Equatorial Palm Oil plc Operational Update (5181D)
June 26 2019 - 6:00AM
UK Regulatory
TIDMPAL
RNS Number : 5181D
Equatorial Palm Oil plc
26 June 2019
26 June 2019
EQUATORIAL PALM OIL plc
("EPO" or the "Company")
Operational Update
Equatorial Palm Oil plc (AIM: PAL), the AIM listed palm oil
development and production company with operations in Liberia, West
Africa, wishes to provide an update with respect to operations on
Palm Bay and Butaw estates and the construction of the Bulking
Station and Export Facility.
Palm Bay Estate
Palm Bay estate currently has 6,470 ha planted of which 5,156 ha
is mature enough to be harvested for the extraction of crude palm
oil ("CPO") at the palm oil mill recently commissioned in Q3
2018.
Encouragingly, the FFB harvested in the last 3 months has
increased from 2,000 metric tonnes ("MT") per month to in excess of
4,000 MT per month. This improvement is a result of the training
that has been provided to the harvesters as they now become more
experienced and the ease to harvest during the dry season. In the
next few months there may be a slight decrease in production of FFB
as the wet season is now with us.
The oil extraction rate has increased from 22% to 25%, which is
highly encouraging and verifies the Company's choice of the correct
breeding material of oil palm to be planted in Liberia.
Butaw Estate
To date, only 1,418 hectares ("ha") have been planted out of a
total concession area of 8,011 ha at Butaw estate. As referred to
in the Company's interim results released on 10 May 2019, a
strategic review of the Butaw estate operations has been undertaken
and a conclusion has now been reached to scale down our operations
at Butaw.
Recent High Carbon Stock ("HCS") assessments and studies have
shown Butaw estate to have insufficient plantable area, therefore
making it neither economic nor sustainable to build a long-term oil
palm business at Butaw. The international HCS guidelines were
introduced several years after we started development operations in
Liberia. The guidelines were primarily intended for South East
Asia, where there is already a large, established Palm Oil industry
making a significant economic contribution, creating huge
employment and significantly improving living standards of the
communities involved. With the same guidelines being applied to
economically challenged countries such as Liberia, it is now, in
practice, more difficult to establish sufficient scale to justify
continued operations.
In addition, the current crop of fresh fruit bunches ("FFB")
produced from Butaw estate are sold to a nearby mill at a loss
given the low sales price and high production and transport costs.
Furthermore, and after significant consideration, it would not be
prudent at the current time to transport the FFB to our new palm
oil mill at Palm Bay estate given the poor conditions of roads and
bridges between the two estates.
As a consequence of the factors outlined above and following a
considered strategic review, one of the main areas of cost
reduction will be a reduction in the workforce at Butaw estate by
approximately 70 per cent. (155 workers). The Company has always
sought to retain its workforce as long as possible in Liberia, and
had also hoped to be able to secure additional land suitable for
planting at Butaw estate to enable continued employment of its
staff. However, this has not been forthcoming and therefore the
workforce requirement in respect of the Butaw estate is
significantly diminished given it is not economic and/or
sustainable to develop the estate in the current circumstances.
As a result of these changes management are assessing the nature
of impairment at Butaw estate to be reflected in the full year
results ended 30 September 2019.
Bulking Station and Export Facility
As referred to in the Company's interim results released on 10
May 2019, the 3,000 MT storage tank at the Company's export
facility at the port of Buchanan has been completed and CPO from
Palm Bay estate is now being transported via road tankers to this
new facility for storage.
The Bulking Station and Export Facility is not due to be fully
commissioned until Q4 2019 and the CPO stored in this new tank will
then be exported to customers.
Geoffrey Brown, Executive Director of EPO, commented:
"We are disappointed that we have had to downsize our operations
at Butaw estate and let go of so many workers in an area with no
other economic activity or job prospects. This is primarily due to
international guidelines being imposed that do not always balance
considerations of HCS preservation with the socio/economic issues
in very deprived areas and communities that are desperate for real
and sustainable futures for their people. We are, however,
encouraged by the progress made from the mature oil palms at Palm
Bay estate. We look forward to the commissioning of the bulking
station and export facility towards the end of calendar year 2019
where we will then be able to ship our products using parcel
shipping tankers from the port of Buchanan."
- END -
For further information, please visit www.epoil.co.uk or
contact:
Equatorial Palm Oil plc +44 (0) 20 7 268
Geoffrey Brown (Executive Director) 4874
Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409
James Harris / James Bellman 3494
Mirabaud Securities Limited (Broker) +44 (0) 20 7484
Peter Krens 3510
Notes to editors:
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 land position in Liberia through its operating subsidiary
Liberian Palm Developments Limited ("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.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDPGUQAQUPBGUQ
(END) Dow Jones Newswires
June 26, 2019 07:00 ET (11:00 GMT)
Equatorial Palm Oil (LSE:PAL)
Historical Stock Chart
From Apr 2024 to May 2024
Equatorial Palm Oil (LSE:PAL)
Historical Stock Chart
From May 2023 to May 2024