our patience about to be rewarded?, page-18

hmmmmm today's announcement a bit unfortunate!

"Papyrus Australia Limited (PPY) and World Future Fibre (WFF) have entered into an agreement whereby they have mutually agreed to bring their joint involvement in the Pulp Fiction Manufacturing Pty Ltd joint venture to an end."

PPY-ites will recall the following:

* PPY signed a Joint Venture Agreement with Melbourne based QFL Photographics (through their Company World Future Fibre Pty Ltd - WFF), to operate the first commercial manufacturing facility in North Queensland.

* The agreement covers the demonstration of the Papyrus Technology to potential licensees and the manufacture of the Papyrus products for customers...

* Following satisfactory performance in the operation of the facility, WFF possess first right of refusal to roll out the Papyrus technology throughout Vietnam where over 90,000 ha of banana grows.

There is no doubt that the departure of QFL puts a dampener on things! If they don't think there is a buck to be made as an INSIDER perhaps we shareholders have got it wrong.

On the other hand looking at the three prongs of the agreement:

** The operation of the plant can be done by anyone (assuming the plant works!)- no problem.

** demonstration to customers and manufacturer of products- can be done by anyone (assuming the plant works!)- no problem.

** first right of refusal to roll out technology to Vietnam... Well, I always thought that was a bad deal for us anyway- giving too much away for nothing.

All in all the key issues for me are:

* will the manufacturing process work at the scaled up commercial level (proof is in the pudding at Mt Uncle)?

* Will an agreement be reached with Sage Engineering (who developed the commercial plant) -which relationship broke down following the plant commissioning problems-, or will PPY have to 'start again' in engineering work in building future plants?

* will the company be able to access commercial markets at profitable levels?

The arrangements with the Beleaf launch auger well on the last, BUT at the moment we have:

* ONE slightly dodgy manufacturing plant in North Queensland
* ONE great-looking product range as a starting point,
* which if successful will require multiple manufacturing plants
* but an obscured way forward to duplicate the manufacturing plant technology.

In addition we wait for further news of product orders from DaiEi Australia and importantly the fate of the agreement with Hayot / BANANAMART (sales into the EU, and manufacturing in the Caribbean and South America- and payment of $2 million to PPY). If this deal falls over I will be a lot more worried!

All in all, a challenging period ahead. A chance to accumulate on weakness for believers???????

BACKGROUND TO PPY

Aims to use fibre from banana trunks (a waste resource) via a patented process to produce paper (packaging, board etc) and veneers at low cost and with negligible pollution. A revolutionary step change in the world pulp production.