2016 AGM Chairman's Address to Shareholders
The Company is making great strides as it implements its strategy of becoming a leading supplier of rock phosphate and other inputs to the growing organic agriculture market in North America.
To this end, during the financial year ending 30 June 2016, Fertoz completed the processing of two batches of direct application rock phosphate with material from the Company's Wapiti and Fernie phosphate projects. We processed approximately 1,700 tonnes of rock phosphate, with this material produced at up to 90% powdered product. The process runs confirmed the ease of processing this material with standard equipment.
We welcomed, during the financial year, our marketing team which has extensive networks and understanding of the agricultural markets in North America. Our team has previously been involved in building up one of the largest networks of independent agricultural consultants in North America. Since their involvement, we have obtained organic certification in the USA and Canada, reviewed the scientific literature in relation to the use of rock phosphate and various blends and, commenced field trials to obtain further data to support our marketing efforts utilising our processed material. We are confident that our science-based approach to building the Fertoz brand is the best way to ensure repeated and steadily increasing seasonal orders so that we can exceed sales expectations in the future.
Subsequent to the end of FY16, the Company has substantially completed road construction at its Wapiti project in British Columbia. That has allowed us to blast, mine and move what we know to be world-class rock phosphate, with more than double the phosphate availability of our competitors in the region.
We are pleased to be mining steadily at Wapiti. The material we are currently mining, plus the tonnes we have in inventory, will provide the volume we need for immediate sales with some additional material available for sales in early spring.
We continue to see a bright future for the phosphate market in general and the organic agriculture industry it serves in particular. There are three basic themes that drive the opportunity we have identified, and our strategy in approaching them:
1. Global demand for organic foods is booming, with a total market size that surged from US$15 billion in 1999 to US$72 billion in 2013. That figure is projected to double by 2018.
2. Organic farming has grown significantly in response to surging consumer demand, with total global organic farmland quadrupling between 1999 and 2013. There is now more than 1.2 million hectares of organic farmland within a 1,200 kilometre radius of Fertoz's Wapiti and Fernie projects. With organic agriculture prices running at a premium of between 1.5 and 4 times that of conventionally farmed food, growers have a strong incentive to go organic.
3. Fertoz has developed a strong resource base with great grades of high-availability rock phosphate, ideally located for transport, sales and marketing to organic growers across North America. Our product compares favourably to other direct application rock phosphates available in North America in terms of total and available phosphate.
These combined efforts have brought Fertoz a significant opportunity to grow market share. To that end, the Company is pursuing a strategy to develop agronomy-based, long-term recurring and sustainable sales.
Therefore, we reach our current point - with Fertoz on the immediate cusp of cash flow, with the right resources, team and marketing capability to support sustainable sales growth of an attractive commodity.
The Company took the right steps to strengthen its balance sheet during and subsequent to FY16, which has placed Fertoz in an ideal cash position to leverage its existing project portfolio and take advantage of the growth in the organic market.
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About Fertoz Ltd
Fertoz (ASX:FTZ) is an Australian-based phosphate exploration and development company with a range of projects in British Columbia, Canada as well as Queensland and the Northern Territory. The Company is focused on becoming a fertiliser producer as quickly as possible, initially focusing on the Canadian/USA markets.
Fertoz plans to develop its exploration assets in Canada in order to identify any potential Direct Shipping Ore (DSO) projects. It intends to seek joint venture partners to assist in funding the exploration projects in Australia.
Phosphate is a commodity necessary for feeding the world, and Fertoz is ready to capitalise on this growing demand.