tiwi, page-5

Hi Molonski

I thought you and other GS MIS investors might be interested in this report from a senate inquiry regarding forestry operations on Tiwi Islands.

The prospects for Tiwi Islands forestry

In light of the collapse of Great Southern Ltd and the apparent impact of the economic downturn on the woodchip market, the forestry operations on the Tiwi Islands face a large number of potentially significant hurdles. These include:

The apparent need for major infrastructure to be constructed before harvesting can commence (wharf collapsed in 2007 due to faulty design);

The possibility that the plantation estate is only about half the optimal size needed for an internationally competitive facility;

The lower price likely to be secured for Acacia mangium compared to other available Australian hardwood woodchip sources;

Reports of growth form problems (genetically defective seed used) that may raise the cost of harvesting;

Their ability to attract and retain appropriate technical and management skills in the absence of an experienced business partner.

The very negative assessment by the Administrators, noted above, that for the Tiwi Island operations 'the operating costs and capital expenditure requirements are extremely high'; and

The high demands for cash flow required to sustain the plantation until harvesting begins.

http://www.aph.gov.au/SENATE/committee/eca_ctte/tiwi_islands/report/c02.pdf