Acquisition of DECA, Compagri and Mozbife

    RNS Number : 7777K
  White Nile Limited
  24 December 2008
   

    White Nile Ltd / Ticker: WNL / Index: AIM / Sector: Oil & Gas
    24 December 2008
    White Nile Ltd ('White Nile' or 'the Company')
    Acquisition of DECA, Compagri and Mozbife & Notice of EGM

    Overview

    *     Identified three acquisition targets which meet criteria of proposed new 'Investing Strategy' of investing in agriculture in
Africa
    *     Plan to acquire 75% of the issued share capital of DECA, Compagri and Mozbife from Central African Mining & Exploration Company
plc ("CAMEC")
    *     DECA focussed on the treatment and processing of grain purchased from local farmers and sales of maize meal
    *     Compagri is a new venture intended to mirror DECA's operation
    *     Mozbife to capitalise on growing demand for beef in Mozambique and currently owns one farm where it is establishing a breeding
herd

    White Nile Chairman Phil Edmonds said, "We can see considerable opportunity in agriculture in Africa and have therefore proposed our
strategy shift. These acquisitions represent our first foray into agriculture and we believe will act as a cornerstone to our operational
performance going forward. DECA's buying operation is focused on direct purchases from numerous local, smallholder farmers and sustains a
substantial number of people in the Manica province in Mozambique. We want to replicate this success with Compagri and then roll out similar
operations in other targeted areas. The demand for beef is also rising significantly and we believe through Mozbife we can become a leading
supplier in this growing market."  

    Full Release

    Following the announcement on 5 December in relation to the Company's proposed name change and adoption of new strategy of investing in
business projects operating in the agricultural or associated engineering industries in Africa ('the Investing Strategy'), the Board of
White Nile has, in line with the proposed Investing Strategy, successfully identified agricultural trading and processing companies
Desenvolvimento E Comercializa? Agricola Limitada ('DECA') and Compagri Limitada ('Compagri'), and cattle ranching and feedlot production
entity Mozbife Limitada ('Mozbife'), all located in Mozambique, as suitable acquisition targets.

    DECA's operations comprise of the treatment and processing of grain purchased from local farmers within Chimoio in the Manica Province
of Mozambique, sales of maize meal and related by-products and the installation of infrastructure and logistics to facilitate operations.
Compagri is a new venture with a facility being established 400km north of Chimoio which is intended to mirror DECA's operations. Mozbife
works alongside the grain businesses of DECA and following identification by its management of the large and growing demand for beef in
Mozambique, currently owns one farm near Chimoio where it is establishing a breeding herd.

    The Board has agreed terms for the Company's wholly-owned subsidiary, Agriterra (Mozambique) Limited, to acquire from CAMEC, subject to
certain conditions precedent, 75 per cent. of the issued share capital of each of DECA, Compagri and Mozbife and for the novation of certain
loans to the Company for an aggregate consideration of US$17 million, which will be satisfied by the issue of 200,000,000 new Ordinary
Shares in the capital of the Company ('the Consideration Shares') and the payment of US$2 million in cash.

    Under the AIM Rules, the Acquisition will constitute a reverse takeover and, as such, is conditional, inter alia, on the approval of
Shareholders. The Board is therefore issuing a circular and convening a second EGM, to be held on 21 January 2008, to seek Shareholder
approval of the Acquisition on the assumption that the resolutions proposed at the EGM to be held on Tuesday, 6 January 2009 will be
approved by Shareholders.

    In addition, since the Acquisition comprises a related party transaction pursuant to the AIM Rules, Mike Pelham, the sole independent
director of the Company, considers, having consulted with Seymour Pierce, that the terms of the Acquisition are fair and reasonable insofar
as Shareholders are concerned.

    An admission document containing the details of the Acquisition and Notice of the EGM is being posted to shareholders today and is
available on the Company's website, www.whitenile-ltd.com. The Annual Report and Accounts for the year ended 30 June 2008 are also being
posted to shareholders today and are available on the website.

    Application will be made for the enlarged Ordinary Share capital of the Company to be admitted to AIM and admission is expected to occur
on 22 January 2009.

    Background

    Proposed acquisition of DECA, Compagri and Mozbife

    DECA, Compagri and Mozbife are Mozambique based companies 75 per cent. of each being owned by CAMEC, a company which holds approximately
8.5 per cent. of White Nile's Ordinary Shares and has common directors (Messrs Edmonds and Groves) with White Nile. 

    Subject to the satisfaction of certain conditions precedent and under the terms of the Acquisition Agreement it has been agreed that:

    *     the Company's wholly owned subsidiary, Agriterra (Mozambique) Limited will acquire 75 per cent. of the issued share capital of
DECA, Compagri and Mozbife; and

    *     the loans of approximately US$21.5 million due from DECA, Compagri and Mozbife to CAMEC and its group companies will be novated to
the Company, 

    for an aggregate consideration of US$17 million, to be satisfied by the issue and allotment of the 200,000,000 Consideration Shares to
CAMEC, and the payment to CAMEC of US$2 million.  

    DECA

    DECA, founded in 2005, is based in Chimoio in the Manica Province of Mozambique, with operations primarily encompassing agricultural
trading and processing functions. Its headquarters are located on a 20 hectare site and consists of seventeen 1,000 tonne silos, seven
warehouses each with capacity for 3,500 tonnes of maize, seven family houses, four single quarters and one guest house, as well as two
milling plants, one workshop and a fleet of over 80 vehicles. The Company has a seasonal workforce of 300 people. Chimoio itself has sound
infrastructure with an airport, rail terminal and an extensive road network.

    DECA's operations are run by a team of experienced individuals and comprise the following principal components:
    *     Acquisition of grain from local, smallholder farmers;
    *     Treatment and processing of grain;
    *     Sales of maize meal and bran/harmony chop; and
    *     Installation of infrastructure and logistics to facilitate operations.

    The buying operation is focused on direct purchases from thousands of local, smallholder farmers. The company prepares and installs the
necessary infrastructure at 'buying points' throughout the region surrounding Chimoio to which these local farmers bring the products which
they have cultivated as 'out growers'.

    DECA then purchases grain through its efficient buying system, delivering cash directly to the producers, and thereby supporting
economic activity in these rural growing areas.

    The Board believes that DECA's operations sustain a substantial number of the local Manica province population. As additional operations
are established, it is hoped that the number of people to benefit will also increase. The UN World Food Programme is one of DECA's main
customers.

    The Board believes that land under maize production has grown significantly during the three years of DECA's operations in the area.
DECA's management continues to work with the Government of Mozambique to develop infrastructure in other potential maize growing areas of
the country, and accordingly hopes to expand its operations into these areas in due course.

    The grain which is acquired from local farmers is transported back to DECA's purpose-built storage and processing facility in Chimoio.
At this facility, the grain is dried, fumigated, prepared and processed into maize meal which is in demand in the local areas.

    Once processed, the products are packaged and transported to appropriate venues for onward sale under DECA branding. During its three
years of operations, DECA has rapidly expanded its Chimoio facility to enable it to meet the high growth in demand for the maize meal.
DECA's maize purchases reached a new high at approximately 21,000 tonnes during the 2007 buying season, limited only by storage capacity.
This has now been expanded to 50,000 tonnes. Maize meal production capacity now stands at approximately 200 tonnes per day, with 40 tonnes
per day of bran/harmony chop as a by-product of the processing procedure.

    Maize meal, also know as mielie meal, is used extensively in African and Asian cuisines to make various pancakes, flatbreads and
porridges and bran/harmony chop products, (which are effectively the waste product of the processing process) are used throughout the region
as livestock feed. Given the alternative uses of processed grain, maize is an efficient commodity. DECA's transport division has seen rapid
growth of its fleet and facilities and is now running over 80 vehicles, with all maintenance and repair work carried out in-house by a team
of locally based mechanics. Although the collection operation is seasonal, it collects enough produce and has the storage space to mill
throughout the year, thus stabilising its revenue stream.

    The Directors consider that DECA's early achievements have created a valuable blueprint to replicate the operation in other areas of
Mozambique, and throughout Africa.

    DECA's total revenues for the year to March 2008 grew to $5.5 million, generating a gross profit of $1.8 million. During 2008, the
average price being achieved for maize meal has been approximately $330 per tonne, compared with an equivalent price of $290 per tonne in
2007. Strong demand has been the primary driver of the increased price with the average price received in the three months ended 30 November
2008 being $598 per tonne.


    Compagri

    As part of DECA's planned expansion, a new facility, Compagri, is in the course of being established 400km north of Chimoio in the Tete
province. It is proposed that Compagri's operations will mirror those of DECA. The first phase of development is expected to be finished in
February 2009 on the 32 hectare site. Once completed this will house four 1,600 tonne silos, two warehouses each with a 3,500 tonne
capacity, one mill, and four staff houses. The site has good communication links and its location will provide access to Malawi which is a
potential export market.

    Mozbife

    Alongside the grain business, the management of DECA have identified cattle ranching and feedlot production as a complementary business
as there is a large and growing demand for beef in Mozambique. Mozbife has been incorporated to begin this process and currently owns one
farm near Chimoio, where it has established a small breeding herd which can be fed, in part at least by DECA's production of harmony
chop/bran product. It is intended that Mozbife's Chimoio farm will grow in size, becoming a revenue generator in its own right and thereby
adding further value to DECA's business.

    The management team of DECA, Compagri and Mozbife is led by Euan Kay, who has acted as managing director of DECA since its inception. 

    Information on White Nile Limited

    White Nile was incorporated as a Guernsey registered company on 17 December 2004. The Company was subsequently admitted to trading on
AIM on 9 February 2005 with a market capitalisation of �15.5 million, having raised gross proceeds of �9 million through a placing of
Ordinary Shares to private and institutional investors, on 4 February 2005.

    Since listing White Nile has assembled a portfolio of early stage exploration licences in Southern Sudan, Ethiopia, Kenya and Nigeria.
The development of these assets has been ongoing and the Company has invested funds in these exploration projects in order to evaluate their
respective hydrocarbon potential. However, due to certain situations beyond the control of the Board, including the fluctuating political
situation in Southern Sudan and the current global economic downturn, it has not been possible, to date, to fully maximise the initial
perceived value of the Company's portfolio.

    On 22 October 2008, the Company provided Shareholders with a detailed update on the current situation in Southern Sudan and subsequently
obtained your approval to convert the 155,000,000 Ordinary Shares held by the Government of Southern Sudan ('GOSS') through Nile Petroleum
Corporation Limited into Deferred Shares. These shares will remain as Deferred Shares until complete clarity of title can be given as to the
Company's position within Block Ba or an acceptable position within a consortium to develop an enlarged Block B is agreed. Although the
Board remains fully supportive and committed to the Southern Sudanese, it is recognised that there are wider political issues which are the
current focus for the GOSS and, realistically, the Board does not believe that the resolution of title issues relating to Block Ba or the
establishment of an acceptable consortium in respect of Block B will occur before the referendum on total independence for Southern Sudan is
held on 9 January 2011.

    The Board therefore believes that in the current economic environment, which is not conducive to the continued funding of non-producing
early stage oil and gas exploration assets, combined with the current political position in Southern Sudan, the Company's current strategy
of concentrating on oil and gas exploration is not now in the best interest of Shareholders. These altered circumstances prompted the Board
to re-asses its strategy and examine the possibilities of utilising its cash balances to generate Shareholder value without jeopardising any
potential future value from its oil interests, by focussing on another industry in Africa. Accordingly, on 5 December 2008, the Company
published the Circular and convened an EGM for 6 January 2009 at which resolutions will be proposed to change the name of the Company to
"Agriterra Limited" and to adopt the Investing Strategy which is:

    *     to invest in and develop projects;
    *     to acquire companies; and/or
    *     to acquire interests in companies,

    whose operations comprise agricultural businesses or associated civil engineering projects and whose operations at the date of
acquisition are principally in central and southern Africa. The Company's investment objective is to provide Shareholders with an attractive
return on their investment predominantly through capital appreciation generated by the growth of any acquired businesses or interests. The
Acquisition fits within this proposed Investing Strategy.
    * * ENDS * *

    For further information please visit www.whitenile-ltd.com or contact:
                                
 Phil Edmonds     White Nile Ltd                 Tel: 0845 108 6060
 Hugo de Salis    St Brides Media & Finance Ltd  Tel: 020 7236 1177
 Jonathan Wright  Seymour Pierce Ltd             Tel: 020 7107 8000


This information is provided by RNS
The company news service from the London Stock Exchange
 
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