The UniMark Group, Inc. (Nasdaq: UNMG), a leading multinational grower and producer of quality citrus and tropical fruit products supplying major branded food companies announced today the progress under its 20 year long-term supply agreement with an affiliate of the largest international soft drink manufacturing company for the growing of Italian lemons.
Pursuant to the terms of the agreement, UniMark agreed to develop 8,650 acres of lemon trees in Mexico for sale at pre-determined prices. Under the terms of the agreement, UniMark is being provided, free of charge, 875,000 Italian lemon tree seedlings, which is estimated to be sufficient to plant approximately 6,900 acres. To date, UniMark has invested approximately $15.0 million in this project and has planted approximately 700,000 seedlings. UniMark estimates that upon completion, the project will consist of approximately 1.1 million trees.
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UniMark estimates that its lemon trees will start producing lemons in commercially viable quantities when they reach four to five years in age. UniMark commenced its planting program in November 1996 and harvested the first crops this past fall. Although no assurances can be given, UniMark estimates its current planting profile and production from the project as follows:
Current Land Profile Annual Average Estimated
Yield Per Metric Ton
Land Status Hectares (D) Acres Tree
Age Hectare(E) Acre(E)
Age of planted trees –
Current year 434 1,072
1-2 years 770 1,903 1 0.0 (B) 0.0(B)
2-3 years 926 2,288 2 0.0 (B) 0.0(B)
4 years 47 116 3 0.8 (B) 0.3(B)
6 years (C) 36 89 4 7.5 3.0
Total planted 2,213 5,468 5 13.5 5.5
Land to be planted 705 1,743 6 18.8 7.6
Total net land
acquired (A) 2,918 7,211 7 25.6 10.4
Total gross land
acquired 3,057 7,554 8-13 35.0 14.2
Total contract land 3,500 8,650 14-20 43.0 17.4
(A) The principal difference between gross and net land is access roads
into the groves.
(B) In most cases, during the first two to three years of the trees
growth, the yield is not sufficient to justify harvesting costs.
(C) Trees were already planted when the grove was acquired from a third
party.
(D) One hectare equals approximately 2.47 acres.
(E) One hectare consists, on the average, of 313 lemon trees
(127 per acre)
Currently, UniMark is planting an additional 300 hectares (741 acres) which is anticipated to be completed by December 31, 2000. The remaining 405 hectares (1,002 acres) are scheduled for planting in 2001 and 2002. During the current harvesting season, the 4 and 6 year grove trees yielded approximately 1,500 metric tons of lemons, generating billings of approximately $200,000. Pricing under the supply agreement is based on a minimum level of oil content in the harvested lemons and annually escalates with U.S. inflation until 2007. Said Emilio Castillo, the Company’s President and Chief Executive Officer, “We believe that this project is the largest citrus agricultural projects ever undertaken in Mexico and we are confident that this project represents a significant component in our strategy to maximize long-term shareholder value.”
Much of the above information is forward-looking and as such, only reflects the Company’s best assessment at this time. Investors are cautioned that forward-looking statements involve risks and uncertainties, that actual results may differ materially from such statements, and that investors should not place undue reliance on such statements. Specifically, the Company cautions that above tables represent UniMark’s current estimate of future yields which is based on, among other factors, the age of the trees, land conditions, weather and irrigation conditions, grove configuration, and historical yields based on other lemon groves and limited harvesting experienced by the Company. A crop reduction or failure in any of the groves resulting from such factors as weather conditions, pestilence, disease and other natural disasters, could adversely affect estimated yields. Further, the projections can be impacted by availability of agricultural land; changes in the Company’s business strategy or development plans; availability, terms and deployment of capital; availability of qualified personnel; inability to increase prices; governmental regulations in Mexico and dependence upon a single customer. As such, the forward-looking statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For a discussion of additional factors that may affect actual results, investors should refer to the Company’s filings with the Securities and Exchange Commission, in particular, its annual report on Form 10-K for the fiscal year ended December 31, 1999, its quarterly report on Form 10-Q for the quarterly period ended September 30, 2000 and those factors listed under “Risk Factors” in the Company’s prospectus dated June 14, 1996.
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