Aquirian to pay $9.6m for purchase of mothballed ammonium nitrate emulsion plant
Specialist mining services provider Aquirian (ASX: AQN) will pay $9.6 million to acquire the Wubin ammonium nitrate emulsion plant in Western Australia from Hanwha Mining Services.
The facility was built and commissioned in 2020 and is production-ready, with licensing to produce 110,000 tonnes per year of ammonium nitrate emulsion.
It was put on care and maintenance 12 months after it opened and has been managed by Aquirian employees since June.
Aquirian plans to operate the plant as a large freehold, private common user asset with storage and manufacturing opportunities available to customers and industry.
The company has projected revenues of up to $60 million; EBITDA (earnings before interest, taxation, depreciation and amortisation) of up to 16%; and a net present value over a 10-year project life of more than $40 million.
Strategic decision
Hanwha is divesting the Wubin facility in good working order as part of its strategic decision to exit the bulk explosives market in Australia.
The company sold its other emulsion production assets in Queensland and New South Wales to Orica earlier this year.
Acquisition of the facility is conditional on Hanwha granting Aquirian an exclusive licence to manufacture and supply its patented “X-Load” range of products in WA and a non-exclusive licence to use and sell other Hanwha products.
An independent valuation in March priced the facility at around $15 million, with an indicated replacement cost of $18 million.
Wubin package
The Wubin package comprises 1.42 square kilometres of freehold land plus an adjoining property with an airstrip and staff accommodation options.
It is strategically located on the northern freight corridor away from major population centres and can cater to a potential 1.25 million tonnes of explosives demand across the state’s mid-west and Pilbara regions.
It produces a range of nitrate-based emulsions to be used as precursor raw materials which can be blended with other materials to produce bulk explosives for mining operations.
The Wubin site is also set up as a logistics and storage hub for ammonium nitrate with a current 1500t storage capacity and plans to upgrade to 10,000t.
Once the sale transaction is completed, it is expected to take up to 12 weeks for Aquirian to bring the facility back online and into production.
Hanwha links
Aquirian managing director David Kelly has links to Hanwha Australia as a former managing director responsible for locating and purchasing the facility site, overseeing completion of the initial design, and managing issues relating to rezoning, compliance and community engagement.
He said the acquisition would allow Aquirian to increase its input across the drill and blast value chain.
“Our management team has extensive industry knowledge and I am excited by this acquisition and the potential synergies and opportunities it offers,” he said.
“The acquisition of a near-new and strategically located asset below its likely replacement cost is anticipated to fast-track our growth plans and provide clients with a new range of services and products to achieve sustainable outcomes in their operations.”