Karoo Prime Lamb Farms — Funding Requirement & Use of Proceeds
Karoo Prime Lamb Farms is seeking total funding of R18,000,000 to establish and capitalise the farming operation. The detailed allocation of funds is as follows:
Section 16 · Business Plan
Funding Requirement & Use of Proceeds
Karoo Prime Lamb Farms is seeking total funding of R18,000,000 to establish and capitalise the farming operation. The detailed allocation of funds is as follows:
Funding land, flock build-up, infrastructure and working capital through to a self-sustaining operation.
Karoo Prime Lamb Farms is seeking total funding of R18,000,000 to establish and capitalise the farming operation. The detailed allocation of funds is as follows:
16.1 Use of Proceeds
| Category | Amount (R) | % of Total | Description |
|---|---|---|---|
| Land Acquisition | R 6,200,000 | 34.4% | Purchase of 2,500 ha farming property near Graaff-Reinet |
| Livestock Procurement | R 5,250,000 | 29.2% | Initial flock of 3,500 sheep (ewes, rams, replacement stock) |
| Infrastructure | R 5,800,000 | 32.2% | Handling facilities, fencing, water, shearing shed, housing |
| Equipment | R 3,000,000 | 16.7% | Vehicles, tractor, feed equipment, generators |
| Working Capital | R 2,750,000 | 15.3% | Operating costs for first 18 months |
| Professional Fees | R 500,000 | 2.8% | Legal, survey, environmental assessment, registration |
| Contingency | R 900,000 | 5.0% | Unforeseen costs buffer |
| Total (before adjustment) | R 24,400,000 | ||
| Less: Phased investment / deferred capex | (R 6,400,000) | Deferred to Year 2–3 from operating cash flow | |
| Net Initial Funding Required | R 18,000,000 | 100% |
16.2 Proposed Funding Structure
The proposed funding structure balances debt and equity to optimise cost of capital while maintaining financial flexibility:
| Source | Amount (R) | Terms | Security |
|---|---|---|---|
| Agricultural Bank Loan | R 10,800,000 | 10-year term, prime + 1%, monthly repayments | First mortgage bond over farm property |
| Private Equity | R 5,400,000 | 30% equity stake, 5-year exit horizon | Shareholder agreement provisions |
| Shareholder Funds | R 1,800,000 | Proportional equity contribution | N/A |
16.3 Investor Returns
Based on the projected financial performance, equity investors can expect the following returns:
-
First dividend distribution anticipated in Year 4, subject to board approval and cash flow availability.
-
Projected internal rate of return (IRR) on equity: 28–32% over a 7-year investment horizon.
-
Projected return on equity: 36.8% by Year 5.
-
Exit options include trade sale, management buyout, or partial listing on the JSE AltX.
This document contains proprietary and confidential information. Distribution without written consent is prohibited.