HUN.L Regulatory News (HUN)

20 Mar 2009 07:00



20 March 2009 AIM: GBF

GEM BioFuels Plc 

("GEM" or "the Company")

Trading Update for the year ended 31 December 2008

The Directors of GEM BioFuels, the emerging Jatropha feedstock supplier to the global biodiesel industry, are pleased to announce a trading update in advance of the publication of the Company's results for the year ended 31 December 2008, the release date of which will be announced shortly.

Including the conclusion of the 2008/09 plantation season in March this year, 2008 has been a year in which the Company has made significant progress in refining its plantation processes and re-enforcing the viability of 'company-managed' Jatropha plantations. 

Highlights

A further 21,600 hectares of Jatropha was successfully planted during the 2008/09 planting season. This brings the total area of Jatropha planted by the Company to 55,700 hectares. 

Development of new, lower cost, plantation establishment and management models. 

Appointment of Didier van Bignoot as Country Manager - Madagascar and Chief Agronomist in December 2008.

Operational Activities

Since commencing operations in 2006 GEM has built a wealth of experience in planting campaigns and as such is now well equipped to deal with the multitude of potential influences on the establishment and operation of Jatropha plantations. 

Recent inspection of the Jatropha plantations established during the 2007/08 season found positive growth progress. Whilst the final value cannot be determined until after the end of the current rainy season, GEM estimates that around 70% of plantings should be successful in growing to maturity and producing Jatropha seed. 

The 2008/09 season has seen GEM move up to 150km North of its Toliara operational base in South West Madagascar. This region is more remote from local labour sources and infrastructure is less developed. The 2008/09 season was planned as a 'mixed' campaign (i.e. partly manual and partly mechanised as opposed to the 2007/08 season which was carried out on an entirely manual basis) in order to avoid lengthy transport of labour and moreover, test out a newly developed plantation establishment methodology, which was expected to yield both cost and operating efficiencies.

This 'mechanised' approach has since proven both effective and cost efficient, however management took the decision to curtail the program at 21,600 hectares due primarily to the inefficiency of the local tractors used.

The Company will continue to focus on its target of establishing 200,000 ha of Jatropha in Madagascar. Based on the success of the 2008/2009 campaign, management believes that, inclusive of the purchase of the necessary equipment, it will be more cost effective to implement significant mechanisation going forward. The Company believes that this can result in an operating cost savings as high as 30%, however will necessitate an additional planting season in order to fully implement.

To build on this position, and further enhance the value of its assets, the Company has recently appointed Mr. Didier van Bignoot to the role of Chief Agronomist and Country Manager in Madagascar. Didier brings a wealth of experience in agricultural and plantation management in developing countries, particularly in Africa and South America, and has already made significant contributions to the Company's strategy for future operations.

Commenting on the announcement Simon Hunt, Chairman of GEM, said: "The Company is now established as a world leader in company-managed Jatropha plantations, with a plantation business of 55,700 hectares. We look forward to taking the next step in the development of its business operations and in turn enhancing value for all shareholders."

Paul Benetti, CEO of GEM, said: "During 2008 GEM has demonstrated the viability of Jatropha as a plantation crop. Having examined business plans and revenue models of significant crude jatropha oil ("CJO") projects around the world, GEM remains committed to the owner/manager plantation business model as the only one that provides the control necessary to deliver commercial quantities of certifiable CJO at the required quality and price in a sustainable manner. Furthermore, we believe jatropha is probably the only non-food feedstock that can supply sustainable commercial volumes of biodiesel in a carbon neutral manner at a price point competitive with fossil fuel."

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