Choice Forestry PDS 2012 - WA Blue Gum Project

OverviewProspective Growers are invited to sublease 2 or moreidentifiable allotments of land (1 hectare each), for anestimated 10 year term as part of a commercialTasmanian Blue Gum (eucalyptus globulus) plantation.Each hectare is likely to contain between 900 and 1,000trees, 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 BlueGum 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 Project will consist of about 250 hectares, or more,subject to land of the required quality being available.• Application Money* per hectare: $10,000 (includingGST)Minimum of 2 - $20,000 (including GST)• Ongoing fees per hectare - rent, management andadministration costs: $445.50 (including GST)Minimum of 2 - $891 (including GST) (Indexed)per annum• Other fees:Harvest, transport costs: to be deducted fromHarvest proceedsHarvest supervision fees: 3.3% (including GST) ofnet Harvest proceedsIncentive bonus: 15% of excess return above$18,000 (including GST) (Indexed) per hectareInsurance: approximately 0.7% of insured value(including GST)Credit (or similar) card merchants fee for Growerswho make payments under the Project using acredit or similar card (presently 1.25% of theamount paid)Finance available• Project term: approximately 10 years• Offer closes: 30 June 2012* The Application Money consists of the amount necessaryto Establish a plantation and partially prepay the rent,please see Section 7 of this PDS for a full explanation ofall fees and charges.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 the Project Managercan negotiate with any other potential buyers for a higherprice. W.A. Chip & Pulp Co. then has the option of meetingthat higher price.All Operations by Industry ExpertsThe Project Manager has contracted noted industryexperts to assist with the operation of the Project includingWACAP Treefarms as Forestry Contractor (jointly ownedby the Marubeni Corporation and the Nippon PaperIndustries Co) and a forestry consultant with extensiveexperience in Western Australia, particularly withTasmanian Blue Gum.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, plantations createa sink for greenhouse gasses and help relieve salinity andsoil erosion.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.Product rulings to that effect have been applied for to theAustralian Tax Office.Growers should seek independent advice in relation to alltaxation issues.Ongoing Government supportSuccessive Federal Governments have renewed theirbacking of the “2020 Vision” of trebling plantation forestareas in Australia in the period from the mid-1990’s to2020 to 3 million hectares, and the Division 394 taxlegislation was introduced for the explicit purpose ofencouraging more tree plantations.