Just a quick thought on FGE. Investors have been patiently...

Just a quick thought on FGE. Investors have been patiently waiting for the HGO Kanmantoo contract to eventualise. The AFR street talk portion mentioned HGO's financing is close to completion.

If I remember correctly, FGE's subsidiary, Abesque was contracted to dismantle the old plant and ship it to Kanmantoo for re-construction. Apparently, according to HGO, Abesque was kept as the nominated process plant constructor to help reconstruct the plant in S.A. This bodes really well for FGE as the bulk of the value of HGO's Kanmantoo project is tied to the re-construction of the old Pillara plant at HGO's Kanmantoo project.

This is a direct quote from HGO's quarterly report: "Abesque engineering limited was the contractor for the dismantling and transportation aspects, and they are also our nominated plant constructor...... Once a FID is made, the Process Plant Construction and Commissioning Contract will be entered into with Abesque."

This is a significant contract if bedded down. HGO has mentioned they will enter into a FID after the close of financing. Given they have had more than 2 years to dwell over Kanmantoo, HGO should know by now whether they are going to go ahead with their Cu project. Given they are close to completing their fund raising (HGO already has more than A$90million on their balance sheet), it would be almost certain they would announce a FID (go-ahead) once they obtain their finance.

Therefore, hopefully sometime in the next 6 weeks, we will be able to see a contract awarded to FGE for the re-construction of the Pillara plant at Kanmantoo. This will be the biggest, or close to the biggest contract that FGE has undertaken to date. This can act as a show case project for the rest of the mid-tier mining sector.

More importantly, it can showcase the ability of Abesque to think outside the square. By using an old plant, they saved HGO countless of millions of $$. It's just a bit unfortunate FGE has not been give more credit for their part in saving their client heaps of $$.

Keep a lookout for HGO's announcement on financial close. Once that happens, it is quite likely the announcement of the re-construction contract would follow suit.

On a sidenote, keep a lookout on CLO's Gorgon construction project. Hopefully FGE will get a share in that once it is up and running.


BTW, I have not just jumped onto the FGE bandwagon.