the stuff of agriculture – water, soil, sunshine, markets

If you do what you always did, you will get what you always got!

Hon Keith DeLacy AMChairman

Integrated Food and Energy developments Pty Ltd (IFED)

AIEA JULY 2014

THE STUFF OF AGRICULTURE – WATER, SOIL, SUNSHINE, MARKETS

THE NORTH HAS IT ALLWATER: Gulf rivers total average run-off is 90 million megalitres (ML) per annum – cf Murray Darling 32 million ML.The Gilbert River system 5.5 million ML - cf the Ord 3.8 million ML.

SOIL: “The results of this analysis indicate that very large areas of the Gilbert River catchment (1 to 2 million ha) are moderately suitable (class 3) for a wide range of crops and irrigation methods.” (CSIRO assessment study FGARA 2014)

SUNSHINE: Few agricultural regions in the world have greater solar exposure (sunshine, the essence of plant life) than Cape York Peninsula.

24 JULY 2014 AIEA JULY 2014

24 JULY 2014 AIEA JULY 2014

AND FINALLY MARKETS: More than half the world’s population live in the circle, and71% of projected growth in global food demand in next 40 years will occur inside circle

• Lakeland Downs (Cooktown)• Territory Rice Ltd (Darwin)• Tipperary Land Corporation (Darwin)• Northern Agricultural Development Corporation (Katherine)• Ord River Project (Kununurra)

AIEA JULY 2014

Nevertheless NORTHERN DEVELOPMENT - a Litany of Failures!

AIEA JULY 2014

A NEW MODEL

A greenfield development of a privately funded, large-scale, world-class, vertically integrated and sustainable agribusiness.

THE IFED PROPOSAL

Etheridge Integrated Agriculture Project

(EIAP)

IFED has secured long-term options over the key properties required for water diversion, water storage, cropping and infrastructure.

AIEA JULY 2014

Project area comprises:5 properties – 326,000 haCropping land – 65,000 haWater storage – 18,000 haInfrastructure – 2,000 haGrazing – 241,000 ha

5,400,000 (Ord River =3,870,000)

PROJECT LOCATION AND SIZE

Einasleigh R

Gilbert R

Flow rate in megalitres /year

Water is flood harvested into lakes and gravity fed to the co-located farming and processing facilities.

AIEA JULY 2014

PROJECT DESIGN

Existingcattle operations


Off-riverWater Storage

Cogen – 90MWBagasse/biogas

Gum Plant

Sugar Mill

662kt/y of sugarFarm

Sugar - 40,000 haGuar – 25,000 ha

Hull and germ 65 kt/y

Sugar cane

4.8 Mt/y

Guarbean

Raw sugar – 535 kt/y

Ethanol – 100 ML/y

Steam and

Electricity - 43MW

Guar gum - 32 kt/y

Meat Processing Plant

ngcattle operations



200,000 / yearCattle Purchased from

local graziers Meat products 53 kt/y

Hides and offal

Pellet Mill Biomass Pellets - 400 kt/yCane Trashat 8% moisture

Cane Tops 120kt/y dry Bagasse

164kt/y dry

AquacultureRedclaw ponds

Redclaw 7.5 kt/y

OVERVIEW: Integration of Water, Farm and Processing Activities.

AIEA JULY 2014 page 8

Feed Mill400 kt/y

+ purchased molasses

AIEA JULY 2014

PROJECT COST ESTIMATE:

Item Cost Estimate - $MLand acquisition plus costs 67 Water Infrastructure & Allocation 497 Farm - Land Preparation 123 Farm - Irrigation Development 367 Sugar mill 371 Ethanol refinery 126 Guar mill 52 Stock feed plant 36 Power station 159 Meat processing 63 Infrastructure & Accommodation 62 Plant & Equipment 54

Capital expenditure $1,977

The vertically integrated farming and processing model delivers revenue diversity and high EBITDA. Typical year from 2020:

Products Units Quantity Sell price

$/unitRevenue

$MCost$M

EBITDA Margin

$MFarming

sugar cane Tonnes 4,800,000 109 -109guar bean Tonnes 98,000 25 -25

Raw sugar Tonnes 535,000 487 261 66 195Ethanol Litres 100,000,000 1.15 115 25 90Guar gum Tonnes 32,000 4,871 156 33 123Stock feed Tonnes 404,000 173 70 17 53Electricity MWH 358,000 106 38 15 23

Meat & co-products Head 200,000 1,140 228 208 20

Indirect Overheads 22 -22

Total 868 520 348

AIEA JULY 2014

PROJECT FORECAST FINANCIALS

Unlike extractive industries which are finite, EIAP will deliver truly sustainable environmental, social and economic outcomes.

• Carbon sustainability– Operates completely on renewable electricity (Cogen); – Exports renewable electricity into the grid; and– 400,000 tonnes biomas pellets – stored carbon – Ethanol produced equals 9 times volume of liquid fuel consumed in the business.

• Ecological sustainability– Propose to harvest just 10% of Gilbert River system average annual discharge (0.55% of Gulf

Rivers discharge)– Off-river water storage – much more ecologically sustainable than on-river dams;– Reduced sediment loss due to better farm design and management;– Negligible nutrient run-off due to state-of-the-art trickle tape irrigation; and– Improved pest management (weeds and destructive feral animals).

AIEA JULY 2014

SUSTAINABILITY

• The Etheridge shire is classified as ‘very remote and disadvantaged’ – unemployment rate 16.2% (March 2012);

• EIAP will create 1,200 direct jobs;• EIAP will underwrite local business and create new business opportunities;• Investment in housing and services will multiply benefits; and• An indigenous employment program will provide a pathway to economic

independence for the local indigenous population.

• Positive animal welfare outcomes• Reduction of stock losses in dry season (water and feed availability); and• Local processing eliminates long distance transport of cattle.

AIEA JULY 2014

Social Sustainability

• Bringing Government policy to life (State and Federal);• Federal Government revenue – company and income taxes;• State Government revenues – payroll tax, port usage fees, vehicle

registrations, fees and charges;• Reduces social outlays – unemployment benefits, subsidies, disaster

relief, etc;• Electricity grid enhancement with renewable electricity, RET

contribution;• Larger rate base for local council;• Improved community facilities; and• Jobs, jobs, jobs…

AIEA JULY 2014

Government & Community Benefits

• Reaching negotiated agreements with five land owners that secures 326,000 hectares under long term options;

• Completion of detailed technical and commercial feasibility analysis;

• “Development Protocol” for a water allocation agreed with the Queensland Government;

• Declaration of a “Co-ordinated Project” by the Queensland government; and

• Well progressed with Pre-Construction Phase capital raising.

AIEA JULY 2014

PROJECT MILESTONES

A LITANY OF FAILURES? What’s changed this time?A NEW MODEL - WHERE EIAP IS DIFFERENT

• SCALE• BIO-MASS = ENERGY• INTEGRATION• DE-RISKED CLIMATE• INNOVATIVE WATER STORAGE• OFF-THE SHELF AGRICULTURE AND PROCESSING

AIEA JULY 2014

WHAT’S CHANGED THIS TIME?SCALE• Scale delivers local processing infrastructure – vital in isolated regions• Economies of scale in production• Market power – both selling and purchasing• In-house research and development• Strong capital base

In isolated areas small or fragmented water allocations do not bring about real economic development.Water must be allocated on the basis of jobs/economic benefit per litre – not on the basis of political expediency.

AIEA JULY 2014

WHAT’S CHANGED THIS TIME?ENERGYThe tropics have an extraordinary capacity to produce bio-mass – and hence electricity and steam via co-generation.

EIAP will produce 90 mw of electricity – 43 mw will be exported into the grid for net $23 million, the rest powering the project - free renewable energy, underwriting the economics of all processes.

INTEGRATION (i)• EIAP is a single entity, privately funded, • Water storage, farming and processing are fully integrated and aligned

AIEA JULY 2014



Off-riverWater Storage

Cogen – 90MWBagasse/biogas

Gum Plant

Sugar Mill

662kt/y of sugarFarm

Sugar - 40,000 haGuar – 25,000 ha

Hull and germ 65 kt/y

Sugar cane

4.8 Mt/y

Guarbean

Raw sugar – 535 kt/y

Ethanol – 100 ML/y

Steam and

Electricity - 43MW

Guar gum - 32 kt/y

Meat Processing Plant

ngcattle operations



200,000 / yearCattle Purchased from

local graziers Meat products 53 kt/y

Hides and offal

Pellet Mill Biomass Pellets - 400 kt/yCane Trashat 8% moisture

Cane Tops 120kt/y dry Bagasse

164kt/y dry

AquacultureRedclaw ponds

Redclaw 7.5 kt/y

INTEGRATION (ii) The waste from one process becomes the feedstock for the next process.

page 18

Feed Mill400 kt/y

+ purchased molasses

WHAT’S CHANGED THIS TIME?DE-RISKED CLIMATE • DROUGHT PROOF – based on the project’s water storage and consumption metrics,

100 years of river flow data demonstrates that EIAP would have harvested a full crop each year.

• CYCLONE PROOF – THE PROJECT IS 330 KM INLAND FROM THE TROPICAL COAST

INNOVATIVE WATER STORAGEOff-river water storage is more efficient and more sustainable than in-river dams.• Compared to the CSIRO FGARA proposal EIAP can store three times the volume of

water at half the cost – utilising the special local terrain• In-river dams harvest all the small flows, off-river storage tends to harvest the big

flows, greatly enhancing ecological sustainability.• Average depth much greater minimising evaporation.

AIEA JULY 2014

WHAT’S CHANGED THIS TIME?OFF-THE-SHELF FARMING AND PROCESSING, AND TROPICAL CROPS IN A TROPICAL ENVIRONMENT

• All of the processing technology is off-the-shelf – sugar mill, co-gen, ethanol, meat processing etc

• Queensland can grow sugar cane (the Mareeba district has a similar climate, is 150 km away on a similar latitude and grows quality sugar)

• But the opportunity is there to deploy all of the accumulated wisdom of the last century

AIEA JULY 2014

THE WAY FORWARDAUSTRALIA NEEDS A CHANGE IN:

• Mind set – particularly in relation to scale and water allocation• Policy – water, tenure, land clearing…• Regulations – still a nightmare out there!• Incentives – particularly tax incentives, for patient, start-up, venture capital

in the agri sector.

IF WE DO WHAT WE ALWAYS DIDWE WILL GET WHAT WE ALWAYS GOT!

AIEA JULY 2014

the stuff of agriculture – water, soil, sunshine, markets

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