Fairmont Resources Signs Agreement to Acquire Major Dimension Stone Producer in Spain
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Fairmont Resources Inc. has proposed the addition of significant dimension stone assets in Spain to its industrial minerals businesses. Fairmont has signed an agreement to acquire the former assets of Granitos de Badajoz S.A. (Grabasa) from a Spanish court appointed receiver. The assets include 23 premium quality dimension stone mine licenses and a 42,000 square meter processing facility for cutting and polishing with an annual production capacity in excess of 250,000 square meters. These mine licenses and processing facility will make Fairmont one of the largest granite producers in Europe.
In business from 1975 to 2011, the extraction and transformation of granite by Grabasa has been the main driver of economic activity in the Extremadura region of Spain. Providing premium dimension stone for commercial, retail and industrial applications throughout Europe, Grabasa averaged more than EUR$6 million in annual sales in the last 5 years of its operation. In the final year of operation Grabasa’s average monthly operating costs were EUR$217,600 and its average monthly sales were EUR$371,475.
Critically, 18 of the 23 mining licenses, totaling 72 percent of the total area of Grabasa’s licenses, are within eight kilometers of the processing plant with the remaining five within 20 kilometers. The processing facility, situated just outside of Burguillos del Cerro, is state of the art with more than EUR$2.2 million of new cutting and polishing equipment purchased by Grabasa as part of a production expansion between 2008 and 2010.
With the onset of the Euro crisis in 2010, Grabasa was unable to meet its debt obligations incurred from the production expansion and was forced into receivership and, until recently, its assets were locked up in court proceedings. Fairmont’s management, with its extensive contacts in the global industrial minerals industry, became aware that the proceedings were imminently concluding and engaged Eureka Trading and Procana Consulting to engage in due diligence and negotiations on Fairmont’s behalf.
The purchase price for all assets is broken down as follows: a one-time payment of EUR$ 2.7 million to Grabasa for 22 mining licenses, processing plant, land, machinery, equipment, stock and vehicles; a one-time payment of EUR$1 million to Gesminesa for the Grabasa I-B mining license; and EUR$575,000 to Eureka and Procana for engineering, due diligence, translation, negotiation, court fees, expenses and success fees. Procana and Eureka will continue to provide services to Fairmont. The total acquisition price is EUR$4.275 million. Eureka has paid a deposit of EUR$60,000 on behalf of Fairmont Resources to secure the transaction.
Fairmont plans to finance the acquisition of the Grabasa assets through debt and equity financing.
“This acquisition is a great step forward in realizing our vision of building Fairmont into a global industrial minerals company. As we move towards closing the transaction on Grabasa as well as advancing our Quebec projects, we feel confident that Fairmont will grow to be the go to industrial minerals company for dense aggregate, quartzite for ferro silicon and granite. We also continue to look for undervalued production and near term production opportunities,” said Fairmont’s President and CEO, Michael Dehn.
About Fairmont
Fairmont’s Quebec properties cover numerous occurrences of high-grade titaniferous magnetite with vanadium. Where these occurrences have been tested they have display exceptional uniformity with respect to grade. Fairmont also controls three quartz/quartzite properties in Quebec, one near Lac Saint Jean and two along the North Shore of the St. Lawrence River.
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