Woodbois Regulatory News (WBI)

20 Jan 2010 13:33



20 January 2010

Obtala Resources plc

Agreement signed for the Distribution Rights to Sierra Leone Diamond Production

Obtala Resources plc ("Obtala") (AIM:OBT) which invests in and develops mineral assets is pleased to announce that it has signed a Distribution Agreement with VL Holdings Limited ("VL"), of Hong Kong, whereby VL will act as the sole distributor for the diamond production from the newly acquired Konoma alluvial diamond operation in Sierra Leone (refer to press release dated 13 January 2010). 

Under the terms of the agreement VL will act as the exclusive distributor responsible for the collection, safe transportation, marketing and selling of stones. VL has acquired the exclusive rights for a one year period in consideration for a one-off payment of US$250,000.

VL has further agreed to pay Obtala an amount equal to the price per carat as determined by the Government Diamond Valuator ("GDV") plus a 15% premium on all stones. The GDV is regulated by the Government of Sierra Leone under the Kimberley Process Certification Scheme. In addition VL will pay OBT 50% of the realised value, after costs, from the sale of polished individual stones greater than or equal to 5 carats.

VL Holdings Limited of Hong Kong , has been chosen as the exclusive distributor for it's more than 40 years, in-house, diamond expertise in Rough, Polished and Diamond Manufacturing and for its expertise in supplying the most renowned Jewellery Brands with the best cut diamonds.

Frank Scolaro, Chairman of Obtala, commented that "the financial crisis of the past year, which seriouslyimpacted upon the diamond business has witnessed the emergence of Hong Kong as a crucial diamond hub, bypassing the traditional diamond centers. The Far East has demonstrated its resilience as an important diamond consumption area. Christies and Sotheby's have in the past year realized the highest prices for some of their nicest stones at their Hong Kong auction sales. Whilst the "United States" and Europe have had to endure sluggish diamond sales, the Far East has witnessed an increased interest for diamonds and witnessed an important increase in diamond consumption.

This agreement with VL Holdings completes the mine to market value chain from which Obtala Resources will financially benefit from the downstream profits which will be realised through the sales of large polished stones.  VL Holdings represents a direct link to a buoyant Far East market where demand for quality gemstones is strong. They provide a technical, financial and secure structure to achieve maximum benefit for downstream revenue which SLHR Limited will now benefit from. The Board of Obtala believe that successful low-cost mining of the alluvial diamond deposits in Sierra Leone will achieve the corporate objective of increasing profitability and enhancing value of the overall portfolio of our projects."

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