Project Sandstorm is a formed entity established for the purpose of acquiring the assets and business of Sandstorm. The company started in 2008, produces sand, gravel and decorative rock and is located in the Kansas City area. The majority interest owner of Sandstorm is in his mid-70’s and is divesting himself of all holdings for estate planning purposes. The management team desires to acquire the assets from the majority owner alongside an investment group.
At the end of March, 2016, a Letter of Intent was signed by all parties necessary for this transaction. All owned and operated assets, excluding the 364 acres at the mining site, are being acquired for $6,200,000. The investor group backing the management team will enter into a Mining Lease for the Land for a royalty payment of Five Percent (5%) of the gross revenues with the exclusive option to purchase the Land at any time for One Million Eight Hundred Thousand Dollars ($1,800,000). The total investment for the project is Nine and One Half Million Dollars [$9,500,000], apportioned as follows: $6,200,000 for asset acquisition; $500,000 to buy out consulting contracts; $1,500,000 for capital improvements; $1,000,000 operating reserve, and the balance for other fees associated with the transaction.
• Asset Value > Purchase Price: The company currently has Inventory and Equipment valued of $8.83 million. Sand and Aggregate Reserves owned are $15.5 million and leased reserves are $1.4 million. All combined, a total of $26 million in current market value.
• Competitive Advantages:
o Fully compliant, which is key given existing state and federal regulatory permits.
o 40 year source of sand, gravel and rock.
o Highly experienced management team.
o Strong asset base.
• Market Channels: Traditional customers are ready-mix concrete companies.
• Growth Opportunities:
o Decorative rock market is one of the biggest here. No area companies have the equipment to produce decorative rock, giving Sandstorm a virtual monopoly. Profits are extraordinary compared to conventional products.
o Filter media sand, material for “sand blasting”, bagging operation and increased geographical decorative rock market are target areas going forward.
• Financials: Management projects revenue of $1.8 Million for 2017 and close to $3 Million for 2018. Historically, the company had annual revenue sales of $3.6 Million from one customer (2010-2013). Since then, the company has built its customer base and is not reliant on one customer. The company did $700k in revenue in 2015.
Asking Price $9,500,000
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