Fox Marble (LON:FOX), the AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region, today announced that it has conditionally acquired Green Power Sh.p.kthe licence holder of the Maleshevë quarry and Scope Sh.p.k. (“Scope”), a company through which Fox Marble has entered into two hire purchase agreements.
The Acquisitions will give Fox Marble the direct rights to the Maleshevë quarry in their entirety, eliminate the annual royalty which would have been due under the operating agreement, and reduce monthly outgoings for equipment and maintenance at the factory.
The Acquisitions are conditional, inter alia, on shareholders approving certain resolutions at the forthcoming Annual General Meeting of the Company relating to authorities to issue new ordinary shares in the Company.
The total consideration for the Acquisitions is £1,300,000 to be satisfied by the issue of new ordinary shares in the Company, further details of which are set out below.
Background and further information
On 19 November 2015, Fox Marble announced the opening of a new quarry at Maleshevë which comprised initially a five hectare area within a larger licensed deposit area, which contained high quality, compact and consistent dolomitic marble. Two benches at that time had been dug at the site.
The quarry was operated subject to an agreement with the licence holder, Green Power, a company incorporated in Kosovo, which granted the Company’s Kosovan subsidiary the rights to develop and operate the quarry.
As previously notified, the Company has developed the Maleshevë quarry since 2015 and since the beginning of 2016 has been extracting and selling Illirico Selene (silver grey) found at that site as well as Illirico Bianco (off white). Production has steadily grown and the Company has extracted circa 15,000 tonnes to date.
Fox Marble has conditionally acquired the entire share capital of Green Power, for a consideration of £1,000,000 to be satisfied by the issue of 13,000,000 new ordinary shares in the Company at a price of 7.69 pence per share.
In the period since entering into the initial agreement with Green Power for nil consideration no royalty payment has been paid, due to the costs associated with development of the quarry. However with increasing production and expected sales of the materials it is anticipated that royalty payments over the remaining period of the agreement are expected to be paid and as such the Board believes that it is in the best interest of the Company to control the asset.
In 2018 Fox Marble entered into certain hire purchase arrangements with Scope, a company incorporated in Kosovo, to acquire and install in its factory including a new CNC machine which was announced on 16 April 2018. The consideration paid for Scope is less than the value of the future payments due under the hire purchase agreements being acquired as part of its acquisition.
The Company has conditionally agreed to acquire the entire issued share capital of Scope for a consideration of £300,000 to be satisfied by the issue of 3,000,000 new ordinary shares in the Company at a price of 10 pence per share.
All of the new ordinary shares being issued as part of the Acquisitions will be subject to lock-in provisions of 2 years with a further twelve month being subject to orderly market agreement.
Related Party Transaction
Florije Rrustemi has a beneficial interest in Green Power and Scope. Florije Rrustemi is the wife of Naim Rrustemi – a director of Fox Marble Kosovo Sh.p.k (“FMK”). FMK is a wholly owned subsidiary of Fox Marble Limited (“FML”) and FML is a wholly owned subsidiary of the Company. The Transactions are therefore related party transactions pursuant to the AIM Rules. The Directors of the Company, none of whom have an interest in the Transactions believe that the terms of the Transactions, having consulted with the Company’s nominated adviser, are fair and reasonable insofar as shareholders are concerned.
The Company will seek the authority to allot the ordinary shares referred to in this announcement at its annual general meeting, which is expected to be held in June 2019.
Fox Marble Chris Gilbert commented, “The opportunity to acquire the Maleshevë quarry in Kosovo will benefit the Company and its shareholders going forward not only with respect to the elimination of the royalty costs, but also in benefiting from the underlying value of the quarry itself. I anticipate this value increasing as we continue to drive production rates in the quarry to satisfy the demand we have generated around the world. The acquisition of Scope reduces the Company’s monthly outgoings at the Factory. We look forward to updating the market in due course”.