Model Estate 2021 - Mining for Minerals

Mining for Minerals

Following last year’s exploratory investigations, some unforeseen delays were encountered with the programme of preparatory works required to enable mineral extraction to commence. Enabling works were however completed in late summer before extraction at the quarry commenced in the final quarter of 2020.

SOLAR FARM

TELECOMS MAST

FISHING RIGHTS

SYNDICATE SHOOT

Other

SOLAR FARM

SYNDICATE SHOOT

FISHING RIGHTS

TELECOMS MAST

MANOR HOUSE

FARMHOUSE

In-hand farm

FARMHOUSE

MANOR HOUSE

Let commercial

Let residential

AST

FBT

Let Farms

Show all components

Read more on the Model Estate...

How did the Model Estate rank amongst the alternative asset classes?

Alternative Asset Class Rankings

A land excavator in a construction site in the UK, with an arched arm.

Delays experienced in the lead up to sales commencing were due to additional archaeological survey work being needed. As the lease had to be completed prior to such works commencing, Quarry Co. were obligated to meet Certain Rent obligations due to the Estate. This ensured the Estate’s revenue position was protected from the outset, albeit with acknowledgement that passing lease provisions permitted Quarry Co. to accrue shortworkings whilst rent was paid throughout periods of nil productivity.

Commencing sales of aggregate products in the winter months is recognised to present challenges given the influence of the weather and relatively reduced demand from construction activity. However, demand driven by regional road building schemes and Quarry Co. winning supply contracts to service such works have assisted in generating immediate sales. Of note, Quarry Co’s decision to include a concrete batching plant on site served to enhance levels of activity and promote value added products via the sale of ready mixed concrete.

Due to the Covid-19 pandemic, Quarry Co. have expressed concerns over the forward operating position if restrictive measures continue to stifle productivity and limit the opportunity to sell materials into regional markets for construction. As a general nationwide trend, the Mineral Products Association reported that annual sales of sand and gravel fell by 12.4% in the final quarter of 2020. Regionally, however, it has been acknowledged between Quarry Co. and the Estate that the local market has remained buoyant due to road building and other ongoing infrastructure schemes being supplied by material from the quarry.

The Estate have agreed that should a localised fall in market circumstances become apparent in the first half of 2021 and production at the quarry is forced to cease during this period for any notable length of time, a discussion with Quarry Co. may be appropriate in terms of considering short-term relief or allowance upon their prevailing rental obligations.

Otherwise, rent and royalty revenues generated under the lease from the first full quarter of mineral production are positive, with the change of use from 25 acres of let agricultural land to an equivalent area of land utilised for (and activity ancillary to) mineral extraction/production generating an annual rental income uplift of c.£540,000.

EMAIL PAUL

01743 213269

Partner

Paul Clarke

For more information please contact our minerals expert:

"Commencing sales of aggregate products in the winter months is recognised to present challenges given the influence of the weather and relatively reduced demand from construction activity."

EMAIL Stephen

01223 346609

Head of Rural Division

Tim Jones

EMAIL JOHNNY

020 7518 3270

Research Analyst

Heena Gadhavi

A picture of Stephen Richards, a member of the Leisure team Carter Jonas, on a white background

A picture of Johnny Clayton, Masterplannner at Carter Jonas, on a white background