Guernsey company Obtala Resources has raised $3 million to improve its forestry business in Mozambique, including C$1.61 million ($1.18 million; €1.07 million) from a US private investor named as George Miller in a document published by the London Stock Exchange (LSE).
A further two investors, Hong Kong-based Global Timber Investment and Basic Materials, a company with offices in Hong Kong, Shanghai and Russia, have committed $900,000 each. The investments have been made in exchange for stakes in Obtala’s forestry business and off-take agreements. Basic Materials has entered into a sales and marketing arrangement for Asia, Russia and the Middle East, according to a statement from Obtala.
The funding, due to be paid in full this June, will also go toward building two on-site kilns in Obtala’s forestry concession and a new sales and distribution centre in Mozambique’s capital Maputo.
Obtala deputy chairman Kevin Milne said in the LSE investment report: “Basic Materials, an off-taker and investor […] based in Hong Kong, Shanghai and Russia, affords a route to these valuable [markets, whilst] the creation of the distribution centre in Maputo will provide direct access to local consumers on both a wholesale and retail basis.”
Under the agreement, the investments are equivalent on Obtala’s books to 6,250 hectares of forestry concession land for George Miller, 3,000 hectares for Global Timber Investment and 3,500 hectares for Basic Materials, according to the report. Obtala operates its Mozambique forestry business through subsidiary and operator Argento Continental Corporation.
“This investment allows us to materially progress our forestry business in Mozambique. It ensures that Obtala retains a strong balance sheet without the requirement to issue equity or relinquish material interests in the forestry business which we value highly,” said Milne, adding that the forestry business would also set up a fund for the benefit of the local community.
Obtala Limited was initially incorporated in the United Kingdom in 2007 and listed on the LSE. In 2010 Obtala was re-registered in Guernsey and was registered on the LSE’s market for small and growing companies AIM in 2010.
Initially focused on mineral opportunities in Tanzania, the company has been re-positioning itself as an emerging Africa agri and timber trading and investment enterprise, according to Obtala’s website. The company is invested in farming operations near Morogoro in Tanzania, and is developing an ethical, Africa-based ketchup and chilli sauce company which it plans to sell in the UK and Africa.