12th May 2014 11:28
LONDON (Alliance News) - Obtala Resources PLC Monday said its forestry business continues to progress well, with additional orders increasing revenues.
Since February, the group said it has received a new order for timber railway sleepers from its client Vale SA, the Brazilian mining conglomerate, for an additional 31 junction sets, over and above the original 90 sets ordered.
The natural resource investment and development company said it remains confident that it will continue to win additional timber supply contracts, as it continues to align itself with the on-going national development plans in Mozambique as a recognised supplier to Vale. It said it is now looking to scale-up production to fill market demand.
"The demand for timber within Mozambique allows us a build a platform from which we can expand regionally and international with the on-going discussions with potential partners supporting this business model and facilitating greater access to global markets," said Chairman Francesco Scolaro in a statement.
Obtala said it is still in discussions with Europe-based timber producers and traders controlling substantial assets in Sub-Saharan Africa and having extensive global client lists for sales about the potential to form a working collaboration, which Obtala said would increase production and market opportunity.
The group also said that it has concluded a contract to supply more than 100 cubic metres of sawn Kiaat timber on a monthly basis over the next year to a local company. It said the revenues generated on a monthly basis from this contract will offset the sleeper production costs.
"Additional orders are being negotiated as local timber prices and demand continue to rise as the country grows and infrastructure is developed and upgraded," the company said in a statement.
Shares in Obtala Resources were trading 2.4% lower Monday morning at 9.09 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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