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Rocks, Rocks and Quarries . Presented by: Richard Edmunds, ARA, AAC 82 nd Annual Meeting of ASFMRA Phoenix, Arizona. Overview of Quarries and their Evaluation.
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Rocks, Rocks and Quarries Presented by: Richard Edmunds, ARA, AAC 82nd Annual Meeting of ASFMRA Phoenix, Arizona
Overview of Quarries and their Evaluation This presentation is designed to acquaint the valuation professional with the quarry industry. The quarries discussed will include gravel, limestone, bluestone and slate as found in the northeastern portion of the US.
Overview of Quarries and their Evaluation A review of quarry characteristics, deposit types, processing and marketing will be covered. The discussion of those items of information needed for the valuation process will be included along with a review of the application of the Sales Comparison Approach and Income Approach (DCF).
Types of Deposits • Gravel – is composed of unconsolidated rock fragments that have a general particle size range and include size classes from granule to boulder sized fragments. One cubic yard of gravel typically weighs about 3000 pounds.
Types of Deposits • Gravel • Limestone – is a sedimentary rock composed primarily of calcium carbonate in the form of mineral calcite. Some varieties of limestone perform well in construction use because they are strong dense rock with few pore spaces. These properties stand up well to abrasion and freeze/thaw. • One cubic yard = 4,000+ lbs.
Types of Deposits • Gravel • Limestone • Bluestone – Pennsylvania Bluestone is unique sand stone found only in Northeastern Pa. It derives its name from its typically blue color. It is marketed in two types: Dimensional which is used for stair steps, window and door fixtures, countertops and Flagstone, which is used for walkways and patios.
Types of Deposits • Gravel • Limestone • Bluestone • Slate – is a fine grained, foliated, homogenous metamorphic rock derived from an original shale-type sedimentary rock composed of clay and volcanic ash through low grade regional metamorphism. The result is a foliated rock in which the foliation may not correspond to the original sedimentary layering. When expertly “cut” by striking with a specialized tool in the quarry, many slates will form smooth flat sheets of stone which have long been used for roofing and floor tiles.
Slate Slate
Common Characteristics • Open Quarries • Overburden….. • Permitted by State DEC, DEP, Etc. • Subject to Safety Regulations
Quarry Considerations • Deposit Characteristic • Potential Uses • Quality of Deposits • Yield and/or production factors
Quarry Considerations Continued • Conversion Factors • Tons vs. Yards • Life of Quarry Factors • Processing and Marketing Issues
Items of information to begin the valuation process • Engineer’s Reports • Deposit Quantity and Quality • Local, State and Federal Environmental Issues • Reclamation requirements • Cash Flow Statements • Marketing Issues • Interviews • Other
Valuation Process • Sales Comparison Approach • Usually limited number of sales • Sales may include multiple types of assets • Income Approach • Discounted Cash Flow
DCF Considerations • Breakdown of Income • Deposit Quantity • Categories of Expenses • Increase or Decrease of Income and Expenses by % or $ • Number of Years for DCF • Reversion Considerations • Discount Rate • Excess Deposits,
Types of Deposits • Gravel • Limestone • Bluestone • Slate – is a fine grained, foliated, homogenous metamorphic rock derived from an original shale-type sedimentary rock composed of clay and volcanic ash through low grade regional metamorphism. The result is a foliated rock in which the foliation may not correspond to the original sedimentary layering. When expertly “cut” by striking with a specialized tool in the quarry, many slates will form smooth flat sheets of stone which have long been used for roofing and floor tiles.
