Expands Cocoa Operations in Sierra Leone

RNS Number : 1145W

Agriterra Ltd

25 January 2012

 



Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture

25 January 2012

Agriterra Ltd ('Agriterra' or 'the Company')

Expands Cocoa Operations in Sierra Leone

Agriterra Ltd, the AIM listed pan African agricultural company, announces that its 100% owned subsidiary, Tropical Farms Ltd ('TFL'), is making excellent progress in fulfilling its objective of becoming a leading buyer, trader and producer of high quality, sustainable and traceable cocoa in Sierra Leone.

Overview:

·    Buying network expanded to 12 locations, targeting 40 in total by 31 December 2012

·    Expanding buying and trading commodity focus to include coffee and palm oil

·    Negotiations underway to secure a 15-acre site in Sierra Leone's New Airport Development Zone in Freetown in order to build a state of the art collateral management facility

·    Advanced discussions to secure a cocoa plantation business in south-east Sierra Leone

·    Strong balance sheet following recent fund raising of US$15 million at 3p per share

·    TFL's activities complement existing beef ranching, maize milling and farming operations in Mozambique and early stage palm oil operations in Sierra Leone   

Andrew Groves, Agriterra CEO said, "Our cocoa buying and trading operation in Sierra Leone, TFL, is rapidly advancing its aggressive growth strategy to become a leading in-country trader of sustainable and traceable cocoa by the end of the year.  In line with this, it is focussed on building its direct buying register, securing a major new 15-acre management facility and acquiring a large cocoa plantation.  Having done the leg work and built its foundation and reputation, it is also looking to expand its commodity reach to include coffee and palm oil. 

"TFL's exciting business model provides a third revenue stream for Agriterra and complements our other agricultural businesses, which comprise maize farming and milling, the cattle ranching business which has reached 2,900-head, feedlot facilities and soon to be finished abattoir services and palm oil.  Importantly, we are well financed having raised $15million in December 2011 at 3p per share, have no debt and increasing revenues, and I am therefore confident that we will achieve our objective of becoming a substantial pan-African agricultural group."

Further Information

TFL's buying and trading operation, headquartered in Kenema in the eastern region of Sierra Leone, is expanding rapidly and is focussed on being a leading buyer, trader and producer of high quality, sustainable and traceable cocoa.  In the six months since its acquisition, TFL has expanded its buying network from four to twelve locations and increased the direct buying register to approximately 3,500 farmers across the country.  TFL's roll-out programme is targeting achieving a network of 40 buying points by 31 December 2012, making it one of the leading in-country traders of sustainable and traceable cocoa.  With an increased network and strengthened in-country relationships, the Board envisages that TFL will expand its commodity reach to include coffee and palm oil. 

TFL's reputation and business profile is building rapidly through relationships with farmers and out-grower schemes.  TFL continues to implement initiatives, including modern farm management techniques and farmer incentive schemes, which have proved extremely successful in Agriterra's maize production and process facilities in Mozambique.  The Board is confident that similar results can be achieved with cocoa production in Sierra Leone and the wider region.

As part of its expansion plans, both in terms of critical mass and commodity, TFL is in negotiations to secure a 15-acre site in Sierra Leone's New Airport Development Zone in Freetown in order to build a state-of-the-art collateral management facility.  This will be TFL's main hub servicing both Freetown and the international markets for all commodities that TFL is involved with.  In addition, it will have sufficient capacity to handle produce from the planned plantations TFL intends to invest in.  In line with this, TFL is also in advanced negotiations to acquire a cocoa plantation business in the south east Sierra Leone.    

TFL's activities complement Agriterra's established maize buying and processing operations in Mozambique and fits well with the Company's strategy of building a pan-African agricultural company with other divisions already including maize farming and milling, cattle ranching and feedlot facilities and abattoir services, which are currently under construction, in addition to palm oil operations.  The Company continues to invest in the ranching operations and will provide a full update on these in the near future.

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For further information please visit www.agriterra-ltd.com or contact:

Andrew Groves	Agriterra Ltd	Tel: [phone]
Jonathan Wright	Seymour Pierce Ltd	Tel: [phone]
David Foreman	Seymour Pierce Ltd	Tel: [phone]
Hugo de Salis	St Brides Media & Finance Ltd	Tel: [phone]
Susie Geliher	St Brides Media & Finance Ltd	Tel: [phone]

Notes

Agriterra Ltd is an AIM listed agricultural company with four divisions: beef, maize, cocoa and palm oil.  Its cattle ranching business, Mozbife, currently has a 2,350 strong herd, a land holding of over 16,000 hectares, a feedlot and a 4,000 head per month abattoir which is under construction.  In addition to selling meat from its own herds, throughput for the feedlot and abattoir will be supplemented using cattle bought in from local communities.

The Company's maize buying and milling operations, DECA and Compagri, are located in Chimoio and Tete in central and north-western Mozambique respectively.  These collect maize from circa 350,000 farmers using the Company's own vehicle fleet, process it into mealie meal, the African staple, and then sell it back to the local market, into supermarkets and to the World Food Programme.  Combined sales for the year ended 31 May totalled 28,822 tonnes maize meal generating revenue of US$13.6 million.

Agriterra's cocoa business is based in Sierra Leone, through its 100% subsidiary TFL, which is currently a buying and trading operation, but provides an ideal conduit to branch out into cocoa production in West Africa.  Its strategy is to establish itself as a secure, sustainable and traceable source of supply to meet the requirements of the major cocoa consumers who are placing increased emphasis in this area.

The Company has expanded its portfolio of agricultural products through the addition of palm oil, and holds a lease over approximately 45,000 hectares of brownfield agricultural land in an area suitable for palm oil production in the Pujehun District in the Southern Province of Sierra Leone.  This area of Sierra Leone, which is close to the Liberian border, receives one the highest levels of rainfall in Sierra Leone, which in itself, receives some of the highest rainfall globally.  In addition, the lease area is located on the equatorial belt, which is the most favourable geographical location for palm oil production. 

 

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