Ingham bio-mill funding alternative

The alternative funding option was outlined at a special meeting held in Ingham on the weekend and was attended by more than 200 shareholders.

During an update on the project, NQBE Chairman, Robert Carey, said that the board is continuing to progress the existing NQBE corporate funding model (mix of equity and finance) for the project, but was also seriously considering an alternative funding pathway.

“Under the alternate model raised, NQBE’s advisors, NAB Advisory, shareholders could be both growers and millers,” Mr Carey said

“The alternative model looks at a different revenue distribution basis to farmers than under the current proposed NQBE arrangement, provides absolutely certainty over the current topical debate of ‘growers economic interest’ and would also provide growers with the opportunity to choose their own marketing agent for the raw sugar and other by-products produced," he said.

“We have undertaken some preliminary modelling on the alternative model and initial indications are that farmers would receive considerably more revenue than they do under the current NQBE and other arrangements.

“I see the alternative model as a win/win for the NQBE farmers, as they could earn increased revenue annually, possibly increase ownership in the NQBE Facility and not put any of their existing farming assets at risk.

Mr Carey stressed that more work needs to be done on the alternative funding model and the NQBE Board will be checking and re-checking the assumptions and calculations to make sure that model does deliver better outcomes, before making any recommendations to the shareholders.

"Notwithstanding which funding model prevails, the NQBE Board has set a deadline of September 30, 2015 for complete financial closure. At that time we aim to be in a position to call tenders for construction and commence building the new facility.”

Mr Carey said a new Cane Supply Agreement (CSA) would be required to reflect the new revenue arrangements should the alternative model be adopted.

He also updated farmers in relation to the current situation with the existing CSA arrangements with the local miller.

“With the current millers having severed their sugar marketing arrangements with Queensland Sugar Limited (QSL) from the end of the 2016 crop, there is no binding agreement in place for supply of cane beyond the 2016.

“This being the case, the annual rollover notification date of February 28 becomes obsolete. Growers do not need to do anything.

“I have been advised by Wilmar that they will present a new draft CSA shortly for farmers to consider. No doubt Wilmar will want farmers to sign the new CSA immediately.

“We have urged the NQBE farmers not to sign any new CSA until the details of any new CSA are thoroughly investigated and considered.”

Mr Carey took the opportunity to introduce shareholders to NQBE’s new director, Dr John Hewson, who attended the meeting.

Dr Hewson addressed the gathering and outlined his reasons for joining the NQBE Board and expressed his support for what he described as an “exciting project”.

At the start of the meeting, shareholders observed a minute’s silence in respect for the company’s former General Manager Operations, Ken McIntosh, who passed away suddenly in early January.

Mr Carey said finding a replacement for Mr McIntosh, who had designed the new state-of-the-art factory was “like mission impossible”.

“However, we have been very fortunate in recruiting a Cairns-based, very experienced industry professional, Tom Hare, to fill the very large shoes left by Ken’s passing.

“In addition to having 35 years of experience all around the world in raw sugar manufacture, sugar refining, distillation and power generation, Tom was also a very close friend and confident of Ken McIntosh and worked with him on many overseas sugar projects. Tom also shares Ken’s passion for the NQBE project.”

Mr Hare commences employment with NQBE in early March 2015.