Cash used in operating activities in Q1 2013 was $4,229,000 compared to $1,414,000 in Q1 2012.
Cash Flows and Liquidity
The cash balance at March 31, 2013 was $7,191,000, compared to $1,260,000 as at December 31, 2012. The increase in cash balance of $5,931,000 was a result of a net loss (excluding non-cash items) of $2,438,000, capital expenditures of $2,858,000 and an increase in working capital of $1,791,000 offset by the issue of shares for cash of $13,018,000.
For Q1 2013, working capital movements resulted in cash outflows of $1,791,000 (cash inflows of $1,167,000 for the first quarter ended March 31, 2012), driven by decreases in inventory of $414,000, receivables of $49,000, prepaid expenses of $419,000 and an increase in payables of $909,000.
Investing activities resulted in cash outflows of $2,956,000 for first quarter ended March 31, 2013 (cash outflows of $2,840,000 in the first quarter ended March 31, 2012).
Cash inflows from financing activities were $13,018,000 for the first quarter ended March 31, 2013 (zero for the first quarter ended March 31, 2012). A further $1,375,000 relating to the same financing activities was received by the Company in early April, 2013.
Liquidity and Capital Resources
As at March 31, 2013, the Company had cash totalling $7,191,000. The Company intends to use these funds to meet funding requirements associated with the growth and development of its business. This includes the rehabilitation of roads and other infrastructure on oil palm estates, new planting on oil palm estates, purchase of farm machinery and equipment, purchase of grain storage and processing plant, planting of crops, acquisition of IT hardware and software and further development of business systems.
The Company recorded net cash outflows in operations and investing activities for the 2012 calendar year and it is possible that this will continue for an additional few years as the Company continues to make significant investments in equipment and infrastructure activities necessary to commercialize its products. Feronia's actual funding requirements will vary based on the factors noted above and its relationships with lead customers and strategic partners.
As part of the first tranche of a non-brokered private placement with Golden Oil Holdings Limited completed on January 15, 2013, the Company issued 42,028,000 Common Shares for aggregate gross proceeds of CDN$5,043,360 ($5,116,007) at a purchase price of CDN$0.12 per share. In the second tranche completed on March 21, 2013, the Company issued 58,800,774 Common Shares to Golden Oil Holdings Limited for aggregate gross proceeds of CDN$7,056,093 ($6,883,993) at a purchase price of CDN$0.12 per share. Pursuant to the second tranche, the Company also issued 20,281,455 common shares to certain other qualifying shareholders of the Company for aggregate gross proceeds of CDN$2,433,774 ($2,392,857).
The proceeds are being used by the Company for working capital and capital expenditure purposes.
Continuing operations of Feronia are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future. There can be no assurance that the Company will be able to continue raising adequate financing or commence profitable operations in the future. See "Risks and Uncertainties" below.
Major outstanding anticipated capital expenditure cash requirements as at the date of this MD&A relate to the construction and completion of the new oil palm mill at Yaligimba (estimated to be $500,000), with expected completion in Q2 2013.
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