Feronia Inc. Reports Third Quarter 2012 Results

Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE:FRN) today released its
unaudited financial results for the three and nine months ended September 30,
2012. All amounts in this release are expressed in US dollars unless otherwise
indicated.


Q3 2012 Highlights 



--  Revenue up 59% to $2.1 million (Q3 2011: $1.3 million) 
--  Replanted 991 hectares ("ha") of oil palm (Q3 2011: 729 ha) with 2,786
    ha planted year-to-date as of September 30, 2012 (1,768 ha in the same
    period of 2011) 
--  Fresh fruit bunch ("FFB") yield for the nine months to September 30,
    2012 of 4.76 tonnes per ha (nine months to September 30, 2011: 2.85
    tonnes per ha) 
--  Increase in oil extraction rate ("OER") to 18.13% (Q3 2011: 16.51%) 
--  Progressed construction of Yaligimba CPO mill 
--  Closed two tranches of brokered private placement for aggregate gross
    proceeds of $7.7 million 
--  Cash balance at September 30, 2012 of $6,372,000 
--  3,244 ha of oil palm planted year-to-date as at October 31, 2012 (1,905
    ha in the same period of 2011) 
--  Subsequent completion of 500 ha of rice planting in October 2012 
--  Achieved practical completion of rice mill in November 2012



Bill Dry, CEO of Feronia Inc. commented: "Feronia's oil palm planting programme
continues apace with more hectares planted in the ten months to the end of
October than in the whole of 2010 and 2011 combined. This is a key value driver
for our palm oil business and testament to the skill and dedication of our
workforce. We are confident that our target of planting 5,000 hectares a year is
achievable in 2013.


"Completion of the rice mill in November was a major milestone in the
development of Feronia's arable farming business as it allows us to process not
only our own crops, but those grown by local small-holder farmers. Civil works
and the drying facilities were completed earlier in the year and the Company is
in the process of completing construction of its associated storage silos.
Storage of dried paddy rice is currently undertaken using a grain bag storage
system which is an acceptable interim solution for storing current volumes and
allows the Company to continue to dry and mill crop. The current installed
capacity at the mill will also allow us to expand our rice production
substantially once we have proven commercially compelling yields."


About Feronia Inc.



--  Feronia operates large-scale commercial oil palm plantations and has
    commenced an arable farming operation in the DRC. 
    
--  The Company, through its subsidiaries, holds concessions on land which
    is owned by the DRC government and on which its oil palm plantation and
    farming operations take place. 
    
--  The Company uses modern agricultural practices to operate and develop
    its oil palm plantations and arable farming. Feronia believes in the
    immense agricultural potential of the DRC for high-quality edible oils,
    oil derivatives and foodstuffs given the suitability of its climate and
    soil and the availability of a skilled workforce. 
    
--  The Company's management team is comprised of experienced administrative
    executives and 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 jobs and economic growth 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 "anticipates", "plans", "proposes", "estimates", "intends",
"expects", "believes", "may", "will" and include without limitation, statements
regarding proposed capital expenditure; the Company's plan of operations and
comparative advantages; plans regarding sowing rice and replanting oil palms;
improvements in harvesting and collection; and positive trends regarding OERs.
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:
risks related to foreign operations (including various political, economic and
other risks and uncertainties), the interpretation and implementation of the
Agriculture Law, termination or non-renewal of concession rights or
expropriation of property rights, political instability and bureaucracy, limited
operating history, lack of profitability, lack of infrastructure in the DRC,
high inflation rates, limited availability of debt financing in the DRC,
fluctuations in currency exchange rates, competition from other businesses,
reliance on various factors (including local labour, importation of machinery
and other key items and business relationships), the Company's reliance on two
refining factories and one major customer, lower productivity at the Company's
plantations and arable farming operations, risks related to the agricultural
industry (including adverse weather conditions, shifting weather patterns, and
crop failure due to infestations), a shift in commodity trends and demands,
vulnerability to fluctuations in the world market, the lack of availability of
qualified management personnel and stock market volatility. 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.


Operational Summary and Key Metrics by Division

Palm Oil Operations

Key Metrics:



                                                            Total           
                         Nine months ended Sept    (as at and for the nine  
                                30, 2012            months ended Sept 30)   
                        Lokutu  Yaligimba Boteka       2012    2011    2010 
                        ------------------------- --------------------------
Immature Hectares        2,867      2,303  1,466      6,636   4,836   2,852 
Producing Hectares       4,809   3,903(1)  1,501  10,213(2)  12,753  13,338 
Fruit Production                                                            
 (tonnes)               24,458          -  5,608     30,066  36,362  23,209 
Oil Produced (tonnes)    4,401          -  1,043      5,444   6,212   3,764 
Oil Extraction Rate      17.99%         -  18.60%     18.10%   17.1%   16.2%
PKO Produced (tonnes)      335          -      -        335       -       - 
FFB Yield/ha(3)           5.09          -   3.74       4.76    2.85    1.74 



Notes:



1.  The producing hectares at the Yaligimba plantation are not currently
    being harvested and as a result are not contributing to FFB or CPO
    production. 
2.  During the years ended December 31, 2010 and 2011, the Company
    classified palms aged 4 to 30 years as mature and producing. Going
    forward, management has elected to classify palms aged 4 to 25 years as
    mature and producing, resulting in a reduction in the number of
    producing hectares. 
3.  FFB yield/ha is for the year to date and is not annualized or seasonally
    adjusted. Annual FFB yield/ha will reflect seasonal factors, with the
    highest production typically around May and the lowest production around
    October.



Key Developments: 



--  On a like for like basis, excluding Yaligimba, fruit production
    decreased by 28.2% and 5.8% for the three and nine months ended
    September 30, 2012, respectively, compared to the corresponding periods
    in 2011. This reduction is primarily a result of the following factors: 
    
    --  A reduction of producing hectares at Boteka and Lokutu from 8,410 ha
        to 6,310 ha following the Company's previously disclosed
        reclassification of palms aged 4 to 25 years as mature and
        producing, the clearance of palms older than 25 years for replanting
        and the cessation of harvesting fruit from palms older than 25 years
        which have lower fruit yields, lower extraction ratios and require
        more time to harvest. This has resulted in an improvement in FFB
        yield per hectare. 
    --  Adoption of best practice harvesting procedures including fruit
        quality checks, in-field supervision, training and field transport
        improvements to ensure only sufficiently ripe fruit is harvested.
        These practices have resulted in an improvement in CPO extraction
        rates with an extraction rate of 18.7% achieved in September 2012. 



Management believes that these improved practices are in the long-term interest
of better profitability but affect gross margin in the short term (see "Results
of Operations" below). 




--  Planted 991 ha of oil palms in the third quarter of 2012. As of October
    31, 2012, a total of 3,244 ha of oil palms had been planted in 2012
    (1,905 ha in the same period of 2011). 
    
--  At Yaligimba, the majority of civil works have now been completed on the
    mill site and installation of the new CPO mill by the Company's
    Malaysian contractors has commenced. Once the new palm oil mill is
    operational (scheduled for the first quarter of 2013), the Company will
    have access to an additional 3,903 ha of producing palms. It is expected
    that the Yaligimba plantation will achieve operating results similar to
    Lokutu on a per hectare basis.



Arable Farm Operations

Key Metrics:



                             As at and for the nine months ended Sept. 30   
Arable                                         2012                     2011
----------------------------------------------------------------------------
Land Available (ha)                          10,000                   10,000
Land Cleared (ha)                             2,000                        -
Land Prepared (ha)                            1,700                      200
Land Planted (ha)                             - (1)                        -



Note:



1.  The harvests were completed in August and September 2012 and there were
    no plantings as at September 30, 2012.



Key Developments:



--  In October 2012, an additional 500 ha of rice were planted. The Company
    planted NERICA-4(R) (New Rice for Africa-4), an upland rice variety
    suited to African soil and weather conditions which is expected to be
    harvested and processed in February 2013, and subsequently sold into the
    domestic market. 
    
--  Subsequent to the end of the period, the Company's rice mill was
    completed and commissioned. It is the only large-scale rice mill in the
    region and will allow the Company to process its own crop and that
    produced by other local small-holder farmers. 
    
--  Earlier in the year civil works and the drying facilities were completed
    and the Company is in the process of completing construction of its
    associated storage silos. Storage of dried paddy rice is currently
    undertaken using a grain bag storage system which is an acceptable
    interim solution for storing current volumes and allows the Company to
    continue to dry and mill crop. 



Outlook

The Company's strategy for its oil palm plantations business continues to be to
maximize returns from existing plantings while investing in new plantings and
the required processing capacity. Commissioning of the new palm oil mill at
Yaligimba is expected to provide the Company with immediate access to an
additional 3,903 ha of mature oil palms for the production of CPO, an increase
of 62.1% from the area currently accessible. Once the Yaligimba palm oil mill is
completed, there are no major capital expenditures currently anticipated in the
Company's oil palm plantations business for the next several years, excluding
fertiliser costs associated with immature palms. 


The Company's primary objective with respect to its arable farming business for
the remainder of 2012 is to prove commercially viable yields at its operation in
Bas Congo, DRC. The Company does not intend to expand the arable farming
operation until commercially compelling yields have been achieved on a scale of
up to 2,000 hectares. Once such yields have been achieved, the Company will
consider expanding the scale of the planting programme.


In summary, the key objectives of the Company in 2012 are as follows:



i.   advancing construction of the palm oil mill at the Yaligimba
     plantation, thereby enabling the Company to harvest and  process fruit
     grown at that location; 
    
ii.  completing up to 5,000 ha of re-planting across its oil palm
     plantations; and 
    
iii. proving commercial yields at its arable farming division.



As previously disclosed by the Company, on December 24, 2011, the government of
the DRC promulgated a new law, "Loi Portant Principes Fondamentaux Relatifs a
L'Agriculture" (the "Agriculture Law"), for the stated purposes of developing
and modernizing the country's agricultural sector. Feronia continues to seek
clarification on the implications of this legislation from local counsel and
government in the DRC. If the Agriculture Law is interpreted by the DRC
government to apply to the existing concession rights held by the Company and
the Agriculture Law is not amended, it could have a material and substantial
adverse effect on the value of its business and its share price. In such case,
Feronia may be required to sell or otherwise dispose of a sufficient interest in
its operating subsidiaries so as to ensure that it meets local ownership
requirements. There is no assurance that such a sale or disposition would be
completed at fair market value or otherwise on acceptable terms to Feronia.


RESULTS OF OPERATIONS - Three and nine months ended September 30, 2012

Revenue and Gross Margin



(Expressed in                                                               
 thousands of US        Three months ended Sept    Nine months ended Sept   
 dollars)                         30,                        30,            
                                                                            
------------------------------------------------- --------------------------
                         2012    2011  % Change     2012    2011  % Change  
                                                                            
------------------------------------------------- --------------------------
                                                                            
Palm Oil               $2,056  $1,189        73%  $5,796  $4,113        41% 
Other                      87     156       (44)%    305     325        (6)%
                                                                            
------------------------------------------------- --------------------------
Revenues               $2,143  $1,345        59%  $6,101  $4,438        37% 
Cost of Sales           1,801     678       166%   4,454   2,435        83% 
                                                                            
------------------------------------------------- --------------------------
Gross Margin PHC(1,2)  $  342  $  667       (49)% $1,647  $2,003       (18)%
                                                                            
Gross Margin PHC                                                            
 %(1,2)                    16%     50%      n/a       27%     45%      n/a  
------------------------------------------------- --------------------------
                                                                            
Arable operating                                                            
 expense               $  360  $  223        61%  $1,648  $  628       162% 
                                                                            
----------------------------------------------------------------------------



Notes:



1.  Gross margin is a non-GAAP financial measure. See "Non-GAAP Financial
    Measures" below. 
2.  Gross margin is impacted in the short term by improved harvesting
    practices which management believes are in the long-term interest of
    better profitability.



Revenues for Q3 2012 were $2,143,000, a 59% increase from Q3 2011. This increase
is due to both the higher quantity of CPO sold in Q3 2012 and lower realized
revenues in Q3 2011 as a result of increasing CPO stock levels in that period. 


The reduction in gross margin for Q3 2012 to 16% (Q3 2011: 50%) is due to an
increase in cost of sales arising because of the need to partially satisfy sales
in Q3 2012 from the Company's stock of CPO. This was necessary due to the
reduced level of CPO production during the quarter. As detailed above, the lower
CPO production during Q3 2012 is primarily a result of there now being less
producing hectares than previously and the adoption of best practice harvesting
procedures. Management believes that the short term impact on gross margin is in
the long-term interest of better profitability.


The following table provides a summary of palm fruit production and CPO:



                           Three months ended        Nine months ended      
                               Sept. 30,                  Sept. 30,         
                         2012    2011  % Change     2012    2011  % Change  
Fruit production                                                            
 (tonnes)               7,148  11,608     (38.4%) 30,066  36,362     (17.3%)
Oil produced (tonnes)   1,296   1,917     (32.4%)  5,444   6,212     (12.4%)
Oil extraction rate      18.1%   16.5%              18.1%   17.1%           



Cash generated by (used in) operating activities



(Expressed in                                                               
 thousands of US                                                            
 dollars)          Three months ended Sept 30,   Nine months ended Sept 30, 
                                                                            
----------------------------------------------- ----------------------------
                      2012      2011  % Change     2012      2011  % Change 
                                                                            
----------------------------------------------- ----------------------------
Cash generated by                                                           
 (used in)                                                                  
 operating                                                                  
 activities        $(2,724) $ (7,429)       63% $(4,820) $(12,106)       60%
----------------------------------------------- ----------------------------
----------------------------------------------- ----------------------------



Operating Costs



(Expressed in thousands    Three months ended         Nine months ended     
 of US dollars)                  Sept 30,                  Sept 30,         
                                                                            
-------------------------------------------------- -------------------------
                           2012    2011 % Change     2012    2011 % Change  
                                                                            
-------------------------------------------------- -------------------------
Selling, general and                                                        
 administrative           2,912  $2,181       34%   8,234  $7,757        6% 
Other gains and losses      (95)    122     (178)%    (62)     70     (189)%
                                                                            
-------------------------------------------------- -------------------------
-------------------------------------------------- -------------------------
Operating costs          $2,817  $2,303       22%  $8,172  $7,827        4% 
-------------------------------------------------- -------------------------
-------------------------------------------------- -------------------------



Selling, general and administrative costs increased by $731,000 for Q3 2012 and
$477,000 for the nine months ended September 30, 2012 when compared to the
corresponding periods of 2011. These increases are mainly due to:




--  Salary costs of $455,000 reallocated from cost of sales to operating
    costs in Q3 2012, which did not occur in Q3 2011. 
    
--  An increase in professional fees during Q3 2012 of $148,000 being
    primarily an increase in legal fees of $66,000 and tax consultancy fees
    of $65,000. Professional fees for the nine months ended September 30,
    2012 were $500,000 lower than the same period in 2011 due to additional
    costs for the year-end audit, IFRS transition and work on the equity
    offering incurred during the first six months of 2011. 
    
--  An increase in amortization cost for Q3 2012 of $192,000 and $616,000
    for the nine months ended September 30, 2012 compared to the same
    periods in 2011, resulting from increased investment in plant and
    equipment during 2011 and 2012.



CASH FLOWS AND LIQUIDITY

The cash balance at September 30, 2012 was $6,372,000, compared to $13,521,000
as at December 31, 2011. The decrease in cash balance of $7,149,000 was a result
of net loss (excluding non-cash items) of $7,311,000 and capital expenditure of
$9,216,000, partially offset by an increase in working capital of $2,492,000 and
the issue of shares for cash of $6,886,000.


For the first nine months of 2012, working capital movements resulted in cash
inflows of $2,492,000 (cash outflows of $6,218,000 for the first nine months of
2011), driven by increases in payables of $402,000 and decreases in inventory of
$808,000, receivables of $699,000 and prepaid expenses of $583,000. 


Investing activities resulted in cash outflows of $9,216,000 for the first nine
months of 2012 (cash outflows of $4,856,000 in the first nine months of 2011).


Cash inflows from financing activities were $6,886,000 in the first nine months
of 2012 (cash inflows of $27,493,000 in the first six months of 2011).


Major outstanding anticipated cash requirements are related to:



i.   the construction and completion of the new oil palm mill at Yaligimba
     (approximately $4,500,000), with expected completion in the first
     quarter of 2013; 
    
ii.  the completion of the rice mill to service Feronia Arable 
     (approximately $150,000), which was completed in November 2012; and 
    
iii. the completion of storage facilities to service the current arable
     operations (approximately $100,000), with expected completion in the
     first quarter of 2013. 



Non-Executive Director Compensation

Due to various factors including the dilution that shareholders of the Company
would suffer at current share price levels, the board of directors of the
Company has determined for the foreseeable future to compensate non-executive
directors and committee members in cash instead of stock options. The
anticipated annual fees are expected to be approximately $137,500 which are in
line with a relative comparator group. The Company continuously reviews its
compensation policies with a view of minimizing the impact to shareholders and
increasing the alignment of all parties with the share price.


Non-GAAP Financial Measures

Gross margin is not a financial measure recognized by IFRS and does not have a
standardized meaning prescribed by IFRS. The Company's method of calculating
gross margin may differ from other methods used. Gross margin is presented in
this press release as additional information regarding the Company's financial
performance. Gross margin has been calculated by deducting cost of sales from
revenue.



FOR FURTHER INFORMATION PLEASE CONTACT: 
Feronia Inc.
Ravi Sood
Executive Chairman
[phone]
[e-mail]


Feronia Inc.
Bill Dry
CEO
44 (0) 7887 525 046
[e-mail]
www.feronia.com