ASX-listed agribusiness developer, Alterra has tabled a positive feasibility study for the 30-year life span of its planned 300-hectare Carpenters Avocado Project near Pemberton in the South West region of Western Australia.
Whilst no numbers were given in today’s announcement, Alterra said development funding of $40.6m and a minimum 30-year project life would deliver “double-digit” internal rates of return, or “IRR”, for potential investors.
The company also said construction of a 4.1 gigalitre dam to irrigate the project had commenced with the first 50-hectare planting due this year, subject to funding.
The Carpenters project feasibility study is now in front of both debt and equity providers and Alterra said it expects the first external cash contributions to start rolling in early this year.
Subject to the availability of funding, the company expects to proceed with planting of the first 50 hectares this year with the balance of 245 hectares planted out over the next two years.
Alterra Chief Executive Officer, Oliver Barnes said: "In pursuing this opportunity, we are adopting conservative assumptions around yield and market prices. However, we are also applying the best available technologies and horticultural practices to ensure Carpenters has the best chance for outperformance,”
Alterra said the study sought to test the viability of the proposed avocado development and identify any critical issues that may impact the bankability of the project.
Key assumptions tested in the study included land assembly, regulatory approvals, subsurface drainage and water catchment forecasting, with water self-sufficiency a key driver for the project.
Importantly, the company noted the study needed to ensure the project’s infrastructure was sufficient to meet peak annual water demands of 2.1 gigalitres and that planting could be completed in just three years.
Whilst water storage capacity is pivotal to the success of Carpenters, Alterra is also looking to increase planting density to chase up to 67 per cent higher avocado yields - at least in the first 6 years.
The company has also been able to bring forward development plans having previously said construction of the 4.1 gigalitre dam was scheduled for later in 2021 and would be reliant on existing water infrastructure for the initial ramp-up in the project.
However, according to Alterra, the landowner from whom Alterra leases the Carpenters land, has elected to start construction early and to directly fund the build costs, in part to meet permitting requirements for dam construction to commence before June 2021.
The company said its land lease had therefore been amended to reflect the landowner’s agreement to fund the construction of the dam at the owner’s risk and build the dam to Alterra’s specifications.
Through the repurposing of both land and water, Alterra looks to be on track to deliver one of its premium horticulture developments in WA’s premier growing region, with funding being the last piece of the puzzle to put in place.
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By Matt Birney
