Foresta Group Quarterly Activities Report - 29 July 2024
FORESTA GROUP HOLDINGS LIMITED (FGH) Share Update July 2024 Monday 29th
Foresta Group Reports Quarterly Progress and Key Developments
Foresta Group Holdings Limited (ASX: FGH) has released its quarterly activities report for the period ending 30 June 2024, highlighting key developments and financial updates.
Instant Summary:
- Exhibition at Fieldays, New Zealand’s largest agriculture event.
- Settlement of ~$1 million placement to accelerate Kawerau Biomass Manufacturing Project.
- Signing of a 30-year lease agreement for a 9.6-hectare site in Kawerau.
- Submission of key consents and approvals for the project.
- Completion of geotechnical investigations with no major concerns.
Fieldays Agriculture Exhibition
The Company’s long-term success is intrinsically linked to enhancing the well-being of the communities and regions where they operate. The opportunity to engage with the community presented itself at Fieldays, the Southern Hemisphere’s largest agriculture event. The exhibition space featured a live demonstration of pine chemical extraction, soaps made from pine chemicals, and a large stump extractor. This platform enabled the Company to connect with a diverse audience, from various stakeholders, including shareholders, suppliers, and politicians to curious visitors.
During this time, the Company welcomed some shareholders to the Company office and Kawerau site, where we shared a detailed plan of our operations, mission, and vision.
Project Update
Foresta has made substantial progress this quarter. A key milestone achieved was the signing of a 30-year lease agreement, with a 20-year renewal option, for a 9.6-hectare industrial zoned site in Kawerau. This site will serve as the foundation for Foresta's flagship manufacturing facility in New Zealand.
The Company’s dedicated Project Management team has focused on several areas:
- Submission of the Overseas Investment Office (OIO) application in May 2024.
- Submission of the Earthworks resource consent application in June 2024.
- Progression to stage 2 for 'Fast-track Approvals' (Resource Consents).
- Completion of geotechnical investigations with no major concerns.
- Finalization of the earthworks design in June 2024.
- Negotiation of Civil Engineering proposals.
- Selection and contract negotiation with a preferred consultant for the Extraction Plant design.
- Receipt of proposals for the 'Contract Administrator' and 'Independent Certifier' roles.
Main Equipment
Foresta has confirmed preferred suppliers for key equipment, including the Wood Pellet Plant and Torrefaction Plant from Europe. Contract negotiations and IP license discussions are ongoing. Evaluations for the Boiler (heat requirements) are also in progress, focusing on leveraging the excess heat generated within the process.
Financials
Foresta Group Holdings Limited had a cash balance of $186,000 as at 30 June 2024. Payments to related parties, including compensation paid to Directors for services performed and executive consulting fees, totaled $271,000 for the quarter.
The settlement of the $1 million placement is a significant step towards accelerating the Kawerau Biomass Manufacturing Project. This funding will help Foresta enhance its production capabilities and potentially increase revenue streams. The progress in securing key consents and approvals also bodes well for the project's timely completion. However, the company's low cash balance and high operating costs may concern investors, highlighting the need for effective cash flow management and additional funding.
Investor Reaction:
Investors have shown cautious optimism regarding the progress of the Kawerau project. While the advancements are promising, the company's financial position remains a point of concern. Analysts suggest that successful execution of the project and securing additional funding will be crucial for maintaining investor confidence.
Conclusion:
Investors should closely monitor Foresta Group's progress in the Kawerau Biomass Manufacturing Project and the company's financial health. The upcoming capital raise will be a critical factor in determining the company's ability to continue its operations and achieve its business objectives.