During the third quarter of 2011, Feronia’s revenue was $1,345,302, an increase of 4% from $1,290,793 in the third quarter of 2010. Revenue for the nine months to September 30, 2011 was $4,438,045, an increase of 47% from $3,027,263 in the nine months ended September 30, 2010.

During the third quarter of 2011, the Company’s major CPO customer engaged in normal course maintenance at its plant which resulted in temporary closures and reduced operating capacity. As a result, CPO sold during the quarter ended September 30, 2011 was approximately 1,200 tonnes compared to 1,917 tonnes produced. It is anticipated that in the fourth quarter of 2011, the Company will sell more CPO than it will produce and the CPO held in inventory will be reduced.

The following table provides a summary of palm fruit production, CPO and revenues:

As a result of the replanting programme and the focus on replacing older, lower yielding oil palms, there were fewer producing hectares in the third quarter of 2011 (12,753) compared to the third quarter of 2010 (13,338). Notwithstanding the reduced productive area the total tonnage of fruit production increased 77% on a year-over-year basis. This increase is attributed to improved harvesting and collection practices that have resulted in higher realized yields. The improved harvesting and collection can be attributed to investments made in road improvements and the introduction of additional vehicles. Oil production increased by 90% over the same periods. Oil production improved by a greater rate than fruit production due to higher oil extraction rates (“OERs”). The improvement in OERs is attributed to the rehabilitation of the oil palm mills.

It is anticipated that the ongoing investment in road improvement and transportation will result in further improvements in harvesting and collection. OERs are anticipated to continue to show a positive trend through improved harvesting and collection practices and the application of fertilizer.

Operating Costs

Operating costs for the third quarter of 2011 were $2,072,572, an increase of $518,460, or 33%, compared to the third quarter of 2010. The increase in the third quarter of 2011 was primarily a result of increases in professional fees, and general and operating expenses of $173,532 and $216,901 respectively, partially offset by a decrease in share-based payments.

Gain in Valuation of Biological Assets

Biological assets for the Company have been identified as bearer assets: these are the plantations which will continue to generate revenue for the Company. The Company values the biological assets on the basis of discounted cash flows over the assets expected 25-year economic life using the three-year rolling average price of CPO and a discount rate of 22%. As the price of CPO has risen over the last nine months, the valuation of the plantations has increased which gives rise to a gain on valuation of biological assets. Under IFRS, plantation costs are not capitalized and have been expensed in 2011. In prior years, these costs were capitalized and have now been expensed in 2010.

Net Income for the Year

The Company had a net loss for the third quarter of $607,533 compared to a loss of $1,516,095 in the third quarter of 2010. The net loss for the nine months ended September 30, 2011 was $454,561 compared to a loss of $4,276,655 for the nine months ended September 30, 2010.

Cash Flows and Liquidity

Cash, cash equivalents and short-term investments were $19,438,731 as at September 30, 2011, compared to $8,907,686 at the end of 2010 and $27,883,375 as at June 30, 2011.

For the quarter and nine months ended September 30, 2011, working capital requirements resulted in cash outflows of $6,092,278 and $6,698,895 respectively. For the quarter ended September 30, 2011 the net cash outflow of $6,092,278 was driven primarily by an increase in prepaid expenses of $4,387,040 and an increase in inventory of $1,413,671. The increase in prepaid expenses was primarily driven by payments made in advance towards purchases of equipment, machinery for the arable farms, vehicles and fertilizer. The increase in inventory is primarily driven by CPO being produced during the quarter but not shipped due to normal course maintenance at a major customer`s plant. It is anticipated that inventory will decline in the fourth quarter as the CPO produced in the third quarter is shipped.

Investing activities resulted in cash outflows of $880,000 for the quarter ended September 30, 2011 and $4,854,000 for the nine months ended September 30, 2011. 

Major outstanding anticipated cash requirements are related to: 

• Completion of the new oil palm mill at Yaligimba;
• Completion of the rice mill to service the arable operations;
• Acquisition of fertilizer for use at the oil palm plantations; and
• Completion of the storage and drying facilities to service the arable operations. 

The Company has sufficient cash resources to complete the currently anticipated expenditures. 

Key Metrics and Recent Developments by Operating Segment 

Palm Oil Operations 

Key Metrics:

Recent Developments: 

• Palm kernel oil mill at Lokutu plantation completed enabling commercial production of palm kernel oil (“PKO”).
• Replanting targets met and exceeded with 729 hectares of oil palm replanted during the quarter and 1,768 hectares replanted in the nine months ending September 30, 2011 against an objective to replant 2,000 hectares during the calendar year.
• Vendor selected for the construction of new oil palm mill at Yaligimba plantation. 

Arable Farm Operations

Recent Developments:

• Reclamation of 2,000 hectares of land completed.
• Import and delivery of required equipment and inputs completed.
• Application of lime completed.
• Seed bed prepared for planting of first crop of rice.

Outlook

“The key drivers for the success of Feronia are new plantings and increasing production volumes” said Feronia Chairman Ravi Sood. “The short and medium-term objectives reflect the focus on these key metrics.”

In the fourth quarter the key objectives for the Company are: 

• Completion of the 2,000 hectare oil palm replanting programme;
• Production of 2,000 tonnes of CPO; and
• Completion of the sowing of the first commercial crop of rice on at least

 “The demand for edible oils and staple crops remains robust both locally and globally.  Feronia is well positioned to displace high-cost imports and to service increasing demand in local markets for our products driven by both population and per capita economic growth. We are optimistic that the Company can continue to build on its recent successes and the 100 years of operating history in the DRC to extend its leading position, creating substantial shareholder value in the process” added Sood. 

Second Quarter Financial Statements Amended

The Company has refiled its unaudited condensed consolidated interim financial report for the three and six months ended June 30, 2011 (the “Q2 Report”).  

During the preparation of the financial statements for the quarter ended September 30, 2011, an error in the computation of the gain on biological assets for the quarter ended June 30, 2011 was uncovered.  The accounting error is attributable to a miscalculation of the value of the current portion of biological assets at June 30, 2011. 

The impact of correcting this error on the Q2 Report is as follows:

The Company has recently strengthened its accounting department through the hiring of a full-time Financial Controller and other support personnel. To reflect the changes made in the amended Q2 Report, the Company has also refiled its MD&A for the corresponding period. The Company has also amended the “Warrant Reserve” table on page 25 of the Q2 Report, under Note 8 - Share-based payment and warrant reserves.

About Feronia Inc.
Feronia Inc. is a large-scale commercial farmland and plantation operator in the Democratic Republic of the Congo (“DRC”). The Company uses modern agricultural practices to operate and develop its oil palm plantations and arable farming business division. Feronia believes in the immense agricultural potential of the DRC for high-quality foodstuffs and edible oils given its ideal climate, excellent soil and highly skilled and experienced workforce. Feronia’s management team is comprised of senior agriculturalists with extensive experience in managing both plantations and large-scale mechanized farming operations in emerging markets.  Feronia is committed to sustainable agriculture, environmental protection and providing support for local communities. For more information please see, www.feronia.com.

Cautionary Notes
Except for statements of historical fact contained herein, the information in this press release constitutes “forward-looking information” within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as “anticipates”, “plans”, “proposes”, “estimates”, “intends”, “expects”, “believes”, “may”, “will” and include without limitation, statements regarding proposed capital expenditure; the Company’s plan of operations and comparative advantages; plans regarding sowing rice and replanting oil palms; sales estimates and inventory levels in the fourth quarter of 2011; improvements in harvesting and collection; and positive trends regarding OERs. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others, regulatory risks, risks inherent in foreign operations, commodity prices, competition, and investments having no history of operations. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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