Second Forestry Acquisition and Operational Update

RNS Number : 3654N

Obtala Resources Limited

01 September 2011

 



Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Montara Mozambique and Tanzania

Second Forestry Acquisition and Operational Update

Obtala Resources Limited (AIM:OBT), the natural resource investment and development company, today announces that it has completed an Agreement ("SPA") and acquired an 85% interest in a private Mozambique registered company ("Acquisition"). The vendor holds a forestry concession in the central coastal region of Mozambique. This is the second forestry acquisition to be completed in Mozambique this year. The Company is also pleased to provide an operational update on Montara's recent activities.

Highlights:

Mozambique

·       Obtala controlled subsidiary, Montara Continental Inc ("Montara") completes acquisition of 85% interest in Mozambican forestry company

·       Concession covers 50,000 hectares

·       Management Plan utilises annual permissible cut volume of 14,500m³ timber

·       Cut logs ready for sale on the ground

·       Previous forestry acquisition made in July 2011 being taken out of care and maintenance and made ready for initial FSC site visit

Tanzania

·       Land clearing in progress on Tanzania Joint Venture

Mozambique

Montara, through its 100% owned subsidiary Argento Continental Corp. ("Argento"), has acquired an 85% shareholding in a private Mozambican registered company, which holds a 50 year forestry concession issued in 2009 in the Zambezia Province of Mozambique. The remaining 15% is held by existing shareholders of the vendor and are non-related to the Company. The acquisition is not a substantial acquisition under the London Stock Exchange AIM Rules.

A Management Plan and forest inventory on the concession indicates the presence of numerous species of exotic hardwoods, including African Blackwood, Kiaat and Panga-Panga. The plan also indicates that the annual allowable cut which corresponds to the annual volume of timber that can be exploited to ensure the sustainability of the resource is 14,500m³ per year based on a 20 year cycle. No species considered as rare in the forest inventory document was included as exploitable. The concession lies within 300km of the deep-water port facilities at Nacala, which has a regular container shipping service to Europe and the Far East.

It is the intention of the Company to initiate the process of Forest Stewardship Council ("FSC") certification which will allow the end user markets in Europe to open up to Montara. Currently there are a number of logs already cut that are ready for immediate sale once an agreement is achieved with a buyer.

Since the earlier acquisition made in late July 2011 the Company has been taking that operation out of care and maintenance and has purchased a mobile sawmill out of the USA which is expected to arrive in September. Rehabilitation of the existing facilities and equipment is underway and staff are being recruited and trained. An initial FSC site visit is expected in late September and to aide this process a number of consultations have been held with the local communities on the concession.

Tanzania

Land clearing has started on the 70% owned agricultural Joint Venture located in the Songea District of southern Tanzania. To date a total of 24ha have been mechanically cleared from a planned 81ha. The intention is to use this cleared block as a testing site for a variety of seed types which will allow for future crop utilisation planning. Discussions with seed, fertilizer and equipment suppliers are underway. A survey crew has been conducting a detailed topographic survey to aid in water irrigation and farm management planning and additional close spaced soil samples are being collected to further define local soil conditions. A staff camp on the project is also being constructed. The Joint Venture company was recently awarded its Certificate of Incentives from the Tanzania Investment Centre.

The objective of the Company is to develop a profitable and self-sustainable forestry and agricultural enterprise in East Africa, which engages and supports the local community. Through this process of development and growth the Company will advance energy and food crops in East Africa and develop this market whilst operating logging and regeneration projects on the forestry concessions.

In addition Obtala, through its subsidiary Montara Continental Limited,has an application for a 54,000 hectare forestry concession within well established Blackwood concessions of the Cabo Delgado Province lodged with the Ministry of Agriculture in Mozambique, and is hopeful that it will be approved later this year.

Argentina

As a result from the development of these projects in Africa the company has decided to terminate exploration plans for the licences in Argentina, as announced in October 2010, and re-direct its efforts towards potentially revenue producing projects.

Chairman's comment

Francesco Scolaro, Chairman of Obtala, commented

"I am very pleased to announce this acquisition as it allows us to build up our forestry business in Mozambique and takes us another step closer to fulfilling our objective of creating a self-sustainable, profitable forestry and agriculturalbusiness.We anticipate that these projects will produce a near-term revenue stream, which will further establish the company in East Africa.

The progress being made in Tanzania is very encouraging as we look to have our trial farm operational before the end of year rains in that part of the country begin in late November-December.

Further, we have  another forestry concession pending government approval in Mozambique, which we hope will be granted shortly, giving Obtala exposure to over 1,600km² of forested land. This land package will enable us to evaluate the potential of bringing in an established partner to create a manufacturing facility in-country, bringing tremendous benefits to both Obtala and the citizens of Mozambique."

Obtala Resources Francesco Scolaro - Chairman Simon Rollason - Managing Director www.obtalaresources.com	[phone]
ZAI Corporate Finance Ltd	[phone]
Marc Cramsie Sarang Shah
Threadneedle Communications
Beth Harris Laurence Read	[phone]

 

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