Obtala Resources (LON:OBT) has welcomed a Mozambican government move, which it says will safeguard the country's long term timber industry.
It has suspended for two years authorising any application to cut down trees without the processing of timber under what's called the "simple licences" system.
Under the second type of licence, called a "forestry concession contract", the companies concerned operate within strict guidelines and must process the timber.
Obtala noted that this suspension does not affect the concession contracts currently held by the firm as all of its timber rights are held under the "forestry concession contract".
Obtala executive deputy chairman Kevin Milne said: "We have received a number of shareholder enquires regarding this subject and welcome the opportunity to clarify the position."
He added: "We continue to operate in a responsible, sustainable manner in accordance with the strict conditions of our forestry concession contracts and laws of Mozambique and look forward to growing this exciting business opportunity."
As reported in October, Obtala is seeking to spin out its timber assets and seek an independent stock market listing on AIM.
This is expected to take place in the first quarter of next year.
The operations have been ascribed a net present value of US$161mln, at a 12% discount, using a 10-year cash flow model. The 2014 study was based on the company owning around 280,000 hectares.
Milne added today: "The process of re-structuring the timber business is on-going and once completed will allow the timber business to continue creating employment and economic growth within the regions where we operate."
Obtala shares eased 15.38% to stand at 5.5p.