Watershed for Arafura

AUSTRALIAN south sea pearl producer Arafura Pearls Holdings is preparing for its watershed 100,000 pearl harvest this year, having raised $20 million over the past four years through its managed investment scheme program.

Faced with a less-than-ideal year for MIS raisings in 2008, Arafura raised just more than $4 million, almost half the amount of the previous year.

But while the future of non-forestry MIS remains uncertain, Arafura chief executive Andrew Hewitt believes the company is in good shape as it prepares for its harvest, which will take the company into a cash-flow-positive position.

"We're taking it year by year," Mr Hewitt told WA Business News.

"We're not an MIS-dedicated company, we're a business that uses MIS as a way of financing growth.

"When you're operating remote location activities, it isn't easy to raise capital.

"We've found it very helpful in expanding and capitalising the company to get this growth and production happening."

Despite the challenges facing the company, and the industry, it has a number of reasons to be confident.

Arafura recorded an after-tax profit of $10.9 million for the 2007-08 financial year, more than double that of the previous year, after a pearl harvest of more than 24,000 white pearls and a more than doubling of the market value of its shell inventory to $41.3 million.

Currency fluctuations should also work in its favour.

Pearls are sold in Japanese yen, which has appreciated by about 40 per cent over the past year against the Australian dollar, and this will have a significant impact on sales revenue.

Arafura holds the largest pearl production quota in the Northern Territory, allowing it to seed up to 253,000 first operation oysters each year through its Elizabeth Bay hatchery.

Together with its WA quota, which allows it to seed 18,000 shell per year, Arafura is the second largest quota holder in Australia, after the Paspaley group.


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