Feedlot company has plan; now looking for investors

They have a site, enough water and the interest. Now all they need is the money.

Pine Creek Cattle Co. wants to build a 25,000-head feedlot in three stages in southwestern Saskatchewan near Shaunavon. The first stage, a lot feeding 8,500 head, would cost $3.5 million.

But the current market downturn due to BSE has put its idea to the test.

“Our timing has been a little off,” admits Jody Fenell, spokesperson for the project.

The proposal was developed after a regional economic development meeting in the fall of 2001. At that time about 35 people each tossed in $100 to fund the preliminary research into large-scale feedlots.

“We knew we’d need some serious money to do more,” Fenell said.

They formed a 14-member board of directors and incorporated Pine Creek Cattle Co. in June 2002. They then recruited 40 investors to raise enough money to cover the costs of feasibility and engineering studies.

The southwestern corner is home to about 70,000 cattle and six auction marts, Fenell said. The feasibility study conducted by Winnipeg’s Kelly Associates found a feedlot in the area would have a competitive advantage over nearby Alberta lots because of lower freight costs on both feeder cattle and feed.

“The response locally all has been positive,” Fenell said.

“But funding is fairly short in this area with BSE. And we’re coming off one of the worst years for cash flow on the grain side.”

However, the proponents are determined to go ahead even if they have to start smaller than the initially planned 8,500 head.

The plan had called for an expansion to 15,000 and then 25,000 head over four to six years.

The company will raise money using the close personal friends and business associates exemption of Saskatchewan securities legislation.

This means it doesn’t have to issue a prospectus and offer shares. The investors are friends, relatives and business associates who must have trust in the proponents of the project.

Fenell said the company planned to be operating by October 2004 and will decide whether to proceed within the next couple of months, depending on how much money it raises.

“It’s a go,” he said. “There’s going to be something built here one way or another.”

Building now might be better than building prior to the discovery of BSE, he added.

“We’d have been going in (to the crisis) as new and we may not have been able to handle it,” Fenell said. “Nobody knows for sure what’s going to happen. I believe there is enough domestic demand that we don’t have to worry about a total catastrophe.”