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Understanding Teak Investment and Reforestation Project Details
1. The following presentation includes various statistics
pertaining to inflation, including selling price indices and
current market values. Please be advised that past inflation
and selling price trends are no guarantee of future
performance.
Individuals should consult their own professional advisors to
determine their financial needs.
No information provided or opinion expressed in this
presentation constitutes an offer to buy or sell any security.
Use your mouse to click anywhere to advance to the next
discussion point or slide
2. The following presentation includes various
statistics pertaining to inflation and selling price
indices and current market values. Please be
advised that past inflation and selling price trends
are no guarantee of future performance.
Individuals should consult their own professional
advisors to determine their financial needs.
No information provided or opinion expressed in
this presentation constitutes an offer to buy or sell
any security.
Use your mouse to click anywhere to advance to
the next discussion point or slide
3. What you should know
about Teak…
Teak (also known as Tectona Grandis):
• Is a deciduous hardwood tree indigenous to the dry and hilly terrains of Indonesia
and Southeast Asia
• Remains one of the most valuable of all hardwoods and is known for its
beauty, strength, durability and weather-resistant qualities
• Is the leading choice for marine and outdoor furniture applications because the
extremely dense wood contains natural oils and rubber content, thereby
possessing the greatest capability of any wood to withstand the effects of the
harsh outdoor environment
• Can naturally endure the effects of sun, rain and even snow without
rotting, warping, cracking, shrinkage or swelling
• Will naturally age to a beautiful silver-gray hew over the years or with a periodic
application of natural teak oil will maintain its original color and richness for a
lifetime.
• Prices have increased 15% per annum between 2002 and 2007 with prices
increasing by a staggering 67% in 2007 due to the supply deficit, according to the
ONF (Central American National Forestry Office)
4. What is the Project?
A unique initiative designed to:
• Promote responsible and sustainable reforestation in an genuine effort to preserve
the threatened tropical rainforest throughout the world, one of Earth’s most
precious natural habitats
… While
• Providing individuals, businesses and institutions the opportunity to fortify their
financial futures through responsible and sustainable investing
The United Teak Reforestation Project was established in 2008 and is
managed by the United Teak Management Group (UTMG)
• UTMG is a Panamanian registered privately held corporation founded on strong
ethical and visionary business principles, primarily focused toward reforestation
development and management of sustainable teak plantations in the Central
American country of The Republic of Panama
• UTMG has full and unencumbered authority to develop, market and manage all
aspects of the United Teak Reforestation Project including the associated
assets, employees, equipment, land and trees
5. Project Overview
Project objectives
• Reduce deforestation of tropical rainforests by developing Teak tree
plantations to fulfill growing global market demand for quality Teak wood
• End destructive environmental impact of historical practices by:
- Reducing the need for harsh and destructive stripping of indigenous trees
- Establishing sustainable Teak tree plantations on land previously “cut and slashed” for cattle
grazing to restore and contribute to the lush tropical canopy
- Reduce and progressively reverse the environmental impact of the callous destruction of tropical
rainforests
Project expansion achieved through sale of Teak trees
• Clients purchase a certified number of quality Teak trees per 1 hectare (2.5
acre) parcel
• UTMG prepares the land, plants, maintains and harvests Teak trees on
behalf of the client
• Client receives harvest proceeds… Project expansion achieved… All
stakeholders benefit, including the precious global environment
6. Project Methodology…
Eliminate “Cut and Slash”
United Teak acquires previously “Cut and Slashed” dormant
fields and live-stock grazing land in ecologically sensitive
areas of beautiful Panama
7. Project Methodology…
Preparation and Planting
Following hand clearing and cultivation of the land, high-
quality Teak Seedlings are selected from certified growers
and planted during the optimal rainy season
8. Project Methodology…
Protection and Growth Cycle
The skilled forestry team at UTMG ensures complete care
and maintenance of the entire Teak plantation over the
projected Twenty-year growth cycle
18 Months 48 Months
9. Project Methodology…
Plantation Management
UTMG manages all aspects of the Project through final
harvest and ultimate sale of Client timber to selected Teak
distributors, wholesalers and end-users
10. What You Are Buying?
Trees guaranteed to grow… With complete life cycle management
• Clients purchase and retain 1 hectare (2.5 acres) segregated “Parcels” of planted
and fully managed Teak trees with a guaranteed[1] minimum yield / number of trees
at final harvest
• Typically, each parcel purchased is planted with approximately 1,100 quality Teak
seedlings obtained through a recognized local Panamanian grower, although other
various species of trees can be mutually agreed upon
• UTMG provides each client with:
- Complete land preparation, planting, care and maintenance of Teak trees purchased throughout
the entire growth cycle (Twenty-years for new seedlings)
- Culling and preparation services (conversion to marketable timber) at final harvest
- Sale of marketable timber in the wholesale Teak market on behalf of the client, obtaining fair and
available wholesale pricing (or preparation for delivery to the client upon request)
• The Purchase Price is the only out of pocket cost to the client… A one-time 12%
fee is deducted from all timber sale proceeds to compensate the
cutting, management and selling services provided by UTMG during the contract
[1]If for any reason the client’s segregated parcel of planted Teak trees does not produce the contracted yield at final harvest, UTMG will
provide the difference from a reserve of privately owned Teak trees
11. Teak Tree Parcel Pricing
Current cost of one United Teak Reforestation Parcel (1,100 trees at
planting with a guaranteed minimum yield of 240 Cubic Meters of
commercial grade wood) is US$41,800
• Investment discounts shall be provided for each United Teak purchase contract of
five parcels or greater
US$9,880 Purchase Size No. of Trees Purchase Price Price per Tree Discount
Down
1 Parcel 1,100 US$41,800 US$38.00 -
US$1,680
a year for 5 Parcels 5,500 US$198,550 US$36.10 5%
19 Years
10 Parcels 11,000 US$376,200 US$34.20 10%
** FOR A LIMITED TIME ONLY **
We are offering 0% interest and absolute no fee financing on the
purchase of each United Teak Reforestation Parcel… No qualification
or credit check required
12. Securing Your Investment
Purchases secured by “Timber Deed”
Front
Documentation Includes:
- Number of trees Back
purchased / guaranteed
at final harvest
- Assignment to customer
of complete and
unencumbered ownership
of trees purchased
- Location of trees (via
GPS coordinates)
GPS
Coordinates
13. Your Teak Parcel Valuation
Calculated value of each United Teak “Parcel”
• One Parcel (1110 trees) of Teak will yield approximately 240 Cubic Meters of
commercial wood within 20 years, utilizing an annualized conservative growth rate
of 12 Cubic Meters per hectare
• A conservative average teak wholesale price estimate per cubic meter (424 board
feet) is US$1,060.00, or US$2.50 per board foot (see chart)
ITTO (1)reportedteak log prices as of October, 2005
M yanm ar V eneer M yanm ar Saw M yanm ar Saw U S Im port
M easure (2 )
2nd Q ual Q uality G r I Q uality G r II A verage 2005
E uro per H oppus Ton 3,866 1,914 1,545 2,207
U S$ per C ubic M eter 2,642 1,308 1,056 1,508
U S $ per B oard Foot 6.23 3.09 2.49 3.56
Notes
(1) Source International Tropical Timber Organization (www.itto.or.jp)
(2) Price refers to plantation sawn wood, and includes small sizes
• The estimated conservative harvest value of a United Teak tree Parcel is
US$254,400 at TODAY’S wholesale prices (US$1,060 x 240 = US$254,400)
14. Asset Value / Returns
When you purchase one of our Return Example:
certified Teak “Parcels” you are Full Parcel of New Seedlings
actually paying only a fraction of the
asset’s value at maturity, based upon Harvest value of full Parcel with
currentwholesale prices! 0% increase (1,100 trees) $254,400
Purchase Price (over 20 years) (41,800)
• This means the value of your initial tree Growth appreciation at today’s
purchase will increase 5 times faster than prices - “Growth Value” $212,600
the cost, simply by growing… We call this
“Growth Value” Total Return 508%
Multiple of cost 5 X’s
• When historical inflation trends are added
to “Growth Value” the return on your Teak
purchase increases to over 900%... Or FUTURE harvest value of full
more than 9 times your total investment Parcel (1,100 trees) $433,200
• Our conservative calculated returns do not Purchase Price (over 20 years) (41,800)
take into account the value of you paying Growth appreciation calculated
for your investment over 20 years… That is at conservative 3% increase $391,400
an additional benefit and investment Total Return 936%
security mechanism unparalleled in the Multiple of cost 9X’s
reforestation investment industry
15. Teak Price Trends
The median wholesale price of Teak has increased an average of 5.5%
per year since 1972
W h o le s a le T e a k P ric e (1)
U S $ P e r C u b ic M e t e r
$2,000
(2)
Natural Deforested
Teak ITTO
FAO
$1,000
(3)
Plantation Teak
$0
1972 1982 1992 2002 2012
Chart Notes
(1) Source International Tropical Timber Organization (www.itto.or.jp), FAO (www.fao.org) and UTMG analysis
(2) Drop in deforested Teak price is related to political situation in Myanmar and international deforestation laws
(3) Plantation Teak prices steadily increased the last five years with projected long term annual growth of 5.5% to 7%
16. Teak Price Future
Teak prices are predicted to continually grow mainly due to increased
global demand and a decreased supply of quality timber
• Increased global government restrictions placed on the cutting of natural growth
forests has created a strong world demand for quality Teak timber. It is expected
that the government will continue to restrict deforestation practices, eventually
prohibiting all cutting of natural forests. This will surely increase the prices of
plantation Teak timber
• The expected cubic meter value at each scheduled thinning / harvest has been
calculated utilizing a moderate 3.0% annual increase in already conservative Teak
timber prices… The market trend since 1972 has averaged more than 5.5%
Projected Teak Price
Commercial Thinning Commercial Thinning Commercial Thinning Commercial Thinning
Year 7 Year 10 Year 14 Year 20
$200 / M3 $1,383 / M3 $1,557 / M3 $1,859 / M3
Notes
(1) A current Teak timber price of US$1,060 M3 was utilized as a starting point for growth projections
(2) Average annual Teak timber price growth rate of 3% was applied to harvest years 10 through 20
(3) Due to reduced size and maturity of timber harvested in year 7, a conservative fixed value of US$200 M 3 was utilized
17. Teak Investment Returns
Should historical price trends of Teak timber continue, the value of
your United Teak investment is expected to greatly exceedthe
appreciation of conventional global investments
• Applying a conservative 3.0% annual Teak timber price increase, your United Teak
investment is projected to earn a 16.5% annualized compounded return… Net!!
Investment Projection
Age of Trees Trees Harvested Commercial Management Investment
Trees Standing Thinned Timber [M3] Value Fees [12%] Net Value
4 1,100 433 0 $0 $0 $0
7 667 267 22.6 $5,391 $647 $4,744
10 400 132 32.5 $44,970 $5,396 $39,574
14 268 88 47.0 $73,102 $8,772 $64,330
20 180 180 166.6 $309,742 $37,169 $272,573
Totals 1,100 268.7 $433,205 $51,985 $381,220
Notes
(1) An average annual Teak timber price growth rate of 3% assumed, calculated utilizing the “Projected Teak Price” chart
(2) The calculated 16.5% average annual compounded return does not take into account periodic harvest revenue payments
18. Comparing Teak to
Conventional Investments
When you compare anticipated appreciation in value to conventional
investment alternatives…Teak greatly exceeds the competition
Compounded annual return – Last 32 years
16.5% United Teak 11,378%
7.4% U.S. Stock Market (DJ) 915% Over 113 Times
Purchase Price
8.0% Stock Market (TSE)
CND. 1,087%
And if history
Total Return % repeats…
3.1% Nikkei (Japan) 258%
after 32 years
11 Times better
5.0% U. S. T-Bills / Bonds 454% than the US
Stock Market
6.1% Gold Bullion 627%
8.8% U.S. Real Estate 1,366%
2,500% 5,000% 7,500% 10,000% 12,500%
19. Primary Influence
How are these returns consistently achievable?
Quick growing resource
Ever-increasing demand
Limited world supply
20. Teak Supply Influences
Teak timber supplies are influenced and limited
primarily due to the following global factors:
• Environmental requirements severely limit suitable growing regions:
- Teak trees only grow adequately within 10 - 15 degrees of the equator
- Growing region must be at the correct elevation with distinct wet and dry seasons
- Only equatorial regions of Central / South America and Southeast Asia / Africa possess the
essential temperature, humidity and rainfall characteristics
• Deforestation and destructive forestry continues to occur in many areas
designated as suitable growth regions:
- The 2001 State of the World’s Forest Report published by the United Nations stated - “While forest
area in developed countries has stabilized and is slightly increasing overall, deforestation has continued in many
developing countries”
• Pressure from the United Nations and key governments forcing new legislation to
prohibit the cutting of indigenous Teak trees
• Good quality plantation Teak requires sufficient care and maintenance in the early
years in order to produce marketable timber
21. Teak Demand
Plantation Teak is the investment of the future, but
supply of good quality timber will be limited
• Demand for good quality Teak has never been higher due to its strength, hardness
and durability
• The high oil content of teak wood provides natural resistance to
insects, fungus, fire, water and toxic acids
• Recognized globally as a quality construction material that will endure the test of
time, lasting for decades and even centuries
• Teak is an essential construction material in ship and yacht
building, joinery, flooring, decorative
carving, cabinetwork, paneling, turnery, specialty fixtures, tanks and vats
• Demand and new applications for Teak wood are ever increasing, while good
quality timber is decreasing at a rapid pace
This dynamic assures ever-increasing prices for Teak wood!
22. Risk Assessment
With such high returns… What are the risks?
• Possible risks associated with Teak plantations:
- Agricultural
- Physical and Environmental
- Government Regulations
- Plantation Management
- Time… State of future markets
- Impact of Inflation
• At United Teak… We have carefully structured our timber
investment packages to mitigate the primary risks
associated with Teak plantations and to ensure your
asset is safe and secure during the 20 year life-cycle
23. Agricultural Risks
• Insects… No indigenous harmful pests. Only
exposure is to roots within first year or of
planting. Problem easily avoided by proper
preparation and bio-sensitive insecticides
• Fungus / biological… No known cases
in Panama of mass fungus or biological
destruction. If present, fixed by implementing an
effective spraying program
• Growth… Inferior growth usually results from
neglect, poor soil or unsuitable climate
conditions. At United Teak we:
- Select farms with only grade 1 soil conditions
situated in optimal growing regions
- Our expert team of on-site foresters oversee all
phases of the growth and management process
including annual maintenance and fertilization
High motivation for continued proper management… UTMG
fees are based solely on quality of final harvest
24. Physical / Environmental
Risks
• Hurricane and Floods… Hurricanes are non-existent in
the region. Trees / farms receive sufficient rainfall eight months of
the year and excess flooding is easy managed by topography
grading and properly planned irrigation
• Fire… Forest fires highly unlikely in the tropics and the trees
high oil content make them impervious to fire once they are a few
years of age. Fire ditches are maintained during the dry season to
reduce accidental fire risks
• Theft… Logistically impossible as workers live onsite and work
the plantation daily. UTMG staff and foresters provide regular
oversight and inspection. Site is fully protected with a security
fence with no hidden or concealed access points
• Unforeseen destruction and catastrophe… None
know to the region
UTMG guarantees your Teak saplings… Should any
trees within the first two years of planting not
perform to industry standards, they will be replaced
and replanted at our cost
25. Government and Legal Risk
Why is Panama ideal?
• Stable government with a democratic voting system and a legal structure
based on globally recognized civil law
• Radical shift in historical governmental process highly unlikely…
- Widespread land ownership and voter participation in general elections
- Viewed as one of brightest democratic success stories of the last century
- Strategically important to the United States and regional stability… A member of the Central
American Free Trade Agreement (CAFTA) with United States
- No indigenous military… Making change by revolution unlikely
- Progressive business environment with tax incentives, land ownership laws and rights
encouraging plantation development
- The Panama economy relies heavily on foreign investment, trade and tourism
• Panama possess the optimum political conditions for stable investment in
Teak plantations…
- “Although not indigenous to Panama, this tiny country provides a uniquely perfect
geographical, climatic and geomorphologic condition for the production of high quality plantation
Teak, and with some of the fastest growth rates of Teak in the world being recorded in Panama.”
[Teakwood Commercialization - 1998]
26. Management Risk
Highly skilled and professional team assembled to manage
your asset’s growth
• John Cornacchia… United Teak Founder, Chairman of the Board
- Passionate visionary with strong ethical business practices
- Successful business owner and operations manager for over 22 years
- Highly experienced in the dynamic global business market
- Operating in Panama for over five years with a solid team on the ground
• Strong operations team… United Teak Management Group
- Chief Executive Officer, corporate insurance expert with over 20 years of experience in
operating businesses in Canada
- Chief Operation Officer with over 16 years experience in managing agriculture projects
in Panama
- A full time forester highly educated and experienced in soil rehabilitation and Teak
plantations
- Full time plantation site manager overseeing a team of various full time and seasonal
plantation employees
27. Time… Market Risk
The hardest risk to manage… Unforeseen market conditions
and changes
• Certain primary factors mitigate this risk, thereby reducing the negative
impact on your investment:
- Teak has always been in high demand and will remain desirable due to the unique
properties and qualities it possesses
- The quality of plantation Teak wood has greatly increased due to improved planting
and maintenance practices, resulting in increased demand for the precious natural
resource
- Supply is becoming increasingly limited due to the high demand
- Worldwide legislative trend toward rainforest preservation and laws prohibiting the
cutting of indigenous Teak trees and other tropical species
- Recent push to establish plantations in indigenous regions of Southeast Asia and India
will not enter the market for many years after plantations in Panama are ready for
harvest, due to the quick growing cycles in the region
The best hedge against time and market risk… Price leverage!
28. Time… Market Risk
How price leverage can hedge against time and market risk:
• Your purchase price provides leverage of 5 to 1 (current harvest value vs. cost)
providing outstanding risk protection
• The chart below depicts what would happen in the unlikely event that the future
value of Teak wood (relative to other goods and services) declines by 50%
Normal Zero
inflation inflation
Today’s wholesale yield value of one parcel $254,400 $254,400
Inflation rate (same as last 15 years) 3.0% ZERO
Future wholesale value $433,200 $254,400
Less: 50% drop in market value ($216,600) ($127,200)
Harvest proceeds $216,600 $127,200
Total return (vs. $41,800 cost) 418% 204%
Multiple of cost 4 X’s 2 X’s
29. Performance Guarantees…
Our Commitment to You
United Teak is built on sound and ethical business
practices… We guarantee our services
• United Teak guarantees that your Teak saplings will grow to industry standards
during the first two crucial growing years:
- Should any of your Teak saplings fail to grow properly within the first two years of initial
planting, United Teak will purchase and replant them at our expense with no additional cost to you -
Zero
• United Teak guarantees that you will be completely satisfied with the performance
of your Teak parcel investment… So much so that we provide a five-year full
money-back policy:
- In the unlikely event that you are not fully satisfied with your Teak parcel investment on the five year
anniversary purchase date, United Teak will provide a full refund of every dollar paid under your
contract, including 2.85% compounded annual interest. No questions and no cost to you - Zero
• United Teak guarantees that your parcel will deliver a minimum yield of 240 cubic
meters of commercial grade timber during the 20 year life-cycle:
- Each of our Teak parcels are properly managed so that they produce 240 cubic meters of
commercial grade timber during the 20 year life-cycle. Simply… We will provide any shortfall that
may possibly occur from our own reserves at no additional cost to you - Zero
The United Teak guarantees represent our commitment to you
30. Taking Action…
United Teak has assembled a highly specialized team of
experts and programs to provide a highly unique opportunity
• If your financial goals include:
- Highly lucrative, long-term investment programs
- Mitigating risks associated with the volatile stock market
- Diversifying your portfolio while investing globally in a renewable resource
- The security of fully guaranteed asset ownership
- Paying for your investment over the entire term of ownership
AND…
- The opportunity to help protect the world’s precious environment
• Get involved with this exciting initiative and contact United Teak
today… Or visit our website at www.unitedteak.com
31. The following presentation includes various
statistics pertaining to inflation and selling price
indices and current market values. Please be
advised that past inflation and selling price trends
are no guarantee of future performance.
Individuals should consult their own professional
advisors to determine their financial needs.
No information provided or opinion expressed in
this presentation constitutes an offer to buy or sell
any security.
Use your mouse to click anywhere to advance to
the next discussion point or slide