Obtala Resources receives US$900,000 investment

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Obtala Resources receives US$900,000 investment

6:45 CAT | 29 Apr 2016

In File Club of Mozambique

Obtala Resources, a company based in the British Channel Islands, on Friday announced that it has received 900,000 US dollars from Basic Materials Limited in return for a 17.5 per cent stake in its forestry concessions.

Obtala’s timber operations are in Mozambique, mainly in the central province of Zambezia. They are operated under a “forestry concession contract” which strictly requires that only a restricted number of trees can be cut down and that the timber must be processed within the country.

In February the company announced that it had secured deals with three international timber investors to fund its projects in return for equity in the company and off-take rights. These agreements will raise three million dollars for its forestry projects.

Obtala will use part of the funds for the construction of two kilns to dry timber. In addition, it will develop a new sales and distribution centre in Maputo. The company will also launch a social and community development fund focusing on providing labour, health and education programmes.

The three investors are Hong Kong based Global Timber Investment Limited (with a 900,000 dollar stake); George Miller, a private investor from the United States (1.16 million dollars); and Basic Materials Limited, a company with offices in Hong Kong and Russia (900,000 dollars).

Basic Materials is the first to complete its promised investment. As part of the deal, it also gains the economic rights over up to 3,500 hectares of forest. The company plans to export timber to Asia and the Middle East.

Source: AIM