TORONTO, Feb. 13, 2014 /CNW/ - Ceres Global Ag Corp ("Ceres") has concluded the comprehensive strategic review that it launched last September in the wake of a substantial change in the composition of its Board of Directors, and has today announced the following:
- In late January 2014, Ceres terminated its arrangements and ongoing discussions with The Scoular Company with respect to the development and construction of a grain facility at Northgate, SK;
- Ceres plans to use its 100% owned subsidiary, Riverland Ag ("Riverland"), to bring in-house the design and development of the proposed Northgate grain elevator;
- Ceres plans to spend up to an additional $17.4 M of capital during the 2014 construction season for the planning and design of the grain facility and the planning, design and initial construction of the oil and natural gas liquids transload facilities;
- Ceres expects to complete the remaining site preparation, track installation and associated port infrastructure for the Northgate project by early summer 2014;
- Once this preparation work is completed and all necessary approvals are obtained, Northgate will have the infrastructure in place to allow manifest and unit trains to cross the border into Canada and to facilitate the trans-loading of agricultural, petroleum and other bulk commodity products;
- Ceres plans to continue the process of optimizing its Riverland grain elevator capacity through enhanced strategic partnership agreements and selective asset sales; and,
- Ceres plans to complete the process of liquidating its small, non-core investment holdings.
"As part of the Ceres Board's strategic review, we looked at all the options for Northgate and concluded that building out the site, advancing the energy transload business and having Riverland design and develop the grain elevator was the best risk-return option for Ceres," said Gary Selke, Chairman of Ceres. "Northgate presents an exciting opportunity for Ceres and will open a whole new logistics outlet for Canadian farmers and energy producers to market their products in the USA, Mexico and beyond," he added.
"This Northgate project provides Ceres with the opportunity to fundamentally re-tool its grain business, transforming Riverland's passive storage model into an active grain trading company, and to pull oil and natural gas liquids through Northgate for export to United States markets," said Michael Detlefsen, President and CEO of Ceres. He continued, "We anticipate that we can replicate at Northgate the energy transloading success we have had with the Stewart Southern Railway and expect that enhanced Canadian grain origination direct from farmers through Northgate would ultimately feed Riverland's end customers and drive higher volumes through Riverland's downstream assets, generating higher system utilization and greater operating efficiencies, and increasing profitability."
To date, the Northgate site preparation is approximately 75% completed, with the majority of the earthworks finished and 1150 metres of installed rail track running north from the Canada-U.S. border into the site. In addition, the Burlington Northern Santa Fe Railway ("BNSF") has started to make significant upgrades to its network on the US side of the border, with a rail connection installed and ready to connect to the Northgate site. Connected to the extensive rail network of the BNSF, the Northgate commodity logistics hub is expected to provide an additional strategic marketing outlet for Western Canadian farmers and energy producers, especially in light of the recent grain and oil logistics bottlenecks in the region. The Northgate facility construction remains subject to receipt of all remaining necessary government permits and approvals and agreements with oil and natural gas liquids project partners. Operations on the track also remain subject to all necessary customs and border crossing approvals.
Ceres proposes to finance the remaining Northgate development and construction costs with a combination of cash flow from operations, proceeds from selective non-core asset sales and bank financing.
Ceres is continuing the process of optimizing Riverland's storage capacity and expects to announce further developments on this process over the next six months. It has also sold the majority of its remaining non-core portfolio investments and expects to liquidate the remaining non-core investments in the near future.
In the coming months, Management expects to provide to shareholders an in-depth presentation on the Northgate Project.
About Ceres Global Ag Corp.
Ceres Global Ag Corp. is a Toronto-based agriculture and commodity logistics holding company with two main investment areas: a Grain Storage, Handling and Merchandising unit, anchored by its 100% ownership of Riverland Ag Corp.; and a Commodity Logistics unit, containing its 25% interest in Stewart Southern Railway Inc. and its development of the Northgate, SK Commodity Logistics Hub. Riverland Ag Corp. is a collection of ten (10) grain storage and handling assets in Minnesota, New York, Wisconsin and Ontario having aggregate storage capacity of approximately 51 million bushels. Riverland Ag also manages two (2) facilities in Wyoming on behalf of its customer-owner. The Stewart Southern Railway Inc. is a 130-km long short-line railway that operates in Southeastern Saskatchewan. The Northgate Commodity Logistics Hub is a $90 million grain, oil and oilfield supplies transloading site being developed in conjunction with Riverland Ag and several potential energy company partners, connected to the Burlington Northern Santa Fe Railroad and expected to open in the Summer of 2014. Ceres common shares trade on the Toronto Stock Exchange under the symbol "CRP".
Cautionary Notice: This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation and United States securities laws. Forward-looking information may include, but is not limited to, statements regarding future operations and results, anticipated business prospects and financial performance of Ceres and its subsidiaries, expectations or projections about the future, strategies and goals for growth, expected and future cash flows, costs, planned capital expenditures, anticipated capital projects, construction and completion dates, operating and financial results, critical accounting estimates and the expected financial and operational consequences of future commitments. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Key assumptions upon which such forward-looking information is based are listed in the "Forward-Looking Information" section of the interim MD&A for the quarter ended September 30, 2013. Many such assumptions are based on factors and events that are not within the control of Ceres and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking information include, among others, risks related to weather, politics and governments, changes in environmental and other laws and regulations, competitive factors in agricultural, food processing and feed sectors, construction and completion of capital projects, labour, equipment and material costs, access to capital markets, interest and currency exchange rates, technological developments, global and local economic conditions, the ability of Ceres to successfully implement strategic initiatives and whether such strategic initiatives will yield the expected benefits, the operating performance of the Corporation's assets, the availability and price of commodities and regulatory environment, processes and decisions. Although Ceres has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results that are not anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Ceres undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking information.
SOURCE: Ceres Global Ag Corp.
For further information: Michael Detlefsen, Chief Executive Officer, at (416) 572-7631.