Wednesday, May 30, 2012

AAco to proceed with acquisition of land for Darwin Meat Processing Facility

AAco has decided to proceed with the acquisition of the site at Livingstone Farm for a price of $13.275 million, subject to satisfaction of conditions precedent with settlement expected to occur by late June 2012. The Company is confident that outstanding conditions precedents will be satisfied shortly and then the contract can proceed to completion.

In May 2012, AAco announced that it had received an Exceptional Development Permit (EDP) approving the development of an abattoir south of Darwin. The approval contains 5 conditions precedent that must be met to enable the development to proceed. The Company has satisfied itself that these EDP conditions precedent have either been met or are capable of being met as part of the final development and approval processes.

The Livingstone site is approximately 600ha in size, of which approximately 14ha will be occupied by the abattoir. The balance of the site will comprise irrigation zones, natural wetlands, ponds and other areas providing facility and amenity to the site. The additional land purchased will ensure a sufficient buffer zone between the abattoir and adjoining areas.

CEO of AAco, Mr David Farley, said: “The project fundamentals around a processing plant in the Northern Territory are compelling, and will secure the long term future of Australia’s northern pastoral industry.”

“The economic benefits extend well beyond northern Australia and we believe will also have substantial positive flow on effects for our northern neighbours,” Mr Farley said.

Subject to final project endorsement by the AAco Board to proceed with the development, the proposed Darwin Meat Processing Facility will be developed at a total estimated capital cost of circa $83 million (including land). This plant will be built as a Hot Boning plant with flexibility to incorporate chillers when required, and a design capacity of up to 225,000 head pa. It is proposed that the plant will process circa 180,000 head pa once full production levels commence.

The project is forecast to meet return criteria established by the AAco Board. The Board will review the final tendered delivery costs prior to construction commencing to ensure these benchmarks are achievable.

While AAco is prepared to invest 100% of the required capital, the Company will seek investment partners in the facility and will hold a minimum of 50% of the equity in the company developing the Darwin Meat Processing Facility, “Northern Australian Beef Limited”, which is currently a wholly owned subsidiary of AAco.

The new facility will be state‐of‐the‐art and when operational, will have the capacity to process up to 1,000 head per day at full production, create up to 260 full time jobs including substantial new opportunities for indigenous and female workers in the region. It will be efficient from a carbon emissions standpoint, and improve animal welfare outcomes.

Mr David Farley said, “A possible move by AAco into meat processing is a natural next step in vertical integration, particularly given our proximity to the growing Asian markets and the quality of our end product.”