Roots Sustainable Agricultural Technologies Limited advised that it has secured a binding 12-month agreement with leading South African insulated panel and cold room manufacturer Precool Manufacturing Co (Pty) Ltd. ("Precool") in respect of marketing, sales, installation and post-sale services for Roots' innovative Root Zone Temperature Optimisation ("RZTO") technology in the South African Market. Established in 1969, Precool provides modular insulation solutions for temperature sensitive environments including those in the agricultural and food sectors. Precool offers a wide variety of products and services targeting a number of key segments including medicinal cannabis, leafy vegetables, nurseries and berries.

Precool is located in Cape Town in close proximity to numerous major blueberry production sites, a sector which has seen rapid growth over the past five years in South Africa. Both parties will mutually market, sell, install and provide post-sale services for Roots' RZTO technology, leveraging Precool's local knowledge and experience to identify potential customers suitable for the deployment. In accordance with the terms of the agreement, the costs of the Roots systems which are to be sold within South Africa will be split between the parties, with Roots bearing 55% of the costs.

Roots has agreed not to engage with any other entity to market, sell or install its technology within the Republic of South Africa for a period of 12 months after the date of purchase of Root's technology by a customer under the agreement. Under the agreement, negotiations to advance the establishment of a joint venture will be undertaken, with the intention to enter into a definitive joint venture agreement within the next 12 months. The establishment of a joint venture has the potential to deliver Roots with a local labour force, logistics hub and greater marketing and post-sale support as well as addressing potential regulatory issues, if any, in the region.

South Africa represents a large market opportunity with the country boasting a growing agricultural industry. The blueberry industry has seen exceptional growth since 2013. According to South African sources, the projections for the South African industry are to reach a production of 50,000 tons by 2023, which would mean achieving 35,000 tons in exports thus placing the South African industry in the top five blueberry exporting countries in the world.

Medicinal cannabis is also experiencing growth following the formalisation of a national strategy from the Department of Agriculture, Land Reform and Rural Development's to industrialise and commercialise the industry. The agreement with Precool further highlights the extensive international expansion initiatives being undertaken by Roots, including the recent broadening of the Company's European footprint with a binding dealership agreement for the UK, Ireland and Austria. The Company continues to witness increased demand for its sustainable agricultural technologies and anticipates that the agreement with Precool will expedite uptake in the Southern African region.