Obtala Resources Limited Agriculture Update (7487E)

TIDMOBT

RNS Number : 7487E

Obtala Resources Limited

06 November 2015

06 November 2015

Obtala Resources Limited

("Obtala", the "Group" or the "Company")

(AIM: OBT)

Agriculture Update

Obtala Resources Limited (AIM:OBT), the vertically integrated agribusiness, timber and retail company, is pleased to provide the following update with respect to its agriculture assets.

Highlights:

-- "AA" grade certification awarded for BRC Global Standard for Food Safety for Morogoro farm in its entirety, for dried fruits and vegetables.

-- Memorandum of Understanding signed with international fruit trading company, a division of Groupo Cabal, the former owners of Del Monte Fresh.

-- 500 tonne of cantaloupe melons under 'plant to order' programme placed for dispatch in Q1 2016.

-- Plan to establish significant banana plantation in Tanzania of 150 hectares under 'plant to order' programme for H2 2016 to fulfil Middle Eastern market.

   --   Strong interest in Middle East for fresh vegetables following Dubai exhibition. 
   --   Mama Jo's repackaging for introduction to airlines inflight catering. 

BRC Global Standard

The Company is pleased to announce that it has been awarded the BRC Global Standard for Food Safety with an "AA" certification grade. The Company has invested a substantial amount of time and resources at the Morogoro farm in order to achieve the globally significant BRC standard. In the last 12 months, Obtala has undertaken additional capital expenditure on the processing unit, infrastructure upgrades, extensive staff training and project management in order to receive this standard. The receipt of this standard (after the award of Global GAAP certification in July), is the final industry certification required to allows Obtala to market its produce to a wide range of potential customers for whom BRC compliance is required. Therefore, Obtala looks forward to delivering enhanced orders and sales from its agri-business in the near future given the platform we now have to conduct sales globally.

The Company is currently in advanced discussions with our UK based food consultants with regard to re-packaging the Mama Jo's range of dried fruits in smaller 40g bags that will be suitable for airlines and fast food/convenience outlets. We continue to grow, dry and package our range of tomato, chilli and peppers in bulk size, and it is anticipated that orders for these products will escalate now that we have the BRC global standard.

Strategic Relationship with Fruit Trader

The Company has signed a Memorandum of Understanding ("MoU") with a highly experienced international exotic fruit trading company (the "Trader"). Under the terms of the MoU, Obtala will work in partnership with the Trader to establish a marketing and sales entity based on a revenue split basis, ensuring the best returns for the Company.

The Trader is part of the agricultural division of Grupo Cabal, a Mexican group with long standing tradition in the sector as former owners of DEL MONTE FRESH and today one of Mexico's largest producers and exporters of tropical fruits. The Trader deals in agricultural commodities from the Americas to the European and Middle Eastern market and will be able to provide its expertise to Obtala for its fresh produce division.

Through the partnership we will have direct involvement in all of the stages of the supply chain, going from production to logistics and distribution channels, ensuring that we systematically deliver to our clients to the highest quality standards in the industry. The Traders' network spans the highest quality producing countries for each of the products in their portfolio where expertise has been harvested for many decades, all the way through to the main consumer markets in the Americas, the European Union and Middle East.

As part of the partnership with the Trader, Obtala will initially supply 20 containers, c.500 tonne, of cantaloupe melon. This variety of melon takes 3-4 months from planting to harvesting, yielding +20 tonnes per hectare. In addition the Trader is highly experienced in banana farming and together we plan to establish a 150 hectare banana plantation on the farm. Typically bananas take between 9-12 months from planting to harvest with 1,800 banana trees per hectare yielding +40 tonnes per hectare, achieving $1,000 per tonne, with costs of $5,000 per hectare.

General Update and Lesotho

Company representatives recently attended a major fresh vegetable exhibition in Dubai which has resulted in strong demand and interest from eight Middle East based trading companies. The Company is currently finalising packaging requirements for the end users and is in discussions with Emirates Airlines about acting as our carrier of choice for the products.

In light of the BRC certification and the increased interest being generated for both dried and fresh produce from the Morogoro farm in Tanzania, the Board has taken the decision to withdraw from its joint venture on a cannery operation in Lesotho. The Company believes it is better served concentrating and focusing its effort and its resources and time on developing the Morogoro farm operation.

Simon Rollason, Managing Director of Obtala, commented, "The BRC certification is the result of much hard work on the ground, significant investment and good working relations with our local workforce and is an important milestone achievement for the farming operation. The future partnership with a division of a major international fruit trading company and the benefit of the downstream revenue share is an exciting development. The expertise that they will bring in terms of marketing and distribution, together with hands on farming expertise can only be beneficial to the Company. Our intention is to increase the area under cultivation and to turn the farm into a major operation in the region with a range of product lines exporting globally."

 
 Obtala Resources 
  Kevin Milne - Executive Deputy 
  Chairman 
  Simon Rollason - Managing Director    [phone] 
  www.obtalaresources.com                1940 
 ZAI Corporate Finance Limited 
  (Nomad) 
  Ray Zimmerman                         [phone] 
  Richard Morrison                       2220 
 Brandon Hill Capital (Broker)          [phone] 
  Jonathan Evans                         5000 
 Square 1 Consulting (Public 
  Relations) 
  David Bick                            [phone] 
  Mark Longson                           5599 
 

Additional information

BRC Global Standards

BRC Global Standards is a leading safety and quality certification programme, used by over 23,000 certificated suppliers in 123 countries, with certification issued through a worldwide network of accredited certification bodies.

The Standards guarantee the standardisation of quality, safety and operational criteria and ensure that manufacturers fulfil their legal obligations and provide protection for the end consumer. BRC Global Standards are now often a fundamental requirement of leading retailers.

The BRC Global Standard for Food Safety Issue 7 was published in January 2015, setting the latest benchmarks for best practice in food manufacture. Issue 7 has been developed to specify the food safety, quality and operational criteria required to be in place within a food manufacturing organisation to fulfil obligations with regard to legal compliance and protection of the consumer. The format and content of the Standard is designed to allow an assessment of a company's premises, operational systems and procedures by a competent third party, the certification body, against the requirements of the Standard.

The BRC Global Standard focuses on:

   --     ensuring consistency of the audit process 

-- providing a Standard that is flexible enough to allow extra voluntary modules to reduce the audit burden

   --     encouraging systems to reduce exposure to fraud 
   --     promoting greater transparency and traceability in the supply chain 

-- encouraging adoption of the Standard in small sites and facilities where processes are still in development

This information is provided by RNS

The company news service from the London Stock Exchange

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November 06, 2015 02:00 ET (07:00 GMT)