Palm Oil Mill and Operational Update

RNS Number : 9931U

Equatorial Palm Oil plc

13 April 2016

 

13 April 2016                                                                                      

EQUATORIAL PALM OIL plc

("EPO" or the "Company")

Development of 60mt/hr Palm Oil Mill and Operational Update

Equatorial Palm Oil plc (AIM: PAL), the AIM listed palm oil development and production company with operations in Liberia, West Africa today updates the market with respect to the decision to construct a 60 metric tonnes per hour ("mt/hr") palm oil mill ("POM") and its general operations.

Highlights:

·     Decision made to progress with investment for construction of 60mt/hr POM at the Palm Bay Estate

·     Approximately US$20m initial capital expenditure, to be funded by debt currently being arranged by Kuala Lumpur Kepong Berhad ("KLK")

·     First production scheduled for 2018

·     First plantings in 2011-12 now bearing fruit

Palm Oil Mill

The Company is pleased to announce it is to construct a 60mt/hr POM to be located at the Palm Bay Estate.

The POM will be constructed in a modular fashion with two lines of 30mt/hr each, however, the ground preparation will be completed for a 60mt/hr POM.  The first stage is the commissioning of a 30mt/hr POM, anticipated to be operational in 2018, which will cost approximately US$20m and is to be funded by debt finance which our major shareholder and JV partner Kuala Lumpur Kepong Berhad ("KLK") is arranging on commercial arm's length terms. The balance of funding for the second 30mt/hr line will be sought closer to the time of commissioning on a similar debt funded basis.

The construction of this mill is very significant for the communities in which we operate and for the Liberian Government. Given the recent downturn in prices for commodities and oil and gas the Liberian Government has put a greater emphasis on agriculture and is providing all necessary assistance to the Company to ensure all imports for "agro-processing" are free of any import duties.

Palm Bay is located 24km from the port of Buchanan where EPO has leased approximately 4.5 acres for a tank farm and export facility that is in close proximity to the wharf from which it is intended that vessels will load EPO's produce for onward shipment to its customers.

Liberian Palm Developments Limited ("LPD") - Operational Review

Work has been ongoing at both Palm Bay and Butaw Estates to tend to the already 7,400 ha planted since 2011. LPD's management has reported that these palms are developing well and the palms planted in 2011 and 2012 are now bearing fruit, although considered too small in quantity and yield to begin processing for oil.

Pending the conclusion of a HCS study funded by the Sustainable Palm Oil Manifesto Group ("the HCS+"), LPD had committed to use the HCS Approach methodology to avoid clearing HCS areas on its estates.  In this respect, LPD had engaged The Forest Trust ("TFT") assistance to assess approximately 1,500ha for new plantings. This exercise is nearing completion and we expect to commence development as per TFT's recommendations.

Currently there are initiatives in place for the convergence of the two methodologies (HCS+ and HCS Approach) which LPD supports in the move towards a single standard for the development of sustainable palm oil. Until this convergence is completed, LPD will adopt the HCS Approach methodology in respect of the development of its estates. LPD will also undertake field trials using the HCS+ methodology for purposes of comparison. 

Geoffrey Brown, Executive Director of EPO, commented:

"The construction of the new 60 mt/hr POM is a major milestone for EPO and for the re-development of the palm oil industry in Liberia. Working with the government and key stakeholders, we shall look to progress a sustainable palm oil operation in Liberia as the region represents a major opportunity to create a key, new global supply hub for seaborne export to international markets."

For further information, please visit www.epoil.co.uk or contact:

Equatorial Palm Oil plc Geoffrey Brown (Executive Director)	[phone]
Strand Hanson Limited (Nominated Adviser) James Harris / James Bellman	[phone]
Mirabaud Securities LLP (Broker) Peter Krens	[phone]

Notes to editors:

Further information on the HCS study, including the HCS+ and HCS Approach methodologies, can be found at www.carbonstockstudy.com.

Equatorial Palm Oil plc is an AIM listed crude palm oil developer and producer with palm oil estates in Liberia, West Africa.  The Company was founded in 2005 and is focused on becoming a global, sustainable producer of high quality palm oil to regional and international markets.

With a significant land position in Liberia through its operating subsidiary LPD, the Company is geographically well positioned to serve the international and regional markets and is committed to making a positive impact on the communities in which it operates through investment in local schools, health clinics, housing and infrastructure. 

The Company's largest shareholder and 50:50 joint venture partner in LPD is KLK. KLK is one of the largest palm oil producers in the world and the Company will greatly benefit from their many years of expertise in oil palm development.

 

END

 

 

MSCDLLFFQZFBBBF