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Kangaroo Island Plantation Timbers bags $20 million via oversubscribed share placement

The company is well funded to develop its export facility at Smith Bay.

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The eucalyptus grown on Kangaroo Island is of high quality

Kangaroo Island Plantation Timbers Ltd (ASX:KPT) has successfully raised $20 million via an institutional share placement at $2.00 per share, to commercialise its timber products.

The placement was heavily oversubscribed with a number of new institutional investors introduced to the register.

KPT owns 85% of the plantation forestry on Kangaroo Island, located off the mainland of South Australia.

Its portfolio is about 80% hardwood (eucalyptus) and 20% softwood (pine).

The eucalyptus grown on Kangaroo Island is believed to be equal to the best quality woodchips currently exported from Australia.

Following the completion of the placement, KPT will be well funded to undertake ongoing development activities in relation to its proposed export facility at Smith Bay.

The company is currently completing the permitting process for the construction of the wharf and site facilities.

KPT recently entered into a memorandum of understanding with Mitsui Bussan Woodchip Oceania, a subsidiary of Mitsui & Co Ltd (TYO:8031), to create an exclusive marketing arrangement.

Significantly, the arrangement provides that Mitsui will purchase up to 500,000 green tonnes per annum of woodchip from KPT on a free-on-board basis or equivalent.

The woodchip sales have an expected start date in the fourth quarter of FY 2018/2019, assuming timely development approval and a nine-month construction period for the company’s Smith Bay wharf.

It is worth noting that there is an emerging shortage of quality hardwood woodchips available to Asian markets, due to growing demand for fibre-based consumer goods, and significant supply constraints.

Quick facts: Kangaroo Island Plantation Timbers Ltd

Price: 0.885 AUD

ASX:KPT
Market: ASX
Market Cap: $49.97 m
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