Erdene Resource Development Corp. received notice from Aggregates USA (AUSA), the lessee and operator of the company's Granite Hill construction aggregates property, that it has commenced commercial production from its quarry located in central Georgia. The company also reported receipt of the 2012 minimum royalty of $165,000 from AUSA.
The Granite Hill Project (also known as the Sparta Quarry) consists of a 100 percent Erdene-owned 342-acre property in central Georgia, which contains a Class A granite aggregate resource in excess of 120 million tons. Under a mining lease, the company has granted an exclusive right to AUSA, a major construction materials producer, to mine, process, and sell aggregate from the Granite Hill property.
Construction of a rail link from the property to the existing main rail line was recently completed, allowing for market penetration throughout the southeastern U.S. AUSA is responsible for fully funding all capital and operating costs for the project, according to he company. The quarry has been constructed to a design capacity of greater than two million tpy of product. The sale of aggregate from the property is subject to an industry competitive royalty payable to the company with annual minimum royalties that are inflated annually.
The company is also evaluating a construction aggregate marine terminal project in Nova Scotia, Canada, that would target the U.S. eastern seaboard market. A deep water location on the eastern seaboard of North America provides a competitive advantage due to lower freight rates for shipping, versus the ever increasing rail and truck hauls faced by inland U.S. construction-aggregate producers.
The strategic location coupled with high-quality granite near deep-water ice-free ports provides an ideal quarry site. Nova Scotia is one of the largest exporters of construction aggregate to the U.S. eastern seaboard and hosts one of Canada's five largest quarries.
Export markets for Nova Scotia aggregate are principally in the eastern U.S., Gulf of Mexico and the Caribbean. Long-term projections for aggregate consumption in the southeastern United States are very positive reflecting the projected population growth of the region, the company said.