epo presentation 030910

8/7/2019 Epo Presentation 030910

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Company Presentation


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Mission Statement

To be a low-cost producer of sustainable crude palm oil in Africa through thereactivation and development of its plantations and agricultural land position in

Liberia

PRESENTATION TEAM

Michael Frayne Executive Chairman

Equatorial Palm Oil (EPIC: PAL)


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Key Data

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The Siva Group

DirectorsJP Morgan

Henderson

Mirabaud

Blackrock

Other

43.2%

29%

12.3%

6.8%2.9%2.6%

3.2%

Significant Shareholders

Share Price 11.5p

Market: Ticker AIM:PAL

Market Capitalisation 13.2 million

Cash 6.5 million (No Debt)

Ordinary Shares 114.75 million

NOMAD & Joint Broker Shore Capital

Joint Broker Mirabaud Securities


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Investment Overview

Company offers early cash flow with high capital growth

Land position of c.169,000 hectares suitable for sustainable crude palm oil (CPO)

10 year target of over 50,000 hectares of new plantings producing 250,000 tpa CPOincreasing to over 100,000 hectares

Liberia as a newly politically stable country is a fast growing investment destination formulti-national corporations (Arcelor Mittal, Sime Darby)

Highly favourable valuation compared to listed peer group

Recently secured 5 million investment by Indian conglomerate The Siva Group

Highly experienced management with proven track record in oil palm developments

Palm oil is the most widely produced edible oil in the world, with demand increasing


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Board & Senior Management

Michael Frayne

Executive Chairman

15 years of experience in the resources sector, successfully establishing several UK and Australianlisted companies - founding director of Asia Energy plc

Peter BaylissManaging Director

Over 20 years of experience in the oil palm sector, including 8 years in PNG with New Britain Palm OilDevelopment Ltd. Significant experience in large scale plantation development, particularly inIndonesia with SA SIPEF NV

Geoff Brown

Plantations Director

Former Chairman of New Britain Palm Oil & Plantations Director of Harrisons & Crosfield plc. Over 40years of experience in plantation management, including 10+ in Malaysia and 20+ in Indonesia asManaging Director of P.T. London Sumatra Indonesia

Joseph Jaoudi

Non Executive Director

A qualified engineer who owned and operated the Palm Bay plantation in Liberia for over 10 years. He

also managed other significant businesses in Liberia and USA including biomass power generation

Anthony Samaha

Non Executive Director

Chartered accountant ex Ernst & Young, experience in due diligence, capital raising, valuations, andmergers and acquisitions. Anthony is a director of AIM listed, Altona Energy plc

Tim Daniel

Chief Financial Officer

Qualified Chartered Accountant ex KPMG. Tim subsequently worked as an investment analyst with aLondon-based hedge fund, focusing on the high yield bond market

Alan YancyManager Corporate Affairs

30 years extensive experience of Liberian business and politics and held senior positions in theLiberian Sugar Corporation for 7 years

Gilbert Netto

Group ManagerOver 30 years experience in the oil palm sector. Experienced in all aspects of the oil palm productioncycle from the planning and establishment of new estates through to the management of matureplantings particularly in West Africa

The right team in place to manage growth


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Palm Oil Products

Brand Manufacturer

Warburtons Warburtons

Hovis Premier Foods

Cadbury Dairy Milk Cadbury

Kingsmill ABF

Persil Unilever

Flora Spreads Unilever

Galaxy Mars

Youngs Frozen Fish Youngs

Kit Kat Nestle

Mr Kipling Cakes Premier Foods

Wrigleys Extra Wrigley

Birds Eye Poultry Birds Eye

Maltesers Mars

Mars Mars

Kelloggs Special K Kelloggs

Ginsters Ginsters

McVities Digestive United Biscuits

Comfort Unilever

Goodfellas Pizza Northern Foods

Top Selling Products Containing Palm Oil

7Essential to the food industry, food and consumer goods


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Project Locations

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Plantations have excellent access to infrastructure and ports

Coastal location close to ports and good infrastructure


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Liberia Ideally Situated

Substantial land position of 169,000 hectares highly suitable for sustainabledevelopment of oil palm plantations

New stable political regime under Ellen Johnson Sirleaf (US backed)

Significant private direct investments over the past 24 months include: Arcelor Mittal US$1.5bn iron ore mine development

Firestone Rubber renewal of rubber estate concessions with expansion investment

China Union 25 year US$2.6bn mineral development agreement

Sime Darby 63 year oil palm/rubber agreement with development plan for 220,000ha

Golden Agri-Resources Ltd announces large scale oil palm investment plans

2010 GDP forecasted to grow at 11.2%; large agricultural sector

Political risk remains but international initiatives in place to mitigate

Developed in tandem with active out growers programme; generating local support

...China and the United States are investing in Liberia in a big way... We cannot wait until

everything is perfect and then decide to invest. By then it will be too late.Ahmad Zubir Murshid, Chief Executive of Sime Darby (November 2009)


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Initial 12 Months

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Reactivation of 3,000 hectares of existing plantations at Palm Bay

Placed initial order of 220,000 oil palm seeds with Unipalm the seeds have been specificallycultivated for the West African palm

First palm oil mill (5tph) ordered from Malaysia for the Palm Bay Plantation delivered in Julyand currently under construction

Expand workforce - current workforce of circa. 200 people to implement strategy 5 million finance from The Siva Group secured to accelerate development programme

Establish nurseries at Palm Bay and Butaw

Prepare first 1,200 hectares of land for planting 600 ha each at Palm Bay and Butaw

Commission palm oil mill and sales of CPO

Creating value through rapid progress


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Palm Oil Processing Mill

First palm oil processing mill from Modipalm Engineering in Malaysia

Now on site

Mill being constructed and commissioned under turnkey contract with manufacturer

CPO production from fruit harvested at Palm Bay

Throughput of five tonnes of fresh fruit bunches per hour

Modipalm has more than 30 years experience manufacturing plant and machinery,equipment and parts for palm oil mills

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Mill Construction

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Seed Nursery

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Social Contribution

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Development Milestones

12-24 Month Targets

Field plant first oil palms out of nurseries

Expand nurseries

Commence operations at River Cess, the third plantation site

Further land preparation for field planting

Continual harvesting from reactivation

Further develop associated & downstream infrastructure

Detailed surveys of expansion areas

Commence out grower programme

15Strategic targets: 50,000 hectares of oil palm planted within 10 years & CPO production of

250,000 tpa increasing to 100,000 ha planted - (current palm oil price $US900 CIF Rotterdam)


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Sustainability

Estimated that only 3% of the worlds palm oil production is sustainable

Committed to developing projects in a sustainable manner and is a member ofRoundtable on Sustainable Palm Oil

Existing plantations are based on previously logged land so will not causedegradation to primary forested areas in Liberia.

Several large companies, including Sainsburys and Unilever, are now looking todevelop sustainable palm oil and are active with RSPO

It is increasingly difficult to acquire arable plantation land in Asia and thus it is imperativethat new frontiers be sought to meet increasing demand.

Chief Executive of Sime Darby, 2009

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Peer Comparisons

17Potential re-rating considering peer group valuations?

Source: Mirabaud Securities LLP & London Stock Exchange

Name Ticker Mkt CapUS$m

EVUS$m

Plantation Locations MatureHectares

EV/haUS$/ha

FFB Prod.tonnes

FFB yieldtonne/ha

Otherassets

Production

New Britain PalmOil

NBPO LN 1,329.8 1,398.1 Papua New Guinea 66,304 21,087 1,525,150 23.0 Refinery

REA Holdings RE/LN 318.5 393.3 Indonesia 18,736 20,994 490,178 26.2 Coal

Anglo-EasternPlantations

AEP LN 348.5 321.4 Indonesia/ Malaysia 28,133 11,426 506,417 18.0 Rubber

MP Evans Group MPE LN 306.6 292.8 Indonesia 15,368 19,054 258,740 16.8 Beef,rubber

NarboroughPlantations

NBP LN 12.4 9.0 Malaysia 555 16,218 12,835 23.1 -

Weighted Average 18,705

Development DevelopmentHectares

Asian Plantations PALM LN 66.6 94.8 Malaysia 15,645 6,060 - - -

Equatorial Palm Oil PAL LN 20.5 11.5 Liberia 168,947 68 - - -


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Share Price Chart

26.02.10Price atlisting17.5p

26.02.10First DayofDealingson AIM

04.03.10JP Morgandiscloses15% holding

23.03.10Commencementof Reactivation atPalm Bay andinitial seedsorder

13.05.10BlackRockdiscloses3.08%holding

27.05.10 Cornerstone Investmentof 5m by Indian Conglomerate,The Siva Group for 29% of theCompany

02.06.10

Shipmentof Mill

04.06.10

FinalResults

08.07.10MirabaudSecurities40ptargetprice

04.08.10Mil arriveson site

An undervalued opportunity?

01.04.10Article fromInvestors Chroniclepublished

26.08.10Proactive

Investors?

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Investment Case

Extensive land position (c.169,000 hectares) with proven suitability for sustainable cultivation of oilpalms for the production of palm oil in Liberia

Low cost production environment with immediate access to sizeable West African palm oil market

Rapid development programme:

Commenced reactivation of existing estates - creates early cash flow & demonstrates business scalability

Expected to immediately enhance land valuations - current valuation range per hectare of developed palmoil is $15,000 to $22,000 (up to $30,000 in 2008)

Palm oil majors including Sime Darby now operating in Liberia reaffirms potential of the region

Price of CPO expected to remain robust in the short and medium term

Experienced management team with expertise in developing large scale oil palm plantations

Dramatically undervalued in comparison to others operating in the oil palm sector

Register has range of large institutional shareholders and the Siva Group strong balance sheet


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Contacts

Michael FrayneChairman

Equatorial Palm Oil Plc

94 Jermyn Street

London SW1Y 6JE

Tel: +44 (0)20 7766 7500

Fax: +44 (0)20 7766 7599

Mobile: +44 (0)7788 724 010

[email protected]


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APPENDIX


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Recent Press

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Recent Press

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Recent Press


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Recent Press


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Recent Press

As US deadlines for the banning of restaurant use of cooking oils containing trans-fats approaches, palm oil producers' confidence is rising that 2010 will deliver higherprices. Major grower IOI Corp Palm last week announced plantation expansions.Palm has been steady around US$715 a tonne for the past month or so, a stabilitywhich is attracting strong Pakistan and Middle East buying.

Source: Agriprods Nov 2009


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Agreements

Rehabilitation Period (7years)

Regular Term

(43 years)

Land Rates - Developed $2.47 per Ha

($25,205 per annum)

$4.94 per Ha

Land Rates Undeveloped $1.23 per Ha

($14,795 per annum)

$2.47 per Ha

Corporate Tax Rate (capped) 30% 30%

Carried forward losses Full recovery Full recovery

GST Exempt Applicable Law

Import Tax Exempt Applicable Law

Withholding Tax 10% 10%

Turnover Tax (% of gross sales) 2% (prepayment) Applicable Law

Oil Palm Development Fund (% of gross sales) 0.5% 1%

Community Development Fund (% of gross sales) 0% 1%

ECOWAS Levy (% of capital imports) 1% 1%


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Why Agriculture? Why Palm Oil?

Import of CPO into West Africa is currentlyover 800,000 tonnes per annum anddemand continues to grow

Palm oil has recently overtaken soya as the

most produced edible vegetable oilworldwide

In 2007, for the first time in history the globalurban population exceeded the ruralpopulation

If the same amount of food were to be

produced today, with the yields of 1961,then the world would require an additional970 million ha, or more than the total landarea of the United States

In the last 40 years, the area of globalagricultural land has grown by 10%

It is increasingly difficult to acquire arableplantation land in Asia and thus it isimperative that new frontiers be sought tomeet increasing demand - Ahmad ZubirMurshid, Chief Executive of Sime Darby

0

0.1

0.2

0.3

0.4

0.5

0.6

1950 1960 1970 1980 1990 2000 2010F 2020F

PerCapitaArableLandforAgricultureSource:FAO,PotashcorpHaArableLandperPerson


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World Palm Oil Demand

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

18%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

AnnualGrowthRate,%

Consump

tion,mT(000's)

DevelopedEconomyFoodDemand,mT(000s) Industrial&ResidualDemand,mT(000s)

DevelopingEconomyFoodDemand,mT(000s) AnnualGrowthRates Source:USDA,FirstCapitolRiskManagement

Source: First Capitol Risk Management, LLC October 28, 2009


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Palm Oil Demand in Africa 1996-08

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

mT(1000's)

PalmOilDemandinAfrica19962008

FoodUseConsumption IndustrialConsumptionSource:USDAFAS



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Stocks to Use & Price Forecast

$0

$75

$150

$225

$300

$375

$450

$525

$600

$675

$750

$825

$900

$975

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

Price

,USD/mT

StockstoUse,%

StockstoUseRatio,% LowPrice,USD/mT BasePrice,USD/mT HighPrice,USD/mTSource:USDA,FirstCapitolRiskManagement



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A Low Cost Producer

EPO expects to be among the lowest cost producers of edible oils in the world

in terms of USD per tonnes

Source: ASI Global, Oil World

230

240

165

460

Indonesia

P alm Oil

EP O Internal

Est .

B razil So y Oil

M alaysia n

P alm Oil

USA S o y Oil


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Out-grower Programme

Dev Banks/Agencies

Liberia

Company

Access to alternate sources of funding via development banks Technical support & lobbying also available

Provides additional benefits to local communities

Increases project momentum & support (Gov & local community) Broadens tax base & participation

Increases rates of land under production

Additional feedstock to complement company owned estates Low relative capex & opex to company owned estates


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Liberia Risk Mitigation

Liberia has worked hard to create favourable economic conditions that is attractingincreasing levels of foreign investment

However given history, risk mitigation is prudent protect such an investment

The Multi-lateral Investment Guarantee Agency (MIGA), www.miga.org, a division ofthe World Bank provides comprehensive political risk insurance for foreign investmentinto Liberia

Overseas Private Investment Corporation (OPIC), www.opic.gov, an independent USgovernment agency will provide similar cover as well as providing significant debtfinance to investments

OPIC has a specific directive to actively pursue investment opportunities in Liberiahowever typically require the investment vehicle is majority owned by US entities

Managers from both MIGA and OPIC are available to discuss their stated interest inbeing involved in Equatorial Palm Oils project in Liberia

A NUMBER OF RISK MITIGATION OPTIONS AVAILABLE FOR INVESTOR

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