In summary terms, at least 650-700ML and possibly as high as 800ML+ in available surface water /dams, water bore and creek extraction irrigation licences, and transferable water licences.
Since July 2015, most of the CAPEX commitments have been geared towards either improving, securing or guaranteeing water infrastructure and security, improving farm drainage, or securing productivity gains in pasture development, coverage and /or rejuvenation.
From the MarQ15 quarterly commentary, the following was said:
"Since last July, "extensive farm pasture renovation and drainage development to maximise on farm fodder growth and water security and growing farm security and values" have been carried out."
This however was explained in more depth in the DecQ15 commentary:
"Currently, on the Brucknell 1and 2 farms and Drumborg (Heywood) farm, an extensive paddock drainage and water storage construction program is underway. Earthworks can only be successfully undertaken in the dryer period from November through March. The outcomes from this development will be materially higher usable fodder and silage production on farm in the key winter and spring seasons (and lower volumes of purchased summer fodder) for years to come."
More broadly, however, the position is best summarised, below.
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Heywood which was the most recently acquired farm (Sep15) included as part of the purchase a 600+ML transferrable irrigation water licence. According to ASXR 7/8/15 "only a small portion of (Heywood's water entitlements are currently being) utilised on the Farm".
ASXR 7/8/15 then went on to say:
"These water entitlements are transferrable to other properties within the same aquifer, including to three of the Group’s other farms at Brucknell and also to Ignatios Farm at Glenfyne, subject to standard licence transfer regulations. This provides a real opportunity for de-risking the dryer summer and early autumn and potentially being able to irrigate grass and feed crops on these farms to materially extend milk production during this season at much lower cost. Applications to regulatory authorities for irrigation on the Brucknell Farms have already been made with the prospect of being able to implement this initiative for the coming summer."
Brucknell 3 also has water licences in place that were included as part of the original purchase (ASXR 22/12/14):
"Brucknell No 3 is a smaller farm than the existing Brucknell Farms with an area of 139 hectares (344 acres) over two separate titles. Water licences for stock irrigation are included in the purchase."
The Ignatios Farm purchase from ASXR 18/11/14 also included water licences described in the following terms:
"black river flats with permanent creek frontage and prime grazing land plus 40(ML) surface dam and high volume bore water licence."
In the Investor Presentation supporting the Brucknell #3 acquisition, the water rights position was described in the following terms:
Dependable water rights under all scenarios;
Stock irrigation licences in place.
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All in all, therefore, AHF would appear to now have extensive water security, irrigation, surface coverage and /or groundwater extraction rights in place to cover both existing, as well as substantially increased, future supply needs meaning that they have almost now drought proofed their existing (and future) farming operations. This is further guaranteed or extended as a result of Ignatios being a feeding supply rather than livestock run farm, whilst much of the capital works carried out over the last 11 months will now ensure reduced future pasture /ground risk as a result of active /intensive farming, meaning that the ground will be able to be worked on with less recurring damage /impact in the future.
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