Free Eyre pushes forward with its plan to build new EP port
Work on a new port on the Eyre Peninsula could start as early as March if Free Eyre’s capital raising drive is successful.
SA Business
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Free Eyre is releasing up to eight million $2 ordinary shares as part of its next phase of capital raising for a new grain-only port on the Eyre Peninsula.
In June, Free Eyre announced it was pushing forward with its plan to build a new facility at Port Spencer, after settling the purchase of land from Centrex Metals.
The land is now owned by Peninsula Ports, a subsidiary company of Free Eyre.
Centrex received $1.4 million from the sale of the 140ha of land, with funding for the purchase coming from round one of Free Eyre’s capital raising tranches.
Round two involves the eight million shares, which are being offered on a partly paid basis, with $1 to be paid upon subscription and the balance to be paid in March. These shares are aimed directly at Eyre Peninsula farmers and agribusinesses.
They are being offered at a 33 per cent discount to those that will be put to institutional investors in the next round of funding.
It is hoped between $82 million to $90 million will be raised in the third round of funding towards the $200 million project. The rest of the funds will come from bank borrowings.
Despite T-Ports new Lucky Bay port operating for the first time this season, and Iron Road still planning a port at Cape Hardy, Free Eyre chief executive Mark Rodda said this project stood apart from others as being solely a grain-only port.
“The Eyre Peninsula’s farmers and the community need this new deep-sea, grain-only port,” he said.
Mr Rodda said with the Eyre Peninsula producing some of the most desirable, premium grain in the world, exports from the new port would take place without fear of the product ever being subject to cross-contamination from minerals or fertiliser.
“We will also provide a major solution to the issues that the local community are expected to experience with the recent closure of the EP rail services,” he said.
With the port located 70km northeast of Port Lincoln, and offering freight advantages for farmers in areas like Lock and Rudall, the new facility could help divert nearly 20,000 truck movements from going through Port Lincoln.
Mr Rodda said Free Eyre was aiming to receive up to one million tonnes of throughput per annum through the new port, from the Eyre Peninsula’s average production of 2.5 million tonnes.
Free Eyre’s break-even throughput would be 350,000 tonnes.
Company chairman John Crosby said one of the aspects that should make the port project attractive to investors was the reliability of grain supply from the Eyre Peninsula.
In five out of the past six years, the region has produced about 2.5 million tonnes of wheat, barley and canola annually.
“The Eyre Peninsula offers a very consistent grain supply, year-in, year-out,” he said.
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Baker Young Stockbrokers is Free Eyre’s appointed capital raising advisory partner and associate director – corporate Matthew Baker said the project would help bring in competition to the Eyre Peninsula, while drawing down costs to farmers. Savings are expected to be brought about by growers delivering grain directly to the export port, with no double handling, as well as the strategic location of the new port offering freight advantages.
With the aim of starting construction in March 2020, it is anticipated for wet testing could take place in July 2021, ready for grain receivals to begin in the 2021 season.
The share offer closes December 20.