RNS Number : 0645E
25 May 2012
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture
25 May 2012
Agriterra Ltd ('Agriterra' or 'the Company')
Acknowledgment of GBP11,372,682 Compensation Award to Agriterra
Agriterra Ltd, the AIM listed pan African agricultural company, is pleased to announce that following its instigation of international arbitration proceedings, the Ministry of Petroleum and Mining of the Republic of South Sudan ('the MPM') has acknowledged in writing the Company's entitlement to receive a compensation payment, as assessed by the country's National Petroleum Commission ('NPC'), of GBP11,372,682 ('the Compensation'). In the same communication, the MPM acknowledged that compensation should have been paid much earlier and has confirmed that it will be paid to the Company within one year.
The Compensation is acknowledged as being partial recompense for the work undertaken and the substantial investment made by the Company on the Block Ba oil concession area in Southern Sudan, during its previous incarnation as White Nile Limited ('White Nile'), an oil and gas exploration company. White Nile commenced exploration work on Block Ba in 2005 and continued exploratory activities prior to the NPC's decision to prohibit exploration work in the area, in June 2007.
Whilst this recent communication from the MPM is a positive development in the Company's efforts to achieve a resolution to this long running matter, and arises from the Board's initiation of international arbitration proceedings, the Company has now called for a meeting with the relevant authorities in the Republic of South Sudan in an effort to expedite payment of the Compensation.
The Company also retains, as a legacy asset, a 20% interest in the South Omo block in Ethiopia, which London listed Tullow Oil plc ('Tullow') and Africa Oil Corp have farmed into the development of. Initial results announced by Tullow following drilling in Block 10BB in Kenya, which houses the same petroleum system as South Omo, have been highly positive, increasing the prospectivity of the South Omo Block. Should a discovery be made on the South Omo block, Agriterra's 20% interest could prove to be significant for the Company's shareholders and Agriterra looks forward to future announcements from Tullow regarding this concession.
Agriterra CEO Andrew Groves said, "Our legacy oil assets are continuing to look extremely promising, with the South Omo block prominent in Tullow and Africa Oil east African exploration plans. An GBP11 million cash payment from the South Sudanese, represents approximately 30% of our current market capitalisation and further enhances our already strong balance sheet on a non dilutive basis."
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For further information please visit www.agriterra-ltd.com or contact:
Andrew Groves Agriterra Ltd Tel: +44 (0) 20 7408
Jonathan Wright Seymour Pierce Ltd Tel: +44 (0) 20 7107
David Foreman Seymour Pierce Ltd Tel: +44 (0) 20 7107
Andy Cuthill MC Peat & Co LLP Tel: +44 (0) 20 7104
Susie Geliher St Brides Media & Finance Tel: +44 (0) 20 7236
Agriterra Ltd is an AIM listed agricultural company with four divisions: beef, maize, cocoa and palm oil. Its cattle ranching business, Mozbife, currently has a 4,000 strong herd, a land holding of over 16,250 hectares, a feedlot and a 4,000 head per month abattoir which is under construction. In addition to selling meat from its own herds, throughput for the feedlot and abattoir will be supplemented using cattle bought in from local communities.
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 mealie meal, the African staple, and then sell it back to the local market, into supermarkets and to the World Food Programme. Combined sales for the year ended 31 May 2011 totalled 28,822 tonnes maize meal generating revenue of US$13.6 million.
Agriterra's cocoa business is based in Sierra Leone, through its 100% subsidiary Tropical Farms Limited, which is currently a buying and trading operation, but provides an ideal conduit to branch out into cocoa production in West Africa. 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.
The Company has expanded its portfolio of agricultural products through the addition of palm oil, and holds a lease over approximately 45,000 hectares of brownfield agricultural land in an area suitable for palm oil production in the Pujehun District in the Southern Province of Sierra Leone. This area of Sierra Leone, which is close to the Liberian border, receives one the highest levels of rainfall in Sierra Leone, which in itself, receives some of the highest rainfall globally. In addition, the lease area is located on the equatorial belt, which is the most favourable geographical location for palm oil production.
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