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Hilltop Stone

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» Project: Quarry Valuation
» Country: USA
» Location: Pendleton County, KY
» Commodity: Aggregate

MW was retained by Hilltop to assist in the due diligence effort associated with the evaluation of a limestone mine acquisition in Pendleton County, Kentucky. The due diligence effort included review of historic mining activity, analysis of core drilling, data from other local operations plus detailed analysis of current surface mining, air quality and discharge permits. Site review included analysis and valuation of the mining equipment on site, the configuration of the processing plant, layout of the mining operation and mine plan.

Based on review of the data MW determined that it was possible to develop the property by surface mining rather than implement the underground plan that the previous owner had considered. This concept required the re-excavation of some previously backfilled areas and the excavation of an interburden layer in the pit floor and significant stripping of undisturbed areas. The mine planning identified major long-term cost savings associated with large scale surface mining. The mining approach provided market pricing strength. Using the mining approach MW assisted Hilltop in the development of a successful bid for the property.

After award of the bid to Hilltop, MW was retained to develop the Business Plan for the project. This Business Plan was developed for submittal to financial institutions to obtain the project financing. The document included a detailed reserve analysis combined with a life of mine plan. A detailed financial model was based on the mine plan, plus the introduction of new mining equipment and processing plant. The Plan also included a detailed competitor analysis plus a market trend analysis.

The Plan provided a valuation of the property based on discounted cash flow, multiple of historic earnings and multiple of sales. This valuation was used to compare the negotiated purchase price with accepted property valuation approaches. Based on the Business Plan project financing was obtained and Hilltop closed the acquisition.