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SA's Beston seeks $3 million to expand dairy plant

Business

Meat and dairy company Beston Global Foods will attempt to raise $3 million to expand production of high-value milk products at its Jervois plant.

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The Adelaide-based company announced its Share Purchase Plan to the ASX this morning, which will allow shareholders to purchase up to $30,000 worth of shares at 10 cents a share. The company’s shares were trading at $0.098 this morning.

The share offer will be open from January 13 – 31. It follows a repositioning of the company last year to focus on meat, dairy and meat alternatives. This included the sale of its 32 per cent stake of South Australian seafood company Ferguson Australia to the Ferguson family in November.

Beston owns five dairy farms in South Australia and Victoria with a total herd of 3600 cows. It also has the capacity to produce 30,000 tonnes of cheese a year.

It refurbished and commissioned its Dairy Protein Fractionation Plant at Jervois in late 2018, which it uses to make high-grade lactoferrin from the whey by-product from its mozzarella production.

Last February the company announced it had completed the installation and commissioning of a freeze-drying and milling facility at its lactoferrin plant. This gave it the ability to make that lactoferrin at Jervois in final product powdered form. Previously it had liquid lactoferrin interstate to third party contractors for further processing.

Lactoferrin is a high-value dairy protein that is mainly known for its use in infant formula and is also used in dairy foods, dietary supplements, pharmaceutical products including respiratory medications, cosmetics and oral hygiene products.

High grade milled lactoferrin can sell for up to $2500 per kilogram on global markets.

“Demand exceeds our capacity to produce and is expected to remain substantially so well into the future with major customers in both Australia and overseas,” Beston chairman Roger Sexton told shareholders in an ASX announcement in November.

“An increased investment into our dairy nutraceutical facilities at Jervois can be expected to generate incremental margins from revenues on these products of between 60 per cent and 80 per cent.”

The $3 million will enable the first stage of the expansion with a second stage – to be funded through a separate capital initiative – to follow later this year.

The company is proposing to invest about $10 million to triple the size of its lactoferrin plant. It estimates the expansion will generate $6 million in pre-tax earnings a year.

“This next stage of expansion will allow an even higher recovery of lactoferrin from BFC’s milk supply to meet the increasing demand for this high-quality nutraceutical product,” Sexton told the ASX today.

Both lactoferrin expansion projects are part of Beston’s “stretching our milk” initiatives, which aim to produce more products from less milk.

Beston Global Food Company listed on the ASX in 2015 and has annual revenues of about $85 million, which it aims to grow to more than $100 million this year.

– The Lead South Australia

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