A Diversified Forest Plantation Investment Opportunity in Western Australia s Great Southern

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Jessie Willis
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1 A Diversified Forest Plantation Investment Opportunity in Western Australia s Great Southern Tom Gaman Forest Data Corp Inverness, California tgaman@forestdata.com High grade paper chips Lignor Sandalwood Oil Mallee Clear sawlogs Flat and fertile lands

2 Objectives Secure and socially responsible investment opportunity in plantation forestry Hands-on participation opportunities Diverse products including carbon sequestration Provide certified forest products for Asian markets Add value to land through economic expansion and ecosystem restoration

3 Context and History The Southwest of Australia shoreline of the Great Australian Bight (Great Southern Ocean) Land use history of sheep farming since 1850 s. High Water Table, mm. rainfall & variable soils rich in nitrogen Private Ownerships range from large outback farms and small farms in fertile areas Most remaining bush is now protected Government/Private Partnerships in development of forest industries include tax incentives and government facilitation.

4 Context and History Local farm products include viticulture, dairy, sheep and increasingly tree crops Farm forestry activities Sandalwood Oil Mallee E. globulus (blue gum plantations) Growing clear hardwood saw logs Rapid growth of industrial plantations Timbercorp ITC Great Southern Albany Plantations Kimberly Clark

5 Port of Albany, Western Australia

6 A typical plantation in waiting in the drier country near Bremer Bay

7 Genetically improved nursery stock is available to be grown by local contract nurseries, this one is Mount Barker

8 <1 year plantation near Pemberton Context and History

9 March 2007 These 2 year Old seedlings have Already grown to 4 meters in height

10 These 2 year Old sprouts have Already grown to 5 meters in height

11 This 9 year old Blue Gum Plantation will be Ready for harvest Next year. Inventory is now averaging over 200 cu. meters/ha Or growth of 25 cubic meters per ha per year

12 Current Situation Local Forestry Infrastructure Plantations ha???????? Chip facilities with railway Chip deep water port with railway access Research and extension A new product Lignor coming on line for 500K metric tons/yr will increase demand Growing City of Albany, a great place to be A few days by sea to Asian markets

13 The Port of Albany is planning to increase chip exports to a ship a week in the near future.

14 A number of growing support industries, such as Blu Chip, are working at Albany

15 Plantation forestry allows for complete protection of native Australian Bush

16 Substantial Government and private investments in R&D are ongoing

18 Projected future Increased demand for plantation products Farms typically leased for 2 rotations by chip industry. Some active sharecropping leases to expire A third rotation is possible--perhaps more with fertilization R&D to address saline problem (some areas) Sawlog/secondary processing industries developing Growth in Albany will increase land values, population, infrastructure Lots of $$ to flowing toregion and continuing to increase land values Blue gum industries will diversity and consolidate

19 A saw timber industry is going to develop around Albany to add value to plantation forestry.

20 A saw timber industry is going to develop around Albany to add value to plantation forestry.

21 A saw timber industry is going to develop around Albany to add value to plantation forestry.

22 Proposed Project Summary Start new forest products LLC and seek green investment Purchase 20 woodlots (+/- 20,000 ha) Varying sites and locations shall be carefully selected Active sharecropping leases, some to expire soon and not to be renewed, others to continue for another years. Management Open local office at Albany Intensify farm forestry activities on lands as they become available Capture yield from coppice growth Improved silviculture and adaptive management

23 Proposed Project Summary

24 Proposed Project Summary

25 Proposed Project Summary Income and Markets Sharecropping leases yielding about 5% per annum plus appreciation of land values Plan to sell post-sharecropping pulp and logs on open market where 6 big local buyers, and independent harvesting companies presently exist. Growth is cubic meters/ha/year yielding about $AU 800 /ha/yr Develop forest resources as carbon trading markets mature Take advantage of appreciation in land values 25 year time horizon with re-assessment every 5 years 10 million tons of carbons sequestered over life of project

26 Project Components $US 40 M required en Quality Plantations and Land Asian Markets Demanding more fiber and forest products Hi Quality Technical and Management Skills Local Contacts tranche for purchase of ha of plantations Continue with leases until expiry (about 2020) 17-20% IRR Model assumes 5% increase in costs per year, 5% inflation and 10% appreciation of land values NPV is $275 M

27 Meeting the Needs Carbon Water quality Wood chips Building materials Resources for expanding populations Jobs and economic security Green investment High NPV 18-20% IRR ha productive lands + 10 million tons of Carbon Sequestered

28 Key Benefits Secure land base and investment Many leverage opportunities in alternate products Many outlets for products Ready investment market make this a liquid investment Carbon and environmental assets

29 Tom Gaman Registered Forester #1776 East-West Forestry Associates, Inc. PO box 276 Inverness, Ca

CCX Forestry Carbon Offset Programs

CCX Forestry Carbon Offset Programs Status of the U.S. Carbon Market A developing, voluntary market No national, regulatory greenhouse gas reduction scheme YET! Many local, state, and regional systems