Sand Mining & Aggregates Quarry Business Plan South Africa

Investor-grade quarry business plan: crushed aggregate and sand reaching R154.3m revenue and a 32.1% EBITDA margin by Year 5.

Magalies Quarry — EBITDA against net income across the plan period, showing the depreciation and interest gap

Business Plan & Investment Proposal · South Africa

Sand Mining & Aggregates Quarry Business Plan — South Africa

Magalies Quarry (Pty) Ltd · Strong At EBITDA From Year 2. Profitable Only From Year 4.

A hard-rock quarry in the Magaliesberg producing crushed aggregate sizings, sand and base
material for contractors, readymix suppliers and roads work within its haulage catchment. Revenue builds from
R50.9 million to R154.3 million over five years and the EBITDA margin from 5.6 to 32.1 per cent, with
net income turning positive in Year 4 once depreciation and interest are carried.

R154.3mYear 5 revenue

R49.5mYear 5 EBITDA

32.1%Year 5 EBITDA margin

Year 4First net profit

This plan has two earnings lines that tell different stories, and the gap between
them is the thing worth understanding. On EBITDA the quarry works almost immediately: R19.6 million and a
22.6 per cent margin by Year 2, rising to 32.1 per cent by Year 5 as revenue triples to
R154.3 million. On net income it does not, staying negative until Year 4. Sitting between the two are
roughly R17 to R22 million a year of depreciation on the plant and R10 to R14 million of
interest on the debt that bought it — the ordinary shape of a heavy-asset operation, and a reason to read past
the EBITDA headline. The commercial logic underneath is simpler than the accounting: aggregate is bought on
delivered cost, haulage dominates that cost, and so a quarry competes on how close it sits to the buyer rather than
on the rock in the ground.

Two earnings lines, four years apart

The same year, read two ways — and what sits between the operating line and the bottom one.

R19.6m EBITDAYear 2, and healthyA 22.6% margin in the second year of operation. On the operating line this quarry works almost immediately.

but still

−R7.3m netYear 2, after the chargesDepreciation on the plant and interest on the debt that bought it consume all of it. The two lines only converge in Year 4.

Key measures

Six measures that determine whether this quarry and its funding stand up.

32.1%Year 5 EBITDA marginFrom 5.6% in Year 1. A quarry is a fixed-cost operation — once the plant is paid for, each additional tonne is close to pure contribution.

Year 4First net profitEBITDA turns healthy in Year 2, but net income stays negative until Year 4. Depreciation and interest sit between the two.

R17–R22mAnnual depreciationPlus R10–R14m of interest. Together they consume the whole of Year 2 and Year 3 EBITDA, which is why the earnings lines diverge.

R154.3mYear 5 revenueFrom R50.9m in Year 1, on crushed stone sizings, sand and base material sold within the haulage catchment.

Delivered costHow aggregate is actually boughtHaulage dominates the customer’s decision, so proximity to the buyer is the defensible position rather than the rock itself.

R4.3mYear 5 mineral royaltyRising from R255,000. A revenue-linked state charge that scales with production and is easy to overlook in a cost build.

Revenue and earnings

Revenue and EBITDA on the base case. Volume and delivered price are the two assumptions
that matter most, and both are stressed in Section 21.

Revenue build — and the EBITDA margin it carries

Year 1R50.9m · 5.6% EBITDA margin
Year 2R86.4m · 22.6%
Year 3R114.5m · 28.4%
Year 4R139.5m · 31.3%
Year 5R154.3m · 32.1%

Revenue triples to R154.3m while EBITDA margin climbs from 5.6% to 32.1%. A quarry is a fixed-cost operation: once the plant is paid for, additional tonnes are close to pure contribution.

EBITDA against the net income beneath it

Year 1R2.8m EBITDA · net income −R16.8m
Year 2R19.6m EBITDA · −R7.3m
Year 3R32.5m EBITDA · −R0.3m
Year 4R43.7m EBITDA · +R7.7m
Year 5R49.5m EBITDA · +R12.7m

EBITDA is healthy from Year 2, but depreciation of roughly R17–R22m a year and interest of R10–R14m sit below it. Net income stays negative until Year 4 — the gap is the whole story.

How to read this plan

EBITDA and net income tell different stories

EBITDA is healthy from Year 2 at a 22.6% margin, but net income is negative until Year 4. Roughly R17–R22m of depreciation and R10–R14m of interest sit between them, and a reader who quotes only the first number will misjudge the plan.

Aggregate is bought on delivered cost

Haulage dominates what a contractor actually pays, so a quarry competes on distance to the buyer more than on the rock in the ground. Proximity, not geology, is the defensible position.

Fixed costs make the margin curve steep

EBITDA margin climbs from 5.6% to 32.1% while revenue triples. Once drilling, crushing and screening capacity is paid for, incremental tonnes carry very little extra cost.

Permitting sits on the critical path

Mining right, environmental authorisation and rehabilitation provisioning each gate the start, and none of them can be accelerated with capital.

The royalty scales with production

R255,000 in Year 1 becomes R4.3 million by Year 5. It is a revenue-linked state charge that grows precisely as the operation succeeds.

Selected exhibits

Year-5 EBITDA and exit equity value by scenario.

Sensitivity of Year-5 exit equity value to key drivers.

Break-even analysis (Year-3 cost economics).

Twenty-three sections and three financial appendices.

Appendices

Strictly confidential. This document is delivered in confidence to the named
recipient and may not be reproduced or circulated, in whole or in part, without prior written consent.