Ann: Half Yearly Report and Accounts , page-8

Hi Keeting

" You said "You mention the prospectus in your blog. I can't recall seeing veneer in the prospectus. It was all about paper".

As you recall, the original idea was to cross-laminate fibre 'mats' at 90 degrees to produce 'raw paper' in a continuous roll. Interestingly looking at the risks section of the prospectus (under Project Risk page 48) it says:

"The main risk here is considered to be the achievement of the design production rate. The two potential risk areas are veneering speed and lamination speed. Failure to achieve these would increase the unit cost due to lower productivity of personnel and equipment. It is considered that this risk in not substantial. While the technical challenges are significant, the machine design and development is being contracted to experienced process and machine design engineers, GJC Engineers Pty Ltd who has opted for a staged development process to mitigate these risks. The risk is further reduced by the successful development of similar processes in other industries, such as textile and plywood industries providing a knowledge base...."

Elsewhere (page 47 on Production Rates) the prospectus also says:

"The plant to be built at Stage 6 configuration (i.e the beta plant) has a design capacity of 20000 Metric tonnes based on 250 days of 8 hours operation. It produces two streams of BPP 2 ply laminate, one thin the other thick. The mass of the thick laminate will be around 500gsm and the total rate of the thick laminate produced will be far greater than the thin laminate. This production rate will require a veneering speed of around 2.6 m/s somewhat higher than than the 0.8 m/s achieved with the experimental plant".

A couple of points can be made here.

* The 2011 production speed appears to be far lower than even the 'experimental machine'- I can't see A Walkamin billet translated into a square metre of veneer in just over 1 second!! If so the 10,000 metre Egyptian order would be spat out in 3.5 hours of machine time. Compare that with the actual 3 months to produce just 2000 square metres (41 minutes of machine time). At the upgraded 'required rate of veneering' - 2.6 m/s- thats 12 MINUTES of machine time.

* As I have said before the technical scaleup and commercialisation of the machine has failed on multiple fronts:
** It cannot produce any veneer from the outer trunk material
** It cannot produce continuous rolls of anything
** It cannot operate at ANYWHERE NEAR the speed indicated in the prospectus