FOX.L Regulatory News (FOX)

AIM: FOX 17 July 2014

FOX MARBLE HOLDINGS PLC

("Fox Marble" or the "Company")

Proposed Placing and Notice of General Meeting

Fox Marble (AIM:FOX), the AIM listed company focused on marble quarrying in Kosovo and the Balkans region, announces that it is proposing to raise approximately £4.75 million (before expenses) by way of a placing of new Ordinary Shares at 18 pence per share through Fox-Davies Capital, subject to shareholder approval (the "Placing").

The Placing proceeds are primarily intended to acquire and develop additional quarry sites to add further high quality marble to its portfolio and to enhance financial returns through improved economic terms. The new interests are in relation to a marble quarry in Macedonia and a further site in Kosovo.

A circular convening the General Meeting to be held at the offices of Nabarro LLP at Lacon House, 84 Theobald's Road, London WC1X 8RW at 10.00 a.m. on Monday 4 August 2014 to grant the Board authority to allot the Placing shares for cash on a non pre-emptive basis will be sent to shareholders today and will be available to download from the Company's website at www.foxmarble.net.

Chris Gilbert, CEO commented: "We believe this year is to be pivotal for the Company, and the acquisition of these additional quarry interests represents a significant opportunity for Fox Marble. The potential higher margins provided by the Sivec marble and anticipated demand for Bianco Illirico, we believe, will enhance the position of the Company both financially and within the global marble market"

Further details of the Placing are provided below.

Contact

Definitions in this announcement are the same as those included in the Company's circular to be posted to shareholders today, dated 17 July 2014, available on the Company's website at www.foxmarble.net 

Introduction

Fox Marble's long-term strategy is to expand its portfolio of marble quarries in South East Europe and to widen its geographic reach to build a profitable marble quarrying and production business. The Company has made substantial progress in the period since admission to AIM with four quarries in operation, a plant in construction and commercial marketing relationships for its portfolio of marble products. The Company now has the opportunity to acquire additional interests in two new quarry sites to add further high quality marble to its portfolio and to enhance financial returns through improved economic terms. The new interests are in relation to a marble quarry in Macedonia and a further site in Kosovo. The Company estimates that the acquisition and development of these additional interests requires an investment of approximately £2.10 million.

A. Sivec Marble Quarry

The Company intends to enter into a sub-lease arrangement with New World Holdings (Malta) Limited (the "Acquisition") in relation to the Omega Sivec marble quarry at Prilep, Macedonia. This quarry is adjacent to the Company's existing joint venture operations at the Prilep Quarry in Macedonia, 180km from Prishtina, the capital of Kosovo, where the Company's processing plant is currently under construction.

The Company has agreed non-binding terms with the vendors with the consideration for the sub-lease of £1,000,000 and a subsequent 40 per cent. gross revenue royalty obligation. The sub-lease will have an initial term of 20 years which will be extendable by the Company for a further 20 years. The sub-lease will grant the Company the exclusive right to quarry, process, remove and sell marble from the quarry.

The Company will pay for and provide all the equipment and staff reasonably required to operate this quarry. The Company estimates that the quarry will require approximately £600,000 of capital expenditure investment to reach commercial production.

B. Bianco Illirico and Cremo Olta Marble Quarry

The Company has also announced its intention to acquire exploration rights to an additional site close to its Malesheva quarry in Kosovo which contains Bianco Illirico (a grey/white marble) and Cremo Olta (a cream/yellow marble). The Company has submitted applications to the Independent Commission of Mines and Minerals (ICMM) in Kosovo for an exploration licence.

In order to finance the Acquisition and development of the sites and rights and in order to fund working capital requirements, the Company intends to raise £4.75 million (before expenses) by way of a placing of 26,388,883 new Ordinary Shares at a price of 18 pence per new Ordinary Share. The Placing Price represents an approximate 6 per cent. premium to the closing mid-price of 17 pence per Ordinary Share on 16 July 2014 (being the last Business Day prior to the announcement of the Placing).

It should be noted that the Placing is to be undertaken before the Acquisition is completed and that the Placing is not conditional upon the completion of the Acquisition. Therefore, the Placing Shares will be issued with no guarantee that the Acquisition will be completed.

The Placing to raise £4.75 million (before expenses) is conditional upon, among other things, Shareholder approval at the General Meeting, the Placing Shares being admitted to trading on AIM ("Admission") and the Placing Agreement not being terminated in accordance with its terms prior to Admission. The passing by Shareholders of the Resolutions at the General Meeting, will give the Directors the required authority to allot the Placing shares and will dis-apply statutory pre-emption rights. Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that the Placing Shares will be issued and admitted to trading on AIM on or about 8.00 a.m. on 5 August 2014.

The General Meeting is being convened for the purpose of proposing the Resolutions described in the circular, which is a condition to completion of the Placing. The Directors intend to vote (or procure a vote) in favour of the Resolutions in respect of their own beneficial holdings totalling 42,550,040 Ordinary Shares, representing approximately 34.46 per cent. of the Existing Ordinary Shares.

Background to and reasons for the Acquisition and the Placing

Fox Marble's long-term strategy is to expand its portfolio of marble quarries in South East Europe and to widen its geographic reach and commercial presence as it looks to build a profitable marble quarrying and production business. The Company has made substantial progress in the period since admission to AIM in August 2012 towards this strategy. The Company now operates four quarries and is currently erecting a processing plant in Kosovo. Moreover, the Company has made progress in developing relationships in key markets through strategic alliances with groups that distribute marble in the UK, USA and Europe.

The Company now has the opportunity to expand its portfolio of marble assets through the acquisition of rights to two further quarries: the Omega quarry in Prilep, Macedonia, containing Sivec marble and a further quarry site in Malesheva, Kosovo containing Cremo Olta and Bianco Illirico marble.

The board estimates the Omega quarry contains similar quantities of marble to the existing joint venture operation in Prilep, Macedonia, including the high quality grade Sivec Extra.

Sivec marble is amongst the most desirable marble in the market and is in short supply. The Company is aware of only one other quarry that currently produces commercial quantities of Sivec marble and supply of the highest quality material is being exhausted. Sivec marble prices begin from €500 per metric tonne (unprocessed) representing the most expensive marble in the Fox Marble portfolio.

The existing Sivec quarry in Macedonia was secured under a joint venture agreement in July 2013 with the investment funded by the joint venture partner Gulf Marble Investments Limited and Fox Marble retaining 25 per cent. of gross revenues in return for operating the quarry. Fox Marble is now seeking to acquire the operating rights to the Omega quarry directly, allowing the Company to retain 60 per cent. of gross revenues and generating superior returns as a result. The estimated total cost of the consideration and capital expenditure for the quarry is £1 million to £2 million and commercial quantities are expected to be produced within six months of its acquisition.

Based on queries from distributors, the Company has found that demand for Bianco Illirico marble is strong particularly in North American markets and the Company believes that this marble could become the largest volume seller of its mid-priced marble range. The Company has identified a 300 hectare site close to the Company's existing licence resource in Malesheva that the directors believe contains a large deposit of Bianco Illirico marble which may provide the Company with a secured source of highly sought after marble.

In order to continue to benefit from the significant interest in Bianco Illirico marble the Company has reserved the rights to this area by submitting applications for an exploration licence to the ICMM. As an existing licence holder in good standing the Company believes there will be no impediment to the grant of this licence.

The Company is carrying out the Placing to fund the acquisition and development of the above sites and to provide additional working capital for the development of the Group's business.

The Acquisition and acquisition of mining rights

The Company has agreed non-binding terms for the Acquisition with the vendors to acquire the interest in the Omega Sivec marble quarry at Prilep. It is anticipated that a definitive agreement will be signed shortly after the Company receives the proceeds of the Placing. However, there can be no certainty that the Acquisition will be completed. In the event that the Company fails to complete the Acquisition, it will use the relevant part of the Placing proceeds to fund other potential quarry interest acquisitions which it has identified.

The applications for an additional exploration licence at Malesheva requires the consent of the ICMM. Applications have been submitted which has secured the site pending completion of the approval process. The Company does not foresee any issues with obtaining this approval particularly as subsidiaries of the Company have previously received approvals from the ICMM in relation to the Group's existing quarrying interests in Kosovo. However, there can be no certainty that the ICMM approval will be obtained.

Current Trading

The Group currently has five quarries under licence and operating agreements in place with a further two quarries. Four of Fox Marble's quarries are currently in operation. At 22 June 2014, Fox Marble had 591 blocks of marble in stock ranging in weight from 5 to 23 metric tonnes totalling 6,448 metric tonnes.

The Company recently announced its first significant sales of approximately €215,000, to be recognised in the second half of the year which represented a significant milestone in the Company's development evidencing commercial traction and demand for the Company's marble particularly in the North American market.

Fox Marble had €2.6 million of cash as at 22 June 2014.

Use of Proceeds

Placing Statistics

Expected Timetable of Principal Events