OVERVIEWW.A. <strong>Blue</strong> <strong>Gum</strong> Limited ("<strong>WA</strong>BG") invites Subscribers tosublease 3 or more identifiable allotments of land (1hectare each), for an estimated 10 year term as part of acommercial Tasmanian <strong>Blue</strong> <strong>Gum</strong> (eucalyptus globulus)plantation. Each hectare is likely to contain between 900and 1,000 trees, with an average of about 950.PULPWOOD INDUSTRYThe continued reliance on paper and paper products bydeveloped countries and the increased consumption ofthese products by developing countries is leading to anincrease in demand for the raw materials required forpaper production. Hardwood fibre, extracted from <strong>Blue</strong><strong>Gum</strong> is the preferred raw material for the production ofhigh quality paper. In fact, most paper mills require thatsome, if not all, of their timber input be hardwood fibre.THE OFFERINGThe <strong>Project</strong> will consist of about 500 hectares, or more,subject to land of the required quality being available.Establishment Fee per hectare: $6,250 (includingGST)Minimum of 3 - $18,750 (including GST)Ongoing fees per hectareOther fees:Lease: $462 (including GST)Minimum of 3 - $1,386 (including GST)(Indexed) per annumTending: $121 (including GST)Minimum of 3 - $363 (including GST)(Indexed) per annumHarvest, transport costs: to be deducted fromHarvest proceedsHarvest supervision fees: approximately3.3% (including GST) of net HarvestproceedsIncentive bonus: 15% of excess return above$18,000 (including GST) (Indexed) perhectareInsurance: approximately 0.7% of insuredvalue (including GST)Credit (or similar) card merchants fee forGrowers who make payments under the<strong>Project</strong> using a credit or similar cardFinance available<strong>Project</strong> term: approximately 10 yearsOffer closes: 30 June <strong>2013</strong>BENEFITSFull 'Offtake' agreement with a 'Higher Price' optionThe Harvested timber will be sold to W.A. Chip & Pulp Co.(jointly owned by the Marubeni Corporation and theNippon Paper Industries Co) unless <strong>WA</strong>BG can negotiatewith any other potential buyers for a higher price. W.A.Chip & Pulp Co. then has the option of meeting thathigher price.Promoting Ecologically Sound Plantation ForestryThe establishment of hardwood plantations in Australiareduces the Harvesting pressure on native foreststhroughout the world, particularly on the tropical forests ofAsia and the South Pacific. Additionally, plantationscreate a sink for greenhouse gasses and help relievesalinity and soil erosion.All Operations by Industry ExpertsThe <strong>Project</strong> Manager has contracted noted industryexperts to assist with the operation of the <strong>Project</strong>including <strong>WA</strong>CAP Treefarms as Forestry Contractor(jointly owned by the Marubeni Corporation and theNippon Paper Industries Co) and a forestry consultantwith extensive experience in Western Australia,particularly with Tasmanian <strong>Blue</strong> <strong>Gum</strong>.Tax EffectivenessA Grower should, upon payment, be entitled to animmediate tax deduction, pursuant to Division 394 of theITAA 1997, being 100% of the total Application Moneypayable. In addition, all the annual or other fees shouldalso be deductible in the respective years of payment.<strong>Product</strong> Rulings PR <strong>2013</strong>/4 has been issed by the ATO on20 March <strong>2013</strong> confirming this.Growers should seek independent advice in relation to alltaxation issues.Ongoing Government supportDivision 394 of the ITAA 97 was introduced for the explicitpurpose of encouraging more tree plantations.
Date of PDS: This PDS is dated 14 June <strong>2013</strong>Issued By:<strong>Project</strong> Name:W.A. BLUE GUM LIMITEDACN 060 179 982AFS Licence Number: 246264Level 21385 Bourke StreetMelbourne Vic 3000AustraliaTelephone: 1300 888 511Facsimile: (03) 9642 4435Email: info@wabluegum.com.auWebsite: www.wabluegum.com.auW.A. BLUE GUM PROJECT <strong>2013</strong> ARSN 164 105579The <strong>Project</strong>:The <strong>Project</strong> involves the Establishment and tendingof Tasmanian <strong>Blue</strong> <strong>Gum</strong> (Eucalyptus globulus)plantations for the Harvesting and sale of timber.The sale of harvested timber is a managedinvestment scheme registered under theCorporations Act. <strong>WA</strong>BG, the Responsible Entityand the <strong>Project</strong> Manager, has been involved inforestry operations for over 10 years and currentlymanages thousands of hectares of eucalyptplantations in Western Australia on behalf ofsubscribers to previous offer documents.Pursuant to the <strong>Project</strong> Agreements the <strong>Project</strong>Manager will arrange the Establishment, tending,felling and Harvesting of <strong>Blue</strong> <strong>Gum</strong> plantations tobe known as the "W.A. <strong>Blue</strong> <strong>Gum</strong> <strong>Project</strong> <strong>2013</strong>".The duties of the <strong>Project</strong> Manager include thefollowing:Establishing the Plantations within theEstablishment Period for the purposes offelling and Harvesting; andtending the Plantations until felling andHarvesting take place.The <strong>Project</strong> is to be established on land in thesouth-west of Western Australia between Bunburyand Albany by raising $3,125,000 in initialApplications Fees based on the present landavailability outlook. Oversubscription may beaccepted, the amount of which will be subject to theavailability of land of the desired quality. EachGrower will sub-lease a specific and identifiablearea of the <strong>Project</strong> Land from the <strong>Project</strong> Managerpursuant to a Sub-lease.The <strong>Project</strong> Manager leases the <strong>Project</strong> Land fromvarious farmers or alternatively, sub-leases fromW.A. Chip & Pulp Co. or <strong>WA</strong>CAP Treefarms. In allinstances, the head lease between the <strong>Project</strong>Manager and the farmer, or alternatively, the subleasebetween the <strong>Project</strong> Manager and W.A. Chip& Pulp Co. or <strong>WA</strong>CAP Treefarms is to be registeredwith Landgate, the Western Australian Office ofTitles thereby protecting the <strong>Project</strong> Manager's andultimately the Grower's interest in the <strong>Project</strong> Land.Each Grower will enter into <strong>Project</strong> Agreements.The <strong>Project</strong> Agreements consist of a Sub-lease(and/or an Agreement to Sub-lease), a <strong>Project</strong>Management Contract and a Wood PurchaseAgreement.Where not all the <strong>Project</strong> Land is available for aparticular Grower on or before 30 June <strong>2013</strong>, theResponsible Entity may still accept the Grower'sApplication subject to a Sub-lease being enteredinto on behalf of the Grower and lodged forregistration by 30 September 2014.In these circumstances, the Grower will be requiredto enter into an Agreement to Sub-lease with the<strong>Project</strong> Manager.It is anticipated that the <strong>Blue</strong> <strong>Gum</strong> trees Establishedand maintained under this <strong>Project</strong> will be availablefor Harvesting as woodchips in about ten years.However, the timber may be sold at any timebetween 2021 and 2025.Under the terms of the Wood Purchase Agreement,W.A. Chip & Pulp Co. will buy the wood unless<strong>WA</strong>BG can negotiate better terms with a reputablethird party after first allowing the Purchaser theopportunity to match the price offered by the otherparty interested in purchasing the wood (seeSection 9.6 of Part B of this PDS). The precisedate of purchase will depend upon both the growingconditions that have existed during the term of the<strong>Project</strong> and an assessment by the Purchaser of themarket conditions at the relevant time. It is likelythat the date of purchase will vary from one block of<strong>Project</strong> Land to another.It is a possibility that the whole or part of the woodgrown will be suitable for a higher value use suchas flooring. If this turns out to be the case then theGrowers and the Purchaser will decide together onthe best way to deal with the grown wood. It cannotbe predicted with any accuracy whether (and, if so,to what extent) it would be wise or necessary toallow a longer rotation in order to take advantage ofthe higher value. This PDS ignores completely thepossibility of a use with a higher value than aswoodchips.All net income on the sale of a Grower's interest inthe Plantations (plus any carbon and environmentalcredits) will be paid progressively to the Custodianfor distribution to each Grower. The proceeds fromthe sale of the wood will be pooled and the netproceeds distributed to Growers on a pro ratabasis, i.e. in the same proportion that the number ofhectares held by each Grower bears to the total ofall hectares comprising the <strong>Project</strong>.If unforeseen expenses in relation to things such asfertiliser and/or insect issues arise, a meeting of allGrowers may be convened. The Growers may, bymajority vote, agree to meet such expenses, inwhich case these expenses will be borne betweenall the Growers in proportion to the number ofhectares held in the <strong>Project</strong> by each Grower.It is the intention of the Responsible Entity toterminate the <strong>Project</strong> upon the distribution of the
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