Mining services provider Aquirian (ASX:AQN) is set to acquire the Wubin Ammonium Nitrate Emulsion Plant in Western Australia from South Korean conglomerate Hanwha Group for $9.6 million.
Aquirian, which has a $13.89 million market capitalisation, has signed a binding agreement for the purchase and says this deal will be fully debt-funded via National Australia Bank (NAB). The move aligns with Aquirian’s technology pathway to optimise blast hole and blast outcomes, as well as to create new opportunities to position it for long-term growth.
The facility, which comprises 142 hectares of freehold land in Wubin, WA, is situated on the northern freight corridor, removing exposure to ‘major’ population centres.
Aquirian says this region provides access to up to 1.25 million tonnes (Mt) of potential explosive demand across WA. The company notes, however, that this volume is based on its own analysis of the market demand for explosives in WA.
In any case, the facility’s location provides Aquirian access to up to 75% of the potential explosives market across the Midwest and Pilbara regions of WA.
Aquirian notes about 1,500t of ammonium nitrate storage is currently on-site and it has the intent to expand capacity to about 10,000t.
The company believes this will allow it to work with major logistics providers.
Aquirian is projecting revenue of up to $40-$60 million per annum from the facility, an earnings before interest, taxes, depreciation, and amortisation (EBITDA) range of 12-16%, and a net present value (NPV) over the 10-year project life of greater than $40 million.
This revenue projection assumes the company will achieve about 30-40% plant loading by year 3-4 and have a variety of site and downstream services in operation.
The transfer or securing of required licences is anticipated to take 3-5 months and is a condition precedent to completion of the sale transaction. Once complete, the facility is anticipated to be back online and in production in the next 8-12 weeks.
Aquirian’s share price had risen 21.74% to $0.21 as of 11:50am AWST.
Aquirian Managing Director David Kelly says this deal will establish the company as a ‘diversified’ mining service provider.
“This unique opportunity evolves Aquirian as a diversified mining service company, adding further value across the drill and blast value chain. Our management team has extensive industry knowledge, including with this Facility, and I am excited by this acquisition and the potential synergies and opportunities it offers.
“Our acquisition of a near new strategically located asset below likely replacement cost is anticipated to enable us to fast-track our growth plans and provide clients with a new range of services and products to achieve sustainable outcomes in their operations“
Our acquisition of a near new strategically located asset below likely replacement cost is anticipated to enable us to fast-track our growth plans and provide clients with a new range of services and products to achieve sustainable outcomes in their operations.”
Meanwhile, the company expects this acquisition to bring its offerings closer to providing drilling technology alongside optimised energetics to meet its clients’ ‘changing and challenging’ mine conditions.
As part of the deal, Aquirian is expected to receive an exclusive licence to manufacture and supply Hanwha’s patented X-Load range of products in WA and a non-exclusive licence to use and sell other Hanwha products.
This acquisition follows the company obtaining independent valuations for the facility in March 2023 for $15 million, which indicated a replacement cost of the facility of about $18 million.
Aquirian provides people, equipment, and innovative products that support mining clients across their operations.
Hanwha is headquartered in Seoul, South Korea and has a balanced business portfolio that includes aerospace, energy and materials, finance, and retail and services.
Aquirian had $3.322 million cash and cash equivalents at hand as of 30 June 2023, according to its latest quarterly report.
Write to Adam Drought at Mining.com.au
Images: Aquirian
