Fox Marble full of potential

Fox Marble, which listed on Aim nearly three years ago, holds licences and operating agreements for 10 quarry sites in Kosovo and Macedonia, four of which are in production. Unlike many other small commodity-focused plays, exploration is not a major issue. Fox's sites sit on an almost limitless supply of marble. In fact, a 2012 independent report found that just five of the quarries held 326.4m cubic metres of indicated and inferred marble reserves. More than a quarter of this - worth €16.5bn (£11.9bn) - was indicated, thereby removing exploration risk.

Marble mining and processing is also a very high-margin game. One cubic metre of mid-range natural stone typically costs Fox €65 to extract, and might sell for €350 on the market in its raw form. But, once processed and sliced into thin slabs (at very low cost), the same piece of marble might fetch €2,250. Although Fox has signed long-term agreements to supply non-processed marble, it eventually wants most sales to be in processed form. This will soon be helped by the completion of a factory capable of processing 64 cubic metres a day, which is one of the main reasons chief executive Chris Gilbert describes 2015 as "our pivotal year".

Recent sales momentum, helped by investment in the sales team last year, is a second reason expectations are high this year. Orders with St Georges, the luxury residential division of Berkeley Homes, have reached €0.6m, and by the start of April, total orders of €2m had already been booked for 2015. These include sales of processed marble through distributors in London and New York, as well as raw marble contracts with companies in China, Italy and Gibraltar. The company says negotiations with other distributors around the world are at advanced stages.

Global demand for marble is increasing, and Fox is confident it has buyers for the 1,000 tonnes of marble it expects to be extracting in each of its four operational quarries by the year-end. Fortunately, the quarries' geology span a wide range of natural stone types and products, and are comparable in quality to Italian marble, the global standard bearer.

But the geography - and the political risks associated with it - has dogged Fox Marble. Mr Gilbert says even he had "less than zero appetite" for doing business in Kosovo when he was first introduced to the project. But with Kosovo's conflicts behind it and the government desperate for direct foreign investment, there are many factors in Fox's favour, including low royalty rates and tax, and comparatively cheap labour.