Digital Gas, Inc.(fka DIGGQ)

[Buckey]

2004-10-12 13:54 ET - News Release



NEW YORK -- (Business Wire) -- Oct. 12, 2004

Digital Gas, Inc. (OTC Pink Sheets:DIGG) has entered
into a definitive agreement with Nova Stone Exporters, Inc. of
Bridgewater, Nova Scotia, to develop several existing stone quarries
located in Shelburne County, Nova Scotia. To further extend the
profitability of the business, Digital Gas is planning to establish a
major integrated resource and energy complex on one of the quarries.
Digital Gas will finance the project through a newly formed spinout
company, with Digital Gas owning 75% of the common shares and Nova
Stone owning 25%.
¶ One quarry contains well in excess of 100 million tons of sized
crushed stone and armor stone and a second site is estimated to
contain a like amount of crushed stone. Under the terms of the
agreement, Digital Gas will develop the quarries into an integrated
resource, energy & farming center. Further development of other
businesses on the site is planned, including: food processing,
pharmaceutical processing, nanotechnology and an advanced
gas-processing center. The fully integrated complex will benefit from
a state of the art loading system and docking facilities for barge and
deepwater shipping that will result in highly competitive access to
major east coast and Gulf Coast US cities and Mexico. To further
extend the profitability of the business, the ships will return to the
complex with special materials for high profit,
value-added-processing.
¶ The current owners and senior management will continue to run the
stone operation, be responsible for all permitting and licensing and
oversee the planned rapid expansion. Digital Gas will finance the
acquisition and expansion through a debt offering by the newly formed
spinout company. Digital Gas is currently negotiating with several
investment bankers to sponsor the new company on a senior exchange.
The agreement calls for the new company to pay the current owners $7
million in cash-out moneys in the form of a note, a $0.20 per ton
royalty interest in the stone shipments and a 25% interest in its
common shares at closing.
¶ Based on current market prices, cost factors and profit margins,
the quarry business alone will generate significant net income for the
estimated 50 years plus life of the quarries. Competitors of the new
company include: Vulcan Materials Company (NYSE:VMC); Martin Marietta
Materials, Inc. (NYSE:MLM); Hanson Building Materials North America,
Inc.; Oldcastle, Inc.; Rinker Materials Corporation; Lafarge North
America Inc. (NYSE:LAF); CEMEX, S.A. de C.V. (NYSE:CX); Florida Rock
Industries, Inc. (NYSE:FRK); MDU Resources Group, Inc. (NYSE:MDU);
Aggregate Industries plc (London:AGG) and Rogers Group, Inc. as well
as other companies in Nova Scotia.
¶ Digital Gas also reports that it is close to finalizing a funding
arrangement of approximately $50 million for its southeast Kansas gas
acquisitions and development, as well as a $60 million investment with
Asian sources for the Quanta Consortium energy & farming center in
Taiwan. Regarding the Quanta Consortium, Richard Earle has retired as
a Partner from Patton Boggs and currently holds the position as their
International Business Advisor through the end of this month.
¶ For further information: call Brian Smith at 732-927-4073 or email
[e-mail]
Contacts:

Digital Gas, Inc.
Brian Smith, 732-927-4073
[e-mail]
Source: Digital Gas, Inc.