Mining services company Aquirian (ASX:AQN) has announced its settlement of the purchase of a 160Ktpa ammonium nitrate facility in WA, crucial for the manufacture and supply of explosives for mining.
The $9.6M purchase is backed by a debt funding arrangement with NAB (ASX:NAB). Aquirian bought the asset off a company called Hanwha.
The company has also acquired an extra 142 hectares along with a logistics and storage hub with a storage capacity of 1.5Kt.
Aquirian intend to expand this facility such that it can handle 10Kt of the explosives feedstock at any given time to feed demand predominately coming from WA, implying relatively low transport costs (compared to supplying to eastern states.)
The company has put in place a target revenue range from $40-$60M per annum with earnings margins (before costs) of 12-16%.
The facility is located nearby major freight roads at Wubin, in WA’s northern wheatbelt. The company described its ‘restart’ as “well progressed.”
“The facility is strategically located, near new and acquired at a cost lower than its replacement value. This acquisition is a key enabler of our technology and energetics strategy,” AQN chief David Kelly said.
“The facility restart is in progress, and we are confident that this acquisition will deliver long-term value to our shareholders.”
Market analysis from Aquirian itself determines that explosives demand in WA sits at 1.25 million tonnes per year.
Broken down by regions per the company’s assessment:
- Kimberley: 15,000t per year
- Pilbara: 800,000t per year
- Mid-West: 100,000t per year
- Goldfields: 200,000t per year
- Southwest: 110,000t per year
AQN shares last traded at 20.5cps.