QUARTERLY ACTIVITIES REPORT SEPTEMBER 2018

Transcription

1 26 OCTOBER 2018 ASX RELEASE / MEDIA RELEASE QUARTERLY ACTIVITIES REPORT SEPTEMBER 2018 HIGHLIGHTS Access to 100,000-tonne stockpile of phosphate in Montana secured, will help meet supply requirements for CY19 and CY20 sales targets Stockpile is proximate to Fertoz s Montana operations and displays similar quality and versatility as existing ore supplies and provides certainty and flexibility in supply Organic certification of FertAg product achieved in New Zealand leads to first NZ sales Progress continued on Bulk Sample Permits in Alberta and at Fernie, Marten and Barnes Lake projects in Canada Three tranches of $0.18 options exercised, providing $2.09 million in additional working capital during the quarter and $680K in October 2018 Weather continues to delay shipments to farmers with 8,500 tons delivered during the quarter against 12,500 tons of orders, impacting cash receipts for the September quarter. December quarter receipts are forecast to exceed $1.5 million, and looking into CY19, the Company has strong inventory on hand to support spring sales Organic phosphate company Fertoz Ltd ( Fertoz or the Company, ASX: FTZ) is pleased to provide an update of activities during the quarter ending 30 September Fertoz Executive Chairman Patrick Avery stated: Securing a new 100,000 tonne stockpile in Montana will help Fertoz ensure we have the supply to meet the growing demand we expect over the next few years. It is close to our existing stockpile at Butte, however that one is rapidly declining due to strong customer orders. We are fortunate to have found another source that meets the standards our customers expect and will allow us to continue the momentum of our operations. Our plan is to ensure we have more than 17,000t of phosphate ready for Spring sales. We are also progressing our applications for Bulk Sample Permits in Canada, with permits for our Fernie Alberta and Marten leases pending and an application going in for a bulk sample permit for Barnes Lake; based on latest regulatory correspondence received we expect to receive positive news on these in the coming weeks. Early snows and frosts did impact harvests and winter fertiliser schedules, leading to delays in deliveries. This has affected our business but so far, we have delivered 8,500 tons out of 12,500 tons of orders. The real impact of such inclement weather is payments delays which has impacted Fertoz s September quarter ASX : FTZ Registered Office Unit 1B, Johnston St, Fitzroy VIC 3065 Ph: office@fertoz.com Board of Directors Executive Chairman Non-Executive Director Non-Executive Director Non-Executive Director Company Secretary P. Avery S. Richardson J. Chisholm A. Byass J. Stedwell Key Projects Wapiti Fernie Fertoz Ltd Ownership: 100% Ownership: 100% A.C.N

2 cash receipts as farmers seek to extend terms. However, we are working with our customers and logistics partners to deliver as much as we can in CY18. Our Australian and New Zealand operations continue to develop well in the face of ongoing drought conditions in NSW and Queensland. FertAg started the new financial year strongly, receiving organic certification in New Zealand to allow us to achieve first NZ sales orders. We are now planning expansion into Western Australia. Strong support of the Company was shown through the conversion of Fertoz $0.18 options into shares during the quarter. This raised an additional $2.09 million and demonstrates the confidence our directors and shareholders have in the Company to achieve its goals. Figure 1: Trenching at Barnes Lake, Fernie Phosphate Project during the quarter SUMMARY North America To ensure the ability to meet sales which grow steadily, the team has identified and secured access to a 100,000t stockpile of high-quality, high phosphate-availability rock phosphate close to existing operations in Montana, USA Access to this stockpile will help Fertoz meet sales targets of 30,000-50,000 tons in CY19 and 100,000 tons in CY20 Exploration in Alberta and British Columbia continued, staking road routes and collecting ore samples from Alberta and BC Fernie leases (Marten and Barnes Lake) as shown in Figure 2. Continued progress on bulk sample permitting for Fertoz s leases in Canada with Alberta lease pending and Marten lease expected to follow 2

3 Application being filed for Barnes Lake bulk sample permit Operations at Butte ramped up with 17,000t processed and 800-1,000 tonnes trucked per week to fill Spring and Summer orders decision made to incur processing costs now (mining, crushing, transport to storage) rather than in CY19 so that we have sufficient product ready for early CY19 / spring delivery. Early snow, frost and rains have slowed deliveries and many farmers have not been able to harvest their primary and second crops, leading to delays in fall fertiliser schedules and delayed payments from distributors and farmers this is impacting forecast cashflows but not overall profitability. Delivered 8,500 tons of our 12,500 tons of orders to key customers, with timing of the remaining 4,000 tons of deliveries weather dependent. However, a number of customers have already indicated increased tonnages are needed in CY19, including Fertoz s largest customer. Final product approval phase underway with one of the largest consumer products companies in North America Joint venture discussions continue with another organic fertiliser business that requires organic phosphate for its blended products, and with another larger distributor represented in many US states Sales of granular product increased as more farmers experience the ease of air-seeder delivery of the fertiliser as well as being able to mix various fertiliser elements into one pellet Sales staff focused on taking orders for Fall 2018 and Spring 2019 Over 40 distributors and growers placed smaller orders for trials Fertoz continued to conduct research for its products in, and penetrate the cannabis market, particularly in Canada where cannabis sales for recreational use was legalised on 17 th October. Many retailers reported selling out on the first day, with lines of keen shoppers developing outside a number of cannabis retailers across Canada. With such a shortage, prices have increased substantially, and the Company expects these price rises to flow into the organic fertiliser market for cannabis Cash at bank end September 2018 was $2.9mil with an additional $680,000 received in October 2018 from further option exercises. Combination of inventory and cash at bank enables Fertoz to confidently expand the business in 2019 and 2020 Forecast sales remain as previously advised approximately 30,000-50,000 tons in CY19 and 100,000 tons in CY20. Figure 2: Sampling at Barnes Lake, Fernie Project 3

4 Australia & New Zealand FertAg received certification from BioGro NZ as an allowable input for organic agriculture, meaning it is certified for organic agriculture in Australia and New Zealand New Zealand represents a large potential market for FertAg as many areas have soils that are suffering from mineral and phosphate depletion Fertoz received its first order from a NZ customer in late September, with a container load of FertAg to be shipped to the customer Plans to expand FertAg into Western Australia underway FertAg granular product FertAg selling well Figure 3: Granular FertAg Planned Activities for December Quarter 2018 For the coming quarter, Fertoz is focused on delivering value through continued marketing and sales calls. As noted above, the Company is working on various joint ventures to increase reach and exposure and secure new customers. As well, the Company s personnel maintain regular contact with key clients to ensure repeat and expanded orders. The progression of the Alberta leases has been satisfactory and the Company is optimistic it will be able to secure a Bulk Sample Permit on the Alberta leases prior to year-end. These leases are considered highly prospective and could potentially be accessed as a priority upon approval due to the excellent infrastructure and proximal access to markets (see Figure 4). 4

5 Figure 4: Alberta Leases are accessible by excellent infrastructure as shown SAFETY There were no lost-time injuries or environmental incidents recorded during the quarter ending 30 September CORPORATE Directors and shareholders exercise options During the quarter, Fertoz s non-executive directors exercised their $0.18 options due to expire on 29 September, which raised $82,607 for the company. Some shareholders also exercised these options raising an additional $1.1m. Previously, options due to expire in August 2018 were exercised, raising $877,000 for the company. This provided Fertoz with $2.09 million in additional funds to facilitate deliveries of product prior to the North American winter. Subsequent to the quarter end, the Company received an additional $680K with respect to options exercise. 5

6 Results of Meeting At a general meeting of Shareholders held on 14 August 2018, all resolutions put to the meeting passed on a show of hands. The Company received 31,429,099 valid proxy votes in respect of each resolution. The Chairman voted all undirected proxies held at his discretion in favour of each resolution. The resolutions were as follows: Cash 1. Ratify appointment of Stuart Richardson 2. Approve previous share issue 3. Approve share issue to Patrick Avery The Company has A$2.9million in cash as at 30 September 2018 and no significant loan balances owing. Subsequent to the quarter ended, the Company received $680K through the exercise options and a further $50K is expected from a director, subject to shareholders approval. The Company also has receivables of approximately C$665K, which is expected to be paid during the next quarter. Fertoz Tenements A list of tenements is provided in Appendix 1. For further information, please contact: Pat Avery Tim Dohrmann Executive Chairman Investor and Media Enquiries Fertoz Limited NWR Communications m: m:

7 Project Name Tenement Number Ownership Approx. Area (ha) Expiry Date Registered Holder Canada Wapiti Project - British Columbia, Canada Wapiti East WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK % /04/2021 Fertoz International WK-One % /04/2021 Fertoz International Wapiti NE % /04/2021 Fertoz International Wapiti Two % /04/2021 Fertoz International Wapiti South % /04/2021 Fertoz International WAP S % /04/2021 Fertoz International WAP S % /04/2021 Fertoz International WAP S % /04/2021 Fertoz International WAP S % /04/2021 Fertoz International WAP S % /04/2021 Fertoz International Red Deer % /04/2021 Fertoz International Red Deer % /04/2021 Fertoz International Red Deer % /04/2021 Fertoz International Munok % /04/2021 Fertoz International Munok % /04/2021 Fertoz International Belcourt % /04/2021 Fertoz International Munok % /04/2021 Fertoz International Belcourt % /04/2021 Fertoz International Belcourt % /04/2021 Fertoz International Belcourt % /04/2021 Fertoz International 7

8 Project Name Tenement Number Ownership Approx. Area (ha) Expiry Date Registered Holder Belcourt Link % /04/2021 Fertoz International WAP % /04/2021 Fertoz International South % /04/2021 Fertoz International South % /04/2021 Fertoz International South Road % /04/2021 Fertoz International Wapiti Project total 11, Fernie Project Barnes Lake BL % /04/2019 Fertoz International BL % /01/2019 Fertoz International Barnes Lake Subtotal 1, Crows Nest Crows Nest % /10/2021 Fertoz International Crows % /10/2021 Fertoz International Crows Nest Subtotal 1, Marten Marten % /06/2021 Fertoz International Marten % /06/2021 Fertoz International Marten Nth % /08/2021 Fertoz International Marten E % /09/2021 Fertoz International Marten Subtotal 1, Mt Lyne Line % /02/2019 Fertoz International Line % /02/2019 Fertoz International Line % /02/2019 Fertoz International Graves Lake % /09/2018 Fertoz International Mt Lyne Subtotal 1,

9 Project Name Tenement Number Ownership Approx. Area (ha) Expiry Date Registered Holder Big Horn RAM % /10/2021 Fertoz International RAM % /03/2021 Fertoz International RAM % /03/2021 Fertoz International RAM % /03/2021 Fertoz International RAM % /03/2021 Fertoz International RAM % /03/2020 Fertoz International BIGHORN % /03/2020 Fertoz International BIG HORN Subtotal 1, Fernie Project Total 7,716.2 CrowsNest, Alberta, Canada TWP % Fertoz International BIGHORN Subtotal Canada Total 18,