Pan Pacific Aggregates

HOLD

22/12/2009 Robert Tyerman

Canada-focused quarrier Pan Pacific Aggregates expects to be in positive cash flow by April and has four acquisitions in mind.

Based in British Columbia and quoted on AIM, Pan Pacific, which is targeting one million tonnes a year of granite production from its Pumptown quarry, is now negotiating contracts 18 months to two years ahead and has a royalty deal for its pumice deposits. In addition to lining up potential takeovers, chief executive William Voaden suggests the company could move into concrete and asphalt in the future, while analysts speculate about whether there might be scope for a second quarry at Pumptown itself.

Pan Pacific, which floated in 2005 at 88p, is emerging successfully from a succession of past crises, which brought its shares as low as 0.25p at one point. The company has strengthened its finances over the past three months by raising £2.7m at 0.5p and hopes to supply infrastructure projects in British Columbia, some related to next year’s Vancouver Winter Olympics.

Highlighted by Growth Company Investor in October as a speculation at 0.9p, the shares have now come back to 0.59p. However, if Voaden’s plans come to fruition, they could still prove cheap.

Tags: AIM, Fundraisings, Mergers & acquisitions

Sector: Mining

Companies: Pan Pacific Aggregates

Market cap: £9.6m

PE Forecast: n/a

Share price: 0.59p