25 May 2012

Obtala buys £7.2m iron ore stake

07/03/2011 Robert Tyerman

Acquistive Obtala Resources (OBT) is buying half of Bushveld Resources, for a stake in South Africa's two billion-tonne Mokopane iron ore deposit. Headed by entrepreneurial chairman Frank Scolaro, the AIM-quoted company, which has newly raised £6 million at 50p, is paying $11 million, mostly in shares at 57p, for 50 per cent Bushveld.

As part of the deal, Obtala has agreed with Bushveld's present owner, Mineral Wealth International (MWI), to have Bushveld floated on AIM within 12 months or else to pay MWI another $20 million (£12.5 million). Obtala cites Bushveld's plum assets as holdings of 32 per cent and 34.25 per cent respectively in subsidiaries holding licences over 7,409 hectares of Mokopane, in the Republic's Limpopo Province.

The Bushveld move follows Obtala's £2.5 million purchase of a half stake in Greenhill Resources, another company in the same mineral-rich district of South Africa, with a potentially attractive tin deposit, also called Mokopane. Recently Obtala bought a chunk of a fellow AIM counter, Goldstone Resources.

Floated at 20p in 2008, Obtala shares now trade at 52.5p, valuing the company at £118 million. While minerals, especially iron ore, remain in vogue and Scolaro's deals impress, they should have yet more mileage.

Tags: AIM market, Iron ore, Mineral Wealth Intnl., Scolaro

Sector: Mining

Companies: Obtala Resources

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