Presented by: Richard Edmunds, ARA, AAC 82 nd Annual Meeting of ASFMRA Phoenix, Arizona 1.

Presented by: Richard Edmunds, ARA, AAC82nd Annual Meeting of ASFMRA

Phoenix, Arizona1

Rocks, Rocks and Quarries

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.

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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).

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Overview of Quarries and their Evaluation

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.

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Types of Deposits

Gravel

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Gravel

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Gravel

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.

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Types of Deposits

Limestone

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Limestone

Limestone

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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. 12

Types of Deposits

Bluestone

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Bluestone

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Bluestone

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Bluestone

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Bluestone

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Bluestone

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Bluestone

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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.

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Types of Deposits

Slate

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Slate

Slate

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Slate

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Slate

Slate

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Slate

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Slate

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Slate

Slate

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Slate

Open Quarries Overburden….. Permitted by State DEC, DEP, Etc. Subject to Safety Regulations

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Common Characteristics

Deposit Characteristic Potential Uses Quality of Deposits Yield and/or production factors

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Quarry Considerations

Conversion Factors Tons vs. Yards Life of Quarry Factors Processing and Marketing Issues

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Quarry Considerations Continued

Engineer’s Reports Deposit Quantity and Quality Local, State and Federal Environmental Issues Reclamation requirements Cash Flow Statements Marketing Issues Interviews Other

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Items of information to begin the valuation process

Sales Comparison Approach Usually limited number of sales Sales may include multiple types of assets

Income Approach

Discounted Cash Flow35

Valuation Process

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, 36

DCF Considerations

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.

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Types of Deposits

That’s all Folks!

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