Obtala Resources : Additional Farm Land

13th October 2014

Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Additional Farm Land

Obtala Resources Limited (AIM: OBT), the emerging agri-processing, farming and timber company, is pleased to announce that it has signed an agreement for additional agricultural land in Morogoro, Tanzania.

Highlights:

·       Land area covers 204 hectares, nearly doubling the existing horticulture block

·       Located on the plot neighbouring the existing tomato, fruit and pepper farm project and associated infrastructure.

·       Situated adjacent to main Dodoma to Dar es Salaam tarred highway and close to existing power-line

·       Land lies 235km from the port at Dar es Salaam and 40km from large labour pool

·       Plan is to build on the initial development made in 2013/2014 and create a series of fruit orchards to offset costs made from buying in fruit from contract farmers

Obtala has agreed terms and signed an Agreement with a private, non-related Tanzanian citizen to form an operating and management company in which the Company will hold an 80% interest. The partner will hold a 20% free-carried interest with the company holding the lease over the land for an initial 15 year period renewable for a further 15 years thereafter.

The land lies adjacent to the main tarmac highway which leads to the port of Dar es Salaam, approximately 235km to the east. The land is ideally located on a neighbouring farm to our existing farm operations and associated infrastructure. The objective will be to increase our footprint in the area and provide additional fruit and pepper inputs for the processing unit already established on site. The additional land will allow for expanded revenues and cost savings equivalent to c.$1 million per annum by having own produce and negating the requirement to purchase inputs from contract farmers. The production of the fruits will dramatically benefit financially from the incentives gained from the recently awarded Export Processing Zone licence (EPZ).

Mango saplings are readily available from the local government nursery and the Company will target planting a 60 hectare mango orchard, containing c.20,000 mango trees. The purchase price for the sapling is $30,000. These trees will yield fruit at the end of the 2nd year producing an estimated at 5-7 tonnes per hectare rising to 10-15 tonnes as the trees mature. Recovered dried product is estimated at 15% of the fresh fruit weight. The new packaging solution we are evaluating, small 75-100g consumer focused doypacks will provide for significant value added margin realisation with units expected to sell for +$1.00 each.

Pineapple is a two season crop; two crops over 30 months and is a drought resistant, requiring minimum irrigation. The Company will work towards planting pineapples over a 60 hectare area. Currently the Compnay is re-planting the crowns retained from the purchase product being fed into the drier. Yields are expected to be about 37 tons fresh fruit per hectare with recovered dried product packaged in similar bags as the mango and other fruits.

Director's comment

Grahame Vetch, Director of Agriculture, commented: "I am delighted to announce the signing of this agreement which expands our land base in one location. We can expand the existing farm infrastructure into the new block and benefit from the cost saving synergies. With this new block we will look to create fruit orchards that require low upfront capex and have low annual operating costs. The value of the crop will enhance as the trees grow and the concept of the value added packaging and branding under the Mama Jo's label presents an exciting opportunity. In the meantime we are buying in fruit from contract farmers but will be able to harvest our own crop in the near future providing significant additional cost savings."