Ann: AGM Presentation , page-2

Well Ramy, it still doesn’t add up, although I enjoyed the ‘Egyptian Forests’ joke on slide 17….. At least we have some concrete figures to analyse.

Here are the original prospectus figures:

The proposed prospectus machine was supposed to be able to process 2 million billets (100,000 Metric tonnes (Mt)) to produce 80,000 tonnes of waste water, and 20,000 Mt of ‘paper’ – 18,000 Mt of outer trunk material to be ‘250 GSM raw paper’ and 2,000 Mt of inner trunk material to be ‘100 GSM raw paper’.

What is suggested as happening in Egypt is ONE new veneering unit (VU) with the capacity to process 1,800,000 billets to yield 80,000 Mt of trunk per year (60 Mt at 330 days x 8 hours per day) and produce 25,000 Mt of outer fibre PLUS 2,000,000 sq m of inner veneer..

Credibility gap number one: The rate of output seems to have nearly doubled!

Lets think about the logistics of this…. 1,800,000 billets per year (= 900,000 trunks) so at the stated production hours (2650 hours per year) the factory will process 340 trunks per hour, meaning 680 billets per hour (and 10 tractor/trailer deliveries an hour). The factory needs to load to the VU, cut (veneer) the billet, separate output into two streams (chipping and sheeting) and transfer to a drying area one billet’s worth of material every 5 and a half SECONDS. The trimmings and trash needs to be cleaned out of the cutting blade as well. Then somehow all these mounting piles of material need to be dried and then sorted, graded and trimmed then packed all within a similar timeframe of a few seconds. No mistakes allowed because the material is quite fragile.

Credibility gap number two: the banana material needs to be dried before use. How are PPY going to dry out 757 square metres of material EVERY HOUR (that's a football field of material EVERY day)???

Credibility gap number three; 1,800,000 billets produce 2,000,000 sq m of veneer. So 1.1 sq m of veneer per billet. BUT the panel materials are said to be 2440 x 1220 – a total of 2.88 sq m. How do the panel pieces miraculously triple in size??

Credibility gap: Page 24 of the presentation says “the operation of the Beta Veneering Unit has been proven at the Walkamin demonstration factory”. Yet that very factory has struggled to spit out 3,000 square metres over a year – 2 sq m per hour. The whiz-bang new factory is supposed to produce 757 sq m PER HOUR. (At that rate the Beta machine should have cranked out the original 10,000 sq m order in two days. In what way is the technology proven, when it would appear more likely to take two YEARS with the Beta machine….)

In closing the funny line in the report is ‘EBFC has been a long standing customer of Papyrus Australia (Ramy pres p. 22) – that is probably because PPY have been so slow at fulfilling the original 10,000 square metre order!!

The upshot is that all this is purely speculative until they can demonstrate that the new machine (which is not even finished let alone tested) actually works.

I notice the Chairman’s report acknowledges the patent infringements, but says there is not enough evidence for action yet. Anyway where are PPY going to find the funds to mount two legal challenges even if they want to.

I also see that another rights issue is on the cards. What price for that? Oh the dilution….. they probably need another 4 million for working cap for this year, so another 100 million shares at 4c perhaps?