(Alliance News) - Woodbois Ltd shares rose on Wednesday, after it announced plans to exit Mozambique and focus on its core business in Gabon.
Shares in Woodbois were up 7.6% to 0.78 pence each in London on Wednesday morning.
The maker of sustainable timber products said it will exit Mozambique, as it believes its operations there "have not and cannot contribute meaningfully" to profit.
Woodbois also noted "heightened geopolitical risks" are a cause for concern in the region, particularly in the northern Cabo Delgado province, which is grappling with a surge of violence from fighters part of the Islamic State group.
Woodbois said some of its concessions are located in Cabo Delgado. "The ban on exports of local wood, have further contributed to this strategic decision," it explained.
It will sell its operations in the southern African nation to a "local purchaser", after striking a letter of intent.
"A comprehensive sale agreement is expected to be entered into in the coming weeks," it added.
Chair & Chief Executive Guido Theuns said: "Woodbois remains committed to focusing on its core business in Gabon, where significant potential exists for production and revenue growth. The Company believes that by concentrating its resources and efforts in Gabon, it can better capitalise on opportunities and drive sustainable value for its shareholders.
"The proposed divestment of our Mozambique operations aligns with our broader strategic objectives and underscores our dedication to optimizing operational efficiency and enhancing shareholder value."
By Sophie Rose, Alliance News senior reporter
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Woodbois (WBI)