RNS Number : 4964E
Pan Pacific Aggregates PLC
29 September 2008
Pan Pacific Aggregates plc
The first half of the year was spent looking for potential acquisitions and negotiating compensation for the imposed time delay for the submission of the large producer permit application on the Northern area of the Sechelt Peninsula. The statement within the 2007 financial accounts provided an update on the Pumptown acquisition.
The acquisition of Pumptown Quarry in the Fraser Valley of British Columbia was completed on the 6th of June 2008, providing the Company with immediate operational capability and cash flow. During June we achieved record production from Pumptown and improved the quality of the product by replacing the crusher system within the quarry process plant.
These interim accounts for the period ending 30th June 2008 includes the June sales figures from Pumptown and demonstrate the tangible benefits of this acquisition.
Operations at Pumptown were set back following an inspection by the Local Authority engineers of the bridge on the sole access road to the quarry which revealed that its structural condition was deteriorating. Aggregate lorries are prohibited from using the bridge until either structural repairs or replacement has been completed. At the time of this inspection, and as part of the acquisition process, we were intending to re-negotiate with HSBC the terms of certain equipment lease for an existing treatment plant.
As a consequence, we were faced not only with the possibility of generating no income from Pumptown for up to 18 months due the need to replace the bridge, but also the possibility of being required to enter into new lease arrangements without the cash flow to support this financial commitment. We therefore released a statement to the market on 29th August 2008 setting out our dilemma. Our previous Nomad (Hanson Westhouse) resigned on the same day and our shares were suspended.
We are pleased to report that the issues arising are being resolved. Since the suspension, we have worked tirelessly to get our shares reinstated to trading on AIM within the 30 day period provided by the AIM Rules for Companies. First and foremost, this requires the appointment of a new Nomad and we are pleased to announce that Dowgate Capital Advisers are to be appointed.
We are currently in discussions with Columbia National Investments Ltd (CNI), the vendor of the Pumptown quarry, and HSBC regarding the leases for the quarry plant, and it is anticipated that there will be a settlement payment made to HSBC by the company during the next 3 months.
As a consequence of our ongoing discussions with CNI we are not expecting to conclude an agreement on Pine Flats by the year end.
We are pleased to report that progress has been made and negotiations are in hand to provide alternative access to the quarry without using the bridge.
During the period of share suspension we have conducted a complete review of the Company's business and structure. This includes refocusing our future development primarily in the Fraser Valley and capitalising on our permitted area at Caren Ridge on Sechelt. We have also restructured our board of management and to this end the Company is pleased to announce that Euan McAlpine has today joined the Board as an executive director.
Mr McAlpine (50) was until recently employed by Cazenove Capital Management Ltd, where for the past eight years he has worked as a fund manager with an emphasis on business development in the north-west of England. He joined Cazenove from Seamless Holdings Ltd, a manufacturer and installer of epoxy resin floor systems and decorative flake wall systems for industrial use, where he was Chairman and Managing Director for 3 years. Prior to joining Seamless Holdings, Mr McAlpine was Managing Director of the Alfred McAlpine Minerals Division, where he developed a very successful quarrying business that was sold to Wimpey Minerals (now Tarmac/Anglo American) with good capital appreciation.
Mr McAlpine is a Member of the Institute of Quarrying.
Save as disclosed below there are no additional disclosures to be made in accordance with paragraph (g) of Schedule 2 of the AIM rules for Euan McAlpine.
Euan McAlpine is currently a director of Managed Support Services plc and Ringcity Ltd and has been a director of Persicle Ltd during the last five years.
Mr McAlpine was the non-executive Chairman of Fearnley Group from November 1997 to September 1999. The company was bought in November 1997 as a management buy-in November 1997. In September 1999, the main lender requested that a receiver be appointed at which point Mr McAlpine resigned. The company is now in the liquidation phase and there are not believed to be any outstanding creditors.
We also expect to appoint a Financial Director as well as a further non-executive director.
In July we completed a private placement of £1.02m for working capital, acquisitions and quarry development.
As at 20th September 2008 there was approximately £575,000 of cash in the Company. Furthermore the Company will review its asset base and will if possible dispose of those non-operational assets that are not income earning to ensure that there is sufficient working capital in the business for the foreseeable future.
The Company's operational focus will now be to develop and consolidate an aggregates business in the Fraser Valley, as well as utilising our existing small producer permit at Sechelt (Caren Ridge). By year-end we intend to have two operating units in production, and this should provide us with a positive cash contribution in the future.
Currently, we are in discussion to acquire an additional operating quarry in the Fraser Valley and will announce further details of this opportunity when negotiations are more advanced.
Lothbury Financial Michael Padley +44 (0) 20 7011 9411
Louise Davis +44 (0) 20 7011 9403
Pan Pacific Aggregates plc William Voaden +44 (0) 20 7096 9580
Dowgate Capital Advisers Ltd David Newton +44 (0) 20 7492 4777
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