Grain News

Ceres Global Ag Corp. Plans to Terminate Arrangements With Scoular and Use Subsidiary to Develop Grain Elevator in Northgate, SK

Date Posted: February 13, 2014

Toronto, ON—Ceres Global Ag Corp (“Ceres”) has concluded the comprehensive strategic review that it launched last September in the wake of a substantial change in the composition of its Board of Directors, and has today announced the following:

• In late January 2014, Ceres terminated its arrangements and ongoing discussions with The Scoular Company with respect to the development and construction of a grain facility at Northgate, SK;

• Ceres plans to use its 100% owned subsidiary, Riverland Ag (“Riverland”), to bring in-­‐house the design and development of the proposed Northgate grain elevator;

• Ceres plans to spend up to an additional $17.4 M of capital during the 2014 construction season for the planning and design of the grain facility and the planning, design and initial construction of the oil and natural gas liquids transload facilities;

• Ceres expects to complete the remaining site preparation, track installation and associated port infrastructure for the Northgate project by early summer 2014;

• Once this preparation work is completed and all necessary approvals are obtained, Northgate will have the infrastructure in place to allow manifest and unit trains to cross the border into Canada and to facilitate the trans-­‐ loading of agricultural, petroleum and other bulk commodity products;

• Ceres plans to continue the process of optimizing its Riverland grain elevator capacity through enhanced strategic partnership agreements and selective asset sales; and,

• Ceres plans to complete the process of liquidating its small, non-­‐core investment holdings.

“As part of the Ceres Board’s strategic review, we looked at all the options for Northgate and concluded that building out the site, advancing the energy transload business and having Riverland design and develop the grain elevator was the best risk-­‐return option for Ceres,” said Gary Selke, Chairman of Ceres.

“Northgate presents an exciting opportunity for Ceres and will open a whole new logistics outlet for Canadian farmers and energy producers to market their products in the USA, Mexico and beyond,” he added.

“This Northgate project provides Ceres with the opportunity to fundamentally re-­‐ tool its grain business, transforming Riverland’s passive storage model into an active grain trading company, and to pull oil and natural gas liquids through Northgate for export to United States markets,” said Michael Detlefsen, President and CEO of Ceres.

He continued, “We anticipate that we can replicate at Northgate the energy transloading success we have had with the Stewart Southern Railway and expect that enhanced Canadian grain origination direct from farmers through Northgate would ultimately feed Riverland’s end customers and drive higher volumes through Riverland’s downstream assets, generating higher system utilization and greater operating efficiencies, and increasing profitability.”

To date, the Northgate site preparation is approximately 75% completed, with the majority of the earthworks finished and 1150 metres of installed rail track running north from the Canada-­‐U.S. border into the site.

In addition, the Burlington Northern Santa Fe Railway (“BNSF”) has started to make significant upgrades to its network on the US side of the border, with a rail connection installed and ready to connect to the Northgate site. Connected to the extensive rail network of the BNSF, the Northgate commodity logistics hub is expected to provide an additional strategic marketing outlet for Western Canadian farmers and energy producers, especially in light of the recent grain and oil logistics bottlenecks in the region.

The Northgate facility construction remains subject to receipt of all remaining necessary government permits and approvals and agreements with oil and natural gas liquids project partners. Operations on the track also remain subject to all necessary customs and border crossing approvals. Ceres proposes to finance the remaining Northgate development and construction costs with a combination of cash flow from operations, proceeds from selective non-­‐ core asset sales and bank financing.

Ceres is continuing the process of optimizing Riverland’s storage capacity and expects to announce further developments on this process over the next six months.

It has also sold the majority of its remaining non-­‐core portfolio investments and expects to liquidate the remaining non-­‐core investments in the near future.

In the coming months, Management expects to provide to shareholders an in-­‐depth presentation on the Northgate Project.

For more information, call 416-572-7631.

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