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Obtala - forestry cash in: buy

By HotStockRockets | Sunday 6 March 2016


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Obtala Resources (OBT) has announced receipt of further monies from its approximately $3 million forestry investment agreement. Good News

The company has now received $0.6 million from Hong Kong-based Global Timber Investment Ltd. A balance of $0.3 million is due by 1st June, with these for a 15% shareholding in a vehicle which holds the timber production offtake rights over a designated 20,000 hectare concession.

This follows an immediate C$1.61 million investment from George Miller, a private investor based in the US, for 12.5% of another such investment vehicle and the economic rights of up to 6,250 hectares and $0.6 million due on 30th April and $0.3 million by 30th June from Hong Kong and Russia officed Basic Materials Ltd. This for 17.5% of another investment vehicle and the economic rights of up to 3,500 hectares.

The announcement additionally notes that “Obtala, through its subsidiary companies, still owns and maintains the timber concessions, which cover a total area of 314,965 hectares” – re-emphasising our previously made points that the transactions are for just a fraction of Obtala’s total forestry portfolio and thus the undervaluation of the current (sub £16 million, $22.3 million) market cap for this African-focused agricultural and timber play.

The shares have nudged back up to a 6p offer price on the back of the announcement but, continuing to believe that this fails to reflect the asset backing and that further news flow is likely soon, our stance remains buy.

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Comments

2 comments

  1. This share is like pushing water up hill with a chocolate stick in August .


  2. Tim reynolds

    Obtala resources have close to £4 million in admin costs and operating costs per annum ….and thats before costs of sales . They never seem to produce much revenue despite all their talk . This $3 million is just plugging a hole . Also it has a. 5 % coupon attached to it in perpetuity which sounds like a loan to me … So whats the forestry really worth ?obt are going to need to raise more money soon again . As shareprophets would say to send to money heaven ….£ 4 million per annum on admin and operating costs …..


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