Operational Update

RNS Number : 9836J

Obtala Resources Limited

24 July 2013

 



24 July 2013

Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Operational Update

Obtala Resources Limited (AIM:OBT), the natural resource investment and development company, is pleased to provide an update on operational activities in Tanzania and Mozambique, and for the investments held by the Company.

Highlights:

·      Development of sundried tomato project progressing well with mainline power being installed, water wells completed and pumps installed

·      Nursery tunnel with installed irrigation ready with first planting expected this week

·      Phase 2 farm planning underway

·      Additional forest concession applications in progress

·      Paragon Diamonds : Mining licence award expected shortly

Agriculture Update

Steady progress continues to be made on the Morogoro sundried tomato project in Tanzania. Two water wells have been drilled with pumps installed and commissioned and the water reservoir with a capacity of 5,400m³ is expected to be completed within a week. Connection to the mainline power supply is in progress with state electricity company, TANESCO, having erected poles and the connecting cable line. The impact of mainline power will be an expected reduction in operational costs compared with having to use on-site generator produced power.

Additional processing equipment is being manufactured within Tanzania to support the operation of the washing plant which is currently clearing the port facilities in Dar es Salaam. The tomato nursery tunnels and associated mist irrigation system will be operational during the coming week with the propagation of the maiden tomato crop expected to start immediately thereafter.

The main open field drip irrigation system, to cover an area of 30 hectares, is currently clearing customs and is expected on site within 2 weeks. The construction of the main processing building, stores, offices, changing rooms, laboratory and packing facilities progresses and is scheduled to be complete in August. A European based fruit drying expert is currently on site assisting in the processing and drying equipment requirements to ensure a high quality product is produced.

The company has further strengthened the farm management team with the recruitment of two Kenyan farmers with strong horticulture and vegetable farming experience. They further bring experience in Global GAP certification and the on-going requirements to maintain the highest standards of quality control.

It is anticipated that preparation for the first production of Phase 1, supplying c.100 tonnes per month of sundried product, will be completed by September 2013.

Planning and scoping is underway for Phase 2 on a plot covering approximately 125 hectares which is located 300 metres from the tomato farm project. The plot has a power line running alongside its eastern boundary. Our European based partners have supplied a variety of pepper and chilli seeds which are being trialled with current indications for high germination levels.

Forestry Update

In line with anticipated increases in demand for timber products within the local market associated with national infrastructure development, the Company has made applications for additional concessions within northern Mozambique. An application for a 23,000 hectare concession is currently pending final sign-off by the Provincial Governor with two further applications, totalling 40,000 hectares, lodged with relevant authorities.

The company is producing 900-1,000 sleepers per week as part of a railway maintenance contract, with additional orders under discussion with a number of end-users.

Bushveld Minerals

The Company has been advised that the purchaser is continuing to work towards securing and completing the funding for the purchase of the Bushveld holding.

Paragon Diamonds

Paragon continues to make steady progress with the flagship, Lemphane project, in Lesotho, with the recent export of diamonds from its on-going evaluation programme, completion of pit sample processing, an independent audit of the bulk sampling, completion of stage 1 drilling programme and is making progress on mining lease application which is expected to be awarded shortly. Further information can be obtained from the company's website: www.paragondiamonds.com.

Chairman's comment

Francesco Scolaro, Chairman of Obtala, commented: "Significant progress is being made with the development of the sundried tomato farm which allows us to maintain our focus on moving as swiftly as possible to fulfil our orders under our off-take agreement and generate cash flows with high margins. The initiation of the Phase 2 farm in Morogoro is a positive sign that we expect to achieve our targets, with the Company having sufficient funds through cash flows and investments to advance the project through to production and delivery. The timber production is expected to ramp up and we look forward to reporting on developments in Mozambique. The progress made by the Paragon management team is highly encouraging and demonstrates the underlying potential of this significant investment held by the Company. We remain confident that our business model will be successful and will prove to be profitable for our shareholders, as we remain debt free."

Obtala Resources Francesco Scolaro - Chairman Simon Rollason - Managing Director www.obtalaresources.com	[phone]
Macquarie Capital (Europe) Limited (Nomad and Broker)
Nicholas Harland	[phone]
Steve Baldwin

 

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