Obtala Resources (LON:OBT) said formal agreements with the Lesotho National Development Corporation (LNDC) over Lesotho’s only fruit and vegetable cannery were concluded last week.
The sign-off took place at a ceremony held on November 29 in Maseru, Lesotho, with members of government and local media present.
Obtala has taken a 70% stake in the Lesotho plant business, and will formally assume operational control over the cannery on 1 April 2014, though work will begin immediately on the ground to develop a "home" farm that will provide consistent supply to the cannery. This will go some way to ensure that the cannery, which currently operates a single eight-hour shift, is used more heavily.
The LNDC has provided a parcel of land covering around 17 hectares, located some six kilometres from the cannery premises, and it is expected that a groundwater study will be completed before the 2013 year-end. This land area is considered sufficient to develop a horticultural enterprise sufficient to supply 100 tonnes of product per week.
Meanwhile, other land areas are also being looked at. Discussions have taken place with representatives of farmers' associations and the company is looking to work closely with a recent government initiative, funded by the World Trade Organisation, to provide local farmers with small scale greenhouses and input start-up kits.
Once the cannery achieves its optimum production capacity, Obtala will benefit from the downstream revenue of selling branded value added products in either cans or glass containers.
“The cannery presents an excellent opportunity for the company to significantly increase its monthly production output, supplementing the tomato farm project in Tanzania, where we will be reporting on progress shortly,” said Francesco Scolaro, chairman of Obtala.
“The Lesotho project will have a significant positive impact upon the social and economic conditions of the rural and farming community with the project providing an incentive for farmers' associations to produce more inputs to boost commercial agricultural production. Importantly, this venture takes us another step towards to our goal of creating a fully vertically integrated business, allowing the company to enter into the branded goods market, significantly increasing our production levels and revenue projections,” Scolaro added.