A major customer for Mission NewEnergy has offered nearly $2 million in compensation as it requests its take-up of biodiesel be halved.
A major customer for Mission NewEnergy has offered nearly $2 million in compensation as it requests its take-up of biodiesel be halved.
In an announcement released after market close, Mission said the unnamed customer will now buy 36 per cent of biodiesel produced at its Malaysian plant for the remainder of the 2009 calendar year, down from 78 per cent.
In exchange, the customer has offered $US1.244 million ($A1.7 million) as compensation.
The company said it remains in discussions with the same customer for new biodiesel orders for 2010.
Mission managing director Nathan Mahalingam said it was an excellent opportunity to find alternative customers for the released capacity.
"The timing is fortuitous as we are in advanced discussion around off-take agreements for our second biodiesel facility and this provides additional product to sell to these new buyers," he said.
"This move will also provide us with spare capacity to sell into the Malaysian biodiesel mandate which is expected to come into force in the last quarter of 2009."
The announcement is below:
Key highlights:
- US$1.244 million gain on biodiesel contract reconstruction
- Biodiesel sales for Q1CY2009 under the existing contract delivered
- Cash collection in India increasing
Biodiesel Contract Reconstruction:
Mission NewEnergy Limited (ASX: MBT), at the request of its major biodiesel customer, has agreed to reduce the quantity of biodiesel sales to its customer in exchange for US$1.244 million as compensation to Mission for the reduced sales. The existing contracts with this customer covered approximately 78% of Mission's current production capacity. Mission has agreed to reduce this amount to 36% of Mission's current production capacity for calendar year 2009.
Mission remains in discussions with this same customer for new biodiesel orders for 2010.
"We see this as an excellent opportunity as we expect to be able to find alternative customers for this released capacity, while maintaining the goodwill with our existing customer." said Nathan Mahalingam Managing Director of Mission, further stating "the timing is fortuitous as we are in advanced discussion around off-take agreements for our second biodiesel facility and this provides additional product to sell to these new buyers. This move will also provide us with spare capacity to sell into the Malaysian biodiesel mandate which is expected to come into force in the last quarter of 2009".
First Quarter Calender Year 2009 Biodeisel Sales:
Mission has been successfully delivering biodiesel to its customer during the first quarter. Consistent sales of by products have also been encouraging.
Cash Collection from Sapling Sales in India:
Mission has seen a steady increase at the rate of which loans are being disbursed from Banks to its contract farmers, which has resulted in Mission realising initial proceeds of cash from the historic sales of its Jatropha
saplings to contract farmers. The rate at which the banks are approving and disbursing funds under the loan documentation has and is expected to continue to increase. The number of loans disbursed effectively doubled in the last two weeks of the quarter alone.
