JAT’s Golden Koala scores new supply agreement

By Megan Graham. Published at Aug 6, 2018, in Small Caps

Golden Koala Group Pty Ltd — 51% owned subsidiary of Jat Energy (ASX:JAT) — has entered into a supply agreement with AustAgri Pty Limited.

Under the agreement, Golden Koala will supply its Golden Koala Premium Range Infant Formulas to AustAgri for sale in mainland China, Hong Kong, Macau and Taiwan, as well as via e-commerce platforms.

With Golden Koala Group Pty Ltd as supplier, and AustAgri (AA) as customer, the key terms of the agreement are as follows;

The Term: five years commencing 90 days after Golden Koala notifies AA that it has received approval for the products from the China Food and Drug Administration.

Exclusivity and territories: AA has been granted the exclusive right to distribute and sell the products in mainland China. It has the non-exclusive right to distribute and sell the products in Hong Kong, Macau and Taiwan.

E-Commerce: AA has the right to distribute and sell the products in mainland China and any other places via e-commerce channel only.

Products: the products are 900g tins of Golden Koala Premium Range Infant Formulas.

Minimum purchase quantities: AA must order a minimum amount of 900g tins annually in each of the five years of the agreement. The total revenue to be received by Golden Koala over five years from sales of minimum quantities will be approximately $98 million.

Guaranteed deposit: AA must pay Golden Koala A$1 million as a guaranteed deposit in two instalments. The first instalment is $500,000 to be paid within seven business days of signing the agreement and $500,000 within seven business days of being notified that CFDA approval has been granted for all products.

Payment terms: 50% is payable by AA at the time of order with the balance payable upon Golden Koala notifying AA that the products are ready for production.

However it is an early stage of JAT’s development so if considering this stock for your portfolio, you should take all public information into account and seek professional financial advice.

JAT announced the agreement on Friday afternoon, which led to the small cap’s shares closing the day almost 12% higher at 8.5 cents.

JAT's share price has risen to 8.5 cents.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

This news comes just weeks after JAT announced a major deal with Woolworths (ASX:WOW), which will see WOW offer NEURIO Formulated Milk Powder with Lactoferrin for sale to Chinese consumers via its flagship store on cross-border platform TMall Global from early August 2018.

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