DekelOil expands into cashews with Pearlside investment

West Africa-focussed agricultural company DekelOil Public has agreed an option to acquire 58.5% of the existing issued share capital of investment holding company Pearlside Holdings, it announced on Tuesday.

The AIM-traded firm said Pearlside currently had one wholly-owned subsidiary, Capro, which it described as a raw cashew nut business developing a large-scale 30,000tpa cashew processing project at Tiebissou in Côte d'Ivoire.

It said Tiebissou would complement DekelOil's existing projects in Côte d'Ivoire - Ayenouan, which produced 38,736 tonnes of crude palm oil in 2017; and Guitry, a second 'seed-to-oil' palm oil project which was currently under development.

The board said the acquisition would provide the company with exposure to the global cashew market, with Tiebissou located in the heart of Côte d'Ivoire's cashew producing region and three hours from the port of Abidjan.

It said it would implement a similar collaborative model to its producing palm oil project at Ayenouan, including a state-of-the-art plant which would process raw cashew nuts grown by local smallholders.

The first phase would see construction of plant with an initial capacity to process 10,000tpa of raw cashew nuts produced by smallholders, with a cashew nut shell liquid processing facility also under consideration.

First production at the 6ha site was targeted for the third quarter of 2019, with development capital and a turnkey contract with a “leading manufacturer” said to be close to completion.

The second phase would increase the capacity to 30,000tpa over five years which was expected to be funded from operating cash flows.

“The Tiebissou Cashew Project would not only transform DekelOil into a multi-project, multi-commodity agricultural company focused on West Africa, but it also has the potential to be a much larger operation than Ayenouan in terms of revenues and profitability,” said executive director Lincoln Moore.

“Based on today's sale prices, processing 10,000tpa of raw cashew nuts in the first full year of operations could generate substantial revenues, which would rise considerably further once the capacity of the plant at Tiebissou has been expanded to 30,000 tpa.

“Combine this with our producing palm oil project at Ayenouan and there is tangible potential to rapidly scale up DekelOil's revenue profile.”