Sedgman Progress Claim Rejected and Heron Claims Liquidated Damages

Heron Resources (ASX:HRR) has said that following an assessment of the progress claim submitted on 1 February 2019 by Sedgman, a wholly owned CIMIC Group Limited company, for additional costs of AU$49.9M, the Contract Superintendent has – with the exception of some minor agreed contract works totalling AU$223,057 – rejected the Sedgman progress claim.

Heron said that Sedgman had claimed additional costs of AU$22 million and forecast costs of AU$28 million to the end of March 2019 over and above the Gaurunteed Maximum Price (GMP) agreed under the contract.

As quoted in the press release:

Sedgman is attempting to circumvent the GMP through the submission of a list of 22 alleged variations claiming for unsubstantiated costs. The Contract Superintendent has determined that the majority of the variations either have no merit, or are time barred under the EPC Contract, and in some cases refer to events that predate the parties entering into the EPC Contract. The contract works agreed by the Contract Superintendent since the previous progress claim total AU$223,057 and were requested by Heron during the construction phase.

Heron said that in assessing Sedgman’s progress claim, delay liquidated damages (LDs) have been applied as a result of the later than planned completion of the processing facility. With the inclusion of the delay LDs the assessed payment schedule finds Sedgman owing Heron and the company will seek payment in accordance with contract provisions. Heron continues to hold $10.8M in bank guarantees from Sedgman.

Click here to read the full Heron Resources (ASX:HRR) press release.