TORONTO, ONTARIO--(Marketwired - Aug. 29, 2014) - Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE:FRN) today released its unaudited financial results for the three and six months ended June 30, 2014. All amounts in this release are expressed in US dollars unless otherwise indicated.
Q2 2014 Highlights
- Produced a company record 3,660 tonnes of Crude Palm Oil ("CPO") (Q2 2013: 2,913 tonnes) from 20,083 tonnes of fruit (Q2 2013: 15,544 tonnes), a year-over-year increase of 26%
- Company record revenue of $4.0 million (Q2 2013: $2.2 million) including from the sale of:
- 4,368 tonnes of CPO at an average price of $787 per tonne (Q2 2013: 2,236 tonnes at $778 per tonne)
- 289 tonnes of Palm Kernel Oil ("PKO") at an average price of $897 per tonne (Q2 2013: nil)
- Replanted 1,561 hectares ("ha") of oil palm (Q2 2013: 2,030 ha)
- Oil extraction rate (excluding Yaligimba) of 18.435% (Q2 2013: 18.74%)
- Fresh fruit bunch ("FFB") yield (excluding Yaligimba) of 2.5 tonnes per ha (Q2 2013: 2.6 tonnes per ha)
- FFB yield of 1.4 tonnes per ha at Yaligimba
- Production levels at Yaligimba increasing as planted hectare rehabilitation (including extensive weeding programme) progresses
- Harvested 238 tonnes of paddy rice that was planted in March/April 2014 and achieved yields of 1.26 tonnes per hectare
- Net loss attributable to Feronia was $(3.6m) or $(0.07) per share, compared to a loss of $(2.2m) or $(0.8) per share in Q2 2013
- 3,150 ha of oil palm has been replanted in the year to date as at August 23, 2014
For the six months ended June 30, 2014 the Company produced 35,489 tonnes of FFB and 6,511 tonnes of CPO, representing increases on the corresponding period in 2013 of 41% and 39% respectively. The majority of the increase relates to contribution from Yaligimba plantation where there was no production until Q4, 2013.
The rehabilitation of Yaligimba, which includes extensive weeding of mature hectares, and the re-configuration of staffing to reflect the plantation's return to production, continues. Production levels at Yaligimba are currently below those at Lokutu, however, the Company expects operating results at both plantations to be similar over time.
The Company realised lower FFB yields for the six months ended June 30, 2014 (3.69 tonnes/Ha) than during the six months ended June 30, 2013 (4.22 tonnes/Ha). Several factors contributed to this decline:
- Ongoing access issues related to the rehabilitation of Yaligimba plantation prevented the harvest of all fruit resulting in a very low FFB-yield at Yaligimba, not representative of the actual agronomic yield or the long-term potential yield. Additional resources have been allocated to the rehabilitation of Yaligimba and substantial performance improvements have been observed and are expected to continue.
- Worsening nutrient deficiencies at Boteka Plantation continued to negatively impact yields. Fertiliser, ground limestone, and guano are being applied to correct the deficiencies and, combined with a normal course fertiliser and soil maintenance regime, we anticipate a substantial improvement in yields commencing in the quarter ending September 30, 2015.
- Approximately 10.7% of the palms harvested in the 6-months ended June 30, 2014 were in their first year of production and therefore low yielding. Since minimal fertiliser application was made to immature areas, these palms are contributing relatively little production and lowering the average on a per hectare basis. Management believes that its ongoing fertiliser regime will result in a substantial improvement in yields from young palms.
- Downtime and capacity limitations at the Lokutu mill constrained harvest and therefore realised FFB yields.
Replanting of oil palms commenced in March 2014 in line with rainfall patterns, with 1,561 ha planted in Q2 2014 (Q2 2013: 2,030 ha) and 1,859 ha replanted as at June 30 2014 (June 30, 2013: 2,452 ha). As at August 23, 2014 the Company had replanted 3,150 ha in the current year and in excess of 14,000 ha since it acquired PHC in 2009. As at August 23, 2014, Feronia's oil palm nurseries contained 579,465 seedlings and were sufficiently stocked to complete the 5,000 hectare replanting programme for 2014.
Ravi Sood, Chairman of Feronia Inc. commented: "We have experienced a variety of challenges related to the rehabilitation of Yaligimba plantation and at the same time, faced normal course issues related to operations at our other two plantations, Lokutu and Boteka. Management has taken action to improve the performance at Yaligimba in the short-term and is continuing to move forward with various initiatives designed at improving the long-term profitability and sustainability of the Company.
"During the second quarter the Company appointed an Environmental and Social Governance Director to manage the implementation of its Environmental and Social Action Plan ("ESAP"). The ESAP is a short-term action plan, funded via a dedicated debt facility, designed to make material improvements and implement processes and procedures that will be ongoing and a vital part of guaranteeing the Company's sustainability.
"The Company has engaged Versa Partners Limited. ("Versa"), a Malaysia-based, leading agri-business consultancy, to assist in the identification and implementation of operational and technical efficiency improvements. Versa has extensive experience in plantation management with a particular expertise on performance improvement. A key objective of the Company's engagement with Versa is to augment long-term training programmes to ensure the ongoing implementation of global best practices."
Mr. Sood concluded: "We continue to grow and drive value through our re-planting programme and ongoing performance improvement initiatives. We expect to complete 2014 with approximately 25,000 ha planted of which approximately 16,000 ha will be immature. While this is not an optimal portfolio from an age perspective for current production, it speaks to the tremendous latent value in our operation and the clear path forward to production and revenue growth. In the short-term we remain focused on delivering performance improvement and making investments in our infrastructure, people and communities that will have substantial long-term returns."
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.
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 "anticipates," "plans," "proposes," "estimates," "intends," "expects," "believes," "may" and "will". 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: risks related to foreign operations (including various political, economic and other risks and uncertainties), the interpretation and implementation of the "Loi Portant Principes Fondamentaux Relatifs A L'Agriculture," termination or non-renewal of concession rights or expropriation of property rights, political instability and bureaucracy, limited operating history, lack of profitability, lack of infrastructure in the DRC, high inflation rates, limited availability of debt financing in the DRC, fluctuations in currency exchange rates, competition from other businesses, reliance on various factors (including local labour, importation of machinery and other key items and business relationships), the Company's reliance on one major customer, lower productivity at the Company's plantations and arable farming operations, risks related to the agricultural industry (including adverse weather conditions, shifting weather patterns, and crop failure due to infestations), a shift in commodity trends and demands, vulnerability to fluctuations in the world market, the lack of availability of qualified management personnel and stock market volatility. Details of the risk factors relating to Feronia and its business are discussed under the heading "Risks and Uncertainties" in Feronia's annual Management's Discussion and Analysis for the year ended December 31, 2013, a copy of which is available on the Company's SEDAR profile at www.sedar.com. 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.