By Tawanda Musarurwa
Listed crocodile breeder, Padenga Holdings Limited, is extending its diversification project through a horticulture investment.
The firm is looking to invest in the production of avocados and macadamia. Currently, Padenga solely produces and exports crocodilian skins and meat to European and Asia markets.
Last year, the group moved to acquire Dallaglio Investments (Pvt) Limited from diversified mining group Vast Resources.
Although that acquisition is yet to be completed, Padenga is optimistic both the gold venture and the horticulture project will be successful.
“Shareholders approved the purchase of a 51 percent stake in the Dallaglio mining group late last year, but one regulatory approval for the acquisition is still awaited. The financials of this group have therefore not been consolidated in the 2019 results.
“Management is very positive about this investment and once the business comes online it will enhance foreign currency generation and significantly improve the Group’s profitability,” said chairman Thembinkosi Sibanda in a statement accompanying the group FY2019 results.
“The investigation and feasibility study into plantation cropping (avocados and macadamias) has been successfully completed and the project has now advanced towards identifying suitable locations that fulfil the multiple variables relevant to successful production.
“Given the lengthy period before commercially viable crop yields are produced, attention is being given to additional shorter season/cycle export crops that will provide positive liquidity and profits during the developmental phase of the plantations.
“The objective is to commence operations in early 2021.”
With global food demand largely stable and projected to grow, horticulture business is considered value accretive.
The move by Padenga to diversify into gold production and horticulture comes as the global exotic skins industry is facing significant headwinds over the past few years, in particular a bans on exotic skins by some key retailers in the industry.
In addition, last year, Padenga’s product (crocodile) risk was heightened by the low water levels at Kariba Dam, where the company’s local operations are based.
And the move to acquire Dallaglio is strategic in view of the gold’s ‘haven status’ for global investors, which has been further buttressed by the coronavirus (Covid-19) pandemic.
Gold is currently trading at circa US$1 700 an ounce.