Tectona grandis – Financial Analysis Annex

Table of ContentsBasic variables...............................................................................................................................................................................................................3Costs Table Variable definitions....................................................................................................................................................................................4Scenario Matrix Table...................................................................................................................................................................................................6Scenario Matrix Table Definitions................................................................................................................................................................................7

Tabulated results of NPV, NFV, IRR - 4 scenarios.....................................................................................8Tabulated costs – applicable to all 4 scenarios..........................................................................................10Graph 1: Wood at Mill yard & Land Lease Scenario................................................................................11Graph 2: Wood at Millyard & Land Purchase Scenario............................................................................12Graph 3: Stumpage & Land Lease Scenario.............................................................................................13Graph 4: Stumpage & Land Purchase Scenario........................................................................................14

Basic variables

Species: Tectona grandis

Land Purchase Cost: 5000 per hectare

Land Lease Cost: 1000 per hectare

Interest Rate: 1% - 8% (-13%)

En patio: GWM harvests the timber and delivers it “at the millyard” (en patio de aserradero)

En pie: contractor harvests the timber and pays a price to GWM, called as “stumpage” and “stumpage price”

Timber price source: www.officinaforestal.cr

Variables calculated: Net Present Value ((NPV), Net Future Value (NFV), Internal Rate of Return (IRR)

Costs Table Variable definitions

Variable Definition

AGE The age of the plantation

Actions Prescriptions and management tasks

Vtcc V (Vtree*N) THINNED (remaining) (Volume total con corteza) Total volume without bark which is residual to the stand after a thinning operation

V_12_UB REMAINING Total volume without bark until a top minimum log diameter of 12 cm

REMOVED_Volume_Total Total Volume Removed (from a thinning or harvesting operation)

REMOVED_V_12cm_Top_Diameter (Rough) Removed Volume from an operation until a top minimum log diameter of 12 cm

N trees removed Number of trees removed

Stumpage Price The Stumpage price per cubic meter

Mill Yard Price The Mill yard price per cubic meter

Stumpage income The income from the specific Stumpage sale

Mill yard income The income from the specific Mill Yard sale

STUMPAGE Thinning cost The thinning cost for the stumpage sale

Variable Definition

Thinning cost Thinning cost of the Mill Yard Sale Operation

Transport Thinned logs Transport of thinned logs

Pruning cost Prunning Cost – usually at early ages, until 4-7 meters

Maintenance and Management cost Several re-occuring costs

Final harvest and transportation cost (for PATIO) The Final harvest and transportation cost applicable to the Mill Yard Operation

STUMPAGE costs Total Stumpage Costs

ENPATIO Costs Total At Mill Yard Costs

Land purchase cost Per Hectare Land Purchase Cost

Land Lease cost Per Hectare Land Lease Cost

Seedling cost (included in the establishment cost) As below

Establishment Cost The cost of plantation establishment

PLUS-MINUS PATIO (Income) Minus (Costs) for the At Mill Yard Management Option

PLUS-MINUS STUMPAGE (Income) Minus (Costs) for the Stumpage Management Option

Scenario Matrix Table

NPV, NFV, IRR analysis was done for each of the 4 scenarios below, using as input the growth of the Species Tech Report, and the price information avaliable.

Land Lease Land Purchase

Wood at mill yard

Land Lease x Wood at mill yard

VARIABLE INTEREST RATE

NPV, NFV, IRR 1.00% - 13%

Land Purchase x Wood at mill yard

VARIABLE INTEREST RATE

NPV, NFV, IRR 1.00% - 13%

Stumpage

Land Lease x Stumpage

VARIABLE INTEREST RATE

NPV, NFV, IRR 1.00% - 13%

Land Purchase x Stumpage

VARIABLE INTEREST RATE

NPV, NFV, IRR 1.00% - 13%

Scenario Matrix Table Definitions

Term used Definition of term

Wood at mill yard Wood is harvested and delivered to Mill Yard, receives a price at millyardIn spanish: “en patio de aserradero”

Stumpage Wood is sold as standing trees, plantation owner receives a price for the wood sold

In Spanish: “en pie”

Land Lease Leasing of the plantation property

Land Purchase Purchasing of the plantation property

NFV Net Future Value

NPV Net Present Value

IRR Internal Rate of Return

Tabulated results of NPV, NFV, IRR - 4 scenarios

Tabulated costs – applicable to all 4 scenarios

Graph 1: Wood at Mill yard & Land Lease Scenario

Graph 2: Wood at Millyard & Land Purchase Scenario

Graph 3: Stumpage & Land Lease Scenario

Graph 4: Stumpage & Land Purchase Scenario