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Palm Oil Plantation Acquisition and Aggregation in Costa Rica

Scott Artmann Sat, 2012-07-21 09:57

Scott Artmann · Sat, 07/21/2012 - 09:57

Business

Business Overview: 

The goal of Coram Deo Palm Oil is to profitably acquire and operate sustainable Palm Oil Plantations in Costa Rica. 

The Company has been organized to acquire and operate oil palm plantations in Southern Costa Rica.   If successful, the Company will be a significant holder of oil palm plantations in Costa Rica and the only holder in Costa Rica that is a member of the Roundtable on Sustainable Palm Oil (“RSPO”), a global body focused on certifying sustainable palm oil production.  The planned CORAM DEO PALM OIL plantations would include anywhere from 100 to 450 hectares[1] of producing oil palms within a 15 mile radius of the largest palm oil processing plant in Central America and within 25 miles of a deep water tanker terminal to ensure an uninterrupted path to world markets.

[1] One hectare is the equivalent of 10,000 square meters or 2.471 acres.

 

 

Industry: 
Project Location: 
Golfito, LI, 00000
Costa Rica
What are your future milestones, and how much capital will you need to achieve each of the milestones outlined?: 

Phase 1 - Acquistion of inital 500 Hectares of producing plantation - $5M US

Phase 2 - Continued opportunistic acqusitions of producing hectarage to 2000 Hectares - Funded from operating cash flow

Phase 3 - Development of techniques for sustainably rehabilitating end of life plantations and acquistion of such - Possible 2nd Round, World bank funding (IFC) or funded from operating cash flow

 

What is your total and operating cash burn (the amount you're spending) per month? : 

Negligible prior to plantation acquistion.  Post acquisition of mature. producing palm plantations, positive cashflow from the project within 90 days

How many future rounds of financing do you project? : 

None

Who is the Customer?: 

Palm Oil holds a dominant position in the global market for edible oil, comprising 26% of the world consumption of edible oil and 40% of world trade.  The African oil palm (the type grown in Costa Rica) produces the most edible oil per hectare of all oil bearing seeds, beating out its nearest competitor by a factor of 10.  Palm Oil is a major constituent in hundreds of food products consumed around the globe as well as being a core foodstuff (frying oil) in both India and China, both of which are experiencing rapid growth.  Additionally, palm oil is the best feedstock for green biodiesel.  These three anchors of demand should ensure steady growth in volume and price in the foreseeable future, regardless of economic circumstances.

What is the Target Market?: 

 

Crude Palm Oil (CPO) and Palm Kernal Oil (PKO) are in demand from multiple industries, including processed foods, basic foods, personal care products and biodiesel.  The Company believes that palm oil is uniquely diversified by this broad demand base, and that should help ensure that whatever the economic conditions, palm oil will remain in demand, and that palm oil demand will grow over time.  While research has provided numerous analyses that show long term growth in demand for palm oil, we believe two quotes are the most encouraging for investors considering this opportunity:

 

 

 

The EU will account for nearly half of the world's biodiesel consumption in 2020 leading to a 30% to 35% rise in vegetable oil prices. - European Commission Office of the Directorate-General of Energy

 

“The demand for palm oil is forecast to double by 2020. To achieve that production increase, 1,160 new square miles will have to be planted every year for 20 years.” – Center for Science in the Public Interest

 

How big is the Target Market in terms of Annual Sales?: 
$5B-$50B
Competition: 

There are numerous plantations in the area, but due to the global demand, all production is under contract with guarantees of purchase and formulas for calculating prices based on the world palm oil price.

 

Business Model: 

The Company anticipates deriving its revenue from the sale of Fresh Fruit Bundles (“FFB’s”) to palm oil mills in the area.  The local mills convert the FFB’s into Crude Palm Oil (“CPO”) and Palm Kernel Oil (“PKO”), which is then sold on the world markets.  FFB prices are governed by a contractual formula that is based on world prices of CPO and therefore cannot be manipulated by the mill.  Under the terms of these contracts, the mill is required to buy all production at prevailing prices as determined by the formula.  These contracts can generally pass with the property at the option of the buyer, so the Company should be able to acquire these contracts with any plantations the Company purchases. 

Technology

Team

NameTitle
Scott ArtmannCEO
Sandy ArtmannCFO
Jose HernandezOther
Carlos ChinchillaOther

Financials

Amount Sought: 
$8,000,000
If raising funds, what shall the funds be used for?: 

Acquistion of producing Palm Oil Plantations

Amount invested by Founders: 
$500,000
Funding Stage: 
Pre-Revenue
Internal Rate of Return (IRR): 
31%

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