DekelOil (LON:DKL) is considering expanding its geographic footprint with a deal to develop a 10,000 acre palm oil operation on a brownfield site near the city of Bibiani, in the western region of Ghana.
The company already has two projects – Ayenouan, which is fully operational, and the 24,000-hectare Guitry property. Both are in Cote d'Ivoire.
It now has 12 months to carry out due diligence on the Ghana opportunity. If it doesn’t pass muster it can walk away without being penalised.
Dekel isn’t paying anything for the asset but will share the profits from palm oil production with local small-holders, who will receive a third of the income generated.
There is a strong market in Ghana for palm oil, which is sold at a premium locally to international prices.
"This agreement is in line with our broader vision to become a major crude palm oil producer in West Africa,” said Dekel director Lincoln Moore.
“Subject to positive findings from our due diligence, this land will be developed as our third vertically integrated West African project and considering the strong local market for palm oil, our management team's strong experience of working in Ghana, and its close proximity to our existing sites, we believe this project will add a complementary and valuable revenue stream to our business.
“In line with our current activities to operate in partnership with local land owners and smallholders, the community will benefit from our activities in Ghana, with the consideration for the land payable through a share of the profits delivered from sales of fresh fruit bunches to a company-owned mill to be developed and built in the future.”