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Fox Marble looking to build brand based on Kosovo’s stone making heritage

The acquisition of rights to extract marble from a quarry in the west of Kosovo, close to its site at Cervenilla, puts Fox Marble on course to achieve its aim of having two quarries in operation by the end of this year.
Fox Marble looking to build brand based on Kosovo’s stone making heritage

Fox Marble (LON:FOX) is excited about its new quarry acquisition in Kosovo but it won’t be able to play with its new toy until the snow clears.

That’s the snow in Kosovo, not England.

The company revealed this week it has acquired the rights to extract marble from a quarry in the west of Kosovo, close to its red marble quarry at Cervenilla.

Company chief executive Chris Gilbert told Proactive Investors that the proximity to its Cervenilla quarry was not a factor in the decision.

“Marble extraction is a fairly low-tech business. You either use a chain-saw or diamond wire to cut the marble. As it happens, we are using diamond wire, and proximity to the other quarry means a short journey to transport the wire but if the new quarry were 50 miles away, we’d just transport it 50 miles up the road,” Gilbert explained.

In other words, it is not like the oil business, where a chunky rig sometimes has to be transported to a remote part of the world.

The new quarry deal has been struck with Drini Company, a Kosovan business that has been using the Drini quarry for aggregates extraction.

The market price of a processed cubic metre of grey marble is €2,100. Under the agreement, Fox Marble will pay a royalty of €20 per cubic metre extracted from the site to Drini Company.

There is no database of royalty rates for marble extraction, but Gilbert indicated that it was a fairly small element in the total extraction cost, albeit a nice little earner for Drini, which was not extracting the marble anyway.

“There is no spot rate for marble,” Gilbert quipped. “It’s a building material, a very stable market,” he added, which is part of its appeal.

“We are, if you like, the opposite of an exploration company. We know the marble’s there. It’s been there for tens of thousands of years, and it’s not going anywhere,” Gilbert said.

It is certainly not going anywhere at the moment, because the country is buried under a snowfall which makes the current coating of snow in England look like a thin layer of cotton wool on a Blue Peter Christmas model.

Fox Marble’s plan is to have two quarries in operation by the end of this year, and it is a plan which has not been altered by the company having four of its five (now six) quarry permits annulled in December of last year.

Gilbert is confident that the permits issue will be resolved in due course. Understandably, he was not prepared to provide a hostage to fortune by giving a time scale for resolution of the issue, but he is adamant the company has the law on its side.

“Even if we did all of the things we have been accused of, which we have not, but let’s assume the worst-case scenario; even if we did those things, the authorities should have put us on notice to set those transgressions right, and they did not do this,” Gilbert explained.

In any event, the temporary setback has not soured the company on operating in Kosovo.

On a national level, the impoverished country is desperate to secure international investment, and the arrival of a London-listed company such as Fox Marble is a feather in Kosovo’s cap. However, at a local level, there may be political capital to be made from opposing foreign involvement, which could present a challenge to Fox Marble.

One of the things Kosovo has in its favour is a long history of stone-making. Gilbert thinks there is a great opportunity to build a brand based on that heritage.

As soon as the snow melts, the company will get cracking on that objective.

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November 19 2015

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