Bioenergy Africa Lists on LSE

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TheBioenergySite Latest News

Tuesday, September 02, 2008

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Bioenergy Africa Lists on LSE

MOZAMBIQUE - BioEnergy Africa Limited, formed to develop projects centred on the production of ethanol, primarily from sugar cane, listed on AIM yesterday (1 September).

The Company raised £8.6 million through a placing of 68,825,600 new Ordinary Shares at 12.5 pence per share, representing approximately 20.7 per cent. of the Enlarged Share Capital of the Company following Admission. On Admission, at the Placing Price, the Company will have a market capitalisation of approximately £41.5 million.

The funds raised will be used to develop its first project, the 30,000ha Massingir Fuel Ethanol Project in Mozambique, and to pursue other commercial opportunities relating to sugar cane and ethanol production which the Directors may identify in southern Africa. Seymour Pierce Limited is the Nominated Adviser and Haywood Securities (UK) Limited is Broker to the Company.

Sugar cane is considered the most efficient, commercially viable ethanol feedstock and southern Africa has the potential to be one of the most cost effective regions for sugar cane production.

Bio-fuels such as ethanol derived from sugar cane represent a low carbon alternative to fossil fuels in transportation.

As a result, governments across the globe have enacted legislation requiring minimal ethanol blends in petrol.

In 2006 global ethanol fuel production was estimated at 48 billion litres and is expected to increase to 100 billion litres by 2010.

The Directors of the Company are experienced in agriculture and natural resource start-up companies, and the raising of funds on international capital markets.

Furthermore, the board comprises individuals with expertise in evaluating acquisition and investment prospects and in the day to day management of public companies.

The Directors intend to strengthen the Board in step with the Company’s development and are currently in the process of recruiting a Chief Executive Officer.

With BioEnergy Africa's initial project based in Mozambique and, given the experience of the Board, the Company is well placed to capitalise on the increasing world demand for ethanol.

The Directors are also investigating other commercial opportunities relating to sugarcane and ethanol production.

These investigations include opportunities in other southern African countries, some of which have historically been significant producers of sugar cane.

Massingir Fuel Ethanol Project

On 10 October 2007, ProCana Limitada, a Mozambican company, signed an investment Agreement with the Government of Mozambique pursuant to which ProCana would develop 30,000ha in Massingir District, Gaza Province, Mozambique, encompassing approximately 24,500ha of planted sugar cane, an ethanol from sugarcane plant, bagasse electricity plant, new transport infrastructures and an additional 11,000ha out-grower scheme.

The Company acquired 94 per cent. of the share capital of ProCana on 12 August. The remaining 6 per cent. is held by ProCana’s founders: Biolimpopo Limitada, a Mozambican company (five per cent.) and by Izak Cornelis Holtzhausen (1 per cent.). Biolimpopo Limitada represents local interest in the Gaza Province.

Estate Development

Located in the Gaza Province in south western Mozambique, the estate’s north-west boundary is 5kms south of the Massingir dam. To its east is the Olifants River which feeds the Massingir reservoir and then flows into the Limpopo River. MFEP is situated on a combination of green-field land and abandoned small holder agricultural land which is predominantly covered in bush. The Government of Mozambique has completed phase 1 of a land zoning process, conducted with environmental impact considerations, which has identified 7 million ha of land for bio-fuel production. The aim of the land zoning process is to safe guard conservation and protect areas of high biodiversity as well as identifying land suitable for food and fuel crop production.

The Directors are currently working to a five stage development plan. Phase 1 (currently underway), involves clearing the land designated for the cane nursery, planting the seed cane and preparing the estate for future infrastructure. Each subsequent phase of the project expands the estates production area and includes the development of the ethanol plant and associated infrastructure. The Directors are aiming to have full production by 2015.

To expedite the process ProCana has already commenced Phase 1, preparing the nursery for propagation of seed cane, from stock which has been purchased in South Africa. The Company is utilising land adjacent to the estate on which there is a disused 150ha irrigation project established by donors to allow the local population to grow vegetables but which has since fallen into disrepair. The Company has agreed to refurbish the irrigation scheme and provide agricultural extension assistance to the local community in return for which the Company will be able to establish the cane nursery on 125ha of the land on which the disused irrigation project is located.

Potential yields

Based on the ‘Canegro Model’ which assumed a moisture per cent. cane value of 70 per cent. in all months, (i.e. the dry mass represents 30 per cent. of the cane’s total mass)average potential yields of 162.9 tonnes per hectare per annum (‘t/ha/an’)of cane are anticipated (48.9 t/ha/an of dry matter).

Due to favourable sugar cane growing conditions the Directors anticipate ProCana will be able to take advantage of an above industry average cutting season as high as 310 days. Although ProCana aims to reach production levels of 160t/ha/an, for forecasting purposes it has set an initial target yield of 130t/ha/an.

At this yield, the estate’s cane producing capacity is expected to peak at 3 million tonnes in 2015 (not including the outgrowers scheme), but reduce slightly from 2020 when replanting commences.

TheBioenergySite News Desk