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Fox Marble: Marble Licenses Restored in Kosovo

Contributed by Fox-Davies Capital

Fox Marble has announced that the licensing authority in Kosovo, (“ICMM"), has restored the four Fox Marble licences it had previously annulled. The Company's fifth licence at Cervenilla remains unaffected.

This is great news for the Company, who all along said that the annulment notices were issued unlawfully and erroneously. Along with the restoration notification, the ICMM has included notices to Fox Marble requiring the Company to maintain its responsibilities with respect to the conditions of the licences within a period of 60 days. Whilst Fox Marble is confident it can achieve this for three of the four licences it has requested an extension of at least 12 months to the deadline for mining to commence at the fourth license in Suhogerll.

The Company has stated that work will now resume at Peja as soon as the snow clears and weather conditions allow. Although the Company will need to get an extension to the Suhogerll license, getting the license for Peja returned was key, as it contains the higher value honey yellow onyx marble. In our valuation of the Company we gave Peja a valuation of €120.4M NPV10, the currently operating Cervenilla quarry at €19.0M NPV10 and no value to Suhogerll as it was not within our current development schedule.

Peja was due to be in production by the end of CY'12, but in reality due to the heavy snowfalls this was unlikely to have happened. However with all the equipment being close at hand we expect Fox Marble will be able to bring the quarry into block production as soon as the snow clears.

We have adjusted our model for the delays and continue to use a conservative sales figure of 50% of production. This gives us a Company valuation of €132.3M, but until the sales figures and prices are confirmed we have applied a 55% discount to this to reach our target price of £0.48 which has been helped by a weaker GBP.