Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE: FRN) today
released its unaudited consolidated financial results for the three
months and six months ended June 30 2011. All amounts in this
release are expressed in US dollars unless otherwise indicated.
Bill Dry, CEO of Feronia, commented: "Feronia continues 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 second quarter (first half) of 2011. On a
year over year basis, palm oil production was up 36% at 2,231
tonnes in Q2 2011, with a further 1,039 hectares of new palms
planted to July 2011. Arable farming operations have also made
significant progress including completing the reclamation of 1,900
hectares of abandoned farmland by the end of June 2011 in
preparation for the first crop sowing in September."
Second Quarter 2011 Financial Highlights:
-- Revenue was $1,614,262, an increase of 41% from $1,143,668 in the second
quarter of 2010.
-- Net income was $1,865,670 for the second quarter in 2011 compared to a
loss of $1,596,428 in the second quarter of 2010. This was primarily due
to a gain of $4,601,246 recognized in the second quarter for the
revaluation of biological assets, compared to a gain of $493,363 in the
second quarter of 2010.
-- Basic and diluted EPS for the quarter was positive $0.01 compared to
negative $0.04 for 2010 Q2.
-- Cash balance as at June 30, 2011 was $27,883,375 compared to $2,920,591
at June 30, 2010. The cash balance at December 31, 2010 was $8,907,686.
Achievement of Milestones in 2011:
"During the first half we completed an equity financing of
$28,778,750 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. The rehabilitation of two palm oil mills
together with improved infrastructure has enabled progress in both
fruit volumes and palm oil extraction. Completing the reclamation
of the first 2,000 hectares of land for our arable farming
operations is a major step forward in Feronia's food production
plans," said Mr. Dry.
Revenue
During the first quarter of 2011, Feronia's revenue was
$1,614,252, an increase of 41% from $1,143,668 in the first quarter
of 2010. Revenue for the six months to June 30, 2011 was
$3,092,743, an increase of 78% from $1,736,470 in the six months to
June 30, 2010.
During the quarter, Feronia produced approximately 11,921 tonnes
of palm fruit which were processed to produce 2,231 tonnes of CPO,
compared to 9,864 tonnes of palm fruit, producing 1,644 tonnes of
CPO in the second quarter of 2010. The average sales price for CPO
realized in the quarter was $1,013 per tonne. In the six months to
June 30, 2011, the Company produced 23,832 tonnes of palm fruit
which were processed to produce 4,295 tonnes of CPO, compared to
16,660 tonnes of palm fruit, producing 2,757 tonnes of CPO in the
six months to June 30, 2010. The oil extraction rate increased to
18.7% in the second quarter of 2011 compared to 16.7% in the second
quarter of 2010. In the six months to June 30, 2011, the oil
extraction rate was 18.0% compared to 16.6% in the six months to
June 30, 2010.
Operating Costs
Operating costs for the second quarter of 2011 were $2,873,646,
an increase of $2,066,566, or 256%, compared to the second quarter
of 2010. The increase in the second quarter of 2011 was primarily a
result of an increase in general and operating expense of $600,825
and professional fees of $872,338. The primary reasons for the
increase in general and administrative expenses relate to the
conversion of all senior management from contractors to employees
and a terminal payment. A significant component of the professional
fees relate to costs related to the conversion to IFRS and the
completion of the first quarter financial statements.
Net Income for the Year
The net income for the second quarter of 2011 was $1,865,670
compared to a loss of $1,596,428 in the second quarter of 2010. Net
income for the six months to June 30, 2011 was $567,776 compared to
a loss of $2,760,560 for the six months ended June 30, 2010.
Capital Expenditures
Capital expenditures in the second quarter increased by
$2,466,134. The major items were as follows:
-- Rehabilitation of the palm oil mills to increase oil extraction rates
and operating efficiencies.
-- Replanting programme on the oil palm estates, planting 1,027 hectares to
quarter-end.
-- 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. During the second
quarter, the spot CPO prices averaged over $1,125 per tonne.
-- At the end of July 2011, the Company's palm oil mills had achieved an
average oil extraction rate of 17.6% for the first seven months of 2011,
a further improvement over the 17.4% achieved in the six months to June
30, 2011.
-- At the end of July, the Company had planted 1,039 hectares this year.
Arable Farm Operations:
-- Land preparation continues to advance, with over 2,000 hectares of
abandoned farmland reclaimed by the end of July.
-- 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 make excellent progress at both its Palm
Oil and Arable Farm Operations" said Ravi Sood, Chairman of
Feronia. "The Company continues to make operational improvements at
all levels. The team continues to demonstrate its ability to deploy
capital effectively to increase both the scale and efficiency of
the operations. We are optimistic that the Company will succeed in
meeting its target of planting 2,000 ha of oil palm by year-end and
its first commercial crop of rice on 2,000 ha in the third and
fourth quarters."
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.
Contacts: Feronia Inc. Ravi Sood Chairman (647) 987-7663
Ravi.sood@feronia.com www.feronia.com
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