Feronia Inc. Reports 2012 Results

Feronia Inc. Reports 2012 Results 
TORONTO, ONTARIO -- (Marketwired) -- 04/30/13 -- Feronia Inc.
("Feronia" or the "Company") (TSX VENTURE:FRN) today released its
audited financial results for the year ended December 31, 2012. All
amounts in this release are expressed in US dollars unless otherwise
2012 Highlights 

--  Revenue of $7.1 million (2011: $7.4 million) from the sale of 6,993
    tonnes of Crude Palm Oil ("CPO") at an average price of $906 per tonne
    (2011: 6,737 tonnes at $984 per tonne) 
--  Replanted 3,924 hectares ("ha") of oil palm (2011: 2,110 ha) 
--  Produced 7,044 tonnes of CPO (2011: 7,981) from 38,596 tonnes of fruit
    (2011: 46,632 tonnes) 
--  Fresh fruit bunch ("FFB") yield of 6.1 tonnes per ha (2011: 4.92 tonnes
    per ha on a like-for-like basis excluding Yaligimba) 
--  Increase in oil extraction rate ("OER") to 18.25% (2011: 17.11%) 
--  Average CPO Free Fatty Acid ("FFA") content of 2.35% (2011: 3.90%) 
--  1,579 km of operational roads (2011: 1,022 km) 
--  Management Training Program reintroduced 
--  Construction of Yaligimba CPO mill progressed 
--  Rice drying and processing facility completed 
--  Net loss attributable to Feronia was $(5.9m) or $(0.04) per share,
    compared to a loss of $(5.7m) or $(0.04) per share in 2011 
--  Closed two tranches of brokered private placement for aggregate gross
    proceeds of Cdn$7.7 million

Subsequent Events  

--  Rice planted in October 2012 demonstrated commercial yields 
--  First sales of own grown rice made in Q1 2013 to local customers 
--  Appointment of new Managing Director of Palm Oil division 
--  Completed non-brokered private placement in March 2013 led by strategic
    investor African Agriculture Fund for aggregate gross proceeds of
    Cdn$14.5 million, including approximately Cdn$2.4 million from existing
    qualifying shareholders of the Company.

Bill Dry, CEO of Feronia Inc. commented: "Much has been achieved
during the year across our business. In palm oil, our replanting
program continues apace with almost 4,000 hectares planted during the
year. This is a key value driver for Feronia and was, we believe, the
largest such program in Africa in 2012. Replanting over 600,000 trees
is no small undertaking and achieving this is a testament to the hard
work and dedication of our staff. Furthermore, we have already
re-planted 422 ha in the first two weeks of the planting season in
March 2013 and have confidence our 2013 target of 5,000 hectares is
"Our arable business has also made good progress with the completion
of our rice drying and processing facilities meaning we have been
able to commence processing and selling our own crop in to the local
market. This is hugely pleasing as the level of demand we are
experiencing and the prices we are achieving support our earlier
assumptions. We intend to continue planting trial crops during 2013
to further test commercial viability and scalability." 
About Feronia Inc. 

--  Feronia operates large-scale commercial oil palm plantations and has
    commenced an arable farming operation in the Democratic Republic of the
    Congo (the "DRC"). 
--  The Company, through its subsidiaries, holds concessions on land which
    is owned by the DRC government and on which its oil palm plantation and
    farming operations take place. 
--  The Company uses modern agricultural practices to operate and develop
    its oil palm plantations and arable farming. Feronia believes in the
    immense agricultural potential of the DRC for high-quality edible oils,
    oil derivatives and foodstuffs given the suitability of its climate and
    soil and the availability of a skilled workforce. 
--  The Company's management team is comprised of experienced administrative
    executives and senior agriculturalists with extensive experience in
    managing both plantations and large-scale mechanized farming operations
    in emerging markets. 
--  Feronia is committed to sustainable agriculture, environmental
    protection and providing jobs and economic growth for local communities.
--  For more information please see www.feronia.com. 

Cautionary Notes 
Except for statements of historical fact contained herein, the
information in this press release constitutes "forward-looking
information" within the meaning of Canadian securities law. Such
forward-looking information may be identified by words such as
"anticipates", "plans", "proposes", "estimates", "intends",
"expects", "believes", "may", "will" and include without limitation,
statements regarding proposed capital expenditure; the Company's plan
of operations; and plans regarding sowing rice and replanting oil
palms. There can be no assurance that such statements will prove to
be accurate; actual results and future events could differ materially
from such statements. Factors that could cause actual results to
differ materially include, among others: risks related to foreign
operations (including various political, economic and other risks and
uncertainties), the interpretation and implementation of the
Agriculture Law, termination or non-renewal of concession rights or
expropriation of property rights, political instability and
bureaucracy, limited operating history, lack of profitability, lack
of infrastructure in the DRC, high inflation rates, limited
availability of debt financing in the DRC, fluctuations in currency
exchange rates, competition from other businesses, reliance on
various factors (including local labour, importation of machinery and
other key items and business relationships), the Company's reliance
on one major customer, lower productivity at the Company's
plantations and arable farming operations, risks related to the
agricultural industry (including adverse weather conditions, shifting
weather patterns, and crop failure due to infestations), a shift in
commodity trends and demands, vulnerability to fluctuations in the
world market, the lack of availability of qualified management
personnel and stock market volatility. Most of these factors are
outside the control of the Company. Investors are cautioned not to
put undue reliance on forward-looking information. Except as
otherwise required by applicable securities statutes or regulation,
the Company expressly disclaims any intent or obligation to update
publicly forward-looking information, whether as a result of new
information, future events or otherwise.  

Operational Summary and Key Metrics by Division                             
Palm Oil Operations                                                         
Key Metrics:                                                                
                  12 months ended Dec. 31,    (as at and for the 12 months  
                          2012                           ended              
                                                        Dec. 31)            
                   Lokutu Yaligimba Boteka       2012       2011       2010 
                  ------------------------- --------------------------------
Immature Hectares                                                           
 Year 0             1,707     1,447    770      3,924      2,110      1,027 
 Year 1             1,065       545    500      2,110      1,027        713 
 Year 2               402       320    305      1,027        713      1,328 
 Year 3               112       420    181        713      1,328        115 
                  ------------------------- --------------------------------
                    3,286     2,732  1,756      7,774      5,178      3,183 
Producing Hectares                                                          
 4 - 7 Years        1,024       855    590      2,469      1,026        268 
 8 - 18 Years         865       661    747      2,273      3,552      4,233 
 19 - 25 Years      2,920     2,387    164      5,471      5,008      5,332 
 Over 25 Years          -         -      -          -      3,167      3,505 
                  ------------------------- --------------------------------
                    4,809  3,903(1)  1,501  10,213(2)  12,753(2)  13,338(2) 
Fruit Production                                                            
 (tonnes)          30,577         -  8,019     38,596     46,632     30,424 
Oil Produced                                                                
 (tonnes)           5,541         -  1,503      7,044      7,981      4,951 
Oil Extraction                                                              
 Rate (%)           18.12%        -  18.74%     18.25%     17.11%     16.27%
PKO Produced                                                                
 (tonnes)             440         -      -        440         99          - 
FFB Yield/Ha         6.36         -   5.34       6.11       3.66       2.28 
FFB Yield/Ha(like-                                                          
 for-like)(3)        6.36         -   5.34       6.11       4.92       3.53 
Average FFA (%)(4)      -         -      -       2.35       3.90       2.75 
Operational Roads                                                           
 (Km)                 512       815    252      1,579      1,022        944 


1.  The producing hectares at the Yaligimba plantation are not currently
    being harvested and as a result are not contributing to FFB or CPO
2.  During the years ended December 31, 2010 and 2011, the Company
    classified palms aged 4 to 30 years as mature and producing. Going
    forward, management has elected to classify palms aged 4 to 25 years as
    mature and producing, resulting in a reduction in the number of
    producing hectares. 
3.  FFB Yield/Ha basis excludes Yaligimba production for 2011 and 2010. 
4.  "FFA" means Free Fatty Acid. 

Recent developments in the oil palm operations 
As at December 31, 2012, Plantations et Huileries du Congo (PHC),
being the main operating unit of Feronia, had concessions of 107,892
ha located in the provinces of Equateur and Orientale in the DRC. In
2012, PHC accounted for 100% of Feronia's revenues. 
As at December 31, 2012, the assets and operations of PHC consisted
of the following: 

--  10,213 ha of producing palms (6,310 ha of producing palms excluding
    3,903 ha of producing palms at the Yaligimba plantation that are not
    currently being harvested); 
--  7,774 ha of immature oil palms; 
--  49,078 ha of surveyed plantable reserves; 
--  two oil palm mills, one which produces crude palm oil ("CPO") only and
    the other which produces both CPO and palm kernel oil ("PKO"); 
--  a workforce of 3,541 employees including 38 managers; 
--  supporting infrastructure of 1,579 km of currently operational roads,
    3,875 houses for employees and managers, 60 schools, four hospitals, six
    dispensaries and 13 health centres; 
--  three oil palm nurseries totaling 48.5 ha and containing an aggregate of
    998,637 palm seedlings, sufficient to plant at least 4,993 hectares; and
--  the Yaligimba Seed Research Station, one of Africa's pre-eminent oil
    palm seed research and breeding operations. 

As previously noted, in the first quarter of 2012 the Company ceased
transporting fruit by barge from Yaligimba to the palm oil mill at
Lokutu due to escalating costs and the deterioration in quality
resulting from transportation. The total number of producing hectares
consequently decreased by 38.2% to 6,310 ha and the total tonnage of
fruit production decreased by 17.2% year-on-year. On a like for like
basis, excluding Yaligimba, fruit production decreased by 9.93% and
6.75% for the three and 12 months ended December 31, 2012,
respectively, compared to the corresponding periods in 2011. 
This reduction is primarily a result of the following factors: 

1.  A reduction of producing hectares at Boteka and Lokutu from 8,410 ha to
    6,310 ha following the Company's previously disclosed reclassification
    of palms aged 4 to 25 years as mature and producing, the clearance of
    palms older than 25 years for replanting and the cessation of harvesting
    fruit from palms older than 25 years which have lower fruit yields,
    lower extraction ratios and require more time to harvest. This has
    resulted in an improvement in FFB yield per hectare. 
2.  Adoption of best practice harvesting procedures including fruit quality
    checks, in-field supervision, training and field transport improvements
    to ensure only sufficiently ripe fruit is harvested. These practices
    have resulted in an improvement in CPO extraction rates with an
    extraction rate of 18.8% achieved in December 2012. 

Management believes that these improved practices are in the
long-term interest of better profitability but have affected gross
margin in the short term. 
The oil produced by the Company is of a high quality with the average
Free Fatty Acid ("FFA") content of oil sold at 2.35% (2011: 3.90%).
The higher level of FFA in 2011 arose from the deterioration of fruit
transported from Yaligimba to Lokutu for processing and was a key
factor in the decision to cease that practice. 
At December 31, 2012, the Company employed 3,541 staff in its palm
oil operations (December 31, 2011: 3,669), more than would normally
be required for a palm oil business with production at Feronia's
current levels. However, the Company recognises the considerable
amount of knowledge and skill held within its workforce and believes
it is a tremendous asset. While a large proportion of the workforce
is currently utilised in Feronia's replanting program, a sufficient
portion of the workforce has the skillset to be re-allocated to
harvesting operations as the Company's producing hectarage increases. 
The Company also has in place a Management Training Programme to
develop management capabilities and skills across four areas -
agronomy, finance, technical (engineering) and personnel. The Company
believes this is essential to ensure the development of skills
through the organisation and is a key part of the Company's
succession planning. 
New plantings of oil palms commenced in March 2012 in line with
rainfall patterns, with 1,138 ha planted in the fourth quarter of
2012 and a total of 3,924 ha of oil palms planted in 2012 (2011:
2,110 ha), representing the replanting of approximately 627,000 trees
(2011: approximately 337,000 trees). Fertiliser has been applied to
palms aged between 4 and 15 years, with 2,469 ha completed by the end
of the fourth quarter of 2012. The size of Feronia's workforce has
been and will be a key factor in delivering on its objective to
replant 5,000 ha each year going forward. Re-planting of oil palm in
2013 commenced in mid-March and, as at March 31, 2013, 422 ha had
been completed.  
At Yaligimba, the Company's contractor is well advanced on the
installation of the CPO mill. Essential work still needs completing,
which has been slowed by the onset of the wet season but completion
is expected in the near term. Once the new palm oil mill is
operational, the Company will have access to an additional 3,903 ha
of producing palms. It is expected that the Yaligimba plantation will
achieve operating results similar to Lokutu on a per hectare basis. 
The Yaligimba palm oil mill will have an initial processing capacity
of 30 tonnes per hour of FFB, with the potential to increase to 60
tonnes per hour in a phase 2 expansion. The Yaligimba palm oil mill's
commissioning will mean that the Company will have installed
processing capacity of 55 tonnes per hour across its entire
operations. It is anticipated that under the current planting program
and internal forecasts for yield improvement, there will be no
requirement for additional processing capacity, other than the phase
2 expansion at Yaligimba, until around 2020. 
In April 2013, Benedict Rich joined the Company as Managing Director
of PHC. Mr. Rich has extensive experience managing plantation
operations in emerging markets and has also been responsible for
various aspects of research and development programs in both tea and
oil palm. He is ISO qualified and has a keen interest and
understanding of sustainability and the environment in the palm oil
industry, having helped develop the industry's environmental, social
and sustainability standards. 

Arable Farm Operations                                                      
Key Metrics:                                                                
Arable                            As at and for the 12 months ended Dec. 31 
                                              2012            2011          
Land Available (ha)                         10,000          10,000          
Land Cleared (ha)                            2,000           2,000          
Land Prepared (ha)                           1,700           1,500          
Land Planted (ha)                              500           1,200          

Recent developments in the arable operations 
As previously noted, the Company's first commercial rice crop of
1,200 ha was sown in October and November 2011 but, due to various
reasons including delays in the importation of appropriate equipment
and poor rainfall, the crop produced only minimal yields. 
In February 2012, 305 ha of rice were planted. Rainfall was adequate
and the harvest completed in August 2012. The harvest yielded 525
tonnes of paddy rice at 1.7 tonnes per hectare. The realised yield
was negatively impacted by significant losses due to mechanical
failures suffered by the Company's combine harvesters. 
In March 2012, 60 ha of edible beans were sown and, in April 2012, a
further 140 ha as part of the Company's strategy of smaller scale,
proof-of-yield plantings. These crops were harvested in September
2012, although the yields were negligible. This was due to the
locally sourced seed stock proving to be of poor quality with
inconsistent growth which prohibited mechanised harvesting. The
Company has elected to trial hybrid seeds from an international
supplier for its next planting.  
In June 2012, the Company commissioned a review of the arable
operation by a firm of independent Brazilian agronomists, including
an assessment of the in-ground rice and bean crops. The results of
the review, which included a number of recommendations being
considered by management, confirm the high potential for large-scale
food production in the Bas Congo region of the DRC. 
In October 2012, 500 ha of rice were planted. The Company planted
NERICA-4(R) (New Rice for Africa-4), an upland rice variety suited to
African soil and weather conditions. Harvest of this crop commenced
in mid-February 2013 with mechanized harvesting supplemented through
local casual labour. 
Results from the trial planting have been very positive with in-field
yields believed to be around 4 tonnes of paddy rice per ha.
Mechanized harvesting achieved an average yield of 3.1 tonnes of
paddy rice per ha over the first 46 ha harvested in February 2013 and
2.5 tonnes per ha from the subsequent 77 ha harvested mechanically by
the end of March 2013. Yield per ha declined as the harvest
progressed due to in-field losses caused by the protracted harvest
period and insufficient harvesting machinery to complete the harvest
in the optimum time period.  The Company had ordered a second combine
harvester to support the harvest but, due to shipping delays
unrelated to the DRC, it did not arrive in time to participate in the
beginning of the harvest. 
In November 2012, the Company's rice mill was completed and
commissioned. It is the only large-scale rice mill in the region and
allows the Company to process its own crop and that produced by other
local small-holder farmers. Earlier in the year, civil works and the
drying facilities were completed. Storage of dried paddy rice is
currently undertaken using a grain bag storage system which is an
acceptable interim solution for storing current volumes and allows
the Company to continue to dry and mill crop. 
In April 2013, following quality tests and qualifying as an approved
supplier to Heineken N.V., the Company commenced selling rice grown
on its farm to Bralima, Heineken's wholly-owned DRC subsidiary.
Bralima has agreed to purchase 1,100 tonnes of rice during 2013. The
Company has also started supplying rice to supermarket chain Ets Kuku
which has received an initial shipment of eight tonnes and requires
23 tonnes per month going forward. Fulfillment of both contracts will
be made from existing stocks of rice accumulated from the Company's
trial plantings, which were harvested, dried and subsequently milled
at the Company's rice mill, and from current and expected future
harvests. The Company expects that minimal capital expenditures will
be required for fulfillment of such contracts. 
The Company now has in place a pricing structure whereby the price
charged for rice is determined by the quality of the product sold,
specifically, the percentage of broken grains. The prices the Company
is achieving are consistent with earlier estimates and at a
significant premium to global rice prices. The Company anticipates
selling to additional counterparties over the course of time. 
The Company's strategy for its oil palm plantations business
continues to be to maximize returns from existing plantings while
investing in new plantings and the required processing capacity.
Commissioning of the new palm oil mill at Yaligimba is expected to
provide the Company with immediate access to an additional 3,903 ha
of mature oil palms for the production of CPO, an increase of 62.1%
from the area currently accessible. Once the Yaligimba palm oil mill
is completed, there are no major capital expenditures currently
anticipated in the Company's oil palm plantations business, excluding
costs associated with the Company's replanting program. 
The Company has made progress in establishing commercially viable
rice yields at its arable operation, has established a pricing
formula and is making sales to high quality local counterparties.
This furthers our confidence in the favorable dynamics of the local
rice market. The Company is currently evaluating how to prudently
expand its arable farming operation in light of these recent positive

In summary, the key objectives of the Company for 2013 are as follows:      
    (i)     finish construction and commission the palm oil mill at the     
            Yaligimba plantation, thereby enabling the Company to harvest   
            and process fruit grown at that location;                       
    (ii)    re-plant up to 5,000 ha across its oil palm plantations; and    
    (iii)   prudently advance its arable farming operation.                 

As previously disclosed by the Company, on December 24, 2011, the
government of the DRC promulgated a new law, "Loi Portant Principes
Fondamentaux Relatifs a L'Agriculture" (the "Agriculture Law"), for
the stated purposes of developing and modernizing the country's
agricultural sector. Feronia continues to seek clarification on the
implications of this legislation from local counsel and government in
the DRC. If the Agriculture Law is interpreted by the DRC government
to apply to the existing concession rights held by the Company and
the Agriculture Law is not amended, it could have a material and
substantial adverse effect on the value of its business and its share
price. In such case, Feronia may be required to sell or otherwise
dispose of a sufficient interest in its operating subsidiaries so as
to ensure that it meets local ownership requirements. There is no
assurance that such a sale or disposition would be completed at fair
market value or otherwise on acceptable terms to Feronia. Please
refer to the Company's Management Discussion and Analysis for the
three and 12 months ended December 31, 2012 available on
www.sedar.com for a full discussion on the Agriculture Law. 

Discussion of Operations - Three and 12 months ended December 31, 2012      
Revenue and Gross Margin                                                    
                    ---------------------------- ---------------------------
                    ---------------------------- ---------------------------
(Expressed in                                                               
 thousands of US                                                            
 dollars)           Three months ended Dec 31,       Year ended Dec 31,     
------------------------------------------------ ---------------------------
                                             %                           %  
                        2012      2011  Change       2012     2011  Change  
------------------------------------------------ ---------------------------
Palm Oil             $ 1,009   $ 2,518     (60)%  $ 6,805  $ 6,631       3% 
Other                     20       493     (96)%      325      818     (60)%
------------------------------------------------ ---------------------------
Revenues             $ 1,029   $ 3,011     (66)%  $ 7,130  $ 7,449      (4)%
Cost of Sales          1,628     2,150     (24)%    6,082    4,585      33% 
------------------------------------------------ ---------------------------
Gross Margin (Loss)                                                         
 PHC (1,2)           $  (599)  $   861    (170)%  $ 1,048  $ 2,864     (63)%
Gross Margin (Loss)                                                         
 PHC % (1,2)             (58)%      29%    n/a         15%      38%    n/a  
------------------------------------------------ ---------------------------
Arable operating                                                            
 expense               1,557     1,620      (4)%    3,205    2,248      43% 
(1)   Gross margin is a non-GAAP financial measure. See "Non-GAAP Financial 
      Measures" below.                                                      
(2)   Gross margin is impacted in the short term by improved harvesting     
      practices which management believes are in the long-term interest of  
      better profitability.                                                 

Revenues for Q4 2012 were $1,029,000, a 66% decrease on Q4 2011
revenues of $3,011,000. Revenues for the year ended December 31, 2012
were $7,130,000, a 4% decrease on the same period in 2011 (year ended
December 31, 2011: $7,449,000). 
The lower level of revenue in Q4 2012 when compared to Q4 2011 was
due to two main factors: 

i.  Sales of CPO being considerably higher in Q4 2011 due to a reduction in
    stock levels at the end of 2011. Sales of CPO in Q4 2012 totalled 1,261
    tonnes whilst sales in Q4 2011 were 2,834 tonnes. 
ii. A 15.7% reduction in the average sale price per tonne of CPO in Q4 2012
    to $731 per tonne, compared with $867 per tonne in Q4 2011 as a result
    of lower prevailing global prices for CPO. 

Revenues for the year ended December 31, 2012 were also impacted by
an 7.9% reduction in the average selling price per tonne of CPO
during the year to $906 per tonne, compared with $984 for 2011. This
reduction reflects: 

i.  Lower prevailing global prices for CPO during 2012 compared to 2011. 
ii. 171 tonnes of lower quality CPO sold for $650 per tonne in the first
    quarter of 2012. This arose when fruit harvested at the Yaligimba
    plantation was being barged to the Lokutu plantation for processing.
    Latency between harvesting and processing led to an increase in the free
    fatty acid levels in this oil to higher than acceptable parameters. The
    lower quality of oil produced from fruit barged from Yaligimba to Lokutu
    contributed to the Company's decision to suspend the barging operation
    at that time. 

However, the Company sold 6,993 tonnes of CPO in the year ended
December 31, 2012, a 3.8% increase on the 6,737 tonnes of CPO sold in

The following table provides a summary of palm fruit production and CPO:    
                     Three months ended Dec. 31   12 months ended Dec. 31,  
                        2012     2011  % Change     2012    2011  % Change  
Fruit production                                                            
 (tonnes)              8,517   10,270     (17.1%) 38,596  46,632     (17.2%)
Oil produced (tonnes)  1,600    1,769      (9.6%)  7,044   7,981     (11.7%)
Oil extraction rate     18.8%    17.2%              18.3%   17.1%           
Cash used in operating activities                                           
                  ---------------------------- -----------------------------
                  ---------------------------- -----------------------------
(Expressed in                                                               
 thousands of US                                                            
 dollars)         Three months ended Dec. 31,       Year ended Dec. 31,     
---------------------------------------------- -----------------------------
                                            %                             % 
                       2012      2011  Change       2012       2011  Change 
---------------------------------------------- -----------------------------
Cash used in                                                                
 activities        $ (1,094) $ (1,470)     26%  $ (5,914) $ (13,576)     56%
---------------------------------------------- -----------------------------
Selling, General and Administrative Costs                                   
                       -------------------------- --------------------------
                       -------------------------- --------------------------
(Expressed in thousands   Three months ended             Year ended         
 of US dollars)                Dec. 31,                   Dec. 31,          
                                              %                          %  
                           2012    2011  Change       2012     2011 Change  
------------------------------------------------- --------------------------
Selling, general and                                                        
 administrative         $ 1,932 $ 3,659     (47)%  $ 9,196 $ 11,048    (17)%
Other (gains) and                                                           
 losses                     123     (44)   (380)%       61       26    135% 
------------------------------------------------- --------------------------
Selling, general and                                                        
 administrative costs   $ 2,055 $ 3,615     (43)%  $ 9,257 $ 11,074    (16)%
------------------------------------------------- --------------------------

Selling, general and administrative costs decreased by $1,727,000 for
Q4 2012 and $1,852,000 for the year ended December 31, 2012 when
compared to the corresponding periods of 2011. These decreases are
mainly due to: 

--  A decrease in professional fees in Q4 2012 compared to Q4 2011 of
    $348,000 being primarily lower audit and accounting fees of $142,000 and
    lower legal fees of $149,000. Professional fees for the year ended
    December 31, 2012 were $845,000 lower than the year ended December 31,
    2011. Audit and accounting fees were $623,000 lower due primarily to
    additional costs in 2011 relating to the year-end audit, IFRS transition
    and work on the equity offering incurred during the year 2011. Further
    reductions also occurred in legal fees of $152,000 and recruitment fees
    of $74,000 compared to 2011. 
--  A decrease in share based payments of $171,000 in Q4 2012 compared to Q4
    2011 and a decrease of $186,000 for the year ended 2012 compared to year
    ended 2011 due to the full vesting, during 2012 of options granted in
    September 2010. 
--  A decrease in other general payments of $698,000 in Q4 2012 compared to
    Q4 2011 and a decrease of $756,000 for the year ended 2012 compared to
    year ended 2011 due to audit adjustments including reversal of provision
    on sale of property amounting to $423,000. 
--  Salaries and wages reduced by $507,000 during Q4 2012 compared to Q4
    2011 due to adjustment of PHC holiday pay accrual of $220,000 and
    decrease of $270,000 in salaries allocated to cost of sales in Q4 2012
    compared to Q4 2011.

Cash Flows and Liquidity 
The cash balance at December 31, 2012 was $1,260,000, compared to
$13,521,000 as at December 31, 2011. The decrease in cash balance of
$12,261,000 was a result of net loss (excluding non-cash items) of
$9,900,000 and capital expenditures of $13,647,000 partially offset
by an increase in working capital of $3,986,000 and the issue of
shares for cash of $6,964,000. 
For the year ended December 31, 2012, working capital movements
resulted in cash inflows of $3,986,000 (cash outflows of $4,787,000
for the year ended December 31, 2011), driven by decreases in
inventory of $4,522,000, receivables of $1,116,000 and prepaid
expenses of $3,273,000 offset by decreases in payables of $138,000. 
Investing activities resulted in cash outflows of $13,647,000 for the
year ended December 31, 2012 (cash outflows of $9,601,000 in the year
ended December 31, 2011). 
Cash inflows from financing activities were $6,964,000 for the year
ended December 31, 2012 (cash inflows of $27,566,000 in the year
ended December 31, 2011). 
Non-GAAP Financial Measures 
Gross margin is not a financial measure recognized by IFRS and does
not have a standardized meaning prescribed by IFRS. The Company's
method of calculating gross margin may differ from other methods
used. Gross margin is presented in this MD&A as additional
information regarding the Company's financial performance. Gross
margin has been calculated by deducting cost of sales from revenue. 
Neither the TSX Venture Exchange nor its regulation services provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release. 
Feronia Inc.
Ravi Sood
Executive Chairman
(416) 907-2026
Feronia Inc.
Bill Dry
44 (0) 7887 525 046
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