Agriterra Ld Regulatory News (AGTA)

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

11 April 2013

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

Expansion and Development of Cocoa Plantation, Sierra Leone

Agriterra Ltd, the AIM listed pan African agricultural company, is pleased to provide an update on the rapid development and expansion of its cocoa farming operations in Sierra Leone, through its wholly owned subsidiary Tropical Farms Ltd ('TFL'), in line with Agriterra's strategy to build a vertically integrated pan-African agricultural group.

Highlights

·; Accelerated development initiatives underway at 1,200 hectare plantation in south-east Kenema to facilitate commercial large scale cocoa production

·; 200 hectares cleared to date - intention to clear full 1,200 hectares by Q4 2013 and complete planting across entire plantation by Q4 2014

·; Acquired further 400 hectares in line with expansion strategy - scheduled to begin clearing land in 2014 ahead of planting cocoa and potentially coffee in 2015

·; Advanced negotiations to acquire additional 1,600 hectares contiguous to the north-east of the current plantation

·; Discussions underway to acquire further 1,550 hectares adjacent and south of the plantation for further ramp up of production in the mid term

·; Potential supplementary cocoa nursery planned - construction to be completed by Q1 2014 enabling the cultivation of up to 1 million seedlings for planting across 1,000 hectares in 2014

·; Developed local infrastructure to support plantation growth - improved road to Kenema and constructed four management houses

Andrew Groves, Agriterra Chief Executive said, "I am delighted to report on the continued growth and development of TFL's farming operations. The expansion of the Plantation underpins TFL's efforts to become a leading agricultural producer, in addition to its established cocoa trading business. The forward pricing environment for cocoa is positive, with the International Cocoa Organisation forecasting that demand is expected to exceed production by 45,000 tonnes in the season to September 2013. We are therefore confident that our expansion into cocoa will benefit greatly from the future demand fundamentals, and with defined development plans to maximise the value of our increasing land holding, I am confident that we are well set to generate significant revenues for the Group and complement our revenue being generated from our beef business and grain processing operations."

In February 2013 TFL acquired a 1,200 hectare plantation located 40km from Kenema in south-east Sierra Leone ('the Plantation'), which previously produced cocoa and coffee. To maximise the value of the land and diversify the Group's product offering, TFL has implemented a defined development programme to expand its land under cultivation. 200 hectares have been cleared to date ahead of the commencement of planting in Q2 2013, and TFL expect the remaining land to be cleared by the end of Q4 2013. TFL plan to have fully planted the Plantation by the end of Q4 2014.

In addition to developing the Plantation, TFL recently acquired a further 400 hectares, located contiguous to the north-east of the Plantation, which the Group plan to begin clearing in 2014 in order to plant cocoa seedlings in 2015. Furthermore, TFL is in advanced negotiations to acquire an additional 1,600 hectares located to the north east of the current Plantation. Once acquired, TFL intend to clear the new land in 2015 to allow cocoa planting in 2016. TFL is also in discussions to acquire a further 1,550 hectares, located to the south-east of the Plantation. Depending on the success of coffee trials, the Group plan to potentially target this land for coffee farming, thus further diversifying Agriterra's competitive agricultural offering.

A new cocoa nursery is currently being planned to support the Plantation's development. The proposed nursery will be fully irrigated and have the capacity to support up to 500 hectares worth of seedlings. Combined with the established nursery, TFL expects they will cultivate 1 million cocoa seedlings for planting in 2014. Furthermore, TFL has also focussed on improving local infrastructure. This includes improving the roads that connect the Plantation to Kenema and developing a plantation road network, building four new management houses and beginning the preparation work for the construction of a 2,000m sq warehouse outside Kenema, which TFL expects to complete by Q3 2013. The warehouse will support cocoa produced internally by TFL at the Plantation and also handle cocoa and coffee bought by TFL's out-grower trading business.

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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 5,450 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 Group also owns a proximal banana plantation and macadamia orchard.

The Group'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 Group'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 Group 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.