Senakin and Satui mining contracts in Indonesia

(31 May 2013)--Leighton Holdings is aware of a market rumour regarding its contact mining business in Indonesia. Leighton confirms there is a dispute between its subsidiary Thiess and the owners of the Senakin and Satui mines in South Kalimantan, PT Arutmin Indonesia (70% BT Bumi Resources and 30% Tata Steel). The dispute is not expected to have any material impact on the Company?s results.

At its Annual General Meeting last week, the Company confirmed that, notwithstanding current market conditions, it remains on track to deliver a full year underlying NPAT within the previous guidance range of $520 to $600 million and a gearing level within the target band of 25 to 35 per cent by year-end.

Thiess decided to suspend operations of the Senakin and Satui mines on 26 April as it pursued Arutmin for the payment of net project receivables, or underclaims, to which Leighton has a contractual entitlement.

The Group remains confident that work at the Senakin and Satui mines will return to production following a satisfactory resolution of matters between the parties. Mining work continues uninterrupted at the Kaltim Prima Coal project (65% Bumi, 30% Tata and 5% other parties) where Thiess is undertaking contract mining work.

Leighton?s contract mining coal business in Indonesia contributed approximately 5.5% of total Group revenue in 2012. The Senakin and Satui mines contributed approximately 1.5% of total Group revenue in 2012.

The suspension of operations evidences Leighton?s stated approach of seeking payment of underclaims and not allowing underclaims to accrue further. Management of underclaims is a key focus. Detailed plans are in place to reduce underclaims across the Group and Leighton expects resolution on a number of the claims during the remainder of the year. (ends)