Shares in carbon plantation manager Alterra have soared after the Perth-based ASX listed agri-business released details showing its carbon forestry projects are expected to deliver $23 million in revenue over the next decade.
Alterra shares rocketed to a high of 4.2c a share on Friday last week following a corporate update detailing the company’s ongoing and successful management of 18,000 hectares of WA carbon plantation projects.
The lift in Alterra’s share price, which surged more than 30 per cent in intra day trade on Friday, prompted a volume and pricing query from the ASX.
In the latest update, Alterra, who also has plans to potentially develop a new style of dairy, said it continued to generate circa $650,000 a quarter from its existing carbon forestry management projects, with contracted revenues of $23.5 million locked in until 2027.
In addition to its management fees, Alterra also picks up 10% of the carbon credits generated for its blue chip clients up until 2027 when those management contracts run out. From 2027 until 2039, additional carbon credits generated will also be owned by Alterra and be available for sale.
Alterra also remains in a robust financial position, with $2.5 million in cash and receivables and net real agricultural property worth about $2.6m that generates rent for the business.
Alterra Executive Director Andrew McBain said: “Alterra is in a solid position and we continue to seek out new opportunities to grow the company while preserving the existing cash-flow generating business.”
“It is crucial that we take the time to ensure that any future investment for growth is done sustainably and without unduly exposing the existing underlying business.”
Despite being around for almost a decade, Alterra still only has 144m shares on issue with Directors and management holding some 34% of the register.
On the dairy side, Alterra said it planned to now explore opportunities in Victoria and Queensland for its proposed System 5 dairy development due to higher demand for milk in those jurisdictions than in W.A.
The company also said it was exploring additional potential business opportunities in beef, honey, horticulture, speciality grains, carbon credits, renewable energy, waste management and general industry.
With a tightly held register, cash in the bank and real property to borrow against, it may not take much for Alterra to create a bit of market excitement for its shareholders with a new project.
