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Australian Yard Austal given Lift after Defence contract Win 31 Oct 2003

Shares in Austal climbed nearly 30% on Friday after its subsidiary, Austal Ships, and Defence Maritime Services, won a half-a-billion dollar contract over 15 years to build Australia's new coastline surveillance boats.

In an acquisition initially worth $375m, Austal Ships and Defence Maritime Services (DMS) will build 12 new Armidale-class vessels to replace the Royal Australian Navy's ageing fleet of 15 Fremantle-class patrol boats.

Austal Ships will be involved in design and construction of the ships while DMS will provide logistical and maintenance support.

Austal managing director Bob McKinnon is looking forward to negotiating the final contractual arrangements with the Department of Defence.

The selection of Austal/DMS recognises the team's ability to provide RAN with economical, high performance ships and cost-effective through-life support to ensure Australia's patrol boat capability is delivered in the best possible manner

The RAN project was expected to add momentum to Austal's push into the international patrol and military vessels market and had already assisted the company to secure an order in June for 10 high-speed patrol boats for the Middle East..

Once the contract was in place, Austal would begin building the first of the 56 metre patrol boats and the entire process will take 42 months.

This will provide Austal with a steady base load of work for three-and-a-half years. At the same time, our production capacity enables us to simultaneously build ferries and other vessels, and the company aims to vigorously pursue new contracts in these markets

Defence Minister Robert Hill is reported to have said that Austal/DMS beat a bid by defence company Tenix because it offered the best value for money.

The new aluminum boats would operate out of Cairns and Darwin and be built at Austal's Henderson yard near Fremantle, in Western Australia