Agriterra Ld Regulatory News (AGTA)

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

13 February 2013

Agriterra Ltd ('Agriterra' or the 'Group')

Cocoa Update

Agriterra Ltd, the AIM listed pan African agricultural company, is pleased to announce that it has expanded its cocoa and farming operations in Sierra Leone, through its wholly owned subsidiary Tropical Farms Ltd ('TFL'). 

In line with increasing the Group's production base and to complement in particular its growing cocoa trading operations, TFL has completed the acquisition of a 50 year lease, with a 21 year extension option, over a previously producing cocoa and coffee plantation covering 1,208 hectares, located 40km from Kenema in south-east Sierra Leone ('the Plantation'). The Plantation, which was previously run by Beresfords, the international plantation group prior to the civil war, will be rehabilitated and redeveloped in order to recommence the production of cocoa, coffee and additional cash crops. A further 546 hectares, located contiguously to the north of the Plantation has also been signed on the same terms as the Plantation.

The Group has already invested significantly in the rehabilitation and development of the Plantation. A modern nursery is being installed, which will be the largest and most technically advanced current cocoa production facility in Sierra Leone. The nursery has an irrigation system capable of supporting capacity of up to 500 hectares worth of seedlings. The nursery covers a green area of 1.6 hectares and has a total size of 1.7 hectares. It currently contains 250,000 seedlings in the germination process, which once matured, will be used to plant a 200 hectare area that is in the process of being cleared. 56 acres are already under cocoa cultivation.

A total of 160 workers are currently being employed from the local community. Machinery purchased includes two excavators, two backhoes, one D6D bulldozer and three tractors, which are being utilised for road construction within the plantation area and for 20km of feeder roads for the surrounding communities. 

In line with the Board's desire to rapidly expand its cocoa plantation business, TFL is actively negotiating to secure a further 1,200 hectares, contiguous to the north of the existing Plantation and a further 800 hectares to the south. The Group hopes to announce the completion of these negotiations in the near term.

Andrew Groves, Agriterra Chief Executive said, "Through TFL we have already established a successful cocoa trading business. With this acquisition and investment we are now entering the second phase of our growth strategy focussed on developing our own plantations. We have an excellent international and Sierra Leone national team who have the experience and expertise to rapidly scale up our in-country operations with the aim of becoming Sierra Leone's leading cocoa company. The plantation is in a highly productive and suitable area for cocoa production, and with the investment programme already underway, we are looking forward to the plant out this season and increasing our production.

"Importantly, there is significant growth potential for our Sierra Leonean business which is already contributing at a Group level and complementing our expanding Mozambique beef operations. We have an extremely strong treasury, having received an initial US$28 million from the sale of our legacy oil asset, and I look forward to completing additional acquisitions of land and building shareholder value further."

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Notes

Agriterra Ltd is an AIM listed agricultural company with five divisions: beef, maize, cocoa, fruit and palm oil. Its cattle ranching business, Mozbife, has a herd in excess of 5,650 head, a land holding of over 21,000 hectares, a feedlot, a 4,000 head per month capacity abattoir and retail units. 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 also owns a proximal banana plantation and macadamia orchard.

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 maize meal, the African staple, and then sell it back to the local market, into supermarkets and to the World Food Programme.

Agriterra's cocoa business is based in Sierra Leone, through its 100% subsidiary Tropical Farms Limited, 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.