Press releases

Final Results

 

Obtala Resources plc ("Obtala") (AIM:OBT), the UK resources investment and development company, is pleased to announce its audited final results for the year ending
31 December 2009.

A copy of the Annual Report and Accounts and Notice of AGM is being posted to shareholders shortly and will be available from the Company's website -
www.obtalaresources.co.uk.

Highlights

• Gains on investing activities of £5.7 million (2008: nil) realising net profit of £1.8 million after tax, impairment and expenses (2008: £0.2 million loss)
• Investment in Kopane Diamonds Developments plc generated a net gain of £5.7 million comprising £2.4 million realised and a further £3.3million of unrealised gains recognised as at 31 December 2009
• Acquisition of 60% shareholding in Montara Continental Limited with an interest in 20,000 hectares of agricultural land in southern Tanzania
• Post year end completion of Sierra Leone Hard Rock Limited acquisition settled by way of Obtala shares with a value of £4.3million for an estimated net book value of assets of £14.8million. Operations re-commenced in February 2010
• Acquisition of 15% interest in Central China Goldfields plc
• Cash reserves of £5.0 million
• Successful implementation of new complimentary investment strategy, generating positive returns

F. Scolaro Chairman commented: "Obtala Resources was presented with significant hurdles in 2009 which were overcome positively, setting a new route forward to welcome 2010 into a more positive, productive and cash generative year".

Chairman's Statement

Following on from a successful listing on AIM in 2008, I am pleased to report the subsequent progress and development of Obtala Resources plc ("Obtala", "Company" or "Group") into an established mineral exploration and development group.

Obtala has continued its primary focus on mineral exploration in Tanzania but during 2009 has also diversified into investment activities, holding strategic interests in other global mineral exploration and development companies. 

Financial results

The current year was difficult for many exploration companies and given the hardships of the recent economic climate I am pleased with the overall performance of the Group. The Group generated a profit after tax of £1.8 million for the year to 31 December 2009 (period ended 31 December 2008:loss of £0.2 million), which included gains of £5.7 million on its investment activities (2008:nil). Cash and cash equivalents amounted to £5.0 million at the year end (2008:£3.2 million) and the Group also held liquid investments with a fair value of £5.1 million (2008:nil). The net equity attributable to the shareholders of Obtala amounted to £30.3 million (2008:£28.3 million). A foreign exchange loss of £2.4 million was recognised directly in other comprehensive income during the year (2008:gain of £7.5million) due to the retranslation of USD denominated assets. 

The directors reviewed the carrying value of the intangible licences and recognised an impairment of £1.8 million (2008:nil), mainly in relation to copper and gold licences. The carrying value of the intangible exploration licences has also decreased by £2.4 million (2008: gain of £7.5 million) during the year due to the foreign exchange movements. Capitalised exploration and evaluation expenditure was £0.6 million (2008:£0.9 million), additions were £0.2 million (2008:£17.1 million) and the year end carrying value for intangible licences was £21.6 million (2008:£25.2 million).

Obtala raised gross additional funds totalling £2.6 million in the year through two private placings of 9,450,000 and 5,722,223 new ordinary shares at 17p and 18p respectively.

Corporate investing activities

Obtala has augmented its pure exploration and development activities with complementary investment activities, focusing on opportunities in the natural resources sector. This has enabled Obtala to take advantage of investments in undervalued resource assets and to exploit potential synergies and strategic alliance opportunities. Whilst the Group has traded in numerous equity and derivative investments in order to enhance shareholder value, its primary investment is in the combination of equity and derivative instruments that Obtala holds in Kopane Diamonds Developments plc ("Kopane").

Kopane

In March 2009 Obtala acquired a 23.0 per cent interest in the ordinary share capital of Kopane, an AIM quoted diamond mining and exploration company. I am pleased to report that our investment has delivered a good return and through various market transactions has realised a gain of £2.4 million from the disposal of a 12 per cent interest in shares with further unrealised gains of £3.1 million recognised in the income statement in respect of equity and derivative financial instruments.  At the year end the Group held a direct equity investment of 11.1 per cent of the ordinary share capital and an indirect interest of 14.7 per cent through a derivative financial instrument. The realised funds are being used to undertake further exploration on the Tanzanian exploration projects and to develop our newly acquired subsidiaries Montara Continental Limited ("Montara"), and Sierra Leone Hard Rock Limited, which was acquired after the balance sheet date. Obtala remains committed to the future of Kopane and remains its largest shareholder.

Acquisition of Montara

In September 2009, we announced the successful acquisition of a controlling 60 per cent shareholding in Montara, a privately held East African agricultural and energy-focused company which currently holds an interest in agricultural farm land in Tanzania, with a Tanzanian partner, and also holds coal exploration licences in southern Tanzania.

The addition of Montara as a subsidiary allows Obtala to add coal exploration licences to the existing mineral asset portfolio and diversify into the agriculture sector. This will firmly place Obtala as a multi-commodity resource company positioned to benefit from and build on its local relationships in East Africa.

Acquisition of Sierra Leone Hard Rock Limited (subsequent to the year end)

In January 2010, Obtala acquired the entire issued share capital of Sierra Leone Hard Rock Limited ("SLHR") and its wholly owned subsidiary Sierra Leone Hard Rock (SL) Limited. This acquisition gives Obtala access to four diamond mining licences, covering an area of 162.40 km2, seven exploration licences, covering an area of 2,590.75 km2 and net assets with a carrying value of £14.82 million per the last financial statements to 30 June 2009. Consideration for the acquisition was satisfied by issuing 21,170,422 new ordinary shares in Obtala equivalent to 9.9 per cent of its enlarged issued share capital following completion. The share issue was equal to a total consideration value of £4,260,547.

The Konoma Project, where the four mining licences are held, serves as the headquarters for the company's diamond mining and prospecting operations, and is located in north-eastern Sierra Leone, approximately 220km east of Freetown, the capital city, and 58km northwest of Koidu. The project extends along the Lower Bafi River east of the confluence with the Sewa River and west of the Moinde River.

The previous owners of SLHR commenced extensive exploration activities in 2004 and commissioned the Konoma Mine 2Mtpa Dense Media Separation (DMS) plant, in June 2006. Up to the end of 2007, approximately 30,000 carats were recovered from over 40,000 stones at an average value per carat of US$408.

I believe that SLHR holds substantial potential in a recovering diamond market. The Konoma Project area has diamondiferous kimberlite dykes with potential surface strike lengths stretching to tens of kilometres. Should these kimberlite bodies be the source of the diamonds in the Bafi River then the grade could be very high. The mining of such bodies would be relatively simple and inexpensive.

Mining operations recommenced in early February 2010 and Obtala is currently in the process of taking the plant out of care-and-maintenance and commencing production. 

Directorate changes

The Obtala Board has been re-organised to four directors with the resignation of James Ede-Golightly on 31 May 2009 and the resignation of professor John Monhemius on 7 December 2009. I would like to take this opportunity to thank both of them for all their hard work as Non-executive Directors and their contribution to the early developments of the Group.

Outlook

I am confident that Obtala will make considerable progress in the coming year and in particular, that the diamond mining operations in Sierra Leone is expected to create further value for our shareholders. In addition Obtala will continue the exploration and development of its other mineral licences and other local assets.

Finally, I would like to thank my colleagues and our employees for all their hard work throughout the year for what has been a successful and eventful year.

 

Francesco Scolaro

Executive Chairman

22 April 2010

 

Contact

Simon Rollason - Managing Director Frank Scolaro - Chairman	+44 (0) 20 7099 1940
Obtala Resources plc	www.obtalaresources.co.uk
ZAI Corporate Finance Ltd	+44 (0) 20 7060 2220
Ray Zimmerman / Sarang Shah