Credit Dejavoo with all the information below - I am just the...

Credit Dejavoo with all the information below - I am just the cut-and-paste man. All sounds reasonable below...

1) E-mail from TFC
2) Official TFC PDF report of auction

Cheers
John

Hi [Dejavoo]

Thanks for your enquiry. I apologise for the delay – end of financial year is particularly busy for us.

In response to your questions:

1. The wood was sourced from trial plantations of Indian Sandalwood (Santalum album). Many of these were established prior to the determination of optimal host regimes and plantation management techniques and are not considered to be representative of TFS grown Sandalwood due to the different management regimes.
2. The trees purchased at auction were branches and logs containing limited heartwood. The trees were a range of ages and were sourced from largely neglected trial plantations. Attached is further information on the wood sourced at auction. Please note, the prices referenced in both the PDS and on the website are the price of Indian Sandalwood heartwood, the oil bearing section of the tree. Similarly in our PDS yield estimates we refer only to anticipated heartwood production as this represents the bulk of the value from the tree.
3. Testing the wood from auction would be particularly difficult due to its mouldy and damaged state. It appears that this wood was left following harvest and subsequently it is quite damaged.
4. TFS is involved in research being conducted on the oil from nuts and is assessing the feasibility of nut oil production. The oil appears to have a number of therapeutic and cosmetic applications however we have not commenced commercial production of nut oil.
Thanks for your interest and please do not hesitate to contact us if you require any further information.

Kind Regards



FOREST PRODUCTS COMMISSION (FPC) AUCTION RESPONSE

At its Harvey depot WA, the West Australian Forest Products Commission (FPC) recently auctioned a sample, in three lots, of Indian Sandalwood harvested from its Kununurra plantation. TFS attended this auction and purchased all three lots. Apart from TFS, there appeared to be no industry representatives bidding at auction although there was one absentee bid on one lot. All other bidders appeared to be recreational wood turners.
The three lots were presented in a poor condition, being mouldy, dirty and some pieces being damaged post harvest (see Figures 1 & 2 below). The lots were only assigned indicative weights and there was little information on, nor classification of, the wood in the sample.

Samples of the wood purchased at the FPC auction in Harvey (Figures 1 & 2, pictured left). Samples were presented in poor condition being mouldy, dirty and some pieces being damaged post harvest.
Cleaned Sandalwood logs (Figure 3, pictured below) typically traded in the international Sandalwood market.

Figure 1.

Figure 2.

Figure 3.

This inferior and small sample presented at Harvey WA is, in international Sandalwood trading terms, an unmarketable consignment in a remote marketplace (as compared to typically traded cleaned logs, see Figure 3.). Relative to TFS trees, the sample would be considered as a selection of underperforming trees. The sample was auctioned at local handicraft value only.
Therefore, this auction does not in any way represent the TFS plantation based Indian Sandalwood market that will emerge when TFS commences reliable and sustainable volumes of production in 2012. This market will be comprised of informed and currently active International buyers.
TFS Indian Sandalwood will be valued by these buyers for its superior heartwood, high quality oil (compliant with international specifications), and for the variety of by-products including resin products, spent charge and

Note - Expert forestry consultant, Peter Kimber is familiar with the trial plantations from which the auctioned material was harvested, and has followed their development since their inception over the period 1987 to the early 1990’s. He emphasizes that the material sold at auction was the product of experimental plantations which were established in some cases on inferior soils, and frequently with unsuitable host species. One of the major objectives of the trials was to determine suitable host species to maximize sandalwood yield and quality. Many of the species tried were failures, which will be reflected in the quality of the sandalwood harvested from these particular trial plots.