Sale of Kingston Park/Bassano
As
foreshadowed in previous correspondence (9 April 2008) if the 2007
Rights Issue fell significantly below full subscription, directors
must consider selling one of the 3 properties.
The
property being sold is Kingston Park/Bassano.
This
decision was reached after directors examined the cashflow needs
of the group together with the likely harvest revenues of each of
the 3 farms.
Whilst
it is not possible to be definitive so far from the next harvest
(April, May, June 2009), it is relatively certain that the
prospects for Bassano are severely compromised by probable lack of
water for irrigation. On
the other hand the security of irrigation water in respect of
Keetah and Kingsford is more certain because the source is
principally from underground water.
Preliminary
financial estimates indicate that it will be possible to reduce
the $5 M loan (mentioned in the Rights Issue Prospectus dated 2
November 2007) down to $2.0 M and still retain sufficient cash
reserves to provide the required nurturing until the 2010 harvest.
It is anticipated that BOGL will operate profitably after
this time.
However,
Directors conclude it unlikely that any dividends will be paid
prior to 2011.It is intended to give a monthly update of BOGL and
its activities on the website.
Progress
of Remaining Two Farms
KEETAH GROVE
The
weather for July and August in terms of temperature and rainfall
has been normal.
In
July maximum daily temperatures have ranged between 17 degrees and
25 degrees and minimum daily temperatures between -1 and +7
degrees. In August
maximum daily temperatures have been between 18 degrees and 25
degrees and minimum daily temperatures have been between zero and
10 degrees.
July
rainfall was 30mm and August rainfall was 41.5mm taking total
annual rainfall for this calendar year to 271mm.
If we receive average annual rainfall for the remaining 4
months (September to December) total annual rainfall will be about
505 mm. Average annual
rainfall is 660mm.
Pruning
of water shoots on Manzanillo is nearly complete with only about
2.5 thousand trees to finish.
In
July air spreading of granulated fertilizer was undertaken.
In August, foliar application of most of the Manzanillo
trees was completed.
Budding
on the trees has started, it is anticipated that flowering will
commence before the end of September.
KINGSFORD GROVE
July
has been characterised by very cold weather with light frosts
(which are causing no damage).
Rainfall
has been below average for July 17mm (about 67% of average) and
August 25mm and the yearly total to date is 132mm.
However this has been adequate and there has been no need
for irrigation. The
lower rainfall poses no problem because the trees are virtually
dormant during this period. Also
generally the trees rely more on irrigation than natural rainfall.
Routine
running continues with some slashing of grasses and weeds, foliar
and granular fertilizer applications are programmed for September.
Flowering
will probably commence Mid October.
Looking
Forward
We
already have satisfactory offers for most of the assets of
Bassano/Kingston Park and it is anticipated that settlement of
sale will be consummated by the end of October.
Given the provision of adequate funds from the Bassano
sale to maintain optimum nurturing, we estimate Olive Oil
production from next harvest will be around double the 2008
harvest at $1.8M and more than $3.0M in 2010 taking the company
past the break even point operations.
