Operating Update, Issue of Equity & Notice

16 February 2021

Fox Marble Holdings plc

("Fox Marble" or the "Company")

Operating Update, Issue of Equity and Notice of Results

Fox Marble, the AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region, is pleased to provide the following operational update ahead of the publication of its preliminary results for the year ended 31 December 2020 which are anticipated to be notified in May 2021.

Highlights

·      Sales for the year ended 31 December 2020 of €0.7 million (2019 - €1.4million).

·      Sales of processed marble increased to €0.6 million from €0.2 million in 2019 reflecting the success of winning large contracts to the Kosovo market.  Sales of block marble fell to €0.1 million from €1.2 million in 2019 as a result of Covid-19 restrictions.      

·      Production for the year ended 31 December 2020 of 6,060 tonnes (2019 - 14,515 tonnes) due to planned stoppages as a result of Covid-19.

·      Processing volumes increased 300% through the factory, as a result of increased demand for material, as well as process improvements made.

·      Fundraising completed raising £1.0 million in December 2020 together with litigation funding committed of £0.5 million to fund arbitration case.  Dentons Europe CS LLP engaged as counsel in December 2020.  

Sales

Sales of processed marble have increased to €0.6 million from €0.2 million in 2019, of which €0.45 million occurred in H2 2020.  A number of new contracts were signed for processing services and processed marble which formed the backbone of sales through the end of 2020 and are expected to continue into 2021. 

·      The Suhareka square in Kosovo contract, announced on 14 April 2020, to supply up to 20,000 square metres of paving.  Material already specified and contracted under the first two stages of the project has a total value in excess of €400,000, and once all 20,000 square metres have been supplied the project is expected to be worth in excess of €750,000, as announced on 13 May 2020.   Fox Marble has supplied over 10,000 sqm of material since June 2020.

·      A contract to supply 20,000 square metres of cut and finished paving tiles for installation in the town square for the Municipality of Poduyeva in Kosovo, announced on 30 July 2020. Fox Marble began supplying material for this project in August 2020 and has supplied over 4,000 square metres of material to date. The Company received confirmation of Phase II of the project in January 2021, and the total value of this contract is around €700,000 over 2020 and 2021, as announced on 30 July 2020 and a further update announcement released by the Company on 4 February 2021. 

·      A contract to supply 35,000 square metres of cut and polished tiles to CC Apartments LLC, announced on 23 June 2020.  CC Apartments LLC is engaged in developing several prestigious projects including apartments in Kosovo, as well as Albania and surrounding countries.   Fox Marble will be processing blocks of a range of marble from its own quarries for this project and supplying this material from its factory in Kosovo over the course of 2021 starting next month.  The total value of the contract is in excess of €700,000.

Sales of block marble have fallen significantly in 2020 from €1.2 million in 2019 to €0.1 million in 2020 due to the impact of COVID-19 on block marble sales.  From January 2020, COVID-19's impact on the Chinese market had an immediate effect. As the pandemic spread, global travel restrictions severely impeded the international trade in blocks. As travel restrictions lift in 2021, the Company expects to see growth in block sales.

Quarry Production

The Group elected to significantly scale back quarry production in order to keep operational cash flow neutral in the face of the fall in demand for block marble caused by COVID-19.  As a result, production fell from 14,515 tonnes in 2019 to 6,060 tonnes in 2020.   Production at Prilep was re-started in August 2020, though production levels continued to be closely monitored.  The Prilep quarry continues to supply block material to the factory in Kosovo.

Cervenillë quarry was the first of our sites opened in November 2012.  It is open across three separate locations (Cervenillë A, B & C) from which red (Rosso Cait), red tinged grey (Flora) light and darker grey (Grigio Argento) marble can be accessed.   The quarry was re-opened in September 2020 to address the demand for Argento Grigio from existing and future processed marble contracts.

The Syriganë quarry in Kosovo - sources of Breccia marbles, is in good condition, with machinery on site and ready for deployment.  At present we do not have quarry teams on site, as we have a significant reserve of stock of materials, however the quarries can be staffed at short notice. 

The foundation of a successful and growing natural stone company is its reserves base. Fox Marble's strategy is to seek to grow this over the medium term, should the appropriate opportunities be available and subject to detailed drilling and exploration. Opening new quarries over the medium term will provide the opportunity to increase both block sales and processed marble from the factory. The Company continues to keep new sites for development under review.

Factory

Fox Marble's processing facility is a 5,400 square metre double skinned steel factory for the cutting and processing of blocks into polished slabs and tiles which was erected on a 10-hectare site that the Company acquired in Lipjan in 2013, close to Pristina airport in Kosovo.

In June 2020, the Company announced that it had acquired two additional automatic CNC cutting machines to be installed in its factory in Kosovo.   The two machines were manufactured by Simec Srl and Garcia Ramos SA and with the existing Gravellona Machine Marmo CNC machine have doubled the capacity to cut tiles.  The machines have been installed and are now fully operational.

The machines, and procedural improvements implemented have helped drive an increase in processing volumes 300% from 2019 to 2020. We continue to examine ways to increase levels of production and operating efficiency through 2021.

Dispute and Arbitration Claim

Fox Marble has engaged the services of Dentons Europe CS LLP ("Dentons") to act on the Company's behalf in its circa €195 million claim against the Republic of Kosovo ("the Arbitration"). Dentons have agreed a fee arrangement which enables Fox Marble to bring the Arbitration through to its conclusion.

To complement this arrangement with Dentons, the Company announced on 16 December 2020 that it had secured firm commitments of £0.5 million ("Litigation Fund") in the form of litigation funding from private investors.

This funding, plus a pre-agreed return on investment, will only be repaid if the Arbitration proceedings are successful.

The Company also conducted a placing raising £1.05 million before expenses, which along with the Litigation Fund and the fee arrangement with Dentons are collectively expected to cover all costs throughout the Arbitration process and has allowed Fox Marble to commence preparations for the formal proceedings against the Republic of Kosovo.

Issue of shares

The Company has issued a total of 5,000,000 new ordinary shares in the Company to five individuals in lieu of cash payments.  The issue of shares reflects the contributions made to the Company by these individuals.

Application will be made for 5,000,000 ordinary shares issued to be admitted to trading on AIM, which is expected to occur on or around 19 February 2021 at 8.00am ("Admission") and will rank equally in all respects with the Company's existing ordinary shares.

Total Voting Rights

In accordance with Rule 5.6.1 of the Disclosure and Transparency Rules ("DTRs"), the Company's issued share capital following Admission will consist of 378,872,214 ordinary shares of 1 pence each. The Company does not hold any ordinary shares in treasury. Therefore, the total number of voting rights in the Company following Admission is 378,872,214.

The above figure of 378,872,214 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the DTRs.

Chris Gilbert, CEO of Fox Marble, commented: 

"2020 was a year dominated by the impact of COVID-19, both on the market in which Fox Marble operates and directly on Fox Marble's operations. Despite a turbulent year, the Company has made significant progress in several areas. Sales of processed marble have increased significantly, driven by the large contracts signed in 2020 within Kosovo, supported by targeted capital expenditure and a focus on process improvements. Funding has been secured for our Arbitration case, and we can now expect to see progress on this matter. While the block marble market was very disappointing in 2020, we are starting to see some green shoots of recovery and are confident that 2021 will see a gradual return to normal sales volumes."

This announcement contains inside information for the purposes of Regulation 11 of the Market Abuse (amendment) (EU exit) Regulations 2019/310. The Directors of the Company take responsibility for this announcement.

For more information on Fox Marble please visit www.foxmarble.net or contact:

Notes to Editors:

Fox Marble (AIM: FOX), is a marble production, processing and distribution company in Kosovo and the Balkans region.  

Its marble products, which includes Alexandrian Blue, Alexandrian White, Breccia Paradisea, Etruscan gold and Grigio Argento and are gaining sales globally both to international wholesale companies as well as being supplied directly into luxury residential properties. In the UK these include among others St George's Homes and Capital and Counties Plc's Lillie Square development. In Sydney, Australia Rosso Cait, Alexandrian White and Breccia Paradisea marble have been used in what is expected to be Australia's most expensive residential property. These sales serve to demonstrate the desirability of Fox's premium marble products as the stone of choice in some of the most prestigious and expensive residential developments around the world. 

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.