7th Jul 2008 09:24
7th July 2008
Pan Pacific Aggregates PLC ("PPA")
"Letter of Intent agreed to operate Pine Flats in Sechelt"
PPA has signed a Letter of Intent agreeing initial terms with the CNI Group ("CNI") to take over their aggregate operations at Pine Flats in Sechelt.
PPA will extract the estimated 100,000,000 tonnes of minable sand and gravel under a long term mineral lease from CNI. The deposit has a mining permit over 50 acres of the total land package of some 2250 acres. Trial operations commenced in 2007, which established that the deposit was commercially profitable and that the quality of the sand product is attractive to both the local markets and the Bay area of San Francisco.
Pine Flats adjoins the current operations of Consolidated Aggregates ("ConAgg") (a subsidiary of one of the world's largest aggregates producers, the Heidelberg Group) who currently export up to 5,000,000 tons per annum of sand from the nearby Trail Bay ship loading facility. The majority of the ConAgg sand product serves the San Francisco market.
It is envisaged that PPA will pay a royalty of $1.50 to CNI for each tonne of aggregate sold from the site and a joint working/ restoration plan is being agreed with CNI that is compatible with the long term development plans for the site. In the course of formalising documentation for these agreements, the parties will determine any appropriate monetary deposits to be paid and the process for application of these deposits, whether by payment of a forward rolling advance royalty programme, or otherwise.
Chairman Don Nicholson and Chief Executive Officer William Voaden commented:
"We are very pleased to have agreed initial terms with CNI to operate the Pine Flats deposit, we anticipate that PPA site operations will commence this summer. Commencement of production will not only generate further cash flow for the PPA Group but also consolidate our position in the Sechelt area.
We envisage further similar additions into the Group during the next 12 months, combined with our anticipated strong organic growth from existing sites that are operating in growth markets."
Enquires:
Pan Pacific Aggregates PLC
William Voaden Tel: 020 7096 9580
Hanson Westhouse Limited
Tim Metcalfe / Harry Barraclough Tel: 020 7601 6100
END
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