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Management Side
Technical Side
Sino-Forest Signs Timber Agreement in Guangxi Province
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Toronto, Ontario, Canada, 10 December 2007 -- Sino-Forest Corporation (TSX:TRE and TRE.S), a leading commercial forestry plantation operator in China, is pleased to announce the signing of an agreement to acquire 150,000 hectares of plantation trees in Guangxi Province through Sino-Panel (Asia) Inc., its wholly-owned subsidiary. The Master Agreement for Acquisition of Pine and Fir Forest is with Zhanjiang Bo Hu Wood Company Limited, which will act as the authorized agent for the original plantation rights holders.

Under the Agreement, Sino-Panel will, through the PRC subsidiaries of Sino-Forest, purchase 150,000 hectares of Chinese fir and pine trees in Guangxi Province with a price not to exceed RMB 380 per cubic meter or approximately USD 51.40 per cubic meter over a 5-year period. The plantations under agreement include mature trees with an estimated wood fiber yield of 100-120 cubic meters per hectare, or an aggregate 15 million to 18 million cubic meters of wood fiber.

In addition to securing the tree acquisition price, Sino-Panel has pre-emptive rights to lease land at a price not to exceed RMB 525 per hectare per annum for 30 years. The land lease is up to 50 years as permissible under the PRC laws and regulations after harvesting. The specific terms and conditions of such purchase or lease are to be determined upon the execution of definitive agreements between the PRC subsidiaries of Sino-Forest and Bo Hu upon the authorization of the original plantation rights holders, and subject to compliance with the relevant PRC laws and regulations.

Allen Chan, Sino-Forest chairman and CEO, said, “We are very pleased to be able to lock-up a significant volume of standing timber and secure this long-term lease in Guangxi given the area is becoming more expensive in this strategic location in the southern coastal region of PRC and the favorable climate and rich soil are conducive to generating fast-growing, high-yield species. Harvested land will be replanted with eucalyptus and we are confident that we could attain an average yield of 150 cubic meters after a 6-year cycle. Moreover, we have a 12-year track record of growing eucalyptus and operating successfully in this region.”

Guangxi is becoming one of the key provinces in PRC as it is close to the port of Beihai, one of the State Council’s approved and established Export Processing Zones (EPZ). In addition, Beihai is one of the few key ports located in south China, close to nearby Association of Southeast Asian Nations (ASEAN) countries, benefiting from favorable tax incentives of importation and re-exportation to other countries. Before this Agreement, Sino-Forest had approximately 129,000 hectares of plantation in Guangxi under management as of third quarter 2007.

“Sino-Forest has acquired 5.5 hectares of land, with an estimated covered area of 100,000 square metres in Beihai’s Export Processing Zone, which could accommodate engineered wood production and other value-added processing," Chan added. "The strategic location of this facility in the EPZ synergies with our domestic plantation fiber and imported timber from nearby countries then process into high-quality, engineered-wood products, and sell to domestic markets or export to other countries.”

About Beihai and the Export Processing Zone in Guangxi

Beihai's strategic geographic position is becoming increasingly important and distinct in the economic development of China’s southwest and the Asia-Pacific region. In 1984, Beihai became one of the first of 14 coastal port cities to further open its businesses to the world trade. EPZs, which is somewhat similar to free trade zones, are economic or development areas of a developing country, where tariffs and quotas are eliminated or reduced and bureaucratic requirements are lowered so as to attract additional business and foreign investments. China’s EPZs are approved by the State Council and supervised by Customs. Goods may be brought into these zones without formal declarations having to be made or the need for payments of duties on goods that are being re-exported after processing. Trade between Guangxi and the ASEAN has expanded; Guangxi’s exports to Vietnam, Indonesia, and Singapore has accounted for 77.5%, 6.5%, and 4.9%, respectively, of total export to ASEAN countries, and imports to Guangxi from Vietnam, Singapore, and Thailand have accounted for 87.3%, 3.6%, and 3.4%, respectively, of total imports from ASEAN countries.

About Sino-Forest Corporation

Sino-Forest Corporation, a Canadian company, is a leading commercial forestry plantations operator in China. The company started its operations in 1994 and is the first foreign and privately managed operator involved in forest products in China. Its principal businesses include the ownership and management of forestry plantation trees and sales of standing timber, wood logs, and complementary manufacturing of downstream engineered-wood products. The Corporation’s common shares trade on the Toronto Stock Exchange under the symbol TRE since 1995.

Please note: All amounts in U.S. dollars are translated at a rate of RMB 7.39 to USD 1.00.


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