Member Info for jk400

In the past, it was a case of good news was rushed out (as early as the 5th) and bad news got pushed back (to as late as the 17th).

I think we're past all of that now though and the 10th has become a regular occurence unless it falls on a weekend, where they generally put it back to the Monday or Tuesday.

In the time that I've been here, plus many of the long term holders, we've seen the total issued share capital go from around 150 million to 550 million, so what's another 20 million between friends?

We've also seen the CPO mill go from 70,000 tonnes per annum capacity to 60,000 tonnes on paper and we were told that no more dilution would be neccessary. A lot of DKL holders have long memories.

As it happens, this particular deal appears to be a good use of shares in lieu.

The SP isn't going to move until we get news of actual bottom line. We now own 100% of a facility that isn't doing anything yet because they've run out of cashews bought last season. The new harvest to buy enough stock for this year runs between February to June.

As long term holders here, it's always interesting to note comments from those on the sidelines.

https://twitter.com/MylesMcNulty/status/1612765492950847488

Basically, "DKL never hit their forecasts" and "Paying fees in shares never reassures me".

Interesting chart there from Myles McNulty though.

Also, Myles if you're lurking here, no Ayenouan has never operated at more than 2/3 capacity but you are wrong on the 60kt pa figure - it's actually a 70kt mill, but no need to question yourself. It does state 60kt on the latest RNS's, but on the older ones, it was 70kt!

Just re my last post, here are the Q4 figures combined for Q4 over the last 7 years.

This does indeed suggest a normalisation as the two outliers of 2021 and 2017 both led us in to whatever the plural of "annus horribilis" is.

Q4 2022
25,524

Q4 2021
39,179

Q4 2020
24,720

Q4 2019
19,437

Q4 2018
24,903

Q4 2017
32,364

Q4 2016
20,726

This is the key line for me: "Production over the past 2-3 months has normalised compared to historic levels which we are hopeful will continue into the upcoming high season."

Rivaldo, re December CPO production and sales being still well below last year, we were forewarned of this if you remember and not to compare too much like for like with last year. On that basis, if we look at the figures for December 2020 (not included in today's RNS), then news becomes rosier...

Dec 22 FFB processed (tonnes)
10,502

Dec 21 FFB processed (tonnes)
14,395

Dec 20 FFB processed (tonnes)
6,929

Prior to that, the figures were quarterly, so we can't compare with Dec 19 / 18 / 17 unfortunately.

It's a good idea to now separate off the cashew RNS's simply because it provides us with two regular monthly news streams rather than one. If they can be released alternately every fortnight, that would be ideal for regular RNS's.

There's always a sting in the tail though, another half million shares conjured up out of thin air.

Thank you Rivaldo.

"First cashew export container shipment to Europe of 16 tonnes was completed in late October at an average price of approximately €4,900 per tonne."

WH Ireland were/are basing their valuation of the cashew facility on, I believe, €1200 per tonne!

Danny, you make some reasonable points, but you are not comparing apples with apples.

2017, as I'm sure you're aware, was a record year for CPO production. 2022, as I'm sure you're aware, either is a record for being the worst (or second worst) year for CPO production.

On that basis, your stagnant revenue argument is flawed.

Part 2:

No intention at this stage to start project 3, focus on palm oil and cashew for now.

10000 tonnes Cashew generates 10-12/13 million revenue with gross margin around 25%-30%. Palm oil is around 20% margin.

Q: "Are you satisfied with where the company is at the moment?"
"We certainly wouldn't feel that way at all, we've been as worried as anyone about the weak fruit period and analysed it and taken extra steps to ensure that everything that we can control particularly around the milling process is as well maintained as it can to ensure that when fruits do increase as we expect them to increase things will go well. Certainly, on the cashew side, incredibly frustrating the delays from our suppliers......With two businesses working in tandem, there's no reason why we can't push 50 million in revenue for the first time next year."

Bear in mind when comparing October - December this year for FFB, figures were very high last year.

Closing comments.
Thanks for joining.
Really challenging time for investors, much appreciated investor patience, always open to questions by email. Lincoln will be at an event in London on Thursday 13th for face to face questions/comments/feedback.

I didn't bother with the more speculative bits such as where do you see CPO prices and the SP going next year, but the full audio recording usually ends up on the DKL website after a few days for anyone who missed it.

Highlights from conference call, dyor, etc.

Q: "What's gone wrong with fruit volumes over the last 8 months?"

2021 was record year for production; January 2022 was ok, last 8 months very poor in terms of FFB. Some of the more meritorious theories have transpired:

1. There was 'something' that triggered an earlier than normal harvest in the second half of 2021 which led to record H2 2021 and therefore fruit had been thrown off to some degree and the trees were slightly stressed entering the high season.
2. We've also had assessments that Q1 2022 very weak rainfall impacted the vital riping of fruit in to the high season, which has some merit because bunch counts were actually quite good heading in to February/March, but actually flowering and final fruit in March/April was much weaker than anticipated.
3. We had more general answers of typical seasonal variations, i.e. a very strong year can often be followed by a weak year.

From a DKL point of view, there are factors that can affect up to 2 years, what the company try to do is to report as much as we can, will continue to report monthly and provide as much guidance on the following month as we can, rather than theorising too long in to the future.

Q: "How do we know it's not just a DKL specific issue?"

Excellent question, so once a month a local group association collects the quantities from DKL and other players in the country. All those in the eastern side of the country were dramatically affected by this weak fruit period through first 6-8 months of 2022. It's starting to pick up a little as per RNS, but just to add on to that talking to people in the west of Ghana and Liberia and no doubt it's been a regional factor.

10th October is date for next RNS and guidance will be provided for early October.

Moving on from fruit, gross margin, Shai Kol now on the line.

Extraction rate is driven by two factors, quality of fruit and efficiency of the mill.

Some recent renewal of equipment at the mill has improved the extraction rate. Another reason for higher margin is of course, prices.

With regards to mill efficiency, currently going through extensive maintenance through quieter low season.

Cashew
More details on 10th October.
Final stages now of last components being installed, shelling machines and so on. Ramp up and complete in the next few weeks. Aim for 10000 tonnes approx in 2023. Currently on track. Significant milestone.

Currently producing and selling locally small amounts, building relationships with customers.

Q: "RSPO certification update?"
Two separate things, mill and estates.
Mill has been pre audited and ready for more than a year now.
Waiting for clarification on some points on estates as not all company owned.
Hopefully more news before end of 2022 and guidance to full audit.
Timing out of our hands to some degree, waiting for RSPO themselves.

Q: "Exposure to increasing interest rates?"
Essentially locked in

I think I'm correct in saying that a weak pound works in our favour here. Although, I will stand corrected.

There was talk after the Brexit vote when the £ vs € exchange rate fell that it was good news for us, so every cloud and all that.

Morning Fk1, yes it was some "forward guidance" in the 12th September RNS.

"Early indications for September are promising, suggesting that volumes may be trending upwards following unusually low like-for-like monthly volumes since February."

I hope we will get more clarity on what the hell has been going on with this years harvest during next weeks conference call.

A couple of new videos from the cashew facility:
https://twitter.com/dekelagrivision/status/1564534992142848002
https://twitter.com/dekelagrivision/status/1562734792671514624

Re cpo pricing, they are restricted in the sense of what the locals will pay and, more importantly, can pay.

That was why they agreed to a guaranteed price of circa $900-$1000 even though, at the time, that looked like a bad move when prices were heading towards $2000. Now, with global prices back towards $1000 there is a guarantee in place to maintain these levels. I can't remember how long the deal was for, but if global prices keep falling, then that was a great move.

Re management, they're not going anywhere. If you don't think they're up to the job, then you need to do what you have to do. Personally, I still have confidence in the strategy and the BOD. The cashews derisks this massively.

If the forward guidance can be believed, and that's a big if, then I see it as a positive RNS.

The problem is that in the past, we've had so much forward guidance based on nothing other than hope and blind optimism, that it's difficult to know whether to believe it anymore.

It does, at least, appear to be based on fact this time but it's not really news that the really low season ends at this time of year.

darien, the "people on the ground" are local smallholders. They buy the plants from the DKL nurseries, but they're under no obligation to sell the FFB's produced back to DKL. Clearly, that's the aim, but nothing is being stolen by the people on the ground running it.

There's been a poor harvest, pure and simple, just like there was in 2017/2018. We have one in certain parts of the UK right now - with wonky veg being the result.

Indeed Fk1, and it's a vicious cycle as those who are not intertwined, but do show a vote of confidence and accept the monopoly money in good faith, then see the SP drifting ever further south dump said shares and further down we go.

A real vote of confidence would be for those shares to be bought on the open market, but it keeps falling on deaf ears.

Remember, the board "saw a lot of value" at 3.65p, but instead of hands in pockets, they pick our pockets yet further.

It would be worth proposing a vote to halt all issuance of shares for a period of at least 3 years, but it would in all likelihood be voted down.

We also need to bear in mind that any impatient short term holders who bought in at 5-6p recently are currently offloading due to 50% losses.

The medium term outlook still appears positive in the same way one swallow does not make a summer, one bad harvest (or in our case, two since 2018) does not warrant this level of SP.

It may well be 0.1% dilution today, but over the last few years, the figure since is closer to 80% of the current shares.

When I first invested here, there were circa 145 million shares in circulation, today there are 537,404,775

In that time, the SP has dropped by a similar percentage of 80% - coincidence?

So yes, some of us are losing our **** because of repeated issuing of shares after the BOD have been repeatedly being made aware of this issue.

G-Man, I wouldn't get too excited about high season as we are about to enter the low season. The harvest for this year is what it is, about 40% down on a normal year.

As I first noted in April when the RNS's were still promising jam tomorrow, it was fairly clear then that our "high season" had come very early this year - back in November/December/January when we saw record FFB's collected in those months. Thankfully, the high international CPO prices have saved our bacon.

The thing we can get excited about moving forward is the ramp up of cashews, which I believe the market have so far completely ignored.

Nice little puff piece today with Lincoln Moore on director talk for anyone interested.

https://www.***************************/dekel-agri-vision-record-annual-production-commodity-pricing-in-sustainable-agriculture-video/4121071007

Indeed Fk1, that and the markets fixation on FFB levels collected above all else would signify more doom and gloom in the short term. Looking ahead though for those of us here for the long term either by choice or circumstance, the much vaunted good news end of the tunnel appears to be not far away with the cashew facility now in to full swing - which so far has been totally ignored by the market - and this time next year, assuming a more normal harvest, FFB's collected each month should be up 200% on this year! No gok wan required on those RNS's and puff pieces, that's for sure.