10/05/2011 (Proactive Investors UK) - Equatorial Palm Oil PLC (LON:PAL) reached a crucial milestone, as Liberia’s first palm oil mill has been opened at the company’s Palm Bay Estate in Grand Bassa County, and it has now begun Crude palm Oil (CPO) sales.

The US$3 million mill was inaugurated following eight months of construction and testing, including the processing of oil palm bunches.

The plant is currently processing 30 tonnes of fresh oil palm bunches (FFB) daily sourced from the surrounding 3,500 hectares of existing oil palms rehabilitated by the company over the past 12 months. An additional 1,200 hectares are being prepared for the 2011 planting of new oil palms currently in the nursery.

Daily production is averaging five tonnes of CPO per day at an extraction rate of 17 percent. Production is expected to rise as the mill reaches full capacity in July 2011 with output in the order of 15 tonnes of CPO per day.

First sales of CPO into the Liberian market occurred during April and a larger sale tender process is to be undertaken during May, EPO said in a statement.

The mill was inaugurated by the Liberian president, Ellen Johnson Sirleaf, who attended and spoke at the event.

EPO is also undertaking several local charitable and community development projects in the communities in which it operates, the latest being providing financing for a new local women's market in the nearby town of Buchanan, which will have over 100 stalls for trading of goods and local produce.

Executive chairman Michael Frayne said: "The inauguration of the mill and commencement of CPO sales are two important milestones for Equatorial Palm Oil as the company continues with its development plans to become a significant palm oil producer in the West African region.“

The company seeks to continue planting and developing additional land areas to reach its planting target of 1,200 hectares in 2011 increasing to higher planting rates in subsequent years.

The news was welcomed by broker Shore Capital. Analyst Phil Carroll said: "Overall, we believe this announcement highlights the continued progress management is making and we expect the news that the company is now generating a revenue stream through the sale of CPO should be taken very positively by investors."

EPO joined the AIM market last year following a £6.5 million IPO. The company aim is to become a sustainable, low-cost producer of crude palm oil in Africa through the reactivation and development of existing plantations and its agricultural land bank in Liberia.

In February 2011, it reported that the joint venture agreement with Indian conglomerate, the Siva Group, has been fully implemented. The deal had initially been flagged in September 2010.

The JV company has received US$22.5 million in cash from Biopalm Energy, a wholly-owned subsidiary of Siva Ventures. EPO itself is investing US$7.5 million into the JV.

The deal also includes a US$30 million loan facility to accelerate the development of EPO’s palm oil operations in Liberia.

The 50:50 JV controls EPO’s entire 169,000 hectare land position at Palm Bay, Butaw and River Cess in Liberia.

BioPalm is already the EPO’s largest shareholder with a 29 percent stake in the company, after the Indian investor subscribed for £5 million in new equity (33.3 million shares) back in May 2010.