Woodbois Limited (AIM:WBI) , the Africa-focused forestry and timber trading company, says they have entered into an MOU with a timber supplier based in West Africa in order to offtake the group’s timber production in Liberia.
Woodbois is involved in the production, development and supply of sustainable African hardwood products.
The MOU will automatically renew at the end of 2020 on 31st December unless agreed otherwise, and under its current terms, the group also have the exclusive right of first refusal to purchase.
“We are delighted that the organisation with whom we have partnered in Liberia, has recognised the advantages of supplying through the Woodbois brand,” said Chief Executive, Paul Dolan.
Woodbois is expected to enter a formal offtake agreement with the unnamed supplier in January 2020.
Shares in Woodbois Limited were trading 4.13% higher at 6.300p on Friday morning.
The company explained how the formal agreement is expected to generate additional trading revenue across 2020, as well as scope to increase as the agreement matures.
In October, Woodbois reported record quarterly revenues of $3.4m from the trading division representing a 70% increase from its average quarterly run-rate of 2018.
The group explained how despite pricing for expensive species had fallen around 10% during 2019, the global demand for African hardwood logs had remained consistent despite economic slowdown in China, which typically accounts for around 50% of total demand.
Dolan previously described the group’s trading strategy as actively engaging with support suppliers who operate “within clearly defined sustainability guidelines verified by accredited independent 3rd party auditors.”
Commenting on this morning’s news, Dolan said that ultimately the agreement would allow the group to “further diversify” its product offering to customers.
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