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Obtala Resources (OBT) has announced the signing of heads of terms for a venture in which it will have a 70% interest to develop a commercial farming operation over an additional 1,265 hectares in Tanzania.
The new land – which is located only 15km from the company's existing horticultural project, allowing for significant synergies of manpower, management control, technology and logistics – will take the company’s total land held under lease agreements in Tanzania to circa 1,800 hectares and will see a banana plantation, mango plantation and Persian Lime tree orchard developed.
Having also recently announced a Memorandum of Understanding with an experienced international exotic fruit trading company, Obtala notes that trader has agreed to fund the cost of the banana seeds and will provide plantation experts, providing significant cost savings at the start of the new enterprise.
Having been 8.25p when we updated earlier this month, the shares have slipped to 7.625p – though still up from little more than 6p in early October.
The rise from there particularly followed news of the commencement of a process to separately list the company’s Mozambique timber business on AIM and, with the potential timber valuation catalyst together with the agriculture potential which now looks to be opening up, our stance remains buy - the stock trades at a vast discount to what we believe to be its true asset value and the demerger should close that big time.
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