Final Results

27 June 2014

Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Audited Year end Results

Obtala Resources Limited (AIM:OBT), the emerging agri-processing, farming and timber company, announces audited results for the year ended 31 December 2013

A copy of the annual report is being posted to shareholders today and is available on the website www.obtalaresources.com

Highlights

Financials

· Profit after tax of £40.5 million (2012: £10.6 million) following forestry asset revaluation

· Strong balance sheet with net assets increased 54% to £122.4 million (2012: £79.5 million)

· Group cash position of £2.2 million (2012: £2.0 million) with no debt

· Platform created to generate meaningful revenues this year and beyond

Operational

Montara Forestry

· Independent valuation of £107.4 million for the forestry concessions in Mozambique

· Strong growth and investment potential for timber business

· Strong order book for forestry production so far in 2014

· Strengthening of forest management team in process to increase production

· Timber demand and price increasing in Mozambique

Montara Agriculture

· Complete vertical integration, controlling margins and profitability, in both our farming and timber businesses.

· Two processing facilities producing our own label range of products

· Commissioning of tomato farm and processing plant in Tanzania

· Successful trials on range of high value dried fruits

· Entered the branded goods market in Europe with launch of "Mama Jo's" range of bottled sauces and successful patent/trade mark issued

· Partnership implemented with Lesotho National Development Corporation to manage Lesotho canning facility agreed in late 2013. Significant progress so far in 2014 with canned tomato products being produced.

Paragon Diamonds

· Significant milestone passed in early 2014 with the award of a mining lease at the flagship Lemphane kimberlite project, Lesotho

· Tonnage increased to 48.6Mt adding to the potential for longer life of mine

· Expected diamond value of US$935-US$1,025/carat expected during stage 1

Square1 Consulting

David Bick

Mark Longson +44 (0)20 7929 5599

Chairman's Statement

I am pleased to present the annual report and consolidated financial statements for Obtala Resources Limited (the "Group") for the year ended 31 December 2013.

The Group made firm progress throughout the year ended 31 December 2013 following developments across the agri-processing, farming and timber businesses. In Tanzania we focused on the development of the Morogoro fruit farms which we have created in a very short space of time and through this process have understood other market opportunities for a wider range of products. In Mozambique our timber operation continued to supply local infrastructure programmes by delivering wooden railway sleepers whilst also exploring a number of other potential timber products for both the local and export markets. Also, towards the end of 2013 the Company signed an agreement to take operational and management control over a fruit and vegetable cannery in Lesotho and in early 2014 we have launched our own range of branded sauces.

Montara

During 2013, the Group continued to expand and develop its agriculture and forestry business to reach the objective of being a revenue generating, profitable and sustainable supplier of agricultural and timber products. To support this business model the Group entered into an agreement with the Lesotho National Development Corporation to take over the managerial and operation control of a fruit and vegetable cannery. This facility together with the drying unit constructed in Tanzania gives the group the ability to improve its profit margins through the production and sales of value added products. In early 2014 we announced the launch of our branded sauce range which is being imported into the United Kingdom. We expect the demand for the Mama Jo's branded products to grow significantly during the coming year.

Agriculture

The Group's focus in 2013 has been the development of the Morogoro tomato farm and processing facility in Tanzania. This was a rapid build project taking only 9 months to commission and illustrates our determination and commitment to get projects off the ground and into production. We have built and installed a bespoke fruit drying unit capable of producing dried product over an 18-20 hour period. Initial work focused on drying tomatoes but more recently we have trialled other fruits such as mango, pineapple and bananas, all of which are abundant in the area and will return a high margin. In Songea we have planted over 100ha of cassava as a rotation to groundnuts and we are looking to sell this crop to local breweries who are moving towards using cassava as a major input into the beer making process.

Forestry

The timber business made steady progress building up the portfolio whilst continuing to deliver wooden railway sleepers. Mozambique's economy is one of the most dynamic on the African continent with a 7% rate of real gross domestic product (GDP) growth which is predicted to continue. The fastest growing sectors were the extractive sector, propelled by a boost in coal exports, and the financial sector fuelled by credit expansion and increased income, mostly centred on urban areas. This bodes well for the Group as we deliver timber products into the rail expansion projects and construction sector. The outlook for 2014 looks positive with a number of contracts and orders in place and the Group believes that this is the right location and time to start increasing the production capability.

In June 2014 we reported the results of an independent valuation report on the Mozambican concessions undertaken. The valuation indicates a Net Present Value before tax and consideration of non-controlling interests ranging between US$141 million (£94 million) and US$308 million (£205 million) based on a discount rate of 15% to zero. The valuation was based on a 10 year cash flow forecast with a capital expenditure requirement of $15m over the period. This valuation underpins the confidence we have in our timber business and we will now look to focus on realising this potential value outlined in the recent report.

Food Processing - Lesotho

As of the 1st April 2014 the Group assumed the management and operational control of a fruit and vegetable cannery. We have been producing canned tomato based products ready for export and have used this initial period as an opportunity to understand the requirements to optimise the facility. Orders have been placed that will enable us to achieve our target production of 20 tonnes per day. Our agricultural team has been active on the ground working with farmer's associations and local commercial farmers to build up the horticultural sector in the Kingdom.

Branded Goods Entry

As announced in February 2014 the group launched its own branded range of glass bottled tomato ketchup, chilli and spicy sauces with a view to targeting the Northern Europe and Northern America catering market. Sauces will be distributed under our new "Mama Jo's" brand name. Manufacture of the sauces and bottling is being processed under a private label arrangement with an established, non-related organisation, allowing rapid entry into the branded goods market and increasing the product range.

Paragon Diamonds

It has been an exciting year for Paragon as they continue to advance their knowledge and development of the Lemphane Kimberlite project in Lesotho. Deep delineation drilling of the 6 ha Lemphane Kimberlite - one of the five major Kimberlites in Lesotho, demonstrated geological continuity to a depth of at least 350m below surface. This resulted in an independently derived tonnage estimate (by AMEC) of 48.6Mt of kimberlite with revenues of at least US$750/carat expected. More recently additional studies have indicated anticipated diamond values projected between US$930/carat and US$1,025/carat. Following completion of the initial bulk sampling program in June 2013, with circa 18,000 tonnes (15,000 dry tonnes) processed, 300 carats were recovered for an average grade of 2cpht. In March 2014 Paragon was awarded the Mining Lease over the Lemphane project, having negotiated a 20% government interest in the future mining operation and an initial 4% diamond royalty. In May 2014, Paragon announced that it had increased its interest in, Meso Diamonds, the local subsidiary holding the Lemphane project from 85% to 100%.

Bushveld Minerals

During the year Obtala disposed of its holding in Bushveld Minerals Limited ("Bushveld") to realise funds to focus on developing the food processing, agri-business and timber businesses.

Mineral exploration in Tanzania

The group holds several mineral licences in Tanzania carried at a value of £15.2 million. Minimal work has been undertaken on these licences during the year as the Group has been focussed on its agri-processing, farming and timber businesses. We will continue the refocusing of the Group in 2014 by seeking to identify potential corporate deals in order extract the underlying value of these licences without actively pursuing significant exploration work ourselves. This may take the form of joint ventures, disposals or other corporate restructuring.

Financial results

The Group remained development focused in the year ended 31 December 2013 in all its operations and generated £0.3million (2012: £0.9 million) of sales from its forestry business. The profit after tax for the year amounted to £40.4 million (2012: £10.6 million) of which £23.0 million (2012: £13.5 million) is attributable to the equity holders. The profit arose following a revaluation of the forestry assets. Cash operating and administration expenses for the year totalled £3.9 million (2012: £4.2 million) of which £0.5 million related to Paragon Diamonds (2012: £1.1 million). 

The results for the year include a loss on disposal of the Bushveld interest of £21.2 million offset by the fair value of forestry assets generating a gain of £107.4 million. This valuation increase is calculated on the basis of a discounted cash flow model undertaken by independent consultants.

The Group has a strong balance sheet with net equity attributable to shareholders of Obtala at 31 December 2013 amounting to £81.0 million (2012: £61.9 million). Net assets, including those attributable to minority interests in Paragon, amounted to £122.4 million (2012: £79.5 million). Intangible exploration assets are carried at £55.9 million (2011: £59.0 million) after taking an impairment change of £2.3 million in respect of licences that the board have relinquished.

Directorate changes

James Ede-Golightly and Mike Bretherton resigned from the board of directors on 22 March 2013 and 4 July 2013 respectively. Sam Small resigned from the board on the 29 November 2013. I would like to take this opportunity to thank all of them for their contributions to the development of the Group and wish them the best for the future. Joseph Philippe Cohen was appointed to the board as Financial Director on the 5 July 2013. Jean François du Lac and Timothy (Tim) William Walker were appointed to the board as Non-Executive Directors on 29 November 2013 and 5 December 2013 respectively bringing with them a wealth of experience which will benefit the Group going forward.

Corporate Social Responsibility

In June 2014 the Group announced that it is entering into a partnership with Sentebale, a children's charity founded in 2006 by Prince Harry and Prince Seeiso of Lesotho, as part of its Corporate Social Responsibility Programme. Sentebale, which means 'Forget me not' in Sesotho, works in partnership with local grassroots organisations and government ministers to provide healthcare and education to some of the most vulnerable children in the world - the victims of extreme poverty and Lesotho's HIV/AIDS epidemic. As a result of the partnership, the Group will make quarterly donations and are committed to working with the charity over a long period of time, developing the partnership further in the future, as Obtala continues to grow its production levels at the fruit and vegetable cannery in Lesotho.

Outlook

2013 proved to be a transitional year for building our extensive asset base. We are now able to produce a range of products, through complete vertical integration, to control and develop our margins and profitability, in both our farming and timber businesses.

We now have two processing facilities producing our own label range of products, and it is planned to construct a canning plant adjacent to our drying unit in Morogoro, Tanzania by H1 of 2015. A platform to generate substantial revenues has been put in place, and sales have commenced successfully across all sectors of the business, as we develop our "farm to fork" product line.

In addition, 2014 will see the launch of our new "African Home Stores" concept, the first to be launched in Q3 this year in Lesotho, providing entry into the African consumables market. We will sell our own products locally, and provide a centre for local residents to buy a range of necessities imported from around the world. Our initial plans are to rollout three African Home Stores in Lesotho, Tanzania and Mozambique by end of H1 2015.

I am confident 2014 will prove equally as exciting and look forward to reporting on the further development of our agri-processing, farming, timber and retail operations.

Paragon shows good potential as it is advancing rapidly towards its objective of becoming a mid-tier diamond producer.

The group's strong balance sheet, together with realisable investments, developing revenue stream and no debt, allows the Group to pursue a fruitful growth strategy.

We are guests in each African country in which the Group has a presence, and have developed strong relationships with local communities and employ circa 700 workers to both our benefits. I would like to thank all our employees and my colleagues for their hard work and look forward to a successful and eventful 2014.

Francesco Scolaro

Executive Chairman

26 June 2014

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of financial position

Consolidated statement of cash flows