Obtala Limited MOU to Promote Legal & Sustainable Processing (3860B)
January 09 2018 - 8:21AM
UK Regulatory
TIDMOBT
RNS Number : 3860B
Obtala Limited
09 January 2018
9 January 2018
Obtala Limited
("Obtala", the "Group" or the "Company")
(AIM: OBT)
MOU to Promote Legal and Sustainable Processing of Timber in
Mozambique
-- Non-binding MOU signed with FundInvest SA, an investment
company established by the Ministry of Land, Environment and Rural
Development (MITADER) to combat illegal logging and promote timber
processing in Mozambique
-- Obtala's subsidiary Argento (48%), Obtala (1%), and
FundInvest (51%) to set up a joint venture company by Q1 2018 to
own and operate a timber harvesting, purchasing, processing, export
and distribution business in Mozambique
-- Company has mandate to source sustainable timber from
regional small-holders in Northern Mozambique to be processed in
country then exported
Obtala Limited (AIM: OBT), the African focused agricultural and
forestry company, is pleased to announce that its Board has
approved the signing of a Memorandum of Understanding (MOU) with
FundInvest SA ('FundInvest') with a view to establishing a new
joint venture company by the end of Q1 2018 to promote timber
processing in Mozambique.
FundInvest was established by the Mozambique Ministry of Land,
Environment and Rural Development (MITADER) in 2017 in response to
the continuation of the illegal export of raw logs (unprocessed
timber). Obtala's opposition to illegal logging and business as a
value-added processor of timber, as evidenced by the construction
of our new sawmill in Nampula, is strongly aligned with the goals
of FundInvest and the Mozambican government.
Following months of talks, an MOU has been reached to set up a
joint venture company whose business shall be to own and operate a
timber harvesting, purchasing, processing, export and distribution
business. The joint venture company will be 51% owned by
FundInvest, 48% by Argento and 1% by Obtala. The activity of the
joint venture company will consist of purchasing logs primarily
from small concession holders (that are otherwise illegally
exported), delivery and processing of timber at sawmills within
Mozambique, and the export of the resulting wood products to
international markets.
FundInvest's primary responsibilities will be to assist with
purchasing timber harvested by concession holders, managing the
transport of wood to sawmills, arranging export processes, and
obtaining government and regulatory approvals, permits and
licenses. Obtala does not plan to invest directly into the joint
venture company but will be responsible for arranging preferential
rate financing from socially impactful funders and government
entities and will make its sawmill in Nampula available for
processing the joint venture's timber at market competitive prices.
Obtala and FundInvest will work jointly to sell the joint venture's
processed timber.
Miles Pelham, Chairman of Obtala, comments: "We were delighted
to have been approached by FundInvest last quarter with a view to
cooperating on the fight against illegal logging in Mozambique. Our
view has always been that a sustainable business model must be
built around extracting the highest dollar value recovery from each
and every log we take from the forest rather than simply exporting
raw unprocessed logs. FundInvest clearly share that vision and are
eager to form a joint venture company that will rapidly advance to
higher value-added processing such as MDF, HDF, and veneer. It is a
strong signal from the government that they intend to support legal
operators and is perfect timing for us as our new sawmill comes
online this quarter."
Obtala Limited
Miles Pelham - Chairman
Paul Dolan - CEO
Martin Collins - Deputy Chairman
www.obtala.com +44 (0)20 7099 1940
Northland Capital Partners Ltd (Nomad and Joint Broker)
Tom Price
David Hignell +44 (0)20 3861 6625
Brandon Hill Capital (Joint Broker)
Jonathan Evans +44 (0)20 3463 5000
Beaufort Securities Limited (Joint Broker)
Jon Belliss +44 (0)20 7382 8300
This information is provided by RNS
The company news service from the London Stock Exchange
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