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Civmec (ASX:CVL) - CEO, Patrick Tallon - The Market Herald
CEO, Patrick Tallon
Source: Ticketbooth
  • Civmec’s (CVL) subsidiary, Civmec Construction & Engineering, has filed a statement of claim against Altura Lithium Operations in a bid to recover a payment
  • The claim, filed in the Supreme Court of Western Australia, relates to process plant construction and installation work at Altura’s Pilgangoora Lithium Project, for which Civmec is still owed approximately $4.5 million
  • However, Altura asserts it was entitled to be paid and subsequently offset liquidated damages under the contract
  • Civmec maintains that this is incorrect and unfounded, and is now pursuing a settlement sum of $2.4 million or, failing that, the full amount owed
  • Civmec shares are steady today, trading for an even 40 cents each

Civmec’s (CVL) subsidiary, Civmec Construction & Engineering, has filed a statement of claim against Altura Lithium Operations for the recovery of payment.

The claim, which has been lodged in the Supreme Court of Western Australia, relates to the construction of a processing plant at Altura’s Pilgangoora Lithium Project in November 2017, for which Civmec says final payment has not yet been received.

Under the terms of the contract, Civmec undertook the installation of structural steel, platework, grating, handrails and mechanical equipment, along with additional work beyond the scope of the original agreement.

Following the completion of construction, the plant was commissioned and began operations in 2018.

Civmec also noted that it had experienced delays due to Altura’s failure to fulfil its obligations under the terms of the contract, which included engineering deliverables and the supply of free issue items.

Despite 'countless efforts' to resolve the matter, Civmec is yet to receive its compensation for the work, which is estimated at approximately $4.5 million.

In January 2019, the two companies entered a period of negotiation in which Civmec agreed to waive a total of $2.1 million off the total amount and Altura said it would pay the difference of $2.4 million.

However, immediately following the agreement, Altura proposed that the sum be settled via the issuance of its shares, which Civmec declined.

Five months later, Civmec issued a statutory demand for the payment, after which Altura asserted it was entitled to be paid and had subsequently offset the liquidated damages under the contract totalling $2.4 million. Civmec has challenged the entitlement, which it considers 'incorrect and unfounded.'

Now, Civmec has filed a claim to recover the settlement sum of $2.4 million or, failing that, the full $4.5 million.

Patrick Tallon, CEO of Civmec, said it is an unfortunate situation.

“This is an extremely disappointing stance that Altura has forced us to take, particularly given the efforts made by Civmec throughout the project and the continuing flexibility afforded to Altura, even to the extent of agreeing to payment plans to assist them throughout their ongoing difficult financial circumstances," he explained.

“To be publicly praised by Altura management for the works done at the plant’s official opening and to be still awaiting payment two years later is unreasonable,” he added.

The company says it is confident in its position, and that it does not foresee any impact on its financial performance for the year ending June 31, 2020.

Civmec shares are steady today, trading for an even 40 cents each at 10:37 am AEST.


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