South African mine workers Renegotiate Contract Terms With Impala Platinum

London ( Apr 22)   Shaft Sinkers Holdings PLC Tuesday said that it has renegotiated the contract terms with platinum miner Impala Platinum Ltd relating to work at the loss-making Impala 17 project in South Africa , which it hopes will improve the financial performance of the contract.

Shaft sinking involves excavating a vertical tunnel. Shaft Sinkers also is engaged in contract mining, mine operation, tunnelling and underground excavations. It has been in discussions with Impala to improve the financial terms of the contract between the two companies.

Shaft Sinkers said that it has renegotiated the terms of the contract, and now will be compensated for labour and materials based on an agreed rate. It also 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, which it said reduced cash flows in South Africa , as its revenue and profits also were hit by strikes in South Africa and the deteriorating value of the South African rand.

"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 company said in a statement.

Shaft Sinkers said the revised terms are expected to improve the financial performance of the contract. However the change of terms will reduce the company's order book by GBP13.9 million . The order book stood at GBP278 million on December 31, 2013 .

Shaft Sinkers shares were down 3.2% at 11.38 pence per share Tuesday.