Agriterra Ltd : Operations Update

Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture

11 June 2013

Agriterra Ltd ('Agriterra' or the 'Group')

Operations Update

Agriterra Ltd, the AIM listed pan-African agricultural group, is pleased to announce an operations update for the year ended 31 May 2013 across its cattle ranching and maize farming/milling facilities in Mozambique and its cocoa trading operations in Sierra Leone.

Mozbife: Cattle Ranching, Mozambique

·    146% increase in revenues from beef operations to US$2.2m (2012: US$0.9m)

·    Successful expansion of cattle operations - herd size increased by 49% and currently stands at 6,869 (2012: 4,601 head)

·    Pedigree breeding herd at Mavonde Stud Ranch and Vanduzi expanded by 118% to 1,525 head - capacity to expand to 4,300 head at Mavonde alone through dam irrigation

·    Achieved average dress out weights of 215kg and average wholesale price of US$4.40/kg

·    2,145 animals slaughtered including 1,497 head processed at the Mozbife abattoir (2012: 1,076 head)

·    Achieving average value of US$117 per carcass from "fifth quarter" (the skin, offal, hooves and head)

·    Two beef retail units now operating in Chimoio and Tete - four further units planned for commissioning by Q4 2013

·    Strong trading achieved at retail units - averaging daily sales of US$3,200 and US$2,800 at Chimoio and Tete respectively

·    Fencing, bush clearing and borehole drilling projects at both Dombe and the new Irmaos Ranch continue

·    Four new centre pivot irrigation systems currently being installed at Mavonde Stud Ranch and Vanduzi farm to increase irrigated pasture potential

DECA & Compagri: Maize Milling and Farming, Mozambique

·    61% increase in revenues from maize milling business to US$15.6m (2012: US$9.7m) - record turnover for DECA and Compagri facilities

·    68% increase in maize milled to a total of 46,600 tonnes at DECA and Compagri (2012: 27,690 tonnes)

·    59% increase in maize sold to a total of 34,500 tonnes at DECA and Compagri (2012: 21,717 tonnes)

·    4 percentage point decrease in grain milling yield to 74% due to adverse weather conditions (2012: 78%)

Positive pricing environment for maize meal - achieved average price of US$432.96 per tonne (2012: US$413.80)

Tropical Farms: Cocoa Trading & Plantation, Sierra Leone

·    Expansion into cocoa plantation development to facilitate commercial large scale cocoa production

·    1,600 hectares of land acquired to date for plantation development - additional 3,150 under negotiation

·    200 hectares cleared to date and 250,000 seedlings due to be planted by August 2013

·    Investment in infrastructure including the construction of a 2,000m2 processing facility in Kenema and a larger collateral management warehousing facility in Freetown linking up-country cocoa growing and buying infrastructure with the export markets

·    Small harvest in Sierra Leone impacted on cocoa and coffee trading business - sold 1,200 tonnes of cocoa (2012: 1,250)

·    12% decrease in revenues from cocoa trading to US$2.9m (2012: US$3.25m)

Agriterra Director Andrew Groves said, "This has been a transformational year for Agriterra, where a combination of growth and investment has enabled our beef business to start generating material revenues for the Group.  Together with record trading from our grain business, I am delighted to report that revenues across the Group increased by over 50% during the year to US$20.8m.

"Growth and investment remain our key focus over the coming year and beyond, with the expansion of our chain of beef retail units being a critical objective.  Trading at the first two units in Chimoio and Tete has been strong, with each generating approximately US$3,000 turnover per day.  With this in mind, the expansion of this high margin business remains extremely important to the Group.

"Investment will also be crucial to our cocoa operations in Sierra Leone, where our team are making excellent progress in establishing a commercial large scale cocoa plantation together with the necessary infrastructure to provide access to export markets.  Whilst a disappointing harvest impacted on cocoa and coffee revenues this season, the development of our own plantation provides additional security of supply in the years to come; a highly important consideration when negotiating long term sales agreements with confectionary companies.   

"Agriterra remains in the enviable position of being able to support this rapid growth through the deployment of its own treasury.  We currently have a healthy cash balance of US$18.5m and are actively pursuing payment of compensation equating to approximately US$17.8m, in partial recompense for the work undertaken and investment made by the Group on the Block Ba oil project in South Sudan, as referred to in previous announcements.  Further updates regarding these proceedings will be made in due course."

** ENDS **

For further information please visit www.agriterra-ltd.com or contact:

Notes

Agriterra Ltd is an AIM listed agricultural company with five divisions: beef, maize, cocoa, fruit and palm oil.  Its cattle ranching business, Mozbife, has a herd in excess of 6,500 head, a land holding of over 21,000 hectares, a feedlot, a 4,000 head per month capacity abattoir and retail units.  In addition to selling meat from its own herds, throughput for the feedlot and abattoir is supplemented with cattle bought in from local communities.  The Company also owns a proximal banana plantation and macadamia orchard.

The Company's maize buying and milling operations, DECA and Compagri, are located in Chimoio and Tete in central and north-western Mozambique respectively.  These collect maize from circa 350,000 farmers using the Company's own vehicle fleet, process it into maize meal, the African staple, and then sell it back to the local market, into supermarkets and to the World Food Programme.

Agriterra's cocoa business is based in Sierra Leone, through its 100% subsidiary Tropical Farms Limited, which includes buying, trading and production operations.  The Company holds over 1,200 hectares of land for cocoa cultivation and also has a strong buying register with three main hub stores, 41 satellite stores and a direct buying register of more than 3,500 farmers across the country.  Its strategy is to establish itself as a secure, sustainable and traceable source of supply to meet the requirements of the major cocoa consumers who are placing increased emphasis in this area.