Obtala Resources Limited Agriculture Update (8532G)
25 November 2015 - 6:01PM
UK Regulatory
TIDMOBT
RNS Number : 8532G
Obtala Resources Limited
25 November 2015
25 November 2015
Obtala Resources Limited
("Obtala", the "Group" or the "Company")
(AIM: OBT)
Agriculture Update
Obtala Resources Limited (AIM:OBT), the vertically integrated
agribusiness, timber and retail company, announces today that it
has signed Heads of Terms, with a private, non-related Tanzanian
entity ("Partner") to form a joint venture to develop a commercial
farming operation over an additional 1,265 hectares in Tanzania. A
formal shareholders agreement, land lease agreement and the
incorporation of a new Tanzanian registered joint venture company
will be concluded shortly.
Highlights:
-- Land area covers 1,265 hectares
-- River frontage on the northern boundary with approved water
extraction rights. Land is partially irrigated with pump house and
surface irrigation canals
-- 250 hectares of land already cleared, ideally suited for fruit tree cultivation
-- Located only 15km from the Company's existing horticultural
project - allowing for significant synergies of manpower,
management control, technology and logistics
-- Good infrastructure, only 220km from the export sea port and airport at Dar es Salaam
-- Existing buildings and power on site - readily convertible to
housing processing and packing facilities
-- Fruit trading partner will fund the seeds for banana
plantation and will send plantation experts from their Central
American operations to assist in the project start-up
-- Total land held under lease agreements in Tanzania will increase to c.1,800 hectares
Obtala has entered into a Heads of Terms with a private,
non-related Tanzanian company to form a new commercial farming
operation in which it will hold a 70% interest. The Partner will
hold a 30%, free-carried interest in the joint venture, which will
lease the land from the Partner at nominal value. Future dividend
payouts will be made once capital and operating expenses have been
recovered. The land is held in two contiguous blocks, one with 75
years remaining on the lease the other 10 years. Both titles deeds
are renewable. There is no consideration to be paid.
The land is adjacent to the Dodoma - Dar es Salaam highway, and
has approximately 250 hectares of land cleared and ready for
development and planting. There are a number of buildings on the
site, which will be upgraded to house a processing and packaging
facility, staff quarters and offices. The northern boundary is
defined by the Wami River and the Partners have secured water
abstraction rights for irrigation purposes.
The Company recently announced on the 6th November that it had
entered into a Memorandum of Understanding ("MoU") with a highly
experienced international exotic fruit trading company (the
"Trader"). Under the terms of the MoU, Obtala will work in
partnership with the Trader, who is part of the agricultural
division of Grupo Cabal, a Mexican group with a long standing
tradition in the sector as former owners of DEL MONTE FRESH, to
establish fruit plantations in Tanzania.
As agreed, in partnership with the Trader the Company will
establish an initial 150 hectare, scaling up to 500 hectare, banana
plantation on the farm. This new land and operating agreement
provides the land platform for this partnership to grow. Typically
bananas take between 9-12 months from planting to harvest with
1,800 banana trees per hectare yielding +40 tonnes per hectare,
achieving $1,000 per tonne, with costs of $5,000 per hectare. In
addition the Company will develop a mango plantation, covering 180
hectare and a 100 hectare Persian Lime tree orchard. The Trader has
agreed to fund the cost of the banana seeds, which is equivalent to
$110,000 per 100 hectares and will further provide plantation
experts from their Central American operations to assist the
project start up and training.
Simon Rollason, Managing Director of Obtala, commented, "This
joint venture will allow us to significantly increase our land
holding and provides a strong foundation to work with our partners
in establishing a significant mixed fruit plantation in Tanzania.
The existing infrastructure, water availability and close proximity
to the export facilities at Dar es Salaam makes this an exciting
opportunity. The land is close to our existing operation thus
creating synergies in terms of manpower and expertise. The funding
of the seed stock and provision of highly trained plantation
experts by our fruit trading partner provides significant cost
savings at the start of this new enterprise."
Obtala Resources
Francesco Scolaro - Chairman
Simon Rollason - Managing Director
www.obtalaresources.com +44 (0)20 7099 1940
ZAI Corporate Finance Limited (Nomad)
Ray Zimmerman
Richard Morrison +44 (0)20 7060 2220
Brandon Hill Capital (Broker)
Jonathan Evans +44 (0)20 3463 5000
This information is provided by RNS
The company news service from the London Stock Exchange
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