KTC 2009 Mahogany Project

2009 Investor’s Project Summary

The KTC Mahogany Project 2009 has been established to provide you with the opportunity to invest in the commercial cultivation of Mahogany trees, a valuable hardwood species primarily used for light construction, high quality furniture, flooring, interior decorative joinery, musical instruments and boat building.

You will be growing Mahogany trees within an established plantation environment, which will be managed by KTC Plantation Management Pty Ltd (Project Manager) an experienced forestry manager with its own ten year old mahogany plantations & other investor owned plantations under management.

Your timber will be harvested and processed into sawn timber ready for sale in both the Domestic and Worldwide markets. Unlike many other timber projects you will benefit by a value adding process that will ensure that your timber meets the highest quality standards for the decorative timbers in the world. Additionally, from an environmental impact your plantation Mahogany will reduce the pressure on the logging of native Mahogany stands in tropical areas around the world.

KEY FEATURE S OF THIS PROJECT

WHAT DO THE RESEARCHERS THINK?
Adviser Edge reviewed the project trust fund structure and made the following comments:

“The establishment of these cash funds provides a level of security that resources will be available to provide access to land and management services over the Project term. This significantly reduces management risk.”
Adviser Edge April 2009

HOW MUCH WILL IT COST?
The costs per Forestry interest are as follows:

OTHER COSTS
There will be no other ‘Ongoing Fees’ in this project. Insurance, covering your Forestry interest may be arranged independently.

When your timber from your Forestry interest is processed and ultimately sold certain fees will be deducted prior to the proceeds being distributed to the Investors:

Deferred Contribution:  4.22% of Gross Harvest Proceeds (GHP)
Harvest costs:  14.57% of GHP
Marketing costs:  6.24% of GHP

100% TAX DEDUCIBILITY
Investors are entitled to an immediate income tax deduction being 100% of the total application monies payable. ATO Product Rulings PR 2009/17 issued on 22nd April 2009 confirm that all Investors will be entitled to deductions for all costs of participating in the KTC Mahogany Project 2009 incurred during the term of the Project, provided the Project is implemented in the manner detailed in the PDS. Any ‘borrowing’ costs will be independent of the project, please consult your accountant or financial adviser.

A copy of the Product Ruling is available above.

While a Product Ruling provides a degree of certainty for participants in relation to their entitlements to taxation benefits, no Product Ruling is a guarantee or endorsement of the reasonableness or viability of the project as an investment or of the reasonableness of commerciality of the fees.

WHY INVEST IN AUSTRALIAN GROWN MAHOGANY?

International markets
The market for quality decorative timbers like Mahogany, continues to grow as the decline in the logging of native tropical forests continues around the world. Recent studies have shown there is a potential to grow plantation mahogany, within the tropical zones of Australia of a quality that will fit into existing domestic and overseas markets.

Australia’s reliance on imports for tropical and decorative timbers provides a further impetus to develop a sustainable industry and, working with the governments 2020 vision for the plantation and timber sectors. Australia is one of the few environs in the world that has both the tropical climate and the political stability to support high value plantations of mahogany.

Environmental considerations
As well as providing excellent market prospects, participation in a Mahogany plantation also has many local environmental benefits. The establishment of hardwood plantations in Australia reduces the harvesting pressure on native forests throughout the world, particularly on the tropical forests of Asia and the South Pacific. Additionally, plantations help relieve salinity and soil erosion and create a sink for greenhouse gasses. Government support

The Federal Government has recently renewed its backing for the “2020 Vision” of trebling plantation forest areas in Australia in the period from the mid 1990’s to 2020 to 3 million hectares. Under this policy, a targeted average of 80,000 hectares are required to be planted each year. The industry is currently short of that target, hence the government support of these types of projects through taxation incentives.

WHY KIMBERLEY TIMBER CORPORATION LIMITED?

Experience Counts!
The board of the Project Manager includes directors with relevant forestry expertise and proven performance in the management of large agricultural and community projects. Additionally, the Forestry Manager has developed a domestic market and has established contacts with overseas timber merchants who have expressed significant interest in the quality of ‘Kimberley Mahogany’.

The Project Manager consults and is advised by Mr Gary Sexton, who is a leading expert in growing Mahogany in Australia. Mr Sexton also is a leading expert in genetic development of Khaya senegalensis (African Mahogany) within Australia, and has been responsible for the development of government assisted farm forestry projects to the establishment of large MIS plantations in both Queensland and the Northern Territory.

THE RESPONSIBLE ENTITY
KTC Securities Ltd is the Responsible Entity of the Project and is responsible for the operation and management of the Project. The Responsible Entity is an unlisted public company and is part of the Kimberley Timber Group.

The Kimberley Timber Group company has an independent Advisory Board with industry and corporate experts. The directors of the Responsible Entity have extensive expertise in agriculture, business management rural property, corporate governance and management of R&D operations.

PROJECT RISKS & SAFEGUARDS
As with any business activity, and more particularly, plantation forestry, there are inherent risks due to matters beyond the control of the Project Manager. Additionally, the Project is subject to the ordinary commercial risks of a medium term venture. The risks associated with agriculture and in particular Mahogany plantations, include such things as natural disasters, suitability of land, seedling and forestry techniques, disease, insects and the ever changing harvesting and processing technology. Other broad risks would fall under the categories of market, regulatory and financial. For a full outline of the risks of this project refer to the PDS.

To minimise these risks and enhance the prospect of producing high value Mahogany sawn timber a plantation management and procedures plan is prepared that clearly establishes the standards and outcomes expected for the forestry, harvesting and processing operations.

The plantation manager is highly experienced having three prior new mahogany plantings through wholesale managed investment projects and a mature mahogany stand that is commercially ready for harvest.

FACTORS AFFECTING PROJECT RETURNS
There are a range of factors that affect returns of plantation Forestry projects many of which are beyond the control of the Project Manager.

For more information relating to the factors affecting returns please refer to the PDS, in particular the Independent Forestry Expert’s Report. This information should provide you with sufficient material upon which you can make your own assessment of the merits of investing in this Project.

DISCLAIMER
This document is a summary only. Please ensure that you read the PDS and Financial Services Guide in full before deciding to participate in the KTC Mahogany Project 2009. This document contains general securities advice only which does not take into account any person’s investment objectives, financial situation or particular needs. Before participating you should assess the suitability of the project to your needs and consult a professional if necessary.