Wednesday, 7 March 2012

Feronia expects new DRC agriculture law will not impede operations

Africa-focused farming and oil palm plantation company Feronia (CVE:FRN) said Wednesday that it expects the new agricultural legislation in the Democratic Republic of Congo (DRC) will not impede its operations there, after discussions held with local counsel and government.
The new legislation has ignited controversy with respect to a provision that purports to limit foreign ownership of DRC farmland.
Feronia said that some agribusinesses in the DRC have raised concerns that this provision may impede existing and new foreign investment.
As such, the company has been engaged in discussions with local counsel and various levels of government in the DRC with respect to the proper interpretation of the new agriculture law, and based on this,  "the company is of the belief that the Agriculture Law would not impede Feronia's operations in the DRC", it said in a statement.
"In particular, as previously noted in its public disclosure documents, Feronia does not own the land in the DRC on which its farming takes place, but rather, through its subsidiaries Plantations et Huileries du Congo SARL (PHC) and Feronia PEK sprl, holds concessions on land which is owned by the DRC government."
The company only owns some parcels of land in the DRC on which the processing and storage facilities for its arable farming operations are located. It added that no farming activity occurs on these lands.
Further, Feronia controls 76.17 percent of the shares of its PHC subsidiary, while the remaining 23.83 percent is held by the DRC government.
The company concluded: "Feronia will continue to seek clarification on the implications of the new Agriculture Law from local counsel and government in the DRC and will provide a further update when more information becomes available.
"However, the company does wish to caution investors that if the final version of the Agriculture Law is interpreted by the DRC government to apply to the requisite ownership of concession rights held by the company, it could have a material adverse effect on the value of its business and its share price."
Feronia is a large-scale commercial farmland and plantation operator in the DRC. The company uses modern agricultural practices to operate and develop its oil palm plantations and arable farming business division.
In November, the company said it narrowed its third-quarter losses as revenue grew four percent on a 90 percent improvement in crude palm oil production, and higher prices.
For the period that ended September 30, revenues grew to $1.35 million from $1.29 million a year earlier, with net loss narrowing to $607,533 from a loss of $1.29 million a year earlier.

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