Inco buys 6% stake in limestone producer

By purchasing seven million shares of Explaura Holdings (COATS), Inco Europe, a unit of Inco (TSE) will earn a 6% interest in the United Kingdom-based mining company. Through a private placement, Inco will acquire four million shares at 40 cents per share. Inco will purchase the remaining three million shares from certain Explaura shareholders at 32 cents per share.

Explaura’s wholly owned subsidiary, Newfoundland Resources and Mining, operates a limestone quarry near Lower Cove, Nfld. The quarry, with a production capacity of four million tons per year, contains over 1.2 billion tons of reserves.

“Inco has been looking at various ways of diversifying, while still using our mining skills,” said an Inco spokesman. “We saw this as an opportunity to make a modest investment in industrial minerals.” Explaura’s limestone is of excellent quality, he added, making the purchase particularly attractive.

Last year, Inco acquired a 100% interest in Western Aggregates, a U.S-based company which produces lightweight aggregate for the construction industry.

Explaura, which reached commercial production at its Newfoundland quarry in June, is shipping a large percentage of its product to the U.S Eastern seaboard. Construction limestone is in short supply in that area, Explaura explained.

The private placement is subject to regulatory approval, and all transactions are expected to be completed within 30 days. Inco says it has no intention of increasing its investment in Explaura at this time.