Mzintlava Quarry

BUSINESS PLAN
Prepared for: Mrs Agnes Tenjiwe Mzobotshi
Contact No: 071 059 7177
Compiled By:

Nonyameko Consulting
Suite 256 Tel: (047) 5371486
ECDC BUILDING
Cnr York & Elliot Road Fax: 086 698 1727
MTHATHA
5100

Table of Contents
1. Executive Summary
2. Milestones
3. Outline of Service
4. Funding required
5. Mission
6. Objectives
7. Business Summary
Key Business Information
Ownership
Management
8. Developmental Impact
9. SWOT Analysis
10. Success Key Points
11. Industrial Overview
12. Market and Marketing Review
Overview
Market Segmentation
Market Segmentation Chart
Marketing Mix
Market Trends and Forecast
Competitive Advantage
13. Technical Review
Premises and Facilities
Labour
Insurance
14. Financial Review
15. Appendices

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1. Executive Summary

“The booming construction industry will need to double its current output of R100-billion
annually to meet the public and private sector growth targets leading to 2014”.
"This, in a nutshell, is the (broad) challenge," Thoko Didiza, Public Works Minister,
declared to delegates at the 2006 Construction Conference at the International
Convention Centre in Durban on Monday, 30 October 2006. The government aims to
halve poverty and unemployment by 2014 as part of the Accelerated and Shared Growth
Initiative of South Africa (Asgisa) and announced that R372-billion would be spent on
infrastructure development over the next few years.
However, contractors, among other industry stakeholders, are faced with the challenge
of having to significantly improve their performance and become more competitive in
delivering quality products within agreed budgets and schedules. Further challenges for
contractors demand strict compliance to safety and environmental regulations while
maintaining good profit margins. Mzintlava Quarry, a small and innovative construction
and stone crushing plant - enterprise based in Lusikisiki is among such contractors.
Mzintlava Quarry was established in 2007 by its founders, with a clear mission and
commitment to providing customers with a flexible civil construction and crush stone
service that is focused on achieving exceptional results in line with the clients’
objectives. This organisation has since earned an enviable reputation for quality service,
problem solving and timely delivery of projects on a stand-alone basis to its clients. As
customers continue to experience first hand service from the enterprise, they have
tended to place bigger orders which have been tackled well with available resources.
The amendment bill of the Department of Minerals and Energy has emphasized the
noticeable contribution to Public Participation in the mining services. This entity is highly
involved in the provision of such services. A license of 25 years has been issued from
2013 to 2038. The organisation has faced a challenge of the non- functionality of the
Crushing Plant and therefore maps this business plan to seek finances for acquiring new
Stone Crushing Plant and an Excavator as illustrated in section 3 below to retain 95% of
its customers and partners.
The financial statements of the enterprise reflect R8 606 000 gross income and a net
worth of R5 503 321 for the business at the end of third financial year. Mzintlava offers
its services to the government institutions, municipalities, private organizations and

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private individuals. The concrete documentation of such provision is available. The
business aims to expand its operations to all areas demanding its services and an
amount of R11 192 425 is required for re-establishing the fully fledged operations.

2. Milestones

Future financial standing of MZINTLAVA QUARRY:

Total Assets R4 458 888
Long term liabilities R8 215 111
Monthly income R650 000
Proposed Contracts:
Road Contractors
Civil Builders
Internal resources:
Experienced Plant manager has been recruited who worked for 6 years for Blue Circle.
Experienced operators and drivers are part of the staff complement and have been there
since its start of operations.
Projections reveal that Mzintlava Quarry will reach an annual turnover of R8 606 000
during the first financial year (of expansion) at a monthly breakeven of R265 543 an
annual turnover of R10 413 260 at the end of the third year with10 % turnover growth.
Plant:
Mzintlava Quarry owns the following plant,
One Jaw Crusher with conveyor belts +- R2 m
1 x Tipper Truck(2007 Mitsubish Fusso 10m3) +- R850 000
1x2007 Isuzu bakkie +- R150 000

1x Electric Generator +- R8 000

1x22m Weigh bridge scale +- R600 000
One x Open End Loader +- R575 000
3x fully furnished containers with computers +- R135 888
Fenced area of operation with lockable gate +- R120 000
1x 3 Phase Electricity Installation +- R20 000
Total Assets R4 458 888

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3. Outline of Service

Mzintlava Quarry is acting as a one-stop contractor for various categories of crushed

stone and dust for comprehensive civil engineering and groundwork services. The
enterprise has identified opportunities of rekindling of a quarry mining that had worked
before by Ramdel Construction while they were constructing R61 around Port St John’s
area. The community is providing labour services feeding the Stone Crusher and loading
of stones on the trucks facilitating the crushing.
 The heaps of the stones are loaded and putting them nearer the Stone Crusher
Plant.
 The operators feed the Stone-Crusher with stones.
 The different categories of the stones are produced and be conveyed to their
different heaps as per size.
 The business work closely with road contractors, municipalities and government
sub-contractors who have been given construction jobs, surveyors and
specialized civil engineers to fit and serve fixed projects within their given sites,
community and terrain by providing crushed stones and dust.
According to the requirements of the license of DMR and the Act thereof, health and
safety measures are practiced in the site. The continuous inspection and auditing of
operations comply with all the requirements of the act.
Ms Agnes Mzobotshi engages highly professional activities by seeking all the available
support from the government example of which is to:
 Identify licensed Blasters in the quarry
 Engage Geological Scientists for research of the area and type of stone being
harvested in quarry mine. Reports and Results of the study display abundance of
Dolerite Rock available on the surface of 15.7 hectares of land hence 25 years
license issued.
 Established Environmental Impact Assessment produced by renowned company
of Sandy Muller called Coastal and Resource Management from East London.
 AMG Global Chartered Accountants were appointed to mentor the organisation
on the usage of the R5m loan issued for the operation. Their report is available
and has led to the issue of the long term licensing.

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4. Funding Required

In its quest for retaining its clients and to remain competitive in the tight local market,
Mzintlava Quarry requires financial assistance for continuation of operations and
expansion:

1xStone Crusher Plant with Accessories- R6 007 800

1x Excavator R 1 681 500
1x New Tipper Trucks R 2 228 700
1 x Flat bed 10 ton Trucks (still to be sourced when funds
permit)
Fencing Material R 1 200 000
Working Capital R 74 425
TOTAL R11 192 425

5. Mission

Mzintlava Quarry endeavors to achieve the dominant market share in chosen market
sectors through a combination of market penetration and selective acquisition. Our
priority is and will hopefully remain ‘our commitment to those for whom we work’. We put
a strong emphasis upon personal contact with our clients and wish to maintain this
contact until our contracts are fruitfully completed. Our deepest desire is to efficiently
produce an effective end-product for our clients. We also continue to value our own
employees and public participation in the project.

6. Objectives

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  To improve efficiency, safety, and productivity with the existing developmental
infrastructure and facilities thus continuing to create and sustain more
employments
 To increase our market share and retain 95% of the engineers and customers we
have worked with.
 Continue to exploit the weaknesses inherent in the major area competitors to
increase our public and community support in the local market area.
 To increase our turnover to double figures in a span of three years of expansion.

7. Business Summary

Key Business Info

Name of the Business: Owl Eye Trading 92

Trading Name of the business: Mzintlava Quarry

Registration Number ; 2002/020770/07
Type of business: Quarry Mining and Construction

Location and Zoning: Mzintlava Quarry is operating under OR Tambo District

Municipality and serves all neighbouring towns of Lusikisiki, Port St John’s, Bizana,
Flagstaff, Tabankulu and Mount Ayliff. Its offices are located in Mzintlava Village Port St
John’s under Ward 13 which is about 10km from Lusikisiki on R61 from Port St John’s.
The pit is in the same area and extends to about 15,7 hectares.

Ownership

Mzintlava Quarry is a Private Company Limited that has one member. Ms Agnes
Mzobotshi, a qualified woman entrepreneur from Lusikisiki is the main shareholder of the
business with 80 % interest (shares) of the enterprise and 10% for Chieftainship while
10% is for local community invested in a Trust. This arrangement of ownership is to
secure local labour and continuous protection of the business and beneficiation of local
resources for improvement of quality of life.

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Management

The business is managed by its member. She has overtime accumulated participatory
strong business principles and has successfully coordinated the introduction of Women
in Mining in the Eastern Cape as espoused by the then Minister of Department of
Mineral and Energy Ms Phumzile Mlambo-Ngcuka. A company for women in mining was
registered as CRSIMA Women in Mining Registration Number 2005/017973/07 intended
for a partnership to enhance corroboration with involved women in mining.
Ms Agnes Mzobotshi is responsible for financial administration including invoicing,
banking payroll, purchasing etc and she also takes care of general office administration
functions assisted by employed clerks in the business
Mr L. Sithamela is a Plant Manager and is always stationed in project sites where plants
are working, he supervises staff in production processes as required by clients/partners
and he plays a key role in fixing the equipment to ensure is optimally used for the
advancement of the operations.
The duty of negotiating new contracts will squarely depend on General Manager Ms
Agnes Mzobotshi.

8. Personnel plan

Mzintlava Quarry will engage direct staff members and two managing people. The
following illustrates the personnel and salaries:

Management Team
Ms Agnes Mzobotshi General Manager R25 000
Mr Luyanda Sithamela Production and Plant R29 000
Manager
Operators
Senior operator - R3 000
TLB operator
Drivers
Senior driver - R2 975
Tipper truck driver
Tipper truck driver R2 755
General truck driver R2 550
Assistants/General Workers

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 Senior assistant - R1 675
Rounding Assistant
General worker R1 500
General worker R1 270
Casual Labourers for stone gathering Stone Gatherers R1 500
Security Guards for the Plant and Area day R4 500
and Night
Monthly Salaries R74 425.00

9. Structure of Governance

General Manager

Production Manager

Operator Senior Operator Operator

Drivers Senior Driver Security Guards

General Worker Rounding Assistant General Worker

10. Development Impact

Black Empowerment:
Mzintlava Quarry supports and upholds the values of Black Economic Empowerment.
The enterprise is 100% black-empowered business and is fully owned by a woman and
Previously Disadvantaged Individuals from the previously disadvantaged areas of the

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Transkei area. The employment of local people and capacity building of people trained in
various aspects of quarry mining on accredited courses by Mineral and Qualifying
Authority including Minerals Technology of South Africa.

Local Economic Development:

The construction industry is a key indicator and driver of economic activity and wealth
creation. The business will work hand in hand with local contractors and institutions in
providing services that will improve infrastructural development in the area. Mzintlava
Quarry’s aim is to leverage its deep and broad knowledge and skills to accelerate
success of local contractors thus leading more job creation and more income realisation
by local people.
 The company has engaged in the building of Community Hall confirmed by letter
from Port St John’s Local Municipality.
 Built a Crèche in the community and used as of now to teach children
 Issued Bursaries for local students and documentation available.

Skills Development:

The construction industry needs to think more creatively about skills acquisition and
employment equity and embark on a multi-pronged strategy. Mzintlava Quarry believes
that importing skills at a significant cost is a short-term solution, and therefore strives to
empower local people and encourages this as a way of accelerating skills development.

11. Swot Analysis

Strengths:
The owner of the business is experienced in the mining and construction industry.
The business is fairly new in the industry and already has references that could promote
it to many levels.
The owner member has built good working relations to form a formidable management
skill for the business
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The unwavering support from the government and Industry Partners largely cushions all
operations of the entity.
The business is a legal entity and is registered as a Private Company Limited and has
renewed license of 25 years in quarry mining.
Joint Venture Prospects on high level of negotiations as at 24/05/2014.
The business will provide a service with quality assurance.

Weaknesses:
The business lacks adequate finances to acquire the needed plant for its transformation.
Insufficient equipment makes project planning difficult.

Counter-action:
(The business will approach financial institutions for financial assistance that will be
used to acquire the needed plants. Acquisition of such equipment will transform the
business into an efficient and a more capable entity).

Opportunities:
Promotion of expanded public works programme and infrastructural development across
the province.
Planned Shopping Centre for Lusikisiki planned by Andre du Toit of Pietermaritzburg.
Housing projects from government demand the service of the business.
Deviation of N2 National Road from Mthatha to KwaZulu Natal is a long term project.
Community labour support is available.
Largely unstructured competition with limited plants in the region that have their permits
withdrawn.

Threats:
More quarry mining businesses coming up in the neighbourhood.
Counter-action:
Will Continuous report unlicensed contractors in the area to Authorities.

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12. Keys to Success

Remaining committed to those for whom the enterprise works for.

Putting a strong emphasis upon personal contact with the clients and maintaining this
contact until contracts are fruitfully completed.

Mzintlava Quarry owner should always value its employees by training them to the
highest level in all aspects of work carried by the enterprise.

Mzintlava Quarry should always seek to produce the highest standards in its work so
that a satisfactory job can be executed for the satisfaction of all.

13. Industrial Overview

The Building and Construction industry produces revenues of in the trillions and provides
direct employment to millions of people worldwide. Between 10% and 15 % of a
country’s gross national product is typically generated by the construction industry,
which has a profound impact on our daily lives. The buildings we live and work in, the
roads and bridges we drive on, the utility distributions systems we use, the railways,
airports and harbours we travel and trade from are all products of this vital industry. The
construction industry is a key indicator and driver of economic activity and wealth
creation. To remain competitive, the industry must continue to evolve on business,
technological and environmental fronts. It must also provide the raw materials to be
accessible near the sites to reduce the transport costs.

14. Market and Marketing Review

Market Overview

According to the Construction Industry Development Board, a total of 698 contractors

are registered in the Eastern Cape, out of which 542 are Grade one, more than 77%.
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Grade one means that these companies are new and have no experience in
construction, very little equipment, and can only be granted work to the value of R200
000. Only one is registered as Grade nine, which means no limit to the type of work they
can do. In between these grades is the rest of the more than 22%, with varied
experience and capacity.

The competition in the Eastern Cape construction industry, specifically in the OR Tambo
District Municipality is fast growing. Most people are starting up construction companies
even though they do not have the required expertise, facilities and plant for this business
field. Most of these companies are set up only with a view of bidding for building tenders
provided by government which limits their scope of operation. These companies find it
difficult to secure the tenders because they lack sufficient equipment and skills required.
The acquisition of the new equipment will add more strength to Mzintlava Quarry and
thus increase its chances of securing bigger projects.

Market Analysis

Crushed Stone products are required for road and driveway construction.  There are a
significant number of roads and driveways which need to be paved each year.  There is
at present only one area source for asphalt.  The high prices charged are a reflection of
their monopoly.  Thus, there is a significant niche to be filled.

Stone and rock-related products are a necessary ingredient to road building in the area. 
There are a significantly large percentage of roads which need to be re-tarred each
year.  In addition, there is a significant percentage of the population who has “retired” to
the area, and is engaged in remodeling and making their new homes more accessible.

Also, the previously-described "window of opportunity" and the vulnerability of

competitors to a customer-oriented operation are significant.  The average end-user is
more concerned with customer service than with price. 

Market Segmentation

Mzintlava Quarry classifies its target market as follows:

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Building Construction Companies
These are formal constructors specializing in structural developments like constructing
shopping centres, halls and recreation facilities. Because of their reputation, they secure
lucrative structural development tenders from government. They sub-contract quarries
and cartage companies in completing their projects.

Civil Engineers
These are the companies that specialise in road construction projects, railways
development and other complex structural developments. They work hand in hand with
government. They sub-contract quarries and cartage companies in completing their
projects.

Standard Customers
These include informal building contractors who take up small building projects. They
mostly deal with individual customers who want services like driveways, small to medium
houses etc. Hardware retailers and brickyards also fall within this group.

Market Segmentation Chart

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 Standard
Customers
15%
Civil Engineers
40%

Building
Contractors
45%

Marketing Mix
Service

Mzintlava Quarry specializes in the supply of different categories of the crushed stone
general civil engineering services and plant hire.
Mzintlava Quarry will work closely with specialized civil engineers and building
contractors.

Mzintlava Quarry deals exclusively in providing stone and crushed stone-related

products, including but not limited to the following:

 13mm
 19mm
 Crusher Dust
 G5
 G7
 6.7mm

Pricing
Flexible pricing policy is applied by the business to enable it to negotiate contracts and
prices with its customers and partners.

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Factors such as quality supplies, proper labour principles, and punctual completion are
taken into consideration together with construction standards when negotiating a price
with a customer.
Mzintlava Quarry also employs tender specification price determinants.
Distribution
All business administration will be conducted at the business offices, in Mzintlava. This
office processes contracts, tenders, plant maintenance plans and financial management.
All production processes are processed in the site office (located at the project site).
This is where specific customer requirements are prepared and implemented. Machinery
and plant are kept and maintained in the site office in conjunction with the administration
office.
Promotion
The owners of the Mzintlava Quarry will jointly approach potential customers and
present services of the business in a quest to secure supplier contracts.
Besides that, the business will apply the following promotional plan:

Kind of Target / Positioning Timing

Promotion
Signage At offices of the business, project site and at Annually
both sides of R61 from Queenstown towards
Mthatha
Yellow pages East London & Border yellow pages Annually
Business Cards Distributed to potential customers and Daily
business people
Media Advertise on local newspapers and local Every third
community radio month

Also, Mzintlava Quarry uses a large sign board that have the name of the business,
contact numbers and location of the office. This board is mounted in the site where it
renders its services until it completes its services. This provides all passersby and
potential customers with the relevant contact information of the business.
Plant is branded with Mzintlava Quarry’s trade name and contacts

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Mzintlava Quarry is registered in Service Providers Databases of all District and Local
Municipalities and will expand that to other municipalities as it grows

Market Trends and Forecast

Construction industry is promising to be eventful in the next coming years. Depending

on the capacity of Mzintlava Quarry (in terms of physical resources which influences
securing of bigger lucrative projects), chances of making huge annual turnovers is high.
The following are positive market indicators that justify potential high turnovers for
Mzintlava Quarry:

The state's expanded public works programme (EPWP) will see between R15-billion and
R20-billion pumped into South Africa's economy over the next five years, with the aim of
employing a 3 million people from 2014.

According to EPWP coordinator Shaun Phillips, the programme will spend at least R15-
billion on labour-intensive jobs over the next five years. This, he said, would translate
into the building of 37 000km of roads, 31 000km of pipelines, 1 500km of storm-water
drains and 150km of urban sidewalks.
With the World Cup completed, Manuel announced that an amount of R5 billion was due
to be spent on dedicated infrastructure over the next years. The bulk of this had gone
towards the construction.

The national housing budget has been allocated an additional R9.5 billion over the next
three years, an increase of almost 40%.

The government has ploughed about R8-billion into the Coega project (Eastern Cape),
including R3.1-billion for the new port, R2-billion for infrastructure in the IDZ, and R2.1-
billion by state electricity company Eskom for to upgrade the power supply. State rail
company Spoornet has invested R500-million in upgrading rail facilities.
Altogether, spending on infrastructure will increase from R112.5bn in 2011/12; to
R125.4bn in 2012/13 and R133.8bn in the 2013/14 financial year. This displays that
more government spending in infrastructure is growing year by year.
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Competitive Advantage
Mzintlava Quarry and Construction will be operated by experienced personnel. The
experience gained from project management and labour intensive projects gives the
business an advantage over its competitors.
Mzintlava Quarry will acquire its more plant and equipment and will therefore never be
engaged on subcontracting other business for its projects.
Owning efficient plant equipment gives the business more benefit over small
construction business as Mzintlava Quarry will also hire out its plant to these
businesses.(TLB ,Trucks, Excavators)
Mzintlava Quarry will groom and develop its personnel unlike the competitors who import
highly expensive personnel.

15. Technical Review

Location and Facilities

Mzintlava Quarry will operate under OR Tambo District Municipalities. Its offices will be
located at Mzintlava Village Port St John’s. Mzintlava Quarry aims to buy the special
plant that will meet all the needs of the customers by providing quality crushed stone.

Labour

Mzintlava Quarry will comply with Basic Conditions of Employment Act, Labour Relations
Act and Health Occupation and Safety Act in all labour issues.
Insurance
All machinery, equipment and the building will be covered with relevant insurance

companies. The business will abide with all regulations in regard to employee health

and safety.

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16. Financial Review

Acquisition and Disbursement

Mzintlava Quarry needs a total amount of R11 192 425 to purchase plant. The business
will apply for loans from the following institutions:
Department of Environment Affairs and Tourism = R3 000 000 Grant

10% of the amount required for new plant will be contributed by the owner of the
enterprise.
SEFA and IDC will be approached for 80% indemnity for the amount required for new
plant.
Banking Institutions will be approached to finance the 10% balance.
Other development institutions like Business Partners, Eastern Cape Development
Corporation and governmental institutions will be approached for financial assistance.
Financial projection

The following three-year projections are attached:

Turnover
Expenses
Cash Flow
Income Statements
Balance Sheets
Ratios
Appendices
Financial Statement
Copies of Contracts
Quotations
Curriculum Vitae of owner
CM 22

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