Obtala Limited (LON:OBT) has seen a positive start to 2018, setting new quarterly records for both its contracted sales and export grade timber production.
The AIM-listed, African-focused, agriculture and forestry company reported US$8mln in contracted sales for the first quarter of 2018, higher than any previous figure, in addition to 3,600m3 of export grade timber production.
Obtala added that its new veneer factory in Gabon had moved into test phase, with production anticipated to begin early in the second quarter of 2018. Its sawmill in Nampula, Mozambique came online in the first quarter, with the arrival of brand new Wood-Mizer processing equipment from South Africa and some older equipment moved to Nampula from the existing sawmill in Uape.
Additionally, the company said it had extended its memorandum of understanding (MOU) with Nouvelle Scierie Moderne de Sassandra (NSMS), the forestry subsidiary of Argento Ltd, announced last month in order to complete due diligence and observe more sample data.
Under the terms of the original announcement, Obtala, through Argento, provided a loan of 450mln West African Francs (US$845,000) to NSMS to pre-finance the production of timber in the Ivory Coast, repayable over 9 months from 31 March 2018, in return for exclusivity over this production.
In the extended agreement, at any time up to 1 April 2019, Obtala can serve written notice via Argento to purchase 100% of NSMS' share capital. Should the acquisition not be pursued, the loan becomes repayable in full. Obtala said initial deliveries from NSMS had been received, put through the kiln drying process in Abidjan and had already been shipped to North America.
Start of Hybrid Orchard Model
The group said production plans for its 2018 agribusiness in Tanzania had been completed, including the return of 200 hectares of agricultural land to a local partner, adding that 2018 would see the start of the Hybrid Orchard Model, with up to 500 hectares of mango saplings to be planted over future years.
Obtala also announced it was at an advanced stage in discussions with an established provider to secure a trade finance facility and was confident that the initial facility of US$5mln would be secured in the second quarter.
Miles Pelham, chairman of Obtala, commented: “We have momentum throughout the Group and I look forward to appraising you of our full results for the year ended 31 December 2017, including a step-change in revenues, well in advance of providing our Q2 update."
Obtala shares were up 2.4% at 10.6p in lunchtime trading Thursday.