The African Teak Project
A Green Earth Africa Investment opportunity

EVERY GENERATION BLAMES THE ONE BEFORE,
AND ALL THEIR FRUSTRATIONS COME BEATING ON YOUR DOOR
- Mike and the mechanics

THE GLOBAL FORESTRY MARKET

Global demand for hardwood has itself multiplied 25 times in the last 40 years, and with population growth rates higher than ever this trend will continue. With less than 13% of the world’s surface covered in forests, and concerns over global warming, there is now a global crackdown on illegal logging and deforestation. Supply is being severely restricted and these two factors combined will drive legal timber prices higher in the years to come.

Given the recent volatility in global stock markets, investors are looking towards commodities for security. Tropical forestry offers the ideal diversification from real estate and equity portfolios, providing a non-volatile market with high long-term returns on investment, and a low risk-to return ratio.

If you don’t feel comfortable owning something for ten years,
then don’t own it for ten minutes.
- Warren Buffet

THE TEAK PROJECT

Environmentally conscious: sustainable forestry gives a unique opportunity to do something healthy for the planet whilst accruing a healthy capital gain.

Long-term, stable investment: with long growth periods and minimal demand/supply fluctuations, forestry offers stable long term return projections

Low entry levels: Forestry investments require little capital (compared to real estate) and being in a stable un-leveraged market offer more dependable less volatile returns

Value rises with maturity: As trees grow, their marketable timber volume increases at an increasing rate, as does the woods’ value

•Little affected by macroeconomics: Irrespective of which government is in power or global currency fluctuations, inflation and interest rates, the long-term factor of forestry and its fundamental applications produce a more constant growth rate

Hedge against real estate & equity portfolios: For the reasons above, forestry’s stability makes it the perfect portfolio hedge against more volatile markets

Flexible exit return dates: with a range of harvest dates forestry investments have great exit strategy flexibility. If the price were to fall one year, wait another year or 2, whilst your asset continues to physically grow.

Potential tax advantages: such as SIPPs or CGT rollover relief, depending on project location and structure

•Demand & supply: Global consumption of tropical hardwoods has multiplied nearly 25 times in the last 4 decades. Around 40m acres of tropical forest are being destroyed each year and not being replaced.

Future carbon credit market: All reforestation projects under the management of Green Earth Africa are eligible for the voluntary carbon markets may be applicable for future carbon accreditation markets depending on location and project management.

WHY INVEST IN TEAK SPECIFICALLY

Strength & weather resistance: Teak (tectona grandis) is a tropical hardwood native to the Southern Africa. Teak grows up to 40m tall and is renowned for its strength and durability. When mature the teak tree withstands even the most challenging weather conditions due to its high natural oil content. This gleaming brown and dark gold hardwood is familiar as indoor and outdoor furniture, decking & construction, all around the world.

Tissue-culture controlled methods: With international boycotts on harvesting natural teak the only alternative supply is cultivated plantations. Plantation teak trees are grown from tissue culture and selected certified seed which when cultivated using our intensive husbandry methods which include drip irrigation ensuring maximum rapid growth can be harvested within 18 to 20 yr cycles.

Fast growing species: At just six months under drip irrigation teak trees are already approximately 10 feet high. By year 2 they are well established as young durable trees starting to gain considerable canopy mass, and reach maturity at 18 years.

High carbon sequestration: In line with its fast growth rates, teak also has one of the fastest carbon sequestration rates. Carbon is removed from the atmosphere and stored in the wood and soil at very high levels. Project dependent this may give teak additional value on the future carbon markets as the world moves to a carbon indexed economy.

Increasing demand: With international boycotts on harvesting natural teak through illegal forestry activities, the supply chain is being squeezed placing more demand on cultivated plantations. With global populations booming in the next 40 years, demand will only escalate.

Price: Open market value of teak has steadily increased over the past 20 years, currently ranging from roughly $3,000/m3 to $5,000/ m3 grade dependent. This is one of the most valuable woods. According to the ITTO the teak price has grown 8.58% per annum from 1997 < 2009.

• Insurance cover is provided by respectable insurance companies such as Lloyds of London and covers loss by fire, storm or explosion, along with local insurance against theft in plantation or transit.
• For stronger faster species growth the best tissues are grown in test tubes and an embryo is cultured. This tissue culture technique was discovered by French botanist George Morel in 1965 and has been commercially practiced for decades to get the best growth from species.

WHY GREEN EARTH AFRICA

Green Earth Africa has large tracts of land leased from various governments throughout Southern Africa and has a strong relationship with governments, chiefs and local communities. The company has no bank borrowings and no liabilities.

Green Earth Africa has a strong management team with a combined working experience of working in Africa of over 100 years, are familiar with the workings and dealings throughout Africa, employ local people, speak the dialect, have 30+ years agricultural and farming experience and have experience with the western investment world and city life and investor expectations.

Green Earth Africa has offices in London UK, Toronto Canada, Cape Town South Africa, Port Louis Mauritius, Zimbabwe and Angola.

Green Earth Africa are government-backed throughout Southern Africa

Trees are planted and harvested using sustainable rotation techniques within FSC guidelines (Forestry Stewardship Council)

• Green credentials for companies and individuals who invest in the timber plantations.
• Humanitarian credentials for companies and individuals who invest in the timber plantations.

LONG TERM INVESTMENT IN TEAK PLANTATION

• US$15 000.00 for one hectare of teak plantation
• Plant spacing of 4 by 4 meters to ensure maximum light exposure and rapid growth.625 trees per hectare.
• All tress under modern , efficient, environmentally friendly drip irrigation enhancing maturity  and harvest time by 100%
• Minimum timber production of 8 meter cubes per hectare per annum.
• Upkeep, maintained and plantation fees deducted after timber is sold and harvested.
• Forecast returns of US$330 000.00 before deductions.
• Unique opportunity to take long -term timber investment
• Plantation already under secure management
• Insurance covering fire, storm & theft
• Avoid forestry take-up risks

RETURN FORECAST BREAKDOWN

• US$15,000.00 investment now for one hectare of new teak plantation.
• Gross Return of US$330 000.00 per hectare after 16 years and harvest of minimum of 8m cube per year per hectare at today’s price of US$2063/m cube for Grade A Indian Sawn Wood , to avoid any inflated returns.
• 10% management fee will be levied for harvesting, management, transport and sale of timber. Total US$33 000.00
• Maintenance fee payable only after maturity and harvest of timber of US$9.00 per tree per year. Total maintenance fee payable which includes replacement of drip irrigation, weeding, pruning, fire control, insurance every five years of US$101 250.00.
• Total initial investment of US$15 000.00
• Gross return US$330 000.00 less 10% management fee less US$101 250.00 maintenance fee *
• Net forecast returns US$195 750.00
• 18 year effective IRR 22%
• It is important to note that all returns are calculated using today’s prices of $2063/m3 for 20 year Grade A Indian Sawn Wood, to avoid any inflated return estimates.
• Any income derived from the carbon markets will be declared as a dividend and distributed proportionally between the investors in the timber plantations.
• Forecast return details, figures and conditions please contact Green Earth Africa.

INVESTMENT RISKS

Green Earth Africa’s teak investments are fully covered by the following insurances:

Green Earth Africa can organise annual trips to the plantations should you wish to visit at any time. They also report on the condition of your trees by providing annual foresters reports per year.

OWNERSHIP STRUCTURE

All investors will also receive:

1. A Lease / License for the land their trees occupy until harvest date identified  by a Survey plan, individual ID tags and GPRS coordinates. Using these co ordinates your plantation can be viewed using Satellite
2. A Timber Ownership Contract that contains details of your plots trees, owner’s rights, and Green earth Africa’s contractual obligations.
3. A Timber Management Contract between the owner and the local management company (Green Earth Africa local subsidiary) setting out both the owner’s rights and the management companies’ obligations.

As an owner at Green Earth Africa’s teak plantations, investors will also:

1. Retain the choice of when to harvest their trees (the longer you delay the greater the volume of timber)
2. Retain the right to cancel the forestry management contract and appoint an alternative one
3. Retain complete control on all major decisions affecting trees
4. Retain the choice of exit point

HOW TO INVEST

SIPPS
You can now use your pension fund to invest in sustainable forestry and agricultural projects using a SIPP.A Self Invested Personal Pension, known as a SIPP, is a personal pension in which the individual investing for retirement chooses where their fund is invested, unlike traditional pensions where they pension fund manager
decides. Any type of pension can be transferred in to a SIPP, which requires professional assistance and advice. One of the UK’s leading wealth management companies, specialising in pensions and investments, will carry out an initial review completely free of charge for potential investors to assess whether the existing pension plan could benefit from being transferred in to a SIPP.Further more, at any age between 55 and 75, you can usually take out up to 25% of the value of your SIPP tax free.

Please consult your Financial Advisor or SIPP provider regarding placing your forestry investment into a Self Invested Pension Plan. Green Earth Africa is not a collective investment scheme.

TAX ADVANTAGES
Commercially managed woodland in the UK is currently free of inheritance tax, provided it has been owned for a minimum of two years. It also qualifies for capital gains tax rollover relief provided the subject of investment is commercial with an established trading activity. Income derived from commercial woodland is free of income and corporation tax too, so a return of 5% from timberland is the equivalent of a return of over 8% from any other investment to a higher rate taxpayer. For information on your countries tax breaks please contact your financial advisor. The information here is not to be taken as financial advice and Green earth Africa is not responsible for its accuracy.

EXIT STRATEGY
Green Earth Africa offers a buy back option to investors. Any investor wishing to sell their plot can issue Green Earth Africa with a sale offer, in writing by registered post. Green Earth Africa will then have twenty one days to respond to the request and will make the investor a cash offer based on the plots current market value. The offer will be valid for twenty one days during which time the investor can accept or decline. If the offer is accepted, Green Earth Africa will make payment within 21days of receiving a written acceptance of their offer.

WHAT TO DO NEXT?

If you would like to invest and reserve a plot please contact Green Earth Africa: