Development progress is well into it’s second month at GP. The nursery and it’s irrigation system have been completed and all 11,000 nuts are tucked comfortably into their sand beds. The agronomy team expect germination to average between 45-60 days. Shortly after germination, nut will be placed into bags with organic fertilizer and nitrogen supplements, 30 days later, the nuts will be laid into their permanent home. The good news is the 4 year harvest schedule begins when the nuts germinate, so we are right on schedule. We have already placed our second order for the next batch of 11,000 seeds, which we expect to be delivered in December. The expectation is to attempt to plant all 250 hectares by the end of 2017. We will have a little higher labor cost, but we will be a full year ahead of schedule if everything goes to plan.
Cattle inventories are rising and we are well into our third month of purchasing. Latest count at the farm is 1875 heads, with an average weight of 310 kilos. We will be continuing to purchase in the month of September and early October. Our target acquisition number for the fall is 2500. Our average purchase price has been between $4200-4350 (COP) per Kilo, which is normal for this time of year. The strategy is to sell as many heads as possible over 450 kilos before February 15th to capture the futures pricing set by Minerva Foods. We will then take a 30-45 day break to allow the farm to recuperate during the dry season. Prices typically bottom around $3500-3800 (COP) per kilo at the end of March, beginning of April. We will then purchase as many heads as possible during this time and offload in August at peak pricing. We anticipate this new timed buying could possibly double our projected dividends during the first year. The Team has also began preparing the new feedlot system for animals over 400 Kilos. We will be growing our own feed in order to optimize costs. Approximately, 5 hectares have been dedicated towards corn production and Agronomist Bruce Hill is also preparing a separate nursery for forage production. The feedlot will give heavier animals maximum weight gains during their final weeks at the ranch.
August was a little slow for the capital raising campaign with school getting back in session and the end of summer vacation, but September has very busy! As of Monday September 12 th , Farmfolio Ganaderia Pietrasanta I LLC is fully subscribed! The Posada family and Farmfolio have reached an agreement to establish the second offering, which will be capitalized with 9% of the families 60% stake in GP and 11% of Farmfolio’s 20%. As promised, we will be offering our current stakeholders the opportunity to first dibs on the new shares. The new offering will be named Farmfolio Ganaderia Pietrasanta II LLC.
This will be similar to a B round and will not dilute anyone in the first offering. Our objective with this offering is liquidate a portion of the company’s shares to fund our next project. We will offer 5000 shares at $1,000 per share. We have updated the valuation of the project on this offering to reflect the new coconut tree counts, pricing, and cattle models. The result of all of these updates has increased the discounted cash flow valuation to almost $65,000 per share! As we told everyone, we were extremely conservative when we originally model FFGP I. We are now adjusting the share values to the actual development plan and market pricing. The new offering will be sold at approximately a 33% discount to the discounted cash flow valuation of $1,533 per share. Our objecting in pricing was to target 14% IRR on a 20-year model and maintain an average 20-year dividend of 20%.
The executive team will be hitting the road this fall to launch the new offering and promote the upcoming Aginvestor App. We will be visiting 10 cities in the next 60 days and would like to invite all shareholders to visit with us if we’re in your area. All of the dates and cities located on the website, farmfolio.net, under the events tab. Friends are welcome. If you would like to reserve a spot, please contact Rita Karpel, [email protected]
The long awaited Aginvestor App is finished! Well, at least beta web version, which will be available beginning Sept 18th .
The cell phone app is pending app store and play store approval, but should follow shortly. This great new app will allow you to view farm activity, holdings, forms, and reserve shares of new projects. We are working with Strip Financial to stream line share purchases and share dividends. We hope to have everything setup on ACH by the end of the year. The Farmshares exchange is now in wire framing and we will begin development sometime in November. We anticipate the platform will be ready to rock once the original shares meet their 1 year requirement for resale.