Dried Fruit Cash Generative Opportunity, Tanzania

RNS Number : 3782Q

Obtala Resources Limited

14 October 2013

 

14^th October 2013

Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Dried Fruit Cash Generative Opportunity, Tanzania

Obtala Resources Limited (AIM:OBT), the natural resource investment and development company, is pleased to announce that it has signed a binding Heads of Agreement for additional agricultural land in Tanzania.

Highlights:

·       Land area covers 1,534 acres -approximately 617 hectares

·       120 hectares of land already cleared, ideally suited for fruit tree cultivation, and also for intensive farming both in green house and open field

·       1,500 fruit bearing mango trees already present on the land

·       Located only 20km from the Company's sundried tomato project - allows for synergies of manpower, management control, technology and logistics

·       Good infrastructure, only 250km from the port at Dar es Salaam

·       Existing buildings on site readily convertible to house processing facility

Obtala has agreed terms and signed a binding Heads of Agreement ("HoA") with a private, non-related Tanzanian company to form a new operating, management and marketing company in which Obtala, through its subsidiary Montara Continental will hold an 80% interest. The partner will hold a 20% free-carried interest with the new company holding the lease over the land for an initial 20 year term, renewable for a further 20 years. There is no consideration paid.

The land is bisected by a new tarmac road which connects with the main Dodoma - Dar es Salaam highway, 12km away. To date approximately 120 hectares of land has been cleared and ready for planting. The owner of the land has already created two substantial water catchment dams and additional water boreholes will be drilled into the shallow groundwater table.

There are 1,500 fruit bearing mango trees on the property and it is the intention of the Company to create a substantial fruit tree orchard with the objective of processing the fruit to a value added dried product. Initially the Company plans to work in conjunction with the local university agriculture department to process the fruit whilst a target of 50,000 additional trees is planted on the project, covering c.200 hectares. Initially production is estimated at 5-7 tonnes per hectare rising to 10-15 tonnes as the trees mature. Current indications are that dried mango slices can achieve export prices as high as $8 per kilogram.

The land is ideally suited for intensive farming both in green house and open field and the Company is evaluating higher yielding, high value crops which can be grown consistently throughout the year to supply both local and international markets generating short-term revenues, in addition to establishing the fruit trees orchards.

The company has taken the decision to reduce its shareholding in Bushveld Minerals Limited. This decision is based on the lack of recent transparency and our understanding of the timing and progress from Endulwini's discussions with its funding partner, in addition to the downward movement in the Bushveld share price in recent months. Funds from a disposal will provide capital for cash generative business opportunities such as this project.

Managing Director's comment

Simon Rollason, Managing Director of Obtala, commented: "We are very pleased to announce the signing of this document which allows the Company to develop a new and exciting business close to the existing major markets and export facilities in Tanzania. This project lies in close proximity to our sun dried tomato farm which remains on-course for first production in November 2013. Our objective is to produce a value added dried product on site which can be sold locally and into the export market. We will also be able to produce additional high yielding, high value crops through a process of intercropping and establishing new blocks on the land which covers a substantial area, utilising best farming practises and irrigation to facilitate margin optimisation and year round revenues. This project together with the recently announced cannery operation in Lesotho is in line with our development plans to re-position the Company as a self-sustainable, profitable, African focused agribusiness and timber trading company with the focus on developing a vertically integrated company which will reap the benefits of value added production and branding."

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

For further information on Montara Continental see our website www.montaracontinental.com

 

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