Eco Buildings Group (LSE:ECOB) — Investor Presentation

0:02 Good morning, ladies and gentlemen, and welcome to the Fox Marble PLC Investor Presentation. Company may not be in a position to answer every question it receives during the meeting itself. However, company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via our Investor and Meet company dashboard. I'd also like to remind you that this

0:32 presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Chris Gilbert, CEO of FOX Marble Holdings PLC. Good morning, Chris. Paul, good morning. Hi. And good morning to everybody. Paul, just briefly, I've got a window that's come up on the presentation saying on the on the presentation saying, are you a shareholder of Fox Marble? So I've lost my presentation to that.

1:02 We'll remove it for you. Hello? Hi there. If you can just click on if you can just click on the respond for me, Chris, that will remove it for you. Hi. Good morning, everybody. Thank you. Hi. Thanks, Paul. Alright. As Paul says, I'm Chris Gilbert. I'm the CEO of FoxMarble, and it's my pleasure to take everybody through the presentation setting out our company, who we are, what we do, and how we're doing it, I guess. So we should start with a history of this company which we founded in 2011 and which we IPO ed on AIM towards the end of two thousand and twelve, basically allowing us to start operations.

1:49 And it's important, I think, to stress that this is a start up or was a start up, where we were basically looking to develop greenfield sites that contained a great deal of very high quality marble. And we were able to start quarrying in Kosovo, our first sort of jurisdiction of operations, in the middle of two thousand thirteen and start the process of developing these prize quarries, which is a lengthy process. So the the point here is is that we apply all of the equipment. We bring some expertise in from Italy, actually, where our quarry masters come from. I suppose Italy really is the sort of cultural center of the marble industry, the dimension stone industry. They've been doing it the longest.

2:36 Their equipment is the best, and and it's one of the centers. And we have a a small office in Carrara through which we source all of these things and sell some of our product. In 2014, we opened a quarry in Macedonia to the South of Kosovo containing a white marble, and and white marble is the gold standard in in the industry. I suppose white and black are the gold standards. And this is a particular white marble in our quarry adjacent to a very well known quarry who are our neighbors containing the similar or the same material. They call it civech, which is trademarked to them, which is why we call ours Alexandrian white. It's the same material, and it's a worldwide sort of heavily highly in demand, desirable marble that that we started developing in 2014.

3:31 In 2015, we developed a further quarry in Kosovo containing a particular marble called Celine or Illyrico Celine, which is a light silver gray, and I'll come back to that later on in the presentation. In 2017, as we promised everybody, we developed started development or we had previously built a factory which became operational towards the end of two thousand and seventeen. And this is a marble processing factory. It's 6,000 square meters in a whacking great yellow shed, ten minutes away from the airport just outside Pristina, the capital city of Kosovo, and it's fully equipped with, again, Italian manufactured equipment. It's widely regarded as the best in the world, and that became operational, as I say, at the end of two thousand seventeen.

4:26 The Project Stone Alliance was launched by way of entering into a memorandum of understanding with the government of Kosovo in which the government of Kosovo agreed to support the Stone Alliance project and its ambition to open 40 quarries throughout the region in Kosovo, and obviously, you know, increase the size of Fox Marble and its operations by an order of magnitude. And Stone Alliance is a project I'll come back to at the end of the presentation. It is not in operation at the moment, but it is set out, as I say, in the form of this memorandum with the government. In 2018, our joint venture partner in our quarry in Macedonia, the the the Alexandria White quarry, exited the agreement.

5:18 And as a consequence of which, Fox increased its share of that arrangement from 35% to 65% of the total operation in a an agreement that we announced at the time. In addition to that, we increased our activities in the factory with a brand new five axis CNC machine capable of producing cut to size marble to order in high volume, which is added to our capabilities and our capacities there. And in 2019, we presided over significant growth in our Macedonian quarry. It's in a town called Prillip, so we call it Prillip Quarry.

6:07 We also were subjected to an unlawful seizure of one of our quarries in Kosovo as a consequence of which we were able to launch a case against the government of Kosovo for failing to protect us under their own laws on foreign investment to foreign investors. And that I'll come back to as well. This is a separate line of activity to the company's operations and what it does on a day to day basis, which is something I think I should stress as I get to it later on as we go through this. In 2,020, obviously, along with the rest of the world, we are called upon to navigate the COVID nineteen crisis, which we have done, I think, surprisingly well, and I will come back to that as we go through the presentation.

7:03 The point about this operation is that Kosovo and Macedonia contain a very, very large quantity of very high quality marble up there with Italian marble in its terms of its quality, its properties, its geophysical measurements. And we are indeed the only people quarrying in Kosovo and one of very few companies quarrying in Macedonia and taking advantage of this very, very rich resource that is that is largely unexploited. So for us, we're the only people processing marble in Kosovo. I think there's a processing factory in Albania. I'm not sure if there's one in Macedonia. There's not one of this kind of scale able to produce this quality of material.

7:52 And as a consequence of that, we have succeeded in establishing a very dynamic sales and operations space in in the Balkans region. And we have benefited, I think, from being in place and operational and fully able to supply, particularly in the local market. We've won contracts for processed material in Kosovo and in Macedonia and Albania. As a result of which, we've seen increased demand. And through the COVID crisis, we we've announced nearly two I think it is €2,000,000 worth of processed marble contracts, which are very time sensitive, which is obviously helpful from from our perspective. Again, we'll come back to that as we go through this.

8:45 The obviously, the crisis has called upon us to deal with the fact that all quarry operations were suspended throughout the Balkans as part of the lockdown. Luckily for us, the factory operation was not was able to continue to operate. We were accorded a designated sector status, which meant we didn't have to close down the factory. We did reduce the headcount in order to enforce social distancing and to be cautious about how our workforce were able to continue to work despite the sort of spread of the virus. We also reduced our costs here in London. Our directors, non exec and execs, are deferring their our fees and salaries.

9:32 We're taking non execs have been taking their fees and all subscribing for shares with their fees to conserve cash. We furloughed some of our staff. We reduced our rent, and we've done a lot in basically preserving as much cash as we possibly can through this crisis. The critical thing that we were able to achieve through this period, we were able to go to our bondholders who are a group of very, very supportive people who held £2,300,000 worth of loan notes convertible loan notes with Fox, which were maturing over the course of this period and and into next year a little bit. And, obviously, as a result of the crisis and as a result of the shutdown in activities and the reduction in revenue, this would this was becoming a fairly urgent matter for us. We were able to sit down with our bondholders and negotiate an extension of the term so that the maturity date was pushed out until December 2026, five and a half years from now. As I say, these are very supportive people. They understood the long term benefit to for everybody, all the stakeholders in agreeing to this, and we preserved some some cash by reducing the coupon that we were paying on a quarterly basis, I think, from 8% to 2%,

11:03 which saved us nearly a £150,000 in cash every year. As a consequence of this, we've strengthened our balance sheet. We've relieved a lot of pressure off the company, and that has put us in a very strong position to benefit as we come out of the crisis to the extent that we are, and also to benefit from the new business that we're winning. In addition to that, we have a we have been able to restart our operations in two of our quarries. In the Macedonia quarry, the Prylic Quarry, we were able to restart operations last month, which is a, obviously, a huge hugely positive step for us. In addition to that, we have reopened the Savanilla Quarry, which is a quarry that we mothballed in 2015, 2016 as a consequence of having a lot of material out of the ground and focusing on the Celine Quarry in Manasseva.

12:07 We've reopened the Sardinilla Quarry as a result of the expanding demand for one of our stones, the Grigio Argento, which is a darker, very nice warm gray with a silver and gold vein through it. And we had thousands of tons of this material out of the ground. But as a consequence of the new contracts that we've won, we've whistled through that fairly rapidly. As a consequence of which, reopening the quarry was a requirement that we needed to conclude in order to continue to extract particularly the Grigio Argento from the Serbian in the quarry in order to be able to fulfill these contracts that we are winning and in the process of negotiating further as we expand our business.

12:57 We have sold examples of every single one of our stones somewhere in the world since we've started our operations and our quarries became commercially operational quarries. So every single one of our stones, we have sold somewhere. And the constituency that buy blocks, which are basically China, India, Turkey, oddly enough, Greece, and Italy, And for us to sell blocks to Turkey is coals to Newcastle because they're the biggest exporters of marble in the world after China. But, nevertheless, they have purchased significant quantities of some of our marble, the Alexandrian blue, the Alexandrian white, and the Grigio over the course of time. We have sold cut to size and slabs to developments here in London, notably the Chelsea Creek development in which the penthouse bathrooms are all installed with Grigio Argento material, oddly enough material that's very much in our focus at the moment, thanks to our domestic contracts, as well as a number of other other developments in in Europe.

14:09 As a consequence of which, we have proven our material in a wide variety of settings. Just to pick an example, the bottom right hand photograph on the slide here is an apartment in the development of St. John's Wood, and all of that marble not the bath, I should add, but all of that marble that you see on the walls is our Alexandria White, and that was installed a few years ago. Marble, as I've said, is all very high quality. It's high end stuff, particularly the Alexandrian white and blue from my Macedonian quarry. But the Grigio and the Brecher in Kosovo is equally at the high end of things, and we benefit from the fact that everybody understands that.

14:58 And, of course, we're a lot less expensive than the Italian equivalent or indeed the Greek equivalent largely because we operate in a very low cost environment. We benefit from the fact that the average monthly wage in Kosovo now is $303,150 euros per month. And whilst our operational costs with respect to consumables like diesel and things like that are the same as they are everywhere. We nevertheless our cost of extraction are a lot lower than anybody else's anywhere in Western Europe for sure and certainly in Italy and Greece. Our factory from which we benefit a ability to supply growing demand has, you know, paid dividends, and we have seen a solid growth in block sales to those people who buy blocks over the course of time as our production has increased.

15:57 So our production has doubled in each of the last two years, and that has resulted in the in driving down our direct production costs per ton. And and I'll come to some some numbers in a minute, but that's obviously has a a benefit straight to the bottom line for us. As I said, our factory, which is now fully operational and in which we are increasingly equipping it to cope with the increased demand for our processed material, now has a processing capacity of a 165 square meters per annum on a two shift basis. It improves our margins dramatically from the blocks extracted from the ground. And we are, as I said, the only domestic producer of of slabs and cut to size or tiles, certainly in Kosovo and I believe in Macedonia as well and most of the other countries in in in the Western Balkans.

16:54 One of the things that we've done in the last eighteen months is we beefed up our management team to help support the increased activities of of of the company. These include Don Nicholson, who comes to us from an August career spanning a point in time when he was Tony Haywood's chief of staff, and Tony Haywood was the CEO of BP to becoming the chairman of Levantina, the biggest Marvel company in Europe, and I think the acting CEO at one point in time. He's an adviser and a designate board member, and he recruited for us Francesco Espinosa who comes to us from Levantina, was a general manager there.

17:45 And Francesco recruited factory manager who ran 14 factories for Levantina in Spain and is now relocated to to Pristina and is in situ operating and and and running our supervising our factory operations in Kosovo. So that coupled with myself and Fiona who've been obviously with the company from day one, as a newly strengthened executive team is is certainly helping with all of the activities of of of the company, and we point to that as one of our strengths. We redeployed some of our equipment into Macedonia to increase production there when some of the quarries were suspended in Kosovo. We have two fully developed quarry sites in Kosovo, and we have a number of undeveloped sites in our sort of within our orbit increasing our resource base.

18:38 Not that we're going to run out of marble anytime soon, but this is going to increase our range of stone. And in particular, one stone that matters to us, which is the Celine stone, where we have an undeveloped site that we have our eyes on, which we talked about in a in a previous announcement as being something that we're very focused on. This is a site that once we develop it, will produce Celine, which was a material that we penetrated very successfully various markets around the world, which we need to get back to. If we talk about Stone Alliance, this is a a project supported by the government of Kosovo where we have identified forty, four zero, quarry sites in Kosovo containing 265,000,000 tons of varying types of very high quality stone.

19:37 Kosovo is interested in supporting this basically because of the benefits of job creation along with commerce and industry, which the country desperately needs, the whole region desperately needs. It's an American Stone Alliance is an American subsidiary. It's a Delaware registered LLC. Its chairman is a recently retired US general, lieutenant general Mike Barbero, who we're fortunate to have chairing this company. And Stone Alliance is designed to be a

20:07 rights owning company for which Foxmarble not only is it a significant shareholder in Stone Alliance, but it is the opco. It will be the company that does everything to develop, export sorry, exploit, extract, process, and support support the sales and distribution of the material from these quarry sites that Stone Alliance owns the rights to. And Stone Alliance is an entity that has relationships with three governments, the US government, obviously, the Kosovo government, and and actually the the British government as well. Standard Alliance has achieved advocacy status with the Commerce Department of Washington, which means that the American government backs and supports this initiative. And practically, it means that the US embassy and the US ambassador, who's a very powerful personality in the region, supports this with respect to its relationship with the government.

21:01 In addition to that, as I previously said, we have launched a claim for a €195,000,000 against the government of Kosovo, which we are pursuing in an international court of arbitration under the rules as a result of the government's failure to support and protect Fox Marble and its interests in Kosovo with particular respect to the Malasseva quarry, which was unlawfully seized locally. And this is a claim that we believe has huge merit. It is a separate line of activity. It has no relationship to the operations of the company, which are not interfered with or disturbed as a result of this claim domestically.

21:47 There's too many people have their eyes on what we're doing and how we do it, the government can't afford to make another slip or another mistake. And it is a one way windfall upside position for FoxMarble. Fox is not financing the action. We're in negotiation with a third party litigation funder who do this. They do this for a living who will finance the sums needed to pursue this claim through the courts in either The UK or The Hague or Washington or there there are arbitration courts in a number of locations around the world. Probably The Hague, I would guess. As a result of that, it's on a no win, no fee basis.

22:34 When we win this and we have a very, very strong case as evidenced by the fact that our lawyers are doing this on a largely CFA basis, again, on a no win, no fee basis because they are convinced of the strength of our position, then the benefits will flow to FoxMarvel and indeed Stone Alliance and will be available for, you know, the various stakeholders involved including shareholders of which I am I am one. As a result of this, we feel that this line of activity can only be really defined as a a one way it's an option gives us a one way windfall upside. We are able or we did double production in the Prylip Quarry, the white marble quarry of Macedonia, to a current production level of around 10,000 tons per annum with a potential target of 20,000 tons over the course of a full year of production with with some redeployment of equipment and some focus on on expanding the quarry itself.

23:53 That's an image of the quarry on the right hand bottom side. You can see it's already one, two, three, four, five, six benches deep. These quarries can go ten, twenty benches deep. The resource is is, you know, tens of meters of down. There's 30,000,000 cubic meters of marble surveyed in this particular quarry site. And the growth in block sales that we were achieving until we were forced to suspend operations in the quarry as a result of COVID nineteen showed a a solid growth over the course of the time up until, as I say, it hit at the beginning of the year. This is a hugely valuable resource for us. And as I say, white marble is the is one of the gold standards here.

24:39 The factory is a unit, as I say, 6,000 square meters that we've invested over €3,000,000 of our capital in. And as I said, has a processing capacity of a 165,000 square meters per annum, which with a small incremental investment, we can increase to around 250,000 square meters per annum, which is something that we probably will need to do as a consequence of the demand that we're generating through our sales activity. What the factory gives us is a much improved sales margin. It improves the yield in the quarry because a quarry will produce a range of quality of blocks from a grade blocks, which everybody would want to buy, to substandard blocks, which might have a hole in them, a crack, or a defect, or a an impurity in it. And those blocks are difficult to sell certainly for any reasonable amount of money.

25:39 We take these blocks to the factory. We process it. We get some waste, but it's found money for us, and we dramatically increase the yields in the quarries as a result of being able to process material that wouldn't necessarily pass muster in the international markets. Obviously, we're the only factory in Kosovo, and I think I think Macedonia. We're the only domestic supplier of slabs and tiles, so we benefit from that. And we can respond very flexibly to international customer demand around the world by having our own facility. And as I said, we recruited a very seasoned factory manager from Levantina in Spain. And Sependino, who's been doing this for donkey's years, is

26:25 now located in in Kosovo and presides over this factory on a on a daily basis. We're increasing equipment in the factory and announced recently the addition of two new CNC machines, which have added to our ability to process on a daily basis. We can now process two and a half times as much material as we could prior to the installation of these two machines, which goes to support the contracts that we've won, and and that we're in the process of winning. And as I say, over the course of the COVID nineteen crisis, we've won contracts to supply a town square piazza in Silver Eyka.

27:17 Phase one is 20 I think it's actually 22,000 square meters of of paving tiles worth €750,000. There is a phase two coming that we're aware of. We've also won a similar town square piazza contract for a town called Podjieva in Kosovo. Again, 20,000 square meters with a total value of just over €700,000. Our total contract wins, a local construction company owned by one of the biggest construction companies on the East Coast Of America, CC LLC apartments. This is a subsidiary of a company owned by a gentleman called Salarusi, mister Salarusi based in Manhattan. And his company recently built the Freedom Tower in Manhattan to replace the loss of the the Twin Towers in the terrible tragedy in in 09/11.

28:15 This contract, which will for which we are being asked to commence supply in January 2021, so at the beginning of next year, is already worth €600,000 for a variety of different types of cut to size material. All of these contracts are asking us to supply around 1,500 square meters per contract a month on a just in time supply basis. So there is a much, much clearer

28:56 sort of we have a much clearer ability to understand our income streams on a regular monthly basis, basically. Unlike these big off take agreements for block sales where you're dependent on the customer coming up and choosing blocks and taking them away and paying for them, these are project contracts where the supply of the material is key to the installation taking place in these town squares. And we've released pictures of our material being installed in these town squares. If they're on our website, we've released them them in in our and on our Twitter feeds showing that our material is being installed. And, obviously, as we supply, we we get paid for it. So this much greater clarity of our income stream and when we can expect it helps us enormously as a business.

29:48 And as I say, we've won €2,000,000 worth of business through the COVID nineteen crisis period demonstrating that there is optimism and there is a a sense of business to be won and commerce to be like, there's some commercial activities taking place despite everything that's going on in in in the world in general. As a consequence of that, we're confident in in our ability to win more of these contracts, particularly these Townsquare contracts, which we seem to be favor the month for. And there is something fairly ironic in the fact that these are government backed contracts. So we as a company are pursuing the government to Kosovo in a claim which we feel has a lot of merit, but at the same time, we're winning contracts with municipalities that are being funded by by local government funds that come from central government. So it's a fairly odd position that we occupy, but, you know, we're certainly not complaining about it.

30:55 The resource that we currently possess includes the Cerbernella Quarry, which is reopened, which contains the Grigio, as well as the Rosso Kate and the Flora marble, which we sold around the world in various quantities up till now. This contains 32,000,000 cubic meters of stone. A cubic meter is worth about 2.8 tons to us. So this is across our three operational sorry, Three quarries, two of which are operational. One of which is fully developed and could be operational, you know, at the slick of a switch, which is our Sirigardhi quarry, which contains pressure. These contain 91,000,000 cubic meters of marble. This is 260,000,000 tons of marble. We are not short of of resource.

31:45 As I say, there are a couple of materials that we would like to get our hands on, which we're in process with, and one of those is the is the saline material, we which spent a long time building into a very successful material around the world. The this is is what I was talking about. The additional resource opportunities include this Celine material, and we expect to be able to

32:14 commence developing this quarry. It's a greenfield site, so this isn't going to be overnight. But over time, this is a quarry that we know contains the saline material, which we made a great success around the world, and we are in train to obtain the rights to do that and therefore be in place to commence operations to do that. And that's probably our primary focus at the moment for developing our company. So the growth potential comes from the development of our core assets, particularly our quarry in Prillip and indeed, our server in the quarry containing the Grigio. We are we have identified and we'll be adding to our quarry resource base, as I've just said.

33:03 And our Stonalise project is a, you know, medium term project

33:09 which we will get to in the course of time. And from that, develop the 40 sites that we have already identified throughout Kosovo and the various materials. So our strategy really is to manage the COVID nineteen crisis as we are very successfully doing, return to some semblance of normality as much as we can, given the lockdown provisions that still exist around the world. I've talked about restructuring that we were able to achieve. Thanks to the support of our bondholders and shareholders within the company. And our job now is to increase production in our quarries, expand our factory capacity to cope with the demand that we are are developing through our sales and marketing activities and acquire new resources.

34:05 We will be opening new quarry sites through 2122, and we will be developing further opportunities in other markets around the world as we expand our operations. And as we develop these markets, once we've got as much as we can out of the markets that we're we're currently in. The consequence of all of this, which has taken longer than perhaps it it it it might have done had we not been in the position to have to develop quarries from a greenfield startup position is that we're a company that it can take advantage of a very stable marketplace.

34:55 Marble pricing is not commoditized. It doesn't change. It ticks up in line with inflation every year. It's an expanding market. It develops and grows over time. It gets blips, obviously, through things like this crisis and the previous financial crisis in 2008. But nevertheless, it's remarkably stable, and it is completely fragmented. There's no dominant player within the marble industry. This is a $20,000,000,000 industry, and the largest company, as far as we can tell, is a Chinese company called Bestshare, which maybe on a good day turns over 250, $300,000,000,000 a year. So we have a a a huge opportunity that we are accessing as we develop our business, as we get to, you know, that wonderful inflection point where we become cash flow positive and profitable.

35:46 And our material, we have demonstrated, is hugely desirable, much in demand, and

35:58 we've penetrated markets all around the world with one example or another of all of our material. And by focusing on our core assets and our core material and sticking to our netting, we believe our company can be very, very successful indeed over the the very near term and and and the foreseeable future as a consequence of all the work that we've done. So thank you for listening. I'm very grateful for the attention that we've had. We've got a hugely supportive group of stakeholders, shareholders, workforce, employees. I'm fortunate with our board and our executive team, our bondholders, and the direction that the company is going in is is very encouraging indeed.

36:45 You will all probably know that we applied to AIM for an extension in order to file our accounts three months later than we would normally should have done, which AIM granted as they have done many companies. Our audit activities were slowed or stopped by the COVID nineteen crisis, but we will be filing our annual accounts by the end of September, having taken advantage of the extension that we've been given, and we will be producing, obviously, our annual report at the same time. Thank you very much. Chris, thank you very much indeed for that. Ladies and gentlemen, do please continue to submit your questions via the q and a tab situated on the top right hand corner of your screen. But just while Chris takes a few moments to review those investor questions submitted already, I'd like to remind you that the recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard on the Investor Me Company platform.

37:41 Lastly, before I do hand back to Chris, I would like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. And Chris, perhaps before we look at some of the questions that are coming during the meeting itself, we did have a number of pre submitted questions from investors. So perhaps I could pose a few of those to you, if I may. Yes, absolutely. Yes, thanks, Paul. Right. Number one, can we have an update on the February strategy announcement, we progress on the two new quarries? As I said in the presentation, we we've got our sites on a quarry site that we will acquire, which is basically a saline a Lyrico saline based quarry.

38:30 This is the light silver gray material that we were very successful in penetrating a number of different markets with, and we expect to be able to talk about that as we look at the operational side of things, which is obviously how to develop this quarry, open it, and start extracting material. So that one, we've talked about. I we did announce the fact that we'd acquired the rights to a quarry that contained a Pietra gray material, which is a darker gray, very similar to the Grigio Argento that we already have in the Sibanila quarry. We drilled this quarry, and as a consequence of the drill cause, we abandoned the rights to that quarry as not being a commercially viable quarry due to the level of fracturing within the stone itself.

39:20 So that one, we we we gave up. So that's the news, if you like, on on on those two queries that we talked about in February. Thank you very much. Thanks, Chris. Next one we've got here, in view of the recent expansion of factory capabilities, how full is the factory, and how easy is it to expand if, hopefully, that is required? Yes. We we we moved to a two shift operation in the factory as a result of the contracts that we won, the these town square contracts alongside all of the other sales that we were we've developed and we're supplying fulfilling over the course of that time. That put pressure on the tile the cutting side of the factory.

40:08 So at that particular time, the footprint of the factory was that the factory was 50% occupied with equipment. So of the 6,000 square meter floor print, 3,000 square meters were filled with gang saws, CNC machines, cranes, you know, polishing lines, and a resin line. As as a consequence of the pressure on the cutting area, well, people will know that we we we announced that we had acquired two new CNC cutting machines, and that has significantly relieved the pressure in that we now have two and a half times more capacity to cut than we did prior to those machines being installed.

40:54 As a consequence of of which, we've got we've got capacity within the factory, and we've got a third shift should we need to go to it. And indeed, we have 2,000 square meters of floor space in addition within our building in which to site more equipment as as and when we need it, and, obviously, we believe that we will we will need it. So as I said, for us to go from a 165,000 square meters of capacity today to 250,000 square meters with the application of a little more equipment is something that we can do just by applying the equipment. Applying a third shift would not give us a full one third more than we would currently experience because a three shift system is really a two and a half shift system when you build in things like maintenance and to hand over times and what have you. But we've got capacity within within the factory.

41:56 We're we're not at a stage yet where we're just we've got no place to go either in terms of space or more equipment or applying a third shift to our operations. So it's relatively easy to to expand. And and as the the person who asked the question said, hopefully, this will be required. So we're in pretty good shape there. Thank you, Chris. Next one we've got here, what percentage utilization are we now getting with quarry marble? With slabs and tiles being manufactured, utilization must have gone up. What percentage are we now achieving and need to This is a this is a really good question, and this goes to the point that I do bang on a lot about, which is that the factory improves the yield in the quarry, if you see what you know, as I said earlier.

42:42 So I was looking at this. It's different for every stone, and it's different for every quarry. So I'm I'm I'm not gonna spend a long time on this, but I picked one example. And the example I picked, because it's hugely relevant, is the Grigio Argento stone in the Serenillo Quarry. So in the last full year that we conducted extraction operations in the Serenillo Quarry, is 2015, we extracted 2,000 tons, just under 2,000 tons of Grigio Argento, of which we sold about 900 tons. Now you could argue that that is a function of our efficiency as a Salesforce, or you could argue that it's a function of the quality of block.

43:30 So let us assume that it is a function of quality of block. I would probably argue that it's nuanced, but but for the sake of doing the math, broadly speaking, half of our material we sold in block four. So that's a quarry yield of 50%, is already a very good yield in any operational quarry, but it is 50%. We come to the beginning of 2,020. We win these contracts that require the supply of processed Grigio Argento, and we find, oddly enough, that we have 1,000 we have about eighteen eighteen hundred, 1,900 tons of Grigio Argento in the quarry unsold, been sitting there since 2015, the end until 2016 when we stopped operations.

44:23 We have taken all 1,851 tons of what is left in that quarry, and we have processed it all, and we've supplied it all. Now there is an element of waste in that 1,850 tons because, obviously, in March, we started with the best quality blocks. And in August, we were down to the worst quality blocks, so the wastage percentage did climb. However, we can argue that as a as a consequence of this process And because we weren't extracting blocks and selling them over the same period of time, we've got a very clean, clear picture of this. Our quarry yield has gone from 50% to arguably 85, 90%, which is a phenomenal result in in in the context of quarry yields.

45:13 Having said that, of that 90%, a proportion of that will definitely have been lost to waste. So if we say we lost 15% of the of the quantity that was processed from the block yard in the quarry, we're still talking about, you know, seventy, seventy five percent yield on that material, which is a phenomenal result, and we benefit from the fact that there is an increased margin. It costs us €55 a ton to extract blocks that we sell for around a 180, €200 a ton. If you take a ton of Grigio Argento and you process it into two centimeters slabs and by the way, the Piazza supply requires us to deliver eight centimeter thick blocks because these are little blocks that, obviously, they're paving.

46:08 I don't know what you call them, tiles, little slabs. So it's much thicker material. But if it were two centimeters, you'd be getting 12 centimeters 12 square meters a ton out of it. If you sold those two centimeters slabs for €50 a square meter, which is a very undemanding conservative number, you're talking about €600, and it's cost maybe a €100 to process. So the margins climb dramatically when you process this stuff. So you increase the yield and you increase your margin. And that, I think, is the key to the core of why this business, it hits scale, is is such an attractive business to be in. That's a good question. Yeah. Thank you very much for your viewing. Next, we've got, I guess, a couple of parts to this one. Sales against manufacturing capability.

47:01 Where are we in regards to orders, customers' demand, and our ability to meet this? For several years, we've quoted orders but never managed to supply them all and drive higher sales numbers. Do we have enough orders to break even? Do we have the capability now also? I can't answer some of this because this would require to require me to make a forward forecast statement, which I'm not in a position to do. I'm not allowed to do it. However, there's a very good point in this in this question that I would like to address. We started as a block man a block extractor and and block extraction and sales organization. We sold blocks. Blocks are sold, as everybody who reads our RNS knows, under the aegis of offtake agreements.

47:51 These big offtake agreements that come from companies in India, in China, in Turkey, who basically say, we're going to buy 500 tons of a particular material every month. We're gonna send our block inspectors to the quarry. They're going to mark them with their, you know, name, and then we're gonna pay for them, and then we're going to take them away. That's how it works. The issue here is that if a customer doesn't show up one month, and they don't show up if their project work diminishes or the demand for that material falls away because one contract is finished and they haven't won another one or for whatever reason, and they don't show up. There is very little you as the supplier can do about it. There's not much you can do about it. Consequently, the ability to legislate and calculate the cash flows and the revenue from offtake agreements is is slightly opaque.

48:47 It's not very exact, which is why I emphasize the clarity that we get from our project work where we know that we're supplying x square meters of whatever it is every month for which obviously they have to pay x factories to come and take it away or or indeed we deliver it, but it's local so it doesn't make a difference. I'm asked whether we have enough orders for breakeven. I'm not in a position to answer that question. What I'm in a position to say is that we've announced orders in excess of €2,000,000 worth of contract work, which is project work, not off take agreements. We have referred to the fact that we have more of these coming. Anybody that looks at our accounts will know that our o our our cost base is around €3,000,000 a year, and we are on record of saying that these contracts will all be fulfilled by the end of two thousand and twenty one.

49:42 So people can see that COVID nineteen notwithstanding, we are making very big strides in getting to that inflection point that we have referred to, and therefore, we'll be in a position to announce that we are cash flow positive. So our order book is climbing. We like the clarity of the project work that this refers to. We have to get back into our quarries and start producing blocks for our international customers. In addition to that, people know what our historical block sales have been because we've announced them. I invite anybody to do the math. That's great. Thanks, Chris. That kinda leads on to the next question we've got here. Are we back in any of the quarries and have blocked marble sales restarted? We we've restarted operations in Prilyb in Macedonia, as I've said, we are recommencing we just started operations in Sevilla.

50:39 The Sevilla quarry primarily is back in action because we're in great need of the Grigio Argento to fulfill these contracts that we're supplying to. So that isn't so much about international block sales as it is fulfilling the supply chain that we're in process within our factory. The Prillip Quarry is open, which is really a judgment call of mine on the basis that we believe that the draconian lockdown provisions in Macedonia will ease over the next few weeks. And the international block buyers who are our customers will be able to come back and inspect blocks. So there's a bit of a judgment call there.

51:26 I've made it. We made it in consultation with our executive team and our minority partner in who's based in Macedonia. So we believe that our block sales will restart very shortly. Thanks, Chris. The one final pre submitted question that you just really answered in your previous answer, just looking at forecasts and targeting revenues. Obviously, you can't expose those. So perhaps, could I ask you just to have a look at the questions submitted during the live session? Just see if there are a few there that you could Yeah. Absolutely. Thanks. About eight minutes or so before Yeah. So running through them very quickly because we're running out of time because I talk too much. The Saudi Arabian mosque, that is actually an Indian temple from a very, very dynamic, very large Hindi Indian sect based in Northern India. We've they they they built a temple in the Eastern here in London. It's wonderful.

52:27 They're building a temple in The UAE just outside Abu Dhabi, and we won a contract to supply white marble to that temple where the operations we we got paid a deposit, which we announced. We've supplied material against that deposit, which we've announced, and then operations was suspended for a variety of reasons. And the development process has been they've announced that they delayed it to 2022. So it's ongoing, but it's not particularly dynamic at the moment. Chris, can I just ask you as well just to read out the question just for Oh, I'm sorry? I I yes. Okay. That's great. Thank you. Next question.

53:12 Chris, in the best case scenario, if the factory were operating at full capacity, what sort of revenue would you be achieving? So if we take my 165,000 square meters and we apply a gosh. The most conservative number you could think of, €35 a square meter. I I mean, this is really picking a low number. That's over €5,000,000 worth of revenue. €5,500,000 worth of revenue, which is the kind of annual revenue we're capable of achieving without adding any additional equipment or or shift pattern to our operation at the moment. Next question, JD. Sorry. I should say who it comes from.

54:03 He's being very complimentary about me. Then he says, you have a fantastic operation opportunity to deliver shareholder value. How might this be affected by regional political issues? I I think over the last sort of seven six, seven years of operation, we have been, you know, we have seen a number of of political issues over time, none of which have affected us particularly. I suppose, really, the big effect has been that we were not protected in the way that we should have been last year. So that has affected us. So you could say that that was an effect that we are now addressing. It hasn't affected us operationally, except, of course, we did lose a quarry site. It has affected our abilities to progress with Stone Alliance.

54:50 So that has affected us. So that's a fair point. So these these, you know, issues that exist in these, you know, post conflict emerging markets, you know, with sort of fairly flaky notions of integrity and, you know, compliance, Yes. We can be affected by them as we've seen. We we believe that we are well equipped to manage, you know, the buffeting that comes with the opportunities that we get in these regions. Glenn b has said if you win the €195,000,000 claim, it's euros not pounds, what percentage of this claim do you expect will benefit Fox? Well, we will have to pay our professional accomplices in this, the lawyers, the litigation funders. But let's say let's say our claim is halved. Let's say we win a €100,000,000.

55:41 Let's say of that a 100,000,000 and and these aren't real numbers. I'm just giving you an example. Let's say 50% of that has to be paid away to third parties, let's say, which is not true, but let's just say to pick the worst case scenario, that leaves us with 50,000,000. If Fox Marvel's bottom line is enhanced to the tune of 50,000,000, it's 10 times our market cap. It's a windfall like there is no other. We would use it to do three things. We would use it to develop the business. We would use it to fund Stone Alliance, and we would use it to find a way of benefiting the shareholders of Fox Marvel. And that's how we look at it at the moment on the basis of were we to win this as as we believe we will.

56:28 Glenn b asks, how does the price per meter compare with other suppliers of marble? If you're an Italian white marble supplier, a a these are this is not like for like, but Italian marble goes for hundreds of euros per square meter. The cheapest marble I've ever seen comes from Turkey and China, which is not very desirable and not very are understood to be not very high quality, and we see prices of $20.25, €30 per square meter for that. But like for like, if we're out there with the Greek and Italian marble in terms of quality, which we are, density and desirability, which we are, then we are a third of the price, and we benefit from that.

57:17 Conrad w asks, at present, the parent company has significant retained losses, which prevent it from paying a dividend until such time as it has distribute distributable reserves. Would a successful settlement payment from the arbitration claim ensure the parent company would have distributable reserves to enable it to pay dividends to shareholders in the future, and what would the tax treatment of any settlement windfall be? The tax treatment would be that it would be subject to any kind of taxation that any profits to the company would experience. So that would be no different. The answer to your question, which is a very good one, is that the probability is that the successful way of being able to get something to a shareholder would be not to pay a dividend.

58:09 It would be to go through a share buyback operation, which would also be very advantageous from a taxation point of view. That would be one of the ways that we would look at this. There would be a way of doing it, and that's one of the one of the things we're looking at we would be looking at. William w asks, are you convinced that the legal case against the Kosovo will not harm Fox's operations in Kosovo? Well, we've submitted our claim, and so far, we're as operationally effective as we always have been if not. Michael h asks, what's the time scale for arbitration? I would say minimum twelve months. Twelve to twenty four months, I would say, is a reasonable expectation. E and P says, should the cadre of small shareholders expect any further dilution over the next two years? If so, will the board consider softening a dilution effect through rights issue?

59:02 Yes. This is always a good point, isn't it? How do we allow for the inclusion of the the the shareholder who isn't one of our institutional shareholders or significant shareholders. This is something that that we are considering as something that we need to address. And it's a good point, and this is something we're thinking about. Peter Jay says, what effects, if any, his last year's accord between Greece and Northern Macedonia and last week's partial recognition had on the company partial recognition between Serbia and Kosovo had on the company? I I would say none whatsoever at the moment. Of course, it does mean that Macedonia is now able to apply to be as an which it has done to be an accession country to Europe.

59:52 So that will have an effect when it takes place. And Macedonia is, I believe, already a member of NATO, which only strengthens the stability of the political situation in the region as was referenced by an earlier somebody who asked a question. So it it can only have a beneficial effect. But do we notice anything on a day to day basis? No. We don't. Andrew c says, could you give us an idea of when the legal action might get to court? If one, could some of the proceeds be usually deployed to expand the company's operations? Yes. Indeed. We absolutely would be using the proceeds to do that. Time wise, as I said, I think twelve to twenty four months. Any less than that, I think it'd be a brave man to say that it would be any faster.

1:00:38 But as I say, we believe we have a very, very strong case and so do our professional advisers who are putting their money where their mouth is. So we we, you know, we just need to get on with it. And that was the last question I have, Paul. I was gonna say, thank thank you so much for such a comprehensive run for you. You've answered every every question there. That was really, really kind. Thank you. I'm just conscious of time. We are just coming up to to the hour mark. So thank you very much for addressing those questions. Chris, perhaps I could just ask you just for a a couple of second wrap up for investors before I direct them for feedback, please. Yeah. First of all, thank you very much for bearing with me through this presentation. It's a great opportunity to talk about our company, of which I'm a passionate advocate. We are deeply committed to our operations.

1:01:25 We are fully vested in the region. We believe that we have the ability, the experience, and the strength of relationships to navigate the kind of buffeting that one of the question asks as one of the questions asked, talked about, and and referred to. And we are confident that we are well placed through the activities that we've managed to achieve through this COVID nineteen crisis period to build on what we've got and finally deliver on the opportunity and what we believe this industry is capable of of producing. It is a very high margin business. It's a very stable business. It's a very desirable product, and we see an expanding market rather than shrinking one, as I say, albeit, you know, this year's crisis.

1:02:19 And we look forward to being able to let everybody know that this is what we've done. And, Paul, thank you and Mark very much indeed. This is a you know, it's a great platform. Thank you so much. Thanks for updating investors, Chris. That was just a real comprehensive run through. Could I ask investors not to close the session? It should be automatically redirected for the opportunity to provide your feedback. If you've accessed the meeting from our website, the feedback page will appear in front of you. If you've accessed from the link in the email, you'll be asked to log in to submit your feedback. It'll take a couple of seconds just to pop up. But on behalf of Fox Marble Holdings PLC, an investment company, thank you for attending. That concludes today's session. Thanks, Chris. Thank you.