Obtala Limited Forestry Update - Award of CPI (5441N)
27 October 2016 - 1:01AM
UK Regulatory
TIDMOBT
RNS Number : 5441N
Obtala Limited
26 October 2016
26 Oct 2016
Obtala Limited
("Obtala", the "Group" or the "Company")
(AIM: OBT)
Forestry Update - Award of CPI
Highlights
-- Forestry subsidiary awarded Centro De Promocao de Investments
(Investment Promotion Centre - CPI) status within Mozambique,
conditional on $3 million phased investment plan
-- Exemption from VAT and customs duties chargeable on
goods/machinery needed for production expansion for a five year
period
-- IRPC (Corporation Tax) offsets for 5 fiscal years of up to
10% inward investment with further available allowances in those
fiscal years relating to local training costs, public use building
construction and cultural heritage protection
-- Freedom for repatriation of profits outside of Mozambique
-- Equitable compensation rights against assets being
expropriated and arbitration through World Bank's International
Centre for Settlement of Investment Disputes and/or ICC.
Obtala Limited, the African focused agricultural and forestry
company, is pleased to announce that its forestry subsidiary,
Argento Mozambique Lda ("Argento"), has been awarded CPI status by
the Mozambican authorities entitling it to various tax benefits and
protections in return for inward investment from the Company's
subsidiary Argento Continental Corporation.
CPI is a government institution with a mandate to attract and
facilitate the establishment of private domestic and foreign direct
investment in Mozambique. Companies operating under CPI status also
have the advantage of non-tax benefits including insurance services
specifically to offset investment risk, VAT exemption on domestic
acquisitions, and importantly, legal protections and compensation
against expropriation with international bodies.
In order to satisfy qualification for CPI status Argento is
required, amongst other things, to implement a phased investment
plan of $3m over a 5 year period. If this investment were not made,
CPI status would be revoked rather than this amount constituting a
debt.
This award covers all operations within Mozambique and allows
Argento to apply for Industrial Free Zone (IFZ) status with
Mozambique's Office for Accelerated Development Economic Areas
(Gazeda). Gazeda established a duty free zone located in the
district of Nacala, Nampula province in 2007 which services the
export of our timber to international markets via Nacala Port.
Achieving IFZ status in Nacala would lead to further enhanced tax
incentives.
The Company is in continued talks with investors regarding
inward investment via the previously announced Argento Preference
Share. Investor due diligence trips are scheduled to our African
operations in November with regard to this matter.
Miles Pelham, Chairman of Obtala commented "The award of CPI
status by the Mozambican authorities is a highly significant and
welcome development as we seek to bolster our production
capabilities within the country. We anticipate that the forestry
division will drive revenue expansion and as such CPI tax benefits
should have material future impact on our bottom line. The
exemption from VAT will reduce the level of Capex required to bring
our Forestry assets into full production.
This award underlines our already strong commitment to
Mozambique. As well as providing inward investment we anticipate
that our activities will have significant positive social impact
through job creation, training and upskilling of local labour and a
sustainable approach to forestry operations."
More details on the Special Economic Zones and their benefits
can be found on the Gazeda website at:
http://www.gazeda.gov.mz/m/index.php?option=com_content&view=article&id=127&Itemid=144&lang=en&limitstart=1
Obtala Resources
Miles Pelham - Chairman
Paul Dolan - CEO
www.obtala.com +44 (0)20 7099 1940
ZAI Corporate Finance Limited (Nomad)
Ray Zimmerman/ Peter Trevelyan-Clark / John Treacy +44 (0)20 7060 2220
Brandon Hill Capital (Broker)
Jonathan Evans +44 (0)20 3463 5000
This announcement contains information that qualified or may
have qualified as inside information for the purposes of article 7
of the Market Abuse Regulation (EU) No. 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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