1 Sep 2008 08:00
1 September 2008
BioEnergy Africa Ltd ('BioEnergy Africa' or 'the Company')
Admission to AIM
BioEnergy Africa Ltd, formed to develop the production of ethanol from sugar cane projects in southern Africa, has listed on AIM today. The Company raised £8.6 million through a placing of 68,825,600 new Ordinary Shares at 12.5 pence per share, representing approximately 20.7 per cent. of the Enlarged Share Capital of the Company. At the Placing Price, the Company will have a market capitalisation of approximately £41.5 million. The funds raised will be used to develop its first project, a 30,000 hectares (‘ha’) ethanol project in Mozambique, and to pursue other commercial opportunities relating to sugar cane and ethanol production which the Directors may identify in southern Africa.
Overview
Bio energy company centred on the production of ethanol from sugar cane in southern Africa
Initial project is the 30,000 ha Massingir Fuel Ethanol Project in Mozambique
Targeting approximately 24,500ha of planted sugar cane, an ethanol from sugar cane plant, bagasse electricity plant, new transport infrastructures and an additional 11,000ha out-grower scheme
Phase 1 clearing underway and water secured - initial production of 600,000 litres of ethanol a day rising to 1,200,000 litres of ethanol a day at full capacity
Investigating additional commercial opportunities in southern Africa
Experienced Board with established contacts in southern Africa and experience of introducing natural resources start-up companies to AIM
BioEnergy Africa Chairman Phil Edmonds said, "With BioEnergy Africa's initial Massingir Fuel Ethanol Project based in Mozambique and the experience of the Board, the Company is well placed to capitalise on the increasing world demand for ethanol. The market is growing rapidly and the economics are highly attractive. With this is mind we are also investigating other commercial opportunities relating to sugarcane and ethanol production in other southern African countries, some of which have historically been significant producers of sugar cane.
"The Massingir Fuel Ethanol Project in Mozambique is targeting an initial production of 600,000 litres of ethanol a day rising to 1,200,000 litres a day at full production. The project marks the inaugural project to position BioEnergy as a leading developer of bio-energy projects in Africa with a strong sustainable policy that ensures ecological development is maintained in tandem with creating employment for local communities. With development already underway at Massingir, we anticipate good returns for investors in this fast growing sector, which we hope to increase as we build our project base and activity levels across southern Africa."
For further information please visit www.bioenergy-ltd.com or contact:
| Phil Edmonds | BioEnergy Africa | Tel: 0845 108 6060 |
| Andrew Groves | BioEnergy Africa | Tel: 0845 108 6060 |
| Jonathan Wright | Seymour Pierce Ltd | Tel: 020 7107 8000 |
| Sarah Jacobs | Seymour Pierce Ltd | Tel: 020 7107 8000 |
| Hugo de Salis | St Brides Media & Finance Ltd | Tel: 020 7236 1177 |
| Susie Callear | St Brides Media & Finance Ltd | Tel: 020 7236 1177 |
Full Release
BioEnergy Africa Limited, formed to develop projects centred on the production of ethanol, primarily from sugar cane, listed on AIM today. The Company raised £8.6 million through a placing of 68,825,600 new Ordinary Shares at 12.5 pence per share, representing approximately 20.7 per cent. of the Enlarged Share Capital of the Company following Admission. On Admission, at the Placing Price, the Company will have a market capitalisation of approximately £41.5 million. The funds raised will be used to develop its first project, the 30,000ha Massingir Fuel Ethanol Project in Mozambique, and to pursue other commercial opportunities relating to sugar cane and ethanol production which the Directors may identify in southern Africa. Seymour Pierce Limited is the Nominated Adviser and Haywood Securities (UK) Limited is Broker to the Company.
Sugar cane is considered the most efficient, commercially viable ethanol feedstock and southern Africa has the potential to be one of the most cost effective regions for sugar cane production.
Bio-fuels such as ethanol derived from sugar cane represent a low carbon alternative to fossil fuels in transportation. As a result, governments across the globe have enacted legislation requiring minimal ethanol blends in petrol. In 2006 global ethanol fuel production was estimated at 48 billion litres and is expected to increase to 100 billion litres by 2010.
The Directors of the Company are experienced in agriculture and natural resource start-up companies, and the raising of funds on international capital markets. Furthermore, the board comprises individuals with expertise in evaluating acquisition and investment prospects and in the day to day management of public companies. The Directors intend to strengthen the Board in step with the Company's development and are currently in the process of recruiting a Chief Executive Officer.
With BioEnergy Africa's initial project based in Mozambique and, given the experience of the Board, the Company is well placed to capitalise on the increasing world demand for ethanol. The Directors are also investigating other commercial opportunities relating to sugarcane and ethanol production. These investigations include opportunities in other southern African countries, some of which have historically been significant producers of sugar cane.
Massingir Fuel Ethanol Project (the MFEP)
On 10 October 2007, ProCana Limitada, a Mozambican company, signed an investment Agreement with the Government of Mozambique pursuant to which ProCana would develop 30,000ha in Massingir District, Gaza Province, Mozambique, encompassing approximately 24,500ha of planted sugar cane, an ethanol from sugarcane plant, bagasse electricity plant, new transport infrastructures and an additional 11,000ha out-grower scheme. The Company acquired 94 per cent. of the share capital of ProCana on 12 August. The remaining 6 per cent. is held by ProCana's founders: Biolimpopo Limitada, a Mozambican company (5 per cent.) and by Izak Cornelis Holtzhausen (1 per cent.). Biolimpopo Limitada represents local interest in the Gaza Province.
Estate Development
Located in the Gaza Province in south western Mozambique, the estate's north-west boundary is 5kms south of the Massingir dam. To its east is the Olifants River which feeds the Massingir reservoir and then flows into the Limpopo River. MFEP is situated on a combination of green-field land and abandoned small holder agricultural land which is predominantly covered in bush. The Government of Mozambique has completed phase 1 of a land zoning process, conducted with environmental impact considerations, which has identified 7 million ha of land for bio-fuel production. The aim of the land zoning process is to safe guard conservation and protect areas of high biodiversity as well as identifying land suitable for food and fuel crop production.
The Directors are currently working to a five stage development plan. Phase 1 (currently underway), involves clearing the land designated for the cane nursery, planting the seed cane and preparing the estate for future infrastructure. Each subsequent phase of the project expands the estates production area and includes the development of the ethanol plant and associated infrastructure. The Directors are aiming to have full production by 2015.
To expedite the process ProCana has already commenced Phase 1, preparing the nursery for propagation of seed cane, from stock which has been purchased in South Africa. The Company is utilising land adjacent to the estate on which there is a disused 150ha irrigation project established by donors to allow the local population to grow vegetables but which has since fallen into disrepair. The Company has agreed to refurbish the irrigation scheme and provide agricultural extension assistance to the local community in return for which the Company will be able to establish the cane nursery on 125ha of the land on which the disused irrigation project is located.
Potential yields
Based on the 'Canegro Model' which assumed a moisture per cent. cane value of 70 per cent. in all months, (i.e. the dry mass represents 30 per cent. of the cane's total mass) average potential yields of 162.9 tonnes per hectare per annum ('t/ha/an')of cane are anticipated (48.9 t/ha/an of dry matter).
Due to favourable sugar cane growing conditions the Directors anticipate ProCana will be able to take advantage of an above industry average cutting season as high as 310 days. Although ProCana aims to reach production levels of 160t/ha/an, for forecasting purposes it has set an initial target yield of 130t/ha/an. At this yield, the estate's cane producing capacity is expected to peak at 3 million tonnes in 2015 (not including the outgrowers scheme), but reduce slightly from 2020 when replanting commences.
Water supply and irrigation
Climatic conditions in southern Africa favour commercial sugar cane production, but irrigation is required throughout the year. One of the project's foundations, however, is that the availability of water from the Massingir dam system makes irrigation a controllable input. The dam now has a storage capacity of (approximately) 2,800 million-m³.
ProCana has obtained a guarantee from the Mozambican government to enable it to use up to 750 million m³/year, with a water licence being granted once the final design for the extraction of the water has been submitted.
The Company is currently in discussion with Netafim of Israel for the design, provision and installation of a state-of-the-art sub-surface drip irrigation system.
Plant
The Company is in discussions with Dedini of Brazil to supply a turnkey ethanol plant. The Directors are considering a modular plant in which capacity can be increased in phases as sugar cane production requires. Dedini has indicated that it is possible that phase 1 can be operational within 18 to 24 months of signature of a contract and phase 2 can be operational 12 months after the completion of plant phase 1. Phase 1 is expected to have capacity to produce up to 600,000 litres of ethanol a day. Phase 2 would double total plant capacity to 1,200,000 litres of ethanol a day.
Infrastructure
The estate will require an electrical reticulation system which links its generation plant to Mozambique's national electricity grid. It is envisaged that initial electricity supplies will be from a diesel generator, but Electricidada de Mocambique has already commenced installation of power lines to the area. When the project is in full operation, it is expected that it will generate its own electricity from the burning of bagasse, a carbon neutral by-product of the manufacturing process, with any surplus being sold back to the Mozambique national grid.
Transportation
Ethanol will be transported to Maputo, where the country's main port and rail links are located. The nearest rail link to the estate is located in Chokwe approximately 40kms from the centre of the estate. There is presently no rail line linking the estate and Chokwe, and ProCana is investigating the options for the construction and operation of a 30 to 40km spur. In the interim, the Directors intend to road haul ethanol to Chokwe, where ProCana intends to construct a road rail transfer depot. There is currently a bulk liquid terminal being constructed in Maputo which ProCana expects to use for exporting.
Employees and the local community
It is anticipated that ProCana will be a major employer in the region, employing up to 800 full time staff and up to 6,500 seasonal workers once production is established. It is expected that the balance of the workforce will come from people relocated from the trans-frontier national park. The Company will provide some low cost housing and expects to make a contribution to the development of community infrastructures such as a small hospital, health posts, schools and recreational facilities, as well as providing training and courses relevant to the Company's business for its workforce.
ProCana is required pursuant to the terms of the Investment Agreement to employ 7,000 Mozambican employees directly by 2013 and to develop infrastructure and pastural improvements by the end of 2008, to guarantee pasture for the cattle for some of the local population of Chinhangane, Banga and Chitar (including those resettled from Nanguene and Macavene), and by the end of 2010, for the local population of Zulo, Mucatine and Manhica (including those resettled from Massingir Velho, Bingo and Mavodze).
Directors
The Directors, Phil Edmonds, Andrew Groves and Corne Holtzhausen, have established business contacts and connections in Africa and are experienced in agriculture and natural resource start-up companies, the raising of funds on international capital markets, evaluating acquisition and investment prospects and in the day to day management of public companies.
Phil Edmonds is a director of a number of public and private companies and has considerable experience in introducing natural resources start-up companies to AIM, including African Platinum Plc (formerly Southern African Resources Plc), Central African Mining & Exploration Company Plc ('CAMEC'), Central African Gold Plc and White Nile Limited. Mr Edmonds is currently Chairman of CAMEC Plc and White Nile Limited. He holds an honours degree in land economy from Cambridge University. He was born in Lusaka, Zambia, educated in Zambia and England and played cricket for England and Middlesex from 1974 to 1987.
Corne Holtzhausen has considerable business experience in a number of disciplines including supermarkets, commercial trading, manufacturing, entertainment and mining with companies including Sasmic Imobiliária Lda, a property holding company, and Abrincadeira Lda, a company which manufactures coin operated games machines. He was born in South Africa and has a thorough knowledge of business dealings in Mozambique, where he resides.
Andrew Groves has significant experience in operations management in southern and central Africa and is a director of numerous private companies, including companies in Zambia and Zimbabwe. In particular he has experience in introducing natural resource start-up companies to AIM, including African Platinum Plc (formerly Southern African Resources Plc), Central African Mining & Exploration Company Plc, Central African Gold Plc and White Nile Limited. Mr Groves' current directorships include CAMEC Plc, Central African Tantalum Limited and White Nile Limited. He was born in Harare, Zimbabwe and educated in Zimbabwe and South Africa.
The Company is currently in the process of recruiting a Chief Executive Officer and is seeking appropriate candidates with a view to appointing a suitably experienced individual in due course. The finance function is currently provided by CAMEC (pursuant to the terms of an administrative and support services agreement). The Board will be strengthened, including the appointment of a Finance Director, in line with the Company's development.
A copy of the full admission document is available at the offices of the Company’s lawyers Salans, Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ and on the Company’s website www.bioenergyafrica-ltd.com
** E N D S**