Agriterra sells interest in South Omo for $50 million
(Press Release) – Agriterra Ltd, the AIM listed pan African agricultural company, is pleased to announce that it has entered into an agreement with Marathon Ethiopia Limited BV, a subsidiary of Marathon Oil Corp (‘Marathon’), for the sale of its 20% legacy interest in the South Omo Block (‘South Omo’) in Ethiopia, for aÃ‚Â cashÃ‚Â consideration of US$40m on completion and a further US$10m on Marathon’s participation in a “Commercial Discovery” (the ‘Agreement’).
Completion of the Agreement is conditional on the consent of the Ethiopian Ministry of Mines as well as the waiver of pre-emption rights by Tullow Oil plc and Africa Oil Corp. (which have now been given).
Agriterra will utilise theÃ‚Â fundsÃ‚Â to implement its growth strategy of capitalising on the rapidly growing agricultural market in sub-Saharan Africa to become a leading food provider.Ã‚Â The Company already has four key divisions: cattle ranching; maize farming and milling in Mozambique; cocoa trading; and palm oil operations in Sierra Leone.Ã‚Â This multi-commodity focus gives Agriterra a strong commercial footprint as it looks to continue to enhance its financial performance and value accretion potential.
Agriterra CEO Andrew Groves said, “The sale of our legacy South Omo interest provides us with a dramatic cash injection.Ã‚Â As a result, the current market capitalisation of just over Ã‚Â£50m does not fully reflect the considerable value of our growing agricultural businesses.
“The funds from this sale will enable us to realise our rapid expansion plans across all our agricultural businesses, effectively enabling the Company to become a significant pan-African food producer and processor.Ã‚Â In Mozambique, our ambitious growth objectives include expanding our current beef herd from 4,000 to 10,000 head by 2015, and building a vertically integrated beef operation through the continued development of a feedlot operation, 4,000 head per month capacity abattoir and butcher shops.Ã‚Â In Sierra Leone, we will focus on growing our cocoaÃ‚Â tradingÃ‚Â operations, in addition to establishing cocoa plantations with the aim of becoming a significant regional producer for the growing international markets.Ã‚Â I look forward to providing further news on this front over the coming weeks and months.
“Finally, as shareholders will be aware, we are also awaiting the payment of Ã‚Â£11m relating to our remaining legacy oil asset in South Sudan.