16th Jun 2014 07:20
LONDON (Alliance News) - Obtala Resources Ltd Monday said a new independent report on its Mozambique timber concessions had drawn encouraging conclusions and substantiate its belief that those assets had previously been undervalued.
In a statement, the company said the report by Honour Capital considered 11 concession areas in three separate clocks in northern Mozambique and forecast 10-year operational sales revenue at costs of USD391 million. It gave the assets net present value of USD197.2 million at an 8% discount rate, and a USD141 million net present value at a 15% discount rate.
"Although the valuation only considers the first 10 years of operation a concession is held on a 50 year agreement and the company is expected to operate over at least the first 25 years, if not for the entire duration of the concession," the company said in a statement.
"With the information that we have received and from the operational review it is our intention to focus on turning this into a strong revenue producing business that not only can produce attractive margins but has the ability to scale up in size. The initial production increase can be achieved with a small capital injection which we can fund," Obtala Chairman Francesco Scolaro said in a statement.
Obtala Resources shares were up 2.9% at 12.6 pence early Monday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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