Obtala going bananas with new Tanzania joint-venture

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Proactive Investors | 25 November 2015

Obtala going bananas with new Tanzania joint-venture
 
Obtala Resources (LON:OBT) has signed outline terms of a deal that will see it significantly increase its farming footprint in Tanzania.
 
The formalities of a joint-venture will be concluded “shortly” that will give the AIM-listed agri-specialist access to 1,265 hectares that sits between the Wami River and the main Dodoma to Dar es Salaam highway.
 
The area is just 220km from the sea port and airport at Dar es Salaam, Tanzania’s largest city, making logistics reasonably easy.
 
With 250 hectares already cleared, the plan initially is to plant bananas, which are reasonably quick-to-market fruit.
 
Obtala will have 70% of the JV, with the unnamed partner holding the remainder.
 
The deal also provides a platform for its first collaboration with a Mexican fruit trading group that used to own of Del Monte Fresh.
 
In fact the trader will pay for the seeds for the initial banana crop at a cost of to $110,000 per 100 hectares.
 
It will also provide plantation experts from its Central American operations to assist the project start up and training.
 
The plan in Tanzania to begin with a 150 hectare, scaling up to 500.
 
Typically bananas take between 9-12 months from planting to harvest.
 
The figures add up. According to Obtala the yield is 1,800 banana trees per hectare producing more than 40 tonnes. The price achieved is around US$1,000 per tonne, or US$40,000 per hectare, with costs of $5,000, the firm added.
 
Alongside the bananas, the firm plans a mango plantation, covering 180 hectares, and a 100-hectare Persian Lime tree orchard.
 
Managing director Simon Rollason said: "This joint venture will allow us to significantly increase our land holding and provides a strong foundation to work with our partners in establishing a significant mixed fruit plantation in Tanzania.
 
“The existing infrastructure, water availability and close proximity to the export facilities at Dar es Salaam makes this an exciting opportunity.
 
“The land is close to our existing operation thus creating synergies in terms of manpower and expertise. The funding of the seed stock and provision of highly trained plantation experts by our fruit trading partner provides significant cost savings at the start of this new enterprise."  
Original source: Proactive Investors
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