presentation on montara continental

A Subsidiary of Obtala Resources Plc

July 2012


Summary of investment potential

• Long lead time activities such as acquiring initial land rights have been completed

• Significant land resources in areas which are favourable for agricultural production

• Pipeline of new projects which will substantially increase development potential through

2012 and 2013

• Montara’s forestry operation has already moved to processing raw materials into high

value, high specification finished timber products

• Montara’s agricultural operation has already demonstrated potential through trial plantings

• Experienced management team in place, with high quality support teams

Introduction : Forestry : Agriculture : Sustainability : Summary : Background


Montara Continental: The Opportunity

• Income generating, scalable business models with low up-front costs

• Commercial production and revenue generation commenced

• Multiple revenue streams with short term positive cash flow

• Agricultural productivity in expanding markets

• Potential to reduce costs through centralised processing operations

• Increase profitability through vertical integration, control of supply chain

• Adding value to co-products through post processing

• Socially responsible investment opportunity

• Strong government (Local and National) support



Strategy & Objectives

Strategy

Be a profitable, leading producer and trader of food crops and forestry products in

East Africa, growing year on year over the next 5 years.

Objectives

• Develop sustainable and profitable forestry and agricultural trading & investments

• Build a leading profitable position in East African agro-forestry within 5 years

• Become a leading producer of soft commodities in East Africa

• Be a leader in transforming the East African forestry sector from raw material

supply to a manufacturer of high value products

• Maintain high standards of sustainable practices and environmental management

• Operate in a socially responsible manner that meets the needs of our

communities, employees, customers and shareholders

• Increase areas of production through acquisition and trading

• Optimise shareholder return



Land Holding Value Comparatives

Agriculture

43,662 Ha

Montara Continental

Limited

Forestry

367,618 Ha

Country Land Use CurrencyUSD/ha

SourceAverage

Argentina 2nd quality arable USD 6,000 1

Australia What AUD 1,336 1

Grazing AUD 2,830 1

Brazil Farmland R$ 2,562 1

Malaysia Greenfields USD 3,000 2

Plantation USD 25,000 2

New Zealand Arable NZD 27,639 1

Romania Farmland Euro 3,920 3

Russia Lease USD 800 1

Source 1. International Farmland Markets 2009, Savills Research

2. Asian Plantations Limited

3. DGC Asset Management, Farmland Investment Report 2012



Forestry Concessions

Concession Area (Hectare)Montara %

Interest

Angoche ** 63,653 Ha 100

Gile 50,000 Ha 100

Purpletown* 200,000 Ha 75

Pemba ** 53,965 Ha 100

TOTAL 367,618 Ha

•Under MoU Due Diligence ** Pending Ministerial Sign-off

•*** JV agreement finalising title deeds

Forestry

Agriculture

Concession Area (Hectare)Montara %

Interest

Tanzania -Songea 19,787 Ha 70

Tanzania –

Nambendo***14,000 Ha 70

Mozambique –

Namuno**9,875 Ha 100

TOTAL 43,662 Ha

Agriculture Concessions

Areas of Operation



Forestry Business Strategy

• Current production

6,000/month

• Aiming to double Q4 2012

• Major supplier to government

backed projects

• Large export potential

• Order placed by major

international buyers

• Aiming to build up buyers list

with target of 10-20

containers/month

Railway SleepersSawn Timber

ExportsHardwood Flooring

• Currently selling strip

flooring blocks locally

• Q4 2012 will be

producing high spec

solid and engineered

flooring

Montara Forestry



Forestry as an Investment

• Timber presents a two-fold opportunity for investment growth:

1.Unlike other commodities (e.g. gold), trees grow in size as well as value per unit

2.Growth can be realised through harvesting, or option to store on-stump when

demand or prices are depressed – as values appreciate over time

• Forestry investments are also underwritten by the value of underlying land assets

• Substantial added value to underdeveloped timber properties through

development of on-site infrastructure to allow for future harvesting

• Global timber prices have increased by 6% annually for over 100 years, Global

timber market is estimated to currently be worth over $600 billion/annum

• Primary drivers underpinning consumption of forest products are economic

growth, personal income, and population growth

• Forestry investments offer stable long-term growth throughout any set of

economic conditions

• Consistent long-term portfolio growth that does not share any correlation with

the performance of traditional investment assets such as equities



The different species we supply

High Value Timber, High

Margin Model

• Main products: Sawn timber,

semi-finished flooring,

sleepers, furniture

• By products: Strip flooring,

construction timber and

biomass

• More than 10 commonly

traded species including:

• 3 species of Precious

Class,

• 7 Species of 1st



Our Forestry Concessions – Mozambique

• Within well established exotic hardwood concessions

• Standing stock immediately available for harvesting

• Active and regulated industry

• Concessions located with good access to export road

and port facilities – 200km from major ports

• Concession licences allows Montara to act as a trader

• Buy from ‘simple’ domestic licences holders at

heavily discounted local market rates

• 10 commercial and a number of less commonly traded

exotic hardwood species on our concessions

• Montara implementing a re-forestation program,

supporting biodiversity redevelopment

• No elaborate management practises required

• Project considered a model for forestry in Mozambique

by local government

• Our projects are major suppliers to government backed

development projects

Forestry Concessions

Operations Head Office Central Depot

Port Facility



Montara Forestry Operations

Sawmill in operation

Sleeper TransportLogs at Gile campWooden railroad sleepers

Chamfuta Logs in GileLocal Consultation



Montara’s Nampula Timber Yard



Sawmill

Harvested timber - Gile

Sawmill facility in Angoche

Forestry Growth Strategy• Logging operational in Angoche and Gile forestry concessions

• Sawmill and machining equipment in Angoche

• 7 mobile sawmills and secondary processing equipment in Gile

• Sawn timber storage facilities constructed in Nampula

• Grow from c.300m3/month sawn timber to 400m3/month by Q4 2012

• Increase profitability by building drying ovens and post processing

• Orders and enquiries from a number of major international buyers

currently being processed – with follow on orders expected

• Evaluating local manufacturing centre and European supply markets

• Evaluating opportunities to expand sleeper supply business

• Management & Inventory Studies on Purpletown and expansion of

Gile concessions underway

• Discussions underway to increase land holding and increase

production capacity

• FSC Certification in progress to expand market opportunities



Montara Agriculture

Agriculture as an Investment

• Farmland as a safe, long-term investment asset that generates income and is

unlikely to depreciate when the value of other investments fall

• Farmland has repeatedly outperformed mainstream assets including stocks,

bonds and commercial real estate

• Primary drivers underpinning current and future farmland values are economic

growth, personal income, and population growth, all of which ultimately dictate

global demand for food, feed and fuel

• Long term - demand for agricultural commodities is therefore expected to

increase in line with growth in these key drivers

• Demand for productive land is resultant of demand for agricultural commodities,

and as demand rises, so too do values

• Increasing demand for agricultural commodities in the face of a finite stock

• Supply of productive land cannot be increased, this creates the potential for

exponential growth in value as capital competes for the most productive assetsPrincipal source DGC Asset Management Forestry Investment Report 2012



Food demand is growing

*Source: Macquarie Commodities Research May 2012

Global food production is struggling to keep up with demand

• World population growth and intensification of food

consumption as diets switch from grain to meat based (see

graphs) means food demand increases

• China is the epitome of this situation

– over the last two decades moving from importing nearly

no soybeans, to being the worlds biggest importer*

– Imports are expected to continue to grow as China has

insufficient land and water to support sufficient food

production growth*

• Agricultural productivity growth from traditional major

producers (USA, EU, Aus) is too slow to meet demand growth*

• Declining world food stocks means greater price volatility

• Use of crops for biofuels has increased demand and provides a

support for global food prices



Investment in Africa targets local demand

• Growth in demand from the emerging markets drives higher food

prices as traditional local producers cannot respond.

• Africa has some of the fastest growing populations coupled with

declining per capita food production

• Tropical Africa has unused agricultural land and good climates

offering greater agricultural productivity than temperate latitudes

• Despite favourable productivity growth conditions, food imports

continue to grow:

– Africa lacks modern farming methods and crucially infrastructure to

store and transport foodstuffs

– Limited large scale commercial enterprises but large land areas

appropriate for commercial farming

• Opportunities for low production costs and high margins

• Local support for inward investment as investment in commercial

operations supports local farmer productivity and development

and reduces food import dependency



Groundnuts March 2012: $1,900/tonne167% price increase

Sunflower oil March 2012: $1,444/tonne155% price increase

Soya Beans March 2012: $512/tonne190% price increase

Long term global pricing follows

increasing demand



Our farms will focus on oilseed production

Groundnuts, Sunflower, Sesame

• Oil extraction for crops uses similar processes – press and filter

• Crops produce valuable and stable co-products (store and sell at best prices)

• Co-products enhance cash flow

• No elaborate management practises

• Little irrigation required and grow well in soils found on Montara’s farms

• Some crops are Nitrogen fixing and enhance the soil characteristics

• Tanzania is short vegetable oil – producing c. 90,000 metric tonnes (te)/annum

of vegetable oil, around half of what it is conservatively consumed (FAO 2008)



Montara Agriculture: Tanzania

• Songea Farm – 19,787 hectares in

Southern Highlands of Tanzania

• In addition JV for 14,000Ha on the

Mozambique border under application

• 99 - year Title Deed Leases

• Majority interest (70:30) in operating

company for both farms

• Multiple perennial rivers on properties

• High to moderate rainfall

• Fertile soils

• Two crops per annum with irrigation

• Local village and administration support


Songea Farm

Port Facility


85 Ha “Proof of Concept” Trial Farming

• Bush Clearing completed Aug - Nov 2011

• Ground preparation Nov-Dec 2011

• Planting Jan-Feb 2012

• Crops planted: Sunflower, Groundnut,

Sesame, Soya, Canola, Cassava

• Harvesting April 2012 onwards

• Local off-take for seeds being finalised

• Can expect 2.5–3.0 tonnes per crop type

per hectare from 1 harvest per annum as

soils develop

• Small scale oil seed press and filter

ordered

• Irrigation will double the harvest per

annum

Land clearing in Tanzania

Songea Farm

Land preparation



Soya seed plantingLutukira field camp

Sesame seed planting

Land contouring

Land preparation at Songea Farm



Large scale crop trials on Songea (2012)

Sunflower

Soya

Soya

CanolaSunflower



c.100km2

Agriculture

Mozambique - Agriculture

• 9,875 Ha agricultural concession in Namuno District

• Located within well known groundnut growing region

• Virgin farm land

• 280km east of the port facility at Pemba

• Flat lying topography

• Located along the perennial Lurio River

• Project well supported by district administration and

local communities



• We strive to be an agent of change for the better in the areas we operate.

• Our project development activities raise living standards and economic wellbeing

in the areas around our operations.

• We are committed to operating within high standards of sustainability in all our

operations, equally valuing social, economic and environmental impacts. This

means that we:

• Obey the laws of the countries in which we operate, and go beyond them

whenever ethical judgment requires.

• Comply with independently produced environmental management plans

• Strive to gain relevant external sustainability accreditation in the areas we

operate

• Invest in community development projects such as schools and civic

infrastructure projects.

• Recruit and train local people for long term skilled employment

Our sustainability commitment



FAIRTRADE “Farm to Market”

• Adopt socially responsible and market-based approach

• Helps producers in developing countries and promotes sustainability

• Improved social and environmental standards

• Provide market access to otherwise marginalized producers

• Helping producers develop knowledge, skills and resources to improve their lives

Corporate Social Responsibility

FOREST STEWARDSHIP COUNCIL

• Mozambique a new member of the FSC

• Independent, non-governmental, non-profit organization established to promote

the responsible management of the world’s forests

• Initiative to promote responsible forest management worldwide

• FSC is a certification system providing internationally recognized standard setting,

trademark assurance and accreditation services



• Focus on groundnuts, sunflower & sustainable

hardwood forestry

• Near term focused growth through increased

land holding and partnership base

• Establishing processing and storage operations

− Capture value addition

• Expand into neighbouring countries

• Expand to trading

• Build export markets

• Acquisition and investment into existing

operational projects

• Evaluate strategic options:

− List/IPO

− Sell

− Continue asset development

− Partnerships

Groundnuts

Sunflower

Groundnuts

Sunflower

Timber

Timber

Regional

Growth

Targets

Export Markets

Montara’s Strategy For Growth



Summary of investment potential

• Long lead time activities such as acquiring initial land rights have been completed

• Significant land resources in areas which are favourable for agricultural production

• Pipeline of new projects which will substantially increase development potential through

2012 and 2013

• Montara’s forestry operation has already moved to processing raw materials into high

value, high specification finished timber products

• Montara’s agricultural operation has already demonstrated potential through trial plantings

• Experienced management team in place, with high quality support teams



Management Team

Grahame Vetch (Manager: Agriculture), is an agricultural economist with over 30 years of

large-scale farm management experience. He was previously the Country Director for

Dominion Farms Ltd; a 17,000-acre start-up irrigated rice and fish farm in Kenya. Grahame

graduated from the Royal Agricultural College, UK in Farm Management and is a fluent

Swahili speaker

Patrick Green (Manager: Forestry) has extensive experience in the field of Forestry, having

been involved in several ventures in Africa and the Baltic states, ranging from the initial

infrastructure set-up to the conclusion of the project. Patrick also brings considerable

experience in the marketing field, being able to find an appropriate client base for a

particularly product, gained from working for several years for one of the worlds’ biggest

producers of wooden garden furniture

Dominic Fava (Manager: Sales) has over 10 years Sales and Marketing experience in the

natural resources sector, which has involved identification and management of strategic

customers, development of markets for new products and supply chain management.

Previous experience has also included evaluation of agribusiness investment opportunities,

market analyses and set-up of new agribusiness operations in East Africa



Appendix

Country Facts



Republic of Mozambique

• Independence from Portuguese colonial rule in 1975

• Civil war 1977 – 1992

• Multi-party democracy under the 1990 constitution

• SADC member, Commonwealth State

• 2002-2010, average annual GDP growth 7% (Worldbank)

• Population – 24 million (2010 WorldBank)

• 88% of arable land still uncultivated

• Tropical climate with two rainy seasons



Republic of Tanzania

Page 31

• Independence gained 1961

• Multi-party democracy

• SADC and Commonwealth member

• 2010 GDP growth 7% (Worldbank 2010)

• Population – 45 million (Worldbank 2010)

• Years of failed agricultural policies

• Agriculture accounts for 26.5% of the GDP

• Cultivated land only accounts for 10% of the total

land area of Tanzania

• Food and cash crops account for 70% of rural incomes

• Agriculture at present dependent on hand tools (only 10% of

operations use motorised power (tractors e.g.); 20% use draft

animals; 70% manual)

• Recent economic reforms have accelerated economic growth but

slow in agriculture sector



Mtwara Development Corridor (MDC)

• A Spatial Development Initiative (SDI)

• Rail links planned to cross Southern

Tanzania

• Development of the Mtwara port as a

second major port facility, after Dar Es

Salaam

• The seaport of Mtwara on the Indian

Ocean to provide a gateway for

international trade

• Create an economic growth zone of trans-

border trade and investment linking

Tanzania, Malawi, Mozambique and

Zambia

• The MDC project in Tanzanian is being

steered and promoted by the National

Development Corporation of Tanzania

(NDC)1-Mwtara Port, 2-Dar es SalaamMontara Farms in Tanzania

1

2

Tanzania

Mozambique

Zambia

Malawi



• Email enquiries:

• [email protected]

• [email protected]

• Business address:

2nd Floor, Martin House, 26-30 Old Church Street, London SW3 5BY

• Telephone enquiries:

• +44 (0) 20 7099 1940

• Fax

• +44 (0) 20 7351 5600

Contacts


presentation on montara continental

Documents

profitable forestry

montaras forestry operation

significant land resources

east african agroforestry

east african forestry

high specification

farmland investment

quality arable usd