TomCo Energy PLC New Palm Oil Division (3411D)
06 July 2016 - 7:00AM
UK Regulatory
TIDMTOM
RNS Number : 3411D
TomCo Energy PLC
06 July 2016
6 July 2016
TomCo Energy plc (AIM: TOM )
("TomCo" or the "Company")
New Palm Oil Division
Highlights
-- Completion of corporate due diligence on a new palm oil
milling project in the Makeni oil palm belt in Sierra Leone;
-- Delivery of an independent report by Astratec Africa Limited
that examines the oil palm industry in Sierra Leone, and assesses
the proposed corporate plan and commercial potential;
-- In the process of finalising the formation of TomCo Palm Oil Ltd in Sierra Leone; and
-- The Company is reviewing finance options in the form of debt
and a small amount of equity, to fund the development costs of this
project.
Further to the announcement made by TomCo on 19 May 2016, the
Company is pleased to announce the go ahead of a new palm oil
division, subject to financing.
Background
The Company has completed its due diligence work on a new palm
oil milling project located in the Makeni oil palm belt in Sierra
Leone. The Directors identified around 1,845Ha of existing oil palm
plantations owned by 33 villages west of Makeni. Preliminary
discussions with the respective farmers yielded overwhelming
support to the Company's proposed processing plant and confirmed
their willingness to supply Fresh Fruit Bunches (FFB - locally
known as banga) for the Company to convert into unrefined crude
palm oil palm kernels for sale in Sierra Leone.
The support from the local communities was further demonstrated
when the village chief of Makarie, Pa Abdulai Conteh, offered to
provide to TomCo the freehold land it required to build a
processing plant on at no cost.
Astratec Report
As part of the due diligence process, TomCo also engaged an
independent palm oil expert, Stuart Honeysett from Astratec Africa
Limited ("Astratec"), to help select a site, and examine the
economics of building a 1tph FFB plant at Makarie, 10km west of
Makeni in Sierra Leone, with the capability of expanding this plant
to 2tph to take advantage of the abundance of nearby plantations in
the area surrounding Makarie, provided the economics of the
expansion are sufficiently attractive. The processing equipment is
expected to be sourced from India and is a simple and robust design
with a central boiler rather than open fires to provide steam for
the processing of the FFB. The report is available on the Company's
website at www.tomcoenergy.uk.com and contains information on the
oil palm industry in Sierra Leone, and details about the specific
project plan and its costs, benefits, and likely commercial
potential for the Company.
Infrastructure
The location of the 1Ha processing plant site was determined by
Astratec, and is about 300m north of the Makarie village, 200m NW
of the Bumbuna Hydroelectric Transmission Line, 400m NW of the
Makeni-Lunsar Highway, and about 10km by road from the centre of
Makeni, the fourth largest city in Sierra Leone. The combination of
these factors provide the site with great logistical advantages and
is also within a 12km radius of the identified palm
plantations.
Permitting
The Company has sought to ensure that the acquisition and
development of the land are in full compliance with all applicable
Sierra Leonean laws. The plant site has been officially surveyed
and a legal title has been granted by the Ministry of Lands.
Attention now turns to land preparation, including building an
access road to one side of the property. A concrete-lined water
well has been built at one corner of the site. The Environmental
Protection Agency ("EPA") and the Electricity Distribution Supply
Authority have both been notified about the project and the
Company's development plans. An EPA licence will be applied for at
the appropriate time.
Funding
The expected capital expenditure required to deliver the 1tpa
FFB processing plant project through to commissioning is
approximately US$500,000. TomCo is reviewing finance options to
secure up to 70% of these costs by way of debt funding, with the
balance being financed through its cash reserves and proceeds from
a future equity placing.
The upgrade to 2tpa is expected to cost about US$400,000, the
packaging plant will be about US$150,000 and the soap plant
US$275,000, to be funded out of debt and operational cashflows.
TomCo is currently reviewing debt and equity financing options,
to fund the initial 1tpa FFB processing plant and to provide
further working capital for the Company.
Andrew Jones, Chairman of TomCo, said "We believe this is a
particularly attractive project in that it will allow us to get a
foothold in the palm oil industry in a socially beneficially way.
The local village benefits from direct and in-direct employment,
the oil palm farmers benefit from having a dependable off-take
partner, the regional traders' markets will benefit from buying a
reliable supply of palm oil from the factory gate, and TomCo
benefits from a low capital cost project that it expects to be
partially debt financed and produce positive cash flows in the
near-term. This project is a win-win for all stakeholders".
Enquiries
For further information, please visit www.tomcoenergy.uk.com or
contact:
TomCo Energy plc
Telephone +44 (0) 20 3823
3635
Chris Brown (CEO) chris@tomcoenergy.uk.com
Andrew Jones (Chairman) andrew@tomcoenergy.uk.com
SP Angel Corporate Finance LLP (Nomad & Broker)
Telephone +44 (0) 20 3470 0470
Stuart Gledhill stuart.gledhill@spangel.co.uk
Richard Hail richard.hail@spangel.co.uk
Tavistock (Financial PR)
Telephone +44 (0) 20 7920 3150
Ed Portman/Jos Simson eportman@tavistock.co.uk
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Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation.
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The company news service from the London Stock Exchange
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