Feronia Inc.
TSX VENTURE : FRN

Feronia Inc.

June 29, 2011 09:16 ET

Feronia Inc. Reports First Quarter 2011 Results Under IFRS

TORONTO, ONTARIO--(Marketwire - June 29, 2011) - Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE:FRN) today released its unaudited consolidated financial results for the quarter ended March 31, 2011. All amounts in this release are expressed in US dollars unless otherwise indicated.

James Siggs, CEO of Feronia, commented: "We are pleased to report that Feronia continued to make significant progress towards its objectives of oil palm replanting, increased palm oil production and land preparation for the arable farming operations in the first quarter of 2011. On a year over year basis, palm oil production was up 85% at 2,063 tonnes in Q1 2011. The arable farming operations have also made good progress including completing the reclamation of 1,396 hectares of abandoned farmland by the end of March 2011."

First Quarter 2011 Financial Highlights:

  • Revenue was $1,478,481, an increase of 149% from $592,802 in the first quarter of 2010.
  • Net loss was $1,297,894 for the first quarter in 2011 compared to $1,164,132 in the first quarter of 2010.
  • Basic and diluted EPS for the quarter was negative $0.01 compared to negative $0.03 for 2010Q1.
  • Cash balance as at March 31, 2011 was $32,671,706 compared to $290,731 at March 31, 2010. The cash balance at December 31, 2010 was $8,907,686.

Achievement of Milestones in 2011:

During the quarter we completed an equity financing of $27,231,219 to fund the construction of a new palm oil mill, accelerate the replanting programme in our oil palm plantations, rehabilitate our oil palm seed production facility and expand our arable farming operations. "Feronia's current business plan is well funded, the Company continues to make key investments in its oil palm plantations and arable farming operations as part of its planned growth programme," said Mr. Siggs.

Revenue

During the first quarter of 2011, Feronia's revenue was $1,478,481, an increase of 149% from $592,802 in the first quarter of 2010.

During the quarter, Feronia produced approximately 11,911 tonnes of palm fruit which were processed to produce 2,063 tonnes of CPO, compared to 6,795 tonnes of palm fruit, producing 1,114 tonnes of CPO in the first quarter of 2010. The oil extraction rate increased to 17.3% in the first quarter of 2011 compared to 16.4% in the first quarter of 2010.

Operating Costs

Operating costs for the first quarter of 2011 were $2,708,000, an increase of $1,419,000, or 110%, compared to the first quarter of 2010. The increase in the first quarter of 2011 was primarily a result of an increase in general and operating expense of $598,000 and professional fees of $700,000. The primary reasons for the increase in general and administrative expenses relate to changes in the system by which management was paid and a terminal payment. Professional fees relate to costs for the year end.

Net Loss for the Year

The net loss for the first quarter of 2011 was $1,297,894 compared to a loss of $1,164,132 in the first quarter of 2010.

Capital Expenditures
Capital expenditures in the first quarter increased by $1,508,118. The major items were as follows:
Rehabilitation of the palm oil mills to increase oil extraction rates and operating efficiencies.
Replanting programme of 1,027 hectares on the oil palm estates.
Development of the arable farm, reclaiming 796 hectares.
Recent Developments by Business Segment
Palm Oil Operations:
Global spot CPO prices have remained firmly over $1000 per tonne having reached a high of $1,335 in the first quarter of 2011.
At the end of May 2011, the Company's palm oil mills had achieved an average oil extraction rate of 18.0% for the first five months of 2011, a further improvement over the 17.3% achieved in Q1 2011.
At the end of May, the Company had planted 633 hectares this year.
Arable Farm Operations:
Land preparation continues to advance, with over 1,800 hectares of abandoned farmland reclaimed by the end of May.
The site for the crop drying, storage and processing complex is being prepared and services arranged.
Orders have been placed for tractors, cultivation and sowing equipment for the planned expansion of the arable area.

Outlook

"Feronia continues to expand its operations according to plan," said Ravi Sood, Chairman of Feronia. "Going forward the Company will continue to build on the advances it has made in its oil palm plantation business. Further improvements in the production of FFB can be expected as more plantations are rehabilitated and further efficiencies in field operations achieved, these in turn will lead to improved oil extraction rates and thus increased oil production. As the company's arable operations expand, production will increase.

Food security and elevated food prices continue to be an issue of global concern. Feronia continues to work towards displacing imports of both staple foods and edible oils into its local market and ultimately becoming a material and constructive supplier to international markets."

About Feronia Inc.

Feronia Inc. is a large-scale commercial farmland and plantation operator in the Democratic Republic of the Congo ("DRC"). The Company uses modern agricultural practices to operate and develop its oil palm plantations and arable farming business division. Feronia believes in the immense agricultural potential of the DRC for high-quality foodstuffs and edible oils given its ideal climate, excellent soil and highly skilled and experienced workforce. Feronia's management team is comprised of senior agriculturalists with extensive experience in managing both plantations and large-scale mechanized farming operations in emerging markets. Feronia is committed to sustainable agriculture, environmental protection and providing support for local communities. For more information please see, www.feronia.com.

Cautionary Notes

Except for statements of historical fact contained herein, the information in this press release constitutes "forward-looking information" within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as "plans", "proposes", "estimates", "intends", "expects", "believes", "may", "will" and include without limitation, statements regarding the stated use of proceeds; plan of operations and comparative advantages; and benefits of this investment. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others, regulatory risks, risks inherent in foreign operations, commodity prices, competition, and investments having no history of operations. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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