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Obtala Resources strikes deal for new Tanzanian fruit business

Published: 09:04 14 Oct 2013 BST

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Obtala Resources' (LON:OBT) ambitions took a step further Monday, as it unveiled plans for a new dried fruit business in Tanzania.

A binding heads of agreement with a local private firm has been inked for land of around 617 hectares, which already contains 1,500 fruit bearing mango trees, with land suitable for growing more trees.

The plan is to create a new operating, management and marketing company in which Obtala will hold an 80% interest, while the partner holds a 20% free carried interest.

The site is 250 kilometres (km) from port and just 20km from the firm's sun dried tomato project, allowing for staffing and operational synergies.

Managing director of Obtala, Simon Rollason, said: "We are very pleased to announce the signing of this document which allows the company to develop a new and exciting business close to the existing major markets and export facilities in Tanzania.

"This project lies in close proximity to our sun dried tomato farm which remains on-course for first production in November 2013.

"Our objective is to produce a value added dried product on site which can be sold locally and into the export market.

"We will also be able to produce additional high yielding, high value crops through a process of intercropping and establishing new blocks on the land which covers a substantial area, utilising best farming practices and irrigation to facilitate margin optimisation and year round revenues.

"This project, together with the recently announced cannery operation in Lesotho, is in line with our development plans to re-position the company as a self-sustainable, profitable, African focused agribusiness and timber trading company with the focus on developing a vertically integrated company which will reap the benefits of value added production and branding."

Separately, Obtala also noted Paragon Diamonds' (LON:PRG) announcement this morning that it had been awarded a mining licence for its Lemphane Kimberlite in Lesotho - putting it on the road to production

Obtala is Paragon's largest shareholder with a 45.35% stake.

Shares advanced 2.90% to 8.875p in early deals.

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