Moolmans remobilises after lockdown, but Aveng warns of liquidity risks

14th May 2020 By: Terence Creamer - Creamer Media Editor

Construction and engineering group Aveng reports that the group’s South African contract-mining subsidiary, Moolmans, has recommenced full operations at the majority of its opencast contracts, while its underground project at Platreef is operating at 50% of capacity in line with South Africa’s level 4 lockdown regulations.

During South Africa’s level 5 hard lockdown, which began in late March and ended on May 1, all the mining contracts ceased and were placed on care and maintenance.

In a note to shareholders, Aveng said Moolmans had implemented Covid-19-specific health and safety precautions as part of the remobilisation process so as to ensure that staff were protected against possible infection as operations resumed.

Moolmans currently has opencast contract mining operations in the Northern Cape and Mpumalanga and is implementing a deep-level shaft-sinking operation in South Africa’s Limpopo province.

The company’s Lefa contract in Guinea had continued to operate throughout the period.

The South African lockdown and related loss of revenue across all Aveng’s businesses in the country had negatively impacted the company’s liquidity position, however, which was already under pressure ahead of the pandemic.

“Liquidity and cash flow management in the South African market remains a key risk to the group.”

The JSE-listed group said the complex and extremely fluid nature of the current environment made it impossible to provide an accurate assessment of the impact of Covid-19 on the group’s financial performance.

Aveng also reported that its Australia-based subsidiary McConnell Dowell had not had any project cancellations as a result of the Covid-19 pandemic and that it was optimistic of an increase in tender flow in line with stimulus packages being introduced.

McConnell Dowell had an order book of A$1.9-billion at the end of December and had tenders worth A$1.2-billion currently under evaluation, pending contract award.

“Tender volumes are expected to increase further over the coming months, particularly in support of stimulus packages as economies enter a post-lockdown period.”