Bombed-out Pan Pacific Aggregates is seeking £1m following a deal it believes will start to restore its fortunes.

Backed by RAB Capital and headed by resources veteran Don Nicholson and William Voaden, the former English China Clays luminary now running broker VSA Resources, Pan Pacific has agreed to buy the Pumptown granite quarry and other properties in the Canadian province of British Columbia from local land developers Herb and Steve Dunton for 80 million shares and £200,000 cash. The purchase, which will give the Dunton brothers 42 per cent of Pan Pacific and seats on its board, will bring the company an asset that observers believe could produce upwards of one million tonnes of granite a year for 12 years.

That could generate profits of £800,000 in its first full year on £2.5 million revenues. If so, it could provide a much-needed fillip to Pan Pacific’s AIM-quoted shares, which have collapsed from 2005’s 80p float price to a barely visible 3.75p.

Pumptown should replace the AIM-quoted company’s original project, to quarry the Sechelt Peninsula up the coast, which has been stalled by what the company regards as extraneous claims and counter-claims from factions among the area’s Sechelt Indian Band and involving the Ottawa government. Pan Pacific, which began a £7.5 million compensation claim from the government, still reckons it can quarry 750,000 tonnes a year from established licences on the peninsula, but is more excited about the potential at Pumptown and Pine Flats, another Dunton project in the vicinity.

Acquired by the Duntons to establish a residential community and golf course, Pine Flats sits on an estimated 250 million tonnes of ‘Sechelt sands’, which Pan Pacific says the Californian transport authorities to the south have named as a preferred material for bridge and road renewal. The company has signed a letter of intent with CNI Group to take over its aggregate operations there and extract an estimated eventual 100 million tonnes of mineable sand and gravel there.

It would be no surprise if PPA were to talk to Heidelberg Cement, the German parent of Britain’s Hanson group, with adjoining Sechelt operations, about a production and processing deal. The company suggests that California alone could take five million tonnes a year.

Analysts suggest a Heidelberg deal could yield Pan Pacific up to £4m in extra annual profits in the medium term. Meanwhile, the company is working on several other potential projects.

With 33 per cent gearing, it is believed the company hopes to raise the £1m it now seeks at 1p to 1.25p a share. More funds will be needed later on to develop the projects under consideration but, if the deals go through as planned, the shares will merit a significant rerating.

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Pan Pacific Aggregates	AIM	£0.72m	0.25p	0.00p
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PPA perseveres			02/10/2008
PPA back to AIM			29/09/2008
Crisis hits PPA			29/08/2008
Pan Pacific Aggregates			08/07/2008
PPA builds for recovery			20/06/2008