Shares in Perth-based Carbon Conscious have surged on news it commenced milk production at a Chinese-owned dairy farm in the South West, with the company planning to expand its cow herd by nearly 500 per cent by 2017.
Carbon entered into a memorandum of understanding with Chinese trading group Green Lake for the purchase of a herd of dairy cattle and the establishment of a supply chain for WA milk into China in December.
In a statement today, the company said substantial progress had been achieved in converting the MoU into a binding agreement.
“Carbon has executed a lease agreement over a dairy property located in the South West region,” Carbon said.
“The dairy property ‘Capel Farm’ is owned by Chinese interests associated with Green Lake, with those parties having invested in excess of $10 million into dairy production assets in WA to date, in order to secure long term supply.”
Carbon will lease the 330 hectare property, which comes equipped with a 60 stand rotary dairy, 600 million litre water license and two pivot irrigation areas to support winter and summer production of silage, for an initial 12 months with options to extend the lease to up to 20 years.
Shares in Carbon were 72.7 per cent higher to 19 cents each at the close of trade.
Carbon has purchased an existing herd of 418 dairy cows from Green Lake and is targeting 2,500 cows by 2017, which would be able to produce about 25 million litres of milk per annum.
Carbon executive director Andrew McBain said the execution of the lease and cattle purchase agreements was the first step in cementing a long term relationship with Green Lake.
“We will play to each of our strengths; Green Lake in the import, cold chain management, marketing, sales and distribution of product into China and Carbon in the management, production and procurement of long term supply from Australia,” Mr McBain said.
“The commencement of milk production is a milestone achievement and is a modest confirmation of our commitment to developing a large, best practice dairy production business.
“We aim to be the ‘go to’ company in WA to support the expansion of dairy products including fresh milk into Asia whether that is from Green Lake, processors or other potential distribution parties.”
