Cavico Corp. (NASDAQ: CAVO),
a leading infrastructure development company based in Vietnam, today announced that its majority owned subsidiary, Cavico Infrastructure Development has signed a joint venture agreement with the Investment and Exploitation of Natural Resources Joint Stock Company (IERC), to invest, exploit and market construction stones from Hang Co Mine.
According to the agreement, Cavico Infrastructure is responsible for exploiting, processing and marketing the stones and IERC will be responsible for administration of the joint venture and obtaining licensing approvals. The parties have agreed to split the revenues. IERC will receive $0.40 for every cubic meter of stone exploited, processed and sold by Cavico Infrastructure. Cavico Infrastructure will retain the remaining revenue, which it anticipates to be approximately $9.5 million.
Cavico Infrastructure also has signed an agreement with IERC to exploit and market construction sand in the Doc Du area, in Vinh Tan village, Binh Thuan province. Cavico will extract sand within 7.63 hectares of land that has 152,600 cubic meters of construction sand reserves at a depth up to 2 meters. Cavico expects to extract approximately 50,000 cubic meters of sand per year for the next three years. The value of this contract is approximately $1.1 million.
In addition, Cavico Infrastructure has signed a contract to sell 360,000 cubic meters of block stones from Hang Co Mine to the Dong Bac Company by the end of 2010. The anticipated value of this contract is $3.0 million. Currently, Cavico Infrastructure is also negotiating a sales contract with ITACO Company to sell construction stones for 2011. Both Dong Bac and ITACO are members of the Vietnam National Coal and Mineral Industries Group, also known as Vinacomin. The current price for block stone and construction stones is about $7.50 and $8.80 per cubic meter respectively.
Hang Co Mine is located at Vinh Tan village, in the province of Binh Thuan, which is in south central Vietnam. The quarry will be the main provider of construction stones to the Vinh Tan thermoelectricity plant. The total land to be quarried is 4.27 hectares which has 640,300 cubic meters of natural stone reserves at a depth up to 15 meters. Cavico expects to excavate approximately 480,000 cubic meters of block stones annually and should complete the excavation by August 2011.