Agriterra Ltd Corporate Update (0185C)
June 23 2016 - 2:00AM
UK Regulatory
TIDMAGTA
RNS Number : 0185C
Agriterra Ltd
23 June 2016
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
23 June 2016
Agriterra Ltd ('Agriterra' or the 'Company')
Corporate Update
Agriterra, the AIM quoted Africa focussed agricultural company
announces that, due to the well documented political unrest in the
area around its cattle ranching operations in Central Mozambique,
the Company has begun destocking its cattle in order to safeguard
and crystallise its considerable livestock capital.
As announced on 21 April 2016, the political and economic
environment in Mozambique has deteriorated during the course of
2016 and local Renamo militias are now entrenched in some rural
areas in the Manica province, where the Company's three farms are
located. The decision has been made to destock these farms in order
to protect the value of the herd during a period in which there is
an increased possibility of livestock theft and an increased risk
in the movement of people and goods in the country.
The Company's three farms, Mavonde, Dombe and Inhazonia,
currently hold approximately 4,000 head of cattle, with
approximately 2,500 further head of cattle currently in the
Company's feedlot facility at Vanduzi. Over the course of the next
10 months the cattle will be delivered to the Vanduzi feedlot for
fattening and subsequent slaughter. The feedlot, which the Company
will continue to operate, enables Agriterra to produce a well
finished, high quality animal for slaughter ensuring premium grade
meat is available to supply its butcheries and wholesale
operations. Once the farms have been completely destocked, which is
anticipated to be by April 2017, the Vanduzi feedlot will
exclusively process locally reared animals. The board is confident
that suitable quality animals are available in the local market for
these purposes, having seen a growth in local commercial cattle
farming in recent times, in part as a result of the market
generated by the Company's feedlot and abattoir infrastructure.
The Board believes the move to destock the farms will also ease
pressure on the Company's operating finances as the significant
maintenance and development which were being incurred on an ongoing
basis during the ranches' development phase, will now be curtailed.
As outlined in the financial results released on 20 November 2015,
revenues within the beef division now cover all of the cash
operating costs of Agriterra's retail, abattoir and feedlot
operations. Once the farms are destocked, and subject to beef sales
volumes increasing in line with management forecasts, the Board
anticipates that the beef division will be generating positive
operating cash flows.
The Company is currently evaluating several opportunities to
maximise the value of the ranches including appraising leasing
opportunities in order to maintain the farm assets while also
generating revenues in the short to medium term. In the longer
term, the Board is hopeful that the political situation in
Mozambique will stabilise permitting the farms to be redeveloped as
cattle ranching farms. Further announcements will be made in due
course as appropriate.
**ENDS**
For further information please visit www.agriterra-ltd.com or
contact:
Daniel Cassiano-Silva Agriterra Ltd Tel: +44 (0)
20 7408 9200
David Foreman Cantor Fitzgerald Tel: +44 (0)
Europe 20 7894 7000
Michael Reynolds Cantor Fitzgerald Tel: +44 (0)
Europe 20 7894 7000
Susie Geliher St Brides Partners Tel: +44 (0)
Ltd 20 7236 1177
This information is provided by RNS
The company news service from the London Stock Exchange
END
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