W.A. Blue Gum Project 2011

W.A. Blue Gum Project ARSN 150 828 283 is a managed investment scheme registered under the Corporations Act 2001. The Project involves the establishment of Eucalyptus globulus (Tasmanian Blue Gum) plantations for the harvesting and sale of timber.

The Project is to be established on land in the south west of Western Australia. The land offered under this Product Disclosure Statement has an unusually high anticipated yield of wood. The land will be targeted to have a weighted average mean annual increment ("MAI") of 34 cubic metres per hectare per annum using certain assumptions. Whether this will be achieved in 10 years or slightly longer is subject to a number of factors including soil type, rainfall and any climatic changes between the time of establishment and harvesting.

The Project Manager will divide the Project Land into allotments of 1 hectare each. The minimum area leased by each Grower is 3 hectares. Growers will contribute a minimum of $16,500 on a GST inclusive basis (being the amount necessary to establish 3 hectares of plantations at $5,000 plus GST per hectare) and thereafter in multiples of $5,500 (including GST) for each extra hectare.

In addition to the payment of $5,000 (plus GST) per hectare, Growers are required to pay both an annual sum for rental of the leased property and fees for the ongoing management of the Plantations. The first annual sum for rental will be $490 (plus GST) per hectare (indexed from 30 June 2011) and is payable on 30 November 2011 and thereafter on the 30 September in each year. The first annual sum for tending will be $110 (plus GST) per hectare (Indexed from 30 June 2011) for Plantation tending, payable on 30 November 2011 and thereafter on the 30 September in each year.

Subsequent amounts for both rental and tending will be indexed in each year to take account of inflation.

The harvested timber will be sold to W.A. Chip & Pulp Co. (jointly owned by the Marubeni Corporation and the Nippon Paper Company) but allowing the Project Manager to negotiate with any other potential buyers for a higher price. W.A. Chip & Pulp Co. then has the right to match these better terms, in which case W.A. Chip & Pulp Co. will be the buyer. The market for Blue Gum is usually competitive and there does not appear to be any reason why this will change during the life of the Project.

The Project Manager has made arrangements for WACAP Treefarms to supply the Project entirely with high quality seedling stock (scientifically improved but not genetically modified) being produced by WACAP Treefarms which are ready for planting in 2011.

WACAP Treefarms has been engaged by the Project Manager to supply and to plant the Blue Gum seedlings and tend the Plantations. Under the terms of the Wood Purchase Agreement W.A. Chip & Pulp Co. will harvest and buy all the wood unless the Project Manager can negotiate better terms with a reputable third party. WACAP Treefarms has been growing hardwood plantations in Western Australia since the late 1980's and currently owns or manages in that state and in the Green Triangle region of Victoria and South Australia about 40,000 hectares of globulus plantations. It has established approximately 60,000 hectares.

All participating Growers may borrow up to 80% of the Application Money (including GST) from Albany Financial Pty Ltd, a company associated with the Project Manager. Amounts borrowed are to be repaid in equal monthly instalments (which include both principal and interest) by way of direct debit over the period ending on 15 June 2016. Each instalment is of both principal and interest. Interest is charged on the reducing principal at an indicative fixed rate of 12.95% per annum.