Woodbois Regulatory News (WBI)

14 Sep 2009 14:16



14 September 2009

OBTALA RESOURCES PLC ("Obtala" or the "Company")

Obtala creates energy focused subsidiary company in East Africa

The Board of Obtala Resources, the AIM quoted mineral exploration and development company, is pleased to provide the market with an update on recent corporate activities. Obtala has worked closely with Montara Continental Ltd ("Montara"), in which Obtala has established a controlling 60% shareholding. The other shareholders in Montara are Mionex Ltd (25% holding) and Gribben Enterprises Ltd (15% holding) whom will act as local partners. 

Montara is an energy-focused company which currently holds coal exploration licences and an interest in agricultural farm land, through a Joint Venture ("JV") with Lutukira Mixed Farms Limited, in Tanzania.

Highlights

Obtala holds a 60% shareholding in an energy commodities focused subsidiary company;

Montara holds a 70% interest in a farming and agriculture focused JV with a local farming company;

Montaro will enter coal exploration in southern Tanzania; and

Obtala (through the JV) will participate in sugarcane and groundnut farming and forestry concessions in East Africa with small scale trial farming to commence in 2010.

Coal Exploration

Montara currently holds title to two prospecting licences (PL) and two reconnaissance licences (PLR) totalling 647.02km2, which are considered prospective for coal exploration. 

The Kate group of licences, cover a contiguous area of 458.93km2, occurs to the west of Lake Rukwa in south western Tanzania. The properties lie to the west of the Namwele-Mkomolo Coalfield, where a small resource has been identified by historical explorers.

Manda North is located in the Ludewa District, also within south western Tanzania, near the Mchuchuma-Katewaka Coalfield. This licence lies immediately adjacent to the coal properties licenced to the National Development Corporation (NDC); an economic development organization established by the Tanzania government. 

The current reserves for the Mchuchuma-Katewaka Coalfield are stated as:

Data source: National Development Corporation, Tanzania, website. 

Please note that these should not be considered as JORC compliant.

The National Development Corporation of Tanzania has completed a feasibility study on the development of a 1.5 mtpa coal mining operation based on the Mchuchuma-Katewaka coal field and an adjacent 400 MW coal fired power plant to supply electricity to the national grid system (Montara is not currently involved in the power plant development). 

The feasibility study completed by the National Development Corporation indicates that the coal project will have low strip ratio ranging from 3.3 to 5.2 (tonnes coal / cubic metre waste ) and an economic mine life exceeding 25 years.  The study indicates that the Mchuchuma-Katewaka coalfield may produce coal with an energy content of 5200-5400 kcal/kg and low levels of sulphur (average 1.3 - 2.1%). It should be noted that Obtala has not commenced any exploration, therefore, it will update the market with relevant data and the above is included only as an indication of data obtained from an immediately adjacent property. 

Agriculture & Forestry

Montara is looking to invest, initially in Tanzania and Mozambique, with a view to establishing self- sustainable and profitable farming enterprises which will create a platform for the company to expand and grow organically while introducing improved land management practices and increase productivity yields per unit area.

Montara currently has a controlling stake of 70% in a JV with an interest in 20,000 hectares of farm land within the fertile Songea district of southern Tanzania. The local partner, Lutukira Mixed Farms Limited, holds the remaining 30%. Negotiations are ongoing and applications submitted for a further 10,000 Hectares and 54,000 Hectares of agricultural and forestry concessions, respectively, in northern Mozambique. The Company will update the market once all applications have been concluded.

The objective is to farm sugarcane and groundnuts, both considered as renewable energy crops both with sellable processing by-products, with small-scale trial farming being initiated in 2010. The intention is that Montara will assist the neighbouring local farmers to improve productivities and act as a conduit to markets, through establishing efficient central processing facilities. 

The sugar markets have recorded 28 year high prices recently as India, the world's largest consumer, taps into the global market to offset the poor local crop harvest in India this year. Also, there is an increase in demand for groundnuts, as a protein source, and groundnut oil in China and India which provide an encouraging economic backdrop for Montara to plant and harvest sugarcane and groundnuts in the near term future. 

Frank Scolaro, Chairman of Obtala, commented that "The creation of Montara Continental as an energy subsidiary firmly places Obtala as a multi-commodity investment company positioned to benefit and build on its local relationships in East Africa. This new subsidiary company allows Obtala to add coal exploration licences to our existing mineral asset portfolio and diversify into farming assets with access to the growing renewable energy sector.  Furthermore, it is anticipated that that in the near future the agriculture and forestry business will be planted and harvested thereby delivering a new stream of revenue to Obtala. The Board is fully committed to progressing existing exploration activities in Tanzania and to reviewing further strategic investments in Africa.  

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