After asking shareholders to expect great things from the Company’s future, Aussie regenerative farming company Wide Open Agriculture (ASX: WOA) has within just a few days later sought voluntary suspension from the ASX for nine weeks. (Sadistic sense of humour, much?).
The suspension follows the Letter to Shareholders on April 19 signed off by CEO Jay Albany.
The letter—comprising a host of wonderful details and great numbers—shot up its dwindling share price by 54% to close on April 19 at $0.325 having drifted to a 3-year low of $0.145 just a month earlier. Odds are, the ASX asked it to corroborate its claims, leaving WOA seeking a suspension to work things out and shareholders suspended in limbo, unable to trade the shares. Wide Open Agriculture needs to provide a further announcement, but it will take not one week or two, but two months to do so. The announcement is expected by June 30, 2023. It’s a much longer suspension than the typical 1-3 days most listed companies request to draft a response to ASX queries.
In the letter, Albany discussed its flagship products—the plant-based protein Buntine Protein and regenerative farming products company Dirty Clean Foods. Citing the latter, he said, “We’ve done a good job.” He noted that the management believes this segment has more value than is currently reflected in the market.
For Buntine, it claimed that WOA has completed the majority of investment required to produce Buntine Protein at a pilot scale in various food applications at its R&D production facility in Kewdale, WA.
The management team of the company is focused on improving the probability of achieving large-scale commercial success at each stage of investment and development. WOA is currently in advanced, confidential negotiations with a strategic production partner to gain access to production services at an existing brownfield site that has the potential to produce commercial quantities of Buntine Protein.
Compared to other plant protein products, such as pea, faba, and chickpea, which are priced from $9 to $13+ per kg, Buntine Protein is expected to be more expensive, because of its “superior functional, health, and environmental benefits”.
In his letter, Albany rationalises the investment proposition using the following scenario:
“A commercial plant of 10,000 tonnes at AUD $10,000 per tonne, for example, creates a potential AUD $100 million opportunity, versus the existing global soy market currently worth AUD $10 billion.”
In the past quarter, the Company secured $8 million in project-based funding from NAB for domestic oat milk production and an additional $4 million in working capital. As the equipment required for producing oat milk and Buntine Protein significantly overlaps, WOA has initiated discussions regarding financing for the remaining equipment necessary for the commercial production of Buntine Protein.
WOA also announced that it has secured approximately $1 million in grant awards and government R&D tax incentives, which they expect to receive as cash payments in CY2023.
Albany said, “I am excited about commercialising it in partnership with our customers. Over the last 15 months, WOA has prioritised the development and commercialisation of plant-based foods, anchored by Buntine Protein®, and significant investment has been made in the development and commercialisation of plant-based foods.
“We have created a powerful portfolio to compete globally for a meaningful share of this disruptive change in the food industry.”
During the quarter, Joanne Ford accepted a position on the Company’s Board of Directors. She is a new independent Director with top-level experience in finance, FMCG, and food manufacturing
In 2023, WOA aims to start domestic production of oat milk in Australia through a production partner, with plans to move to their own manufacturing after achieving their Buntine Protein goals, expecting financial benefits such as lower shipping rates, sales synergies, and more advantageous international tariff and shipping rates to Asia.
However, the ASX suspension request paints a different picture.
Alinda is a Business Reporter for The Sentiment
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1 Comment
Chuxta
@Alinda, is this due to financial implications or rather the announcement issued, which finally had a positive impact to the share price?
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