DekelOil (LON:DKL) shares shot up 15% after it confirmed Wednesday that its palm kernel crushing plant is now in commercial production and sales have begun.
The company said the new operation provides an “additional significant revenue stream” Ayenouan, Côte d'Ivoire, site of its state-of-the art palm oil mill.
Over the next eight weeks, production at the kernel crusher will be gradually increased towards its full capacity of 60 tonnes per day - in time to meet the peak harvesting season early next year.
Sales of palm kernel oil and cake are being made at the factory gate, and there is strong local demand, which has allowed Dekel to garner agreements with local refineries and suppliers.
Director Lincoln Moore said: "The kernel crushing plant will materially increase both sales and profitability at our established Ayenouan palm oil project, and its completion therefore represents a strong value trigger.”
Moore added that the new plant, in tandem with increased production of crude palm oil at the firm’s 70,000 tonnes per annum mill, “will propel our profitability to significantly higher levels than prior years”.
The facility came on-stream well ahead of the schedule, according to the broker Cantor Fitzgerald, which said it will help “grow earnings in line with our forecasts”.
“More importantly the announcement shows that management are building a track record of delivering on expectations,” said Cantor said in a note to clients, repeating its ‘buy’ advice and 1.5p price target.
At 1.30pm, the stock was changing hands for 1.21p, up 0.16p.