Pan Pacific Aggregates

As foreshadowed here, Canada-focused Pan Pacific Aggregates (PPA) has raised £1.7m to quarry granite in British Columbia.

The AIM-quoted company, which recently won local authority permission to develop the Pumptown granite quarry near Abbotsford in Canada’s western province, has raised the money at a discounted 0.5p and, says managing director William Voaden, now has the funds to bring it into production and generate cash. In fact, PPA has raised £2.7m in all, but needs approval from shareholders, at a special meeting later this month, to authorise the final £1m.

Voaden and fellow directors, including industry specialist Euan McAlpine, hope to take annual output from Pumptown to one million tonnes a year. The plan is to supply local infrastructure projects, some related to the 2010 Winter Olympics in Vancouver, and the company speaks of gross margins of C$4.5 (£2.65p) a tonne.

Private investors and directors have stumped up the money for this fundraising, with McAlpine subscribing for 12m shares and taking his PPA stake to 2.3%. The company is paying a 5% commission to Voaden’s company VSA for helping with the placing, as well as 5% for an earlier £250,000 funding and has also granted VSA warrants to subscribe for 15.6m new shares at 0.5p and a further 4.5m at only 0.28p by 9 October 2012.

These prices represent hefty discounts to today’s 0.90p and are small fractions of PPA’s original 2005 float price of 80p and subsequent peak of 93p. But they are above the 0.25p low to which the shares sank after a series of severe setbacks last year.

Highlighted here recently as a flutter at 0.38p, PPA shares have already nearly trebled. They clearly remain risky, but, if Pumptown performs, they could rally further.