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JOHANNESBURG - MURRAY & Roberts (M&R), the listed multinational engineering and construction group, is to proceed with its R4.8 billion five-year contract mining project for Kalagadi Manganese.

Henry Laas, group chief executive of M&R, yesterday also confirmed the group planned to make acquisitions in the oil and gas sector in the US. Laas said the Kalagadi Manganese project had been in M&R’s order book since 2015, but the funding structures had now been finalised and it was proceeding. “There is a three-month mobilisation period and we are hopeful that in January we will be in production,” he said. Laas said this R4.8bn project formed part of the “fantastic” R17.5bn order book of M&R’s oil and gas platform.

Kalagadi Manganese has been exploring for manganese in the Kalahari Basin. The three farms on which the company holds new order mining rights are believed to hold about 960 million tons of manganese ore. Laas said the contract was for five years, but these contracts were normally extended.

“Kalagadi as a company has no capability to undertake any mining work. But as happened with Aquarius, at the time we were doing all their mining and at the end of the contract they acquired our people and assets from us. That might happen at Kalagadi,” he said. Turning to the group’s acquisition plans, Laas said the oil and gas platform was pursuing acquisitions in the US.

Laas said the group had budgeted for a deal to be concluded by December, but that was too optimistic. He expected a transaction to be finalised by June next year. He said the group had identified acquisition targets in the US with a proven track record and M&R was reaching out through its transaction advisers to establish whether there was an appetite by these companies to engage. Laas said that once that had been confirmed, M&R would start engaging with them.

He said M&R planned to invest between R400m and R500m in acquisitions in the oil and gas sector in the US. “If it’s a smaller company, we will buy the entire company, but if it is a larger company we may end up with 50percent or so,” he said.

Laas said acquisitions were a very important part of M&R’s future growth aspirations, but stressed that the group needed to achieve growth organically and through acquisitions. “The opportunity in the market is just not there for us to achieve the organic growth that we believe will satisfy our shareholders. "So we need to find smart investment opportunities where we can invest, we can get returns and we can grow,” he said.

M&R said earlier this week when it released its financial results for the year to June that its 2018 financial year would be the start of a new earnings growth period for the group. This was based on the group’s belief that the metals and minerals cycle had already turned.

M&R reported an 8percent increase in diluted continuing headline earnings a share, excluding the Middle East, to 212c in the year to June from 197c in the previous year. The group’s earnings were dented by a R570m loss incurred in the Middle East and a R170m net present value charge for its cash contribution over 12 years in terms of the Voluntary Rebuilding Programme agreement with the government.

This was partially offset by a R160m profit realised in the Bombela Civils joint venture, which was contracted to design, build, operate, maintain and partially finance the Gautrain rapid rail project, following settlement of a Gautrain claim.  Shares in M&R dropped 5.48percent yesterday on the JSE to close at R12.93.