1st Mar 2016 11:28
LONDON (Alliance News) - Agricultural and timber company Obtala Resources Ltd said Tuesday it has received USD600,000 of Hong Kong-based Global Timber Investment Ltd's investment, in line with an agreement announced last month.
Obtala Resources said it has received the funds from Global Timber and expects a further USD300,000 on June 1, bringing the total value of the investment into Obtala's forestry division to USD900,000.
Last month, Obtala said three independent investors, including Global Timber, agreed to inject a combined USD3.0 million into its forestry division in return for minority equity interests in the company's forest concessions in Mozambique. The investors also will receive certain off-take rights under the deal.
Obtala has a 75% stake in the forestry business and has created three individual special purpose vehicles to manage the administration and economic rights of each investor and their respective offtake arrangements.
In return for its USD900,000 investment Global Timber will receive a 15% stake in the special purpose vehicle and the economic rights covering "up to" 3,000 hectares.
The other two investors are Basic Minerals Ltd, a company based in Hong Kong and Russia, which is also investing USD900,000 in return for a 17.5% stake in the special purpose vehicle and the economic rights of up to 3,500 hectares, and private US investor George Miller, who will receive a 12.5% stake and economic rights of us to 6,250 hectares for his USD1.6 million investment.
The proceeds from the investment will be used to build two kilns at its operations to improve the timber quality and the recovery rates, as well as to develop a new sales and distribution centre in Maputo, the capital of Mozambique, to serve new export markets and enhance its domestic offering.
The proceeds will also be used as working capital and to form a development fund aimed at providing labour, health and education programmes in the country.
Shares in Obtala were untraded on Tuesday, having last traded at 5.63 pence.
By Hannah Boland; [email protected]; @Hannaheboland
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