GRABASA - Granitos de Badajoz S.A.
On March 21, 2020 Fairmont announced the proposed 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 metre processing facility for cutting and polishing with an annual production capacity in excess of 250,000 square metres. 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 over €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 €217,600 and its average monthly sales were €371,475.
Critically, 18 of the 23 mining licenses, totaling 72% of the total area of Grabasa’s licenses, are within eight kilometres of the processing plant with the remaining five within 20 kilometres. The ISO 9001:2008 certified processing facility, situated just outside of Burguillos del Cerro, is state of the art with over €2.2M of new cutting and polishing equipment purchased by Grabasa as part of a production expansion between 2008 and 2010.
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 over €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 €217,600 and its average monthly sales were €371,475.
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 (“Eureka”) and Procana Consulting (“Procana”) to engage in due diligence and negotiations on Fairmont’s behalf on a success fee basis.
The purchase price for all assets is broken down as follows; a one-time payment of €2.7 million to Grabasa for 22 mining licenses, processing plant, land, machinery, equipment, stock and vehicles; a one-time payment of €1 million to Gesminesa for the Grabasa I-B mining license; and €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 €4.275 million. Eureka has paid a deposit of €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. Terms of the financing will be announced at a later date.