Operational Update (1429C)
March 02 2011 - 1:01AM
UK Regulatory
TIDMDOO
RNS Number : 1429C
D1 Oils Plc
02 March 2011
D1 Oils plc ("D1")
Operational Update
Ahead of the anticipated release of D1's preliminary results for
the year ended 31 December 2010, the Board is pleased to provide
this operational update.
Sales of Crude Jatropha Oil ("CJO")
D1 has continued to experience demand for greater quantities of
CJO than it is able to supply and has over the last 6 months sold
all of its production, some 500 tonnes. These sales have been
achieved at an average, ex works, selling price of approximately
US$975 per tonne. This price is slightly lower than anticipated due
to a change in mix between local and export sales and between spot
purchases for trial work and repeat purchases from commercial
customers (both local and multi-national). The spot price is
continuing to firm and D1 now has a strong backlog of orders for ex
tank sales in India at above $1,000 per tonne.
The Board attributes this demand primarily to the continued
upward trend in global vegetable oil and mineral oil prices, for
instance palm oil is currently $1,279 per tonne CIF North West
Europe up from $793 per tonne 12 months prior (source: FAO and Oil
World).
Sourcing of Jatropha grain
D1 continues to develop proprietary networks to source grain and
market CJO principally in Central and North-West India (from both
D1's farmers and established third party grain traders in those
areas), North-East India (through its joint venture with
Williamson-Magor ("D1-WM"), one of India's largest tea plantation
groups), Zambia and Indonesia.
In Central and North-West India, late rains during November and
December have caused the grain collection period to extend into
March/April 2011. Accordingly, the Board is not yet in a position
to confirm final grain collection numbers for the season. Despite
this delay grain sourced from D1's farmers in these areas has
already exceeded expectations in many districts and the Board
remains pleased with the performance of these regions and expects
further significant growth in collection volumes in the next
harvest season.
However, North East India experienced the heaviest rainfall, and
lowest levels of sunshine, in June and July for thirty years, which
led to depressed flowering and in turn reduced weeding and other
activity by our partner farmers. As a result, yield in this region
will fall significantly below expectations and consequently D1-WM
will not be extracting oil in the North-East this season.
Overall, grain collection in the other regions of activity is on
track.
On 24 November 2010, the Board of D1 stated an expectation that
2,000 tonnes of CJ0 would be forthcoming for the 2010/11 harvest
season. The Board believes that purchases from large third party
traders (holding significant stocks of Jatropha grain in India)
could be more than sufficient to make good this season's shortfall
arising from the D1-WM Joint Venture. However, D1 is maintaining a
strict market discipline in the ongoing discussions with these
third parties and is only prepared to purchase grain on which it
can make a positive margin for its shareholders. To date D1 has
only purchased small quantities of grain from traders.
Accordingly, the Board estimates that D1 will now deliver
approximately 1,200 tonnes of CJO this harvest season without
material access to these trader stocks or up to 2,000 tonnes or
more if grain can be purchased satisfactorily from third party
traders.
The Directors are pleased to report that the variable cost of
D1's CJO in India (net of biomass sales credits) is currently
running at about US$700 per tonne as compared to roughly US$850 a
year ago mainly due to achieving high seedcake prices and lower
expelling costs which have helped offset the higher transport costs
experienced.
The Board notes that, as previously reported, future investment
in D1's high protein animal feed technology could further
dramatically reduce this CJO cost. D1 intends to implement a small
commercial version of this technology during the next 12
months.
Given the successful grain yields delivered in Central &
North-West India, Zambia and Indonesia, the Board remains confident
that D1 will have both the grain and the supply chain organisation
to deliver a substantial increase in CJO during the 2011/12 harvest
season and in future years.
Financial update
The Board is pleased to report that annual overhead cash burn
has now been reduced to a current run rate of GBP3.0 million per
annum, and that net cash balances at 25 February 2011 amounted to
approximately GBP3.6 million.
Preliminary results
The Board anticipates that D1 will release its preliminary
results for the year ended 31 December 2010 in May 2011.
For further information please contact:
D1 Oils Plc +44 (0) 20 7936 9104
Martin Jarvis
Chief Executive Officer
WH Ireland + 44 (0) 20 7220 0470
Chris Fielding
Brunswick Group + 44 (0) 20 7404 5959
Kevin Byram
Rosheeka Amarasekara
This information is provided by RNS
The company news service from the London Stock Exchange
END
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