T (08) 8363 5010 F (08) 8363 5020 E: [email protected]W: www.free-eyre.com.au 20 Payneham Road, Stepney SA 5069 FREE E YRE I NVESTOR U PDATE IN THIS ISSUE CEO’s Message 1 FREE Eyre Board 1 EP Grain 1 FE Fibre 2 FE Fertiliser 2 FREE Eyre Share Trading 2 Port Spencer 3 EP Storage 4 CEO’s Message On behalf of the Directors and staff of FREE Eyre Limited (FEL), I am pleased to update shareholders on the activities and initiatives of your company over the past six months. During this time, we have been concentrating on the significant long-term strategic project opportunities in front of FEL (Port Spencer) as well as the list of immediate opportunities that present themselves – fibre and fertiliser. We are also in discussions with chemical, insurance, finance and telecommunication companies as we investigate business models and partnerships that may reduce the costs of these inputs or increase the services to our Eyre Peninsula shareholders. The 475 FEL shareholders continue to present a significant block of purchasing power to suppliers and it is our role to convert this potential into direct and indirect business for you. We will be officially opening the FEL ‘solar farm’ at the EP Field Days site next week. On your behalf, FEL have funded this 3kW solar installation that will effectively mitigate the cost of electricity to the Field Days for the next 30 years. It is effectively a long-term, ongoing, financial sponsorship from the EP’s farmers and agribusinesses, for the EP’s farmers and agribusinesses. The FEL tent at the EP Field Days - site 286 (corner D Road and 7th Street) - is alongside the solar farm, so we very much look forward to you calling in and discussing your thoughts and aspirations for FREE Eyre - your company. FREE Eyre Board It is with pleasure that we announce the appointment of Caroline Schaefer to the Board of FREE Eyre Limited. Caroline was raised in the Kimba district and along with her parliamentary experience, including Minister for Primary Industries and a Member of the Natural Resource Standing Committee of the Parliament and currently Chair of Northern and Yorke NRM Board, has involved herself within the agribusiness community, such as Chair of the Agribusiness Association of Australia and Board member for Australian Women in Agriculture, as well as previous commitments to the Kimba District Council and Kimba District Hospital. Her agribusiness experience as well as local Eyre Peninsula knowledge is an exciting addition to the Board of FEL. EP Grain We were very pleased to welcome Julian Speed to the role of General Manager, EP Grain in April. Julian was raised in the farming community on the EP and after a number of agribusiness roles across Australia and New Zealand, has returned to this very important role. Having received strong client feedback on the existing EP Grain product offering, Julian and the EP Grain team have been actively working on new cash, forward and pool products, tailored specifically to the EP. The team will be launching and explaining a number of these products at the Cleve Field Days, so please call in at site 358 (corner C Road and 9th Street), introduce yourself to Julian and catch up on the latest developments. AUGUST 2012 Page 1 Investor Update: 2012-1
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T (08) 8363 5010 F (08) 8363 5020 E: [email protected] W: www.free-eyre.com.au
20 Payneham Road, Stepney SA 5069
FREE EYRE INVESTOR UPDATE
IN THIS ISSUE
CEO’s Message 1
FREE Eyre Board 1
EP Grain 1
FE Fibre 2
FE Fertiliser 2
FREE Eyre Share Trading 2
Port Spencer 3
EP Storage 4
CEO’s Message On behalf of the Directors and staff of FREE Eyre Limited (FEL), I am pleased to update shareholders on the activities and initiatives of your company over the past six months. During this time, we have been concentrating on the significant long-term strategic project opportunities in front of FEL (Port Spencer) as well as the list of immediate opportunities that present themselves – fibre and fertiliser. We are also in discussions with chemical, insurance, finance and telecommunication companies as we investigate business models and partnerships that may reduce the costs of these inputs or increase the services to our Eyre Peninsula shareholders. The 475 FEL shareholders continue to present a significant block of purchasing power to suppliers and it is our role to convert this potential into direct and indirect business for you. We will be officially opening the FEL ‘solar farm’ at the EP Field Days site next week. On your behalf, FEL have funded this 3kW solar installation that will effectively mitigate the cost of electricity to the Field Days for the next 30 years. It is effectively a long-term, ongoing, financial sponsorship from the EP’s farmers and agribusinesses, for the EP’s farmers and agribusinesses. The FEL tent at the EP Field Days - site 286 (corner D Road and 7th Street) - is alongside the solar farm, so we very much look forward to you calling in and discussing your thoughts and aspirations for FREE Eyre - your company.
FREE Eyre Board It is with pleasure that we announce the appointment of Caroline Schaefer to the Board of FREE Eyre Limited. Caroline was raised in the Kimba district and along with her parliamentary experience, including Minister for Primary Industries and a Member of the Natural Resource Standing Committee of the Parliament and currently Chair of Northern and Yorke NRM Board, has involved herself within the agribusiness community, such as Chair of the Agribusiness Association of Australia and Board member for Australian Women in Agriculture, as well as previous commitments to the Kimba District Council and Kimba District Hospital. Her agribusiness experience as well as local Eyre Peninsula knowledge is an exciting addition to the Board of FEL.
EP Grain
We were very pleased to welcome Julian Speed to the role of General Manager, EP Grain in April. Julian was raised in the farming community on the EP and after a number of agribusiness roles across Australia and New Zealand, has returned to this very important role. Having received strong client feedback on the existing EP Grain product
offering, Julian and the EP Grain team have been actively working on new cash, forward and pool products, tailored specifically to the EP. The team will be launching and explaining a number of these products at the Cleve Field Days, so please call in at site 358 (corner C Road and 9th Street), introduce yourself to Julian and catch up on the latest developments.
T (08) 8363 5010 F (08) 8363 5020 E: [email protected] W: www.free-eyre.com.au
20 Payneham Road, Stepney SA 5069
FREE EYRE INVESTOR UPDATE
FE Fibre You will have recently received information announcing our latest venture – F.E Fibre – a wool marketing and supply chain partnership with icon South Australian wool buyer, processor and exporter Michell.
The aim of this partnership is to provide EP woolgrowers with the industry’s most cost effective, direct to market supply chain. This business model eliminates unnecessary overheads and traditional ‘hidden’ wool broker charges. A key feature is that it also allows growers to sell their cardings wools directly to the processor who is most likely to purchase them at auction anyway. The Michell name has been associated with the international wool textile industry for more than 140 years. The original wool-scouring operation at Undalya (south of Auburn) in 1870, has grown to one of the largest and most sophisticated wool–processing operations in the world. Scouring and topmaking facilities in Adelaide, China and Malaysia have become the foundation stone to the Michell Groups 2007 establishment of the IO Merino enterprise. IO Merino was established as a testing ground for innovative yarn products to target the base layer clothing segment around the world. Be sure to visit the FEL site, number 286, at the Field Days to receive more information on how you can benefit from F.E Fibre and see first hand the excellent work the Michell Group is doing on behalf of the Australian Wool Industry. In the future, we hope to develop supply programs with Michell to see EP wool go directly into the end product – true value adding!
For further information, please contact Simon Hood, Michell Direct Wool on 1300 470 655, or the FREE Eyre office on (08) 8363 5010.
FE Fertiliser FEL’s partnership with Direct Farm Inputs (DFI) has been well received by EP farmers with around 2,000 tonnes transacted in the first few months. Many of you will have spoken to our representative, Alison Mundy, who is successfully sharing her time between her EP Storage administrative role and the F.E Fertiliser agency business. Those of you who have dealt with Alison will appreciate her efforts to coordinate the logistics of fertiliser parcels from DFI’s Adelaide depot to your farm. Please call into the FEL site, number 286, to catch up with Alison and discuss your future fertiliser needs. Alison is always looking for the opportunity to match grower’s needs – be they volume, type or financial year related – to DFI’s supply position. We are very pleased to inform our shareholders that DFI take possession of the former Megafert fertiliser site on the outskirts of Cleve on 10 August. This investment by DFI will be a very welcome enhancement to the local supply of fertiliser and we look forward to the positive impact to the F.E Fertiliser agency and our shareholder’s businesses.
For further information, please contact Alison Mundy: Telephone: (08) 8620 2073 Mobile: 0429 030 006 Email: [email protected]
FREE Eyre Share Trading We are pleased to announce that FREE Eyre will soon be launching their Share Trading page on our website. This will enable the transfer of shares, via either purchasing or selling, between existing shareholders or those wishing to become shareholders. The idea of this interactive page on our website is to allow potential buyers or sellers to get in contact with each other and negotiate an agreeable price to transact the shares. FREE Eyre has no involvement in this negotiation process and our role is merely to advise interested parties that a transaction has been notified.
If you are interested in this, please visit our website, www.free-eyre.com.au for further information.
T (08) 8363 5010 F (08) 8363 5020 E: [email protected] W: www.free-eyre.com.au
20 Payneham Road, Stepney SA 5069
FREE EYRE INVESTOR UPDATE
Port Spencer The proposed Port Spencer development continues to offer the greatest strategic opportunity to bring competition to the grain storage, handling and exporting sector. As Centrex Metal’s chosen “Grain Operator” in the Port Spencer Owner’s Team, we continue to pursue this project with vigor. FEL has spent considerable time engaging with major grain industry players in an effort to identify companies interested in partnering with FEL. These companies were invited to explain how they would engage with FEL on the Port Spencer grain export terminal, a strategically located up-country network of storage sites to feed the port and grain accumulation opportunities across the state of South Australia (excluding the Eyre Peninsula, given the existing EP Grain joint venture). As with all FEL initiatives, potential partners were made aware of FEL’s desire to maintain at least a 50% stake in these projects. Expressions of Interest were received from six major Australian and global grain companies. Three parties were consequently short-listed and discussions with them continue. During these negotiations the Viterra-Glencore transaction was announced, understandably causing all parties to pause to consider the ramifications of this takeover and the implications to their respective businesses. We expect that our negotiations with all parties relating to the Port Spencer project will continue in earnest once Glencore take control of the Viterra network and their plans for South Australian are released.
Centrex Update
Port Spencer is a proposed deep water export facility capable of accommodating Cape class vessels. The planned site for Port Spencer, northeast of Port Lincoln, is in close proximity to Centrex’s other iron ore development interests on the Eyre Peninsula. The Port Spencer 50/50 joint venture agreement between Centrex and WARI was signed on 9 March 2012. WARI is a wholly owned subsidiary of WISCO. The signing is a significant milestone for the Port Spencer project as Directors believe it represents a vote of conf idence by WISCO in the mining JV (Eyre Peninsula) and in the associated infrastructure development. The final outstanding condition precedent to the formal commencement of the joint venture is approval by the National Development and Reform Commission (NDRC) in China. This approval is expected in August this year, after which the joint venture will commence a design feasibility study. Centrex and Golder Associates have completed the Port Spencer PER. This was released for public comment on 9 March 2012 by SA’s Minister of Planning, the Hon. John Rau. The public consultation period ran for 7 weeks, concluding on 27 April 2012. Centrex received 12 submissions from a wide variety of stakeholders. Centrex has now addressed all the questions raised in these submissions and is in the final review stages prior to formal submission to the SA, expected early in August. Centrex has commenced preparation for performing offshore drilling to confirm ground conditions for construction of the jetty. License applications are in the final stages of approval and once obtained, this work is expected to commence late in August.
Page 3
It is proposed for Port Spencer to have a 2-berth jetty, with separate, fully enclosed belts for delivery of both iron ore and grain. These images have been composed by Centrex as part of their formal Development Application and highlight the 'industrial park' grid nature of the facility. On the right of each photo are 10,000 tonne silo’s for grain and a 60,000 tonne shed to demonstrate where the proposed grain terminal will sit within the Port Spencer precinct. On the left of each photo is the proposed hematite storage shed. The magnetite is proposed to be shipped to Port Spencer via slurry pipe, dried and subsequently loaded onto the waiting ship.
T (08) 8363 5010 F (08) 8363 5020 E: [email protected] W: www.free-eyre.com.au
20 Payneham Road, Stepney SA 5069
FREE EYRE INVESTOR UPDATE
EP Storage Despite smaller than anticipated harvest receivals, the EP Storage business at Taragoro continues to perform extremely well – and profitably. The team, led by Allen (Wink) Curtis, have made strong improvements in the running rate (on a per/tonne basis) of the business. Whilst still enjoying strong support from local business providers, the EP Storage team completes the majority of their maintenance and site development requirements ‘in-house’, adding greatly to the cost controls of the business. Over the next few months we will be working diligently to engage with buyers to support the EP Storage site for the 2012 harvest. As a third party site with the associated third party access-to-port charges, we are thinking carefully as to how we attract both growers and sellers to store and buy grain from Taragoro in the most competitive manner. We will be contacting supporters of EP Storage in the coming weeks to discuss a number of different models in an effort to mitigate the price differences of the past. These models will consider rewarding / rebating supporters based on factors such as loyalty, volume or other relevant ideas. All FEL shareholders will appreciate the direct and indirect benefits that the EP Storage investment has made to competition in the area of grain storage and handling on the EP. We only need to consider the large capital investment that Viterra has made in its sites (falling numbers machines, increased receival capacity, cap on charges, etc) as a result of EP Storage to remind ourselves of the ongoing need to have a competitive alternative. We will be establishing an EP Storage “Silo Committee” in the next few weeks and we welcome supporters to put their hand up and get involved. The EP Storage team will be present in the FEL site - number 286 - at the Cleve Field Days and we very much look forward to discussing the imminent harvest with you and how we can craft the business operations to ensure a percentage of your business.
