Luba Freeport Undergoes Rapid Transformation

Luba Freeport Undergoes Rapid Transformation
Luba Freeport 10/13/2006
Luba Freeport Ltd, Lonrho's 63% subsidiary, has undergone a rapid transformation since Lonrho's investment in May 2006. Luba has firmly established a reputation as an efficient, cost effective port for the oil and gas industry in the Gulf of Guinea. The total number of vessel calls for the calendar year 2005 of 767 had already been exceeded by the end of September 2006, with 787 vessel calls representing an increase of 37% over the equivalent period last year. In order to maximise revenue from Luba, which is currently running at near to its full operational capacity, Lonrho has continued to develop plans with management to improve the port's facilities.

Significant improvements have already been made with the addition of new client accommodation and kitchen facilities and the recent completion of a 10,000 sq. meter chemical bunded transit area to service key customers. An additional 10,000 sq. meter logistics facility for Baker Hughes, a world leader in oilfield services, is also expected to be completed within the next four weeks.

In July 2006, Luba retained Jurong Primewide, a world leader in port development to plan and design the expansion of Luba's facilities. Jurong is part of JTC Corporation, owner-operator of Jurong Port Authority, a combined container, bulk commodity and integrated oil and gas terminal facility in Singapore. Shortly after, Luba appointed MACE, a premier independent professional management consultancy, who will work with Luba to help deliver the expansion on time and budget. MACE currently manages the infrastructure delivery for London's 2012 Olympics and Heathrow Airport's Terminal 5.

In September 2006, Mobil Equatorial Guinea Inc. ("MEGI"), part of ExxonMobil, the world's largest oil and gas producer, agreed final terms with Luba to build a 60,000 sq. meter logistics facility at the port. MEGI's move to Luba, when the facility is completed by the middle of 2007, is expected to be a catalyst for other key players in the oil and gas industry to relocate to the port. Luba also signed a mandate with The Netherlands Development Finance Company ("FMO") for an up to US$30m debt financing package to fast track development of the port's facilities, including construction of the MEGI facility.

Looking forward, Lonrho's vision for developing Luba into the premier West African shipping hub will be further realized with the start of construction for an additional 180m of quay. In addition, the development of a larger storage facility for MI Swaco and a waste disposal and management facility for MI Fluids, a leading provider of fluid engineering services to the oil and gas sector, will follow the completion of the MEGI facility. Improvements to road infrastructure within the port area and a new medical facility will also form part of Luba's Phase 1 expansion.

Lonrho's Joint Executive Chairman and Chief Executive David Lenigas said:

"The development of Luba to date has already proved significant and I am encouraged by its progress. Given the buoyant regional oil and gas industry and the opportunity to develop Luba into a transhipping hub, the framework is now in place for continued growth.

"Lonrho's backing has already raised the interest of numerous prospective clients and I am confident that our investment in Luba will progressively add value for Lonrho's shareholders."