 2037
Adam Aljewicz			+44 20 7457 2029

Note for editors:

Bateman Engineering is a technology-driven engineering-project house serving the minerals and metals industries worldwide. Bateman Engineering’s shares (BATE.L) are traded on AIM, a market of the London Stock Exchange