Obtala Resources Limited Timber Strategy Update (0382Q)
June 15 2015 - 2:00AM
UK Regulatory
TIDMOBT
RNS Number : 0382Q
Obtala Resources Limited
15 June 2015
15 June 2015
Obtala Resources Limited
("Obtala" or the "Company")
(AIM: OBT)
Timber Strategy Update
Obtala Resources Limited (AIM:OBT), the vertically integrated
agribusiness, timber and retail company, is pleased to provide the
following update on its timber operations:
Key Points
-- Timber acreage in Mozambique to be increased by 13%
-- New forestry asset valuation commissioned
-- Board agrees strategy for realising value of forestry assets
Two new timber concessions to be acquired
The Company is, subject to Government approval, completing the
acquisition of 50 year leases for two new timber concessions
totaling 35,000 hectares in Mozambique to bring the total forestry
area to 314,965 hectares. This provides for a 13% increase in its
current land holdings. The new blocks are situated adjacent to our
main operational centre and, together with the existing holdings,
provide a critical mass in terms of approved annual permitted cut.
The Company has commissioned Honour Capital, a specialist forestry
advisory and management Company, to undertake a valuation review of
the new blocks. Honour Capital prepared a valuation report in June
2014 which attributed a NPV to the timber business of US$161
million at a 12% discount based on a 10 year cash flow model.
Plant investment
The Company intends to make a cash injection of $300,000 for
additional capital equipment to increase the operational
productivity and improve on-site capability to produce value-added
end products; such as traditional decking, decking tiles, window
and door frames. The supply of these products will provide
additional value uplift to the revenues generated from the
concessions and will provide for additional employment and training
for the local population.
Operations
The Company resumed field operations at the start of the logging
season in April and is supplying processed timber to Mozambican
based construction companies for the rapidly expanding housing
market throughout Mozambique which is forecast to grow over the
next few years. Due to strong local demand for timber, the Company
is not planning on exporting timber this year. Mozambique's GDP is
forecast to grow on an annual basis at 7.5% between 2015-19
(Source: Economist 2015) with demand for timber products and timber
sales prices increasing. Negotiations continue with respect to the
potential participation of the timber opportunity in Brazil and
contract logging in Mozambique.
Commenting on today's announcement, Francesco Scolaro, Chairman
of Obtala, said:
"We are dedicated to making the timber operations a great
success in Mozambique where we have built a highly efficient
operational platform over the past few years. The additional land
holdings provide security that we can achieve higher production
levels. In tandem, we are making a capital injection to increase
and improve our operational capacity and offer a wider range of
timber products to the growing local market.
"The Board of Obtala has also agreed a strategy to divest the
forestry division thereby recognizing its true value and to grow
the business in Mozambique more expeditiously. We will provide
further updates to shareholders in due course."
Obtala Resources
Francesco Scolaro - Chairman
Simon Rollason - Managing
Director
www.obtalaresources.com +44 (0)20 7099 1940
ZAI Corporate Finance Limited
(Nomad) +44 (0)20 7060 2220
Richard Morrison
Irina Lomova
Brandon Hill Capital (Broker) +44 (0)20 3463 5000
Jonathan Evans
Square 1 Consulting (Public
Relations) +44 (0)20 7929 5599
David Bick
Mark Longson
Notes:
Information on Honour Capital
Honour Capital is an independent consultancy that specialises in
providing a comprehensive forestry investment and management
services, and regulated and authorised to conduct investment
appraisals and analysis of forestry by the Royal Institution of
Chartered Surveyors (RICS).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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