The W.A. Blue Gum Project 2011

W.A. Blue Gum Limited (W.A. Blue Gum) is offering investors the opportunity to participate in the plantation pulpwood industry through the offer of 500 Woodlots in the W.A. Blue Gum Project 2011. W.A. Blue Gum has the capacity to accept oversubscriptions, depending on the availability of suitable land. W.A. Blue Gum advises that the plantation services agreements with WACAP incorporate a minimum stocking guarantee of 90% of the original stocking rate for a period of approximately one year from planting.

The Project involves the establishment of Tasmanian blue gums for the production of hardwood chips for export and, potentially, domestic pulp markets. The units will be located in south-west Western Australia, in the forestry region between Albany and Bunbury.

The Project has an expected term of 10 years from the planting date, which must occur before 31 December 2012. W.A. Blue Gum has indicated that it aims to establish 100% of the trees in 2011. However, this will be dependent on seasonal conditions and the ability to secure land within the 2011 planting window. Historically, between 30% and 100% of trees have been planted within six months of the Project commencement date, with the remainder planted in the winter following the Project commencement. The plantations are forecast to be harvested in 2021. However, the Project agreements provide some flexibility regarding the timing of the harvest, with the timber able to be sold at any time between 2020 and 2023. Net proceeds from the harvest will be pooled and distributed to investors on a pro-rata basis.

W.A. Blue Gum will outsource the management of the plantations to WACAP Tree Farms Pty Ltd (WACAP), a subsidiary of WA Plantation Resources Pty Ltd (WAPRES). WACAP will be responsible for all management operations required, from land preparation and sourcing seedlings, right through to the management of harvesting. W.A. Blue Gum has entered into a Wood Purchase Agreement with another WAPRES subsidiary, WA Chip and Pulp Company, for the purchase of all timber grown in the Project.

W.A. Blue Gum will lease the project land from various farmers, or sub-lease land from WA Chip and Pulp Company or WACAP. In all instances, W.A. Blue Gum will register the head-lease or sub-lease with the Office of Titles, Perth. The average lease cost for the Project is not expected to be known until all the land has been secured for the Project. However, it is expected that the rental fee paid by investors should be sufficient to cover ongoing obligations throughout the life of the Project.