Acquisition of Cocoa Business in Sierra Leone (3332K)
July 13 2011 - 9:00AM
UK Regulatory
TIDMAGTA
RNS Number : 3332K
Agriterra Ltd
13 July 2011
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
13 July 2011
Agriterra Ltd ('Agriterra' or 'the Company')
Acquisition of Cocoa Business in Sierra Leone
Agriterra Ltd, the AIM listed company focussed on the
agricultural sector in Africa, is pleased to announce that it has
entered into an agreement to acquire the entire issued share
capital of Tropical Farms Ltd ('TFL'), a cocoa company based in
Sierra Leone. This acquisition will provide the Company with a
platform to expand into cocoa production through TFL's regional
expertise and established buying operations and represents the
first stage of establishing a substantial cocoa business in West
Africa. The Board is focussed on achieving security of supply
through the forging of long term relationships with farmers and
out-grower schemes, in addition to the implementation of farm
management initiatives and eventually, the development of the
Company's own cocoa plantations.
TFL's business model complements Agriterra's established and
profitable maize buying and processing operations in Mozambique and
is in line with the Company's strategy of building a pan-African
agricultural company with other divisions already including maize
farming and milling, cattle ranching and feedlot facilities and
imminently abattoir services.
TFL was established in 2008 to provide a high quality,
sustainable and traceable cocoa buying operation head quartered in
Kenema in the eastern region of Sierra Leone. With four buying
centres currently in operation and a direct buying register of
approximately 2,000 farmers across Sierra Leone, the Board of
Agriterra believes that TFL has established a valuable base of
'out-growers' which can now be rapidly expanded under the Agriterra
umbrella. It is the Company's intention to develop additional
community buying centres across the district, whilst also providing
additional solar drying and fermentation facilities, in order to
increase total buying capacity and guarantee sources of supply.
This model will provide TFL with security of supply at farm level
with traceability without the need for local agents.
The Board of Agriterra also intends to implement additional
initiatives to help increase yields for its out growers and
subsequently improve the margins and profitability for its
operations in Sierra Leone These initiatives, including
implementing modern farm management techniques and farmer incentive
schemes, have proved extremely successful in Agriterra maize
production and process facilities in Mozambique, and the Company is
confident that similar results can be achieved with cocoa
production in Sierra Leone and the wider region.
As immediate cash flow from cocoa sales to the established major
international cocoa buyers increases, it is the Board's objective
to expand the buying operations into Liberia and also to develop
its own cocoa plantations in the region, effectively establishing a
"tree to market-place" business model for rapid growth and
expansion. The Company is currently evaluating additional
acquisition opportunities from which to expand its activities.
The Board believes that cocoa represents an exciting opportunity
for the Company. Global demand is strengthening and security of
supply and traceability is becoming increasingly important. Cocoa
production in Sierra Leone is improving at farm level, with new
techniques being applied and yields and cultivation expected to
increase. This provides TFL a significant opportunity to leverage
its first mover advantage, both through its existing base of out
growers but thereafter through its own plantations.
Importantly, through the acquisition of TFL, the Company will
also acquire the skill and knowledge base of Mr. Adrian Simpson,
Managing Partner of TFL. Mr. Simpson has 25 years experience in the
commodities and risk management trade globally including nine years
at E D & F Man where at he spent four years running a large
cocoa buying operation in the Cote D'Ivoire and six years at Drum
Resource Ltd, a London based company which Adrian founded that
focussed on the trading of and international risk managing for the
commodity trade.
Agriterra Chairman Phil Edmonds said, "TFL has an established
operation in Sierra Leone and is based on quality, traceability and
sustainability, all the major themes in the expanding cocoa market.
Its acquisition provides us with the ideal platform to expand both
into the cocoa market, and West African agriculture in general, as
we look to build on our already successful maize and beef
operations in Mozambique.
"Our focus is now to support the development of TFL, replicate
its success regionally and leverage this to secure our own
plantations. By combining our experience and strong understanding
of the agricultural sector with Adrian and his team, we will look
to build a significant presence in the cocoa industry initially
focussing on Sierra Leone and subsequently other countries in the
region."
** ENDS **
For further information please visit www.agriterra-ltd.com or
contact:
Andrew Groves Agriterra Ltd Tel: +44 (0) 20 7408
9200
Jonathan Wright Seymour Pierce Ltd Tel: +44 (0) 20 7107
8000
David Foreman Seymour Pierce Ltd Tel: +44 (0) 20 7107
8000
Robin Henshall Matrix Corporate Capital Tel: +44 (0) 20 3206
LLP 7000
Hugo de Salis St Brides Media & Finance Tel: +44 (0) 20 7236
Ltd 1177
Susie Geliher St Brides Media & Finance Tel: +44 (0) 20 7236
Ltd 1177
This information is provided by RNS
The company news service from the London Stock Exchange
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