LONDON (ShareCast) - (ShareCast News) - Mercantile Ports and Logistics and its wholly owned subsidiary M/s. Karanja Terminal and Logistics updated the market on their progress developing a modern port and logistics facility in Navi Mumbai, India, and announced the signing of a memorandum of understanding with an unnamed publicly listed international construction company on Monday.
The AIM-traded company confirmed that it had - following the customer having conducted an extensive due diligence process - entered into the MoU.

Under the terms of the MoU, the customer would be expected to lease a significant proportion of the company's completed project in order to develop an operations hub for steel superstructure fabrication.

"The infrastructure for this hub, which will be constructed by the customer, would include supply, storage, fabrication, painting, assembly and waterway transport facilities at MPL's port," Mercantile's board said in a statement.

"The land on which this operations hub is to be built is expected to be leased to the customer for an initial period of three years, with an option to renew annually for a further three years."

Mercantile said it was pleased with the level of interest it received from other potential customers, who were reportedly attracted by the ability to secure priority berthing at the company's facility, and it expected to enter into further MoUs in the coming months.

Over the last quarter, the board said work progressed well andit was pleased with developments.

"The focus has continued to be on land reclamation, and piling for the jetty.

"So far this year, the company estimates that approximately 10 acres worth of reclamation material has arrived on site, some of which has been used for surcharging."

Surcharge material - being material that is temporarily placed on top of reclaimed land in order to compact it - could itself be used as reclamation material once it has served its purpose as surcharge material, the board said.

"As at today's date, some 79 acres - or 40% - of the overall reclamation target has been achieved, although the company is pleased to report that an estimated 60% of the total reclamation material required to complete the facility is now on site. "

Piling for the construction of the berths capable of receiving vessels was also progressing, with work being carried out on a 24 hour basis.

Mercantile said engineers did encounter previously undetected hard rock in the harbour basin during piling, and dredging that rock from the berth reduced the pace of piling whilst the matter was resolved.

"Notwithstanding this, as at today's date, piling for approximately 40% of the final quay length has now been completed.

"In addition, the increased volume of traffic to the site caused significant wear and tear to the site's access road and meant that there was a reduction in the number of vehicles able to access the site during January 2017 whilst this problem was addressed."

The company said it could report that the issue had now been resolved, and traffic to the site returned to scheduled levels.

"The company's main contractor is operating at full capacity and the company's engineers remain engaged with the contractor to ensure that the configuration of the final facility is optimised to achieve maximum utilisation of the land mass created."

Mercantile said it was confident of completing its facility by the end of the current year, although the matters referred, taken together, had contributed to adding approximately eight weeks to the previously reported timetable.

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