Under the Jiangxi Master Agreement, Sino-Panel will, through PRC subsidiaries of Sino-Forest, acquire between 15 million and 18 million cubic meters. In addition to securing the maximum tree acquisition price, Sino-Panel has pre-emptive rights to lease the underlying plantation land at a price, permitted under the relevant PRC laws and regulations, not to exceed RMB 450 per hectare per annum for 30 years from the time of harvest. The land lease also can be extended to 50 years as permitted under PRC laws and regulations. The specific terms and conditions of purchasing or leasing are to be determined upon the execution of definitive agreements between the PRC subsidiaries of Sino-Panel and Jiangxi Zhonggan upon the authorization of original plantation rights holders, and subject to the requisite governmental approval and in compliance with the relevant PRC laws and regulations.
"We are fortunate to have been able to capture and support investment opportunities in China’s developing forestry sector by locking up a large amount of fiber at competitive prices," said Allen Chan, Sino-Forest chairman and CEO. "The Jiangxi Master Agreement is Sino-Forest’s fifth, long-term, fiber purchase agreement during the past two years. These five agreements cover a total plantation area of more than 1 million hectares in five of China’s most densely forested provinces."
Chan added, "Plantation forests in Jiangxi have been generally underproductive despite favorable tree growing conditions. We are confident that our 14-year proven track record and our silviculture expertise will allow us to significantly improve current low wood fiber yield, and improve the livelihoods of local farmers."
Net proceeds from the recently closed CAD 380 million bought deal offering will be used primarily for the acquisition of standing timber in Jiangxi Province and for general corporate purposes.
Jiangxi Province is located in southeastern China between Hunan and Fujian, where Sino-Forest already has significant plantation operations. Favorable climate and fertile soil in Jiangxi are quite suitable for growing five to eight years short cycle fast-growing species such as eucalyptus, poplar, acacia, and other species. One of Sino-Forest’s core competencies is growing eucalyptus and other short cycle fast-growing species, and its scientific silviculture expertise should help Jiangxi’s government strive to achieve its goals of achieving forest coverage of 63% from current 60% with forest stock volume of 750 million meters.
Sino-Forest Corporation is a leading commercial forest plantation operator in China. Its principal businesses include the ownership and management of forest plantation trees, the sale of standing timber and wood logs, and the complementary manufacturing of downstream engineered-wood products. The company’s common shares have traded on the Toronto Stock Exchange under the symbol TRE since 1995.