2009 Investor’s Project
The KTC Mahogany Project 2009 has been established
to provide you with the opportunity to invest in the
commercial cultivation of Mahogany trees, a valuable
hardwood species primarily used for light
construction, high quality furniture, flooring,
interior decorative joinery, musical instruments and
You will be growing Mahogany trees within an
established plantation environment, which will be
managed by KTC Plantation Management Pty Ltd
(Project Manager) an experienced forestry manager
with its own ten year old mahogany plantations &
other investor owned plantations under management.
Your timber will be harvested and processed into
sawn timber ready for sale in both the Domestic and
Worldwide markets. Unlike many other timber projects
you will benefit by a value adding process that will
ensure that your timber meets the highest quality
standards for the decorative timbers in the world.
Additionally, from an environmental impact your
plantation Mahogany will reduce the pressure on the
logging of native Mahogany stands in tropical areas
around the world.
KEY FEATURE S OF THIS PROJECT
100% tax deductible via ATO
Product Ruling PR 2009/17
Highly experienced project
management and an
10 Year short rotation –
Returns after 13 years
No yearly ‘Ongoing’ fees
Superior genetics with
proven high yields
Liquidity option after four
years whilst maintaining
full tax deductibility
Sustainability of existing
timber markets – 10 year
Superior farm management
practices that maximise
Worldwide demand driven by
diminishing quality of
The project relates to the establishment of a maximum of
1,000 hectares of Khaya senegalensis (African Mahogany) on
land in Western Australia or Far North Queensland. All
project costs are 100% Tax deductible. Interests can only be
issued on receipt of an application form attached to the
Product Disclosure Statement (PDS) dated 22nd April 2009.
HOW DOES THE PROJECT WORK?
You become an Investor by completing the application at the
back of the PDS and paying the applicable subscription
By doing so you:
Subscribe for two or more
Engage the RE to establish
and maintain a Mahogany
Engage the RE to harvest,
process and market your sawn
timber from the harvest at
year 11 for the maximum
price they can obtain,
either within Australia or
DO THE RESEARCHERS THINK?
Adviser Edge reviewed the project trust fund structure and
made the following comments:
“The establishment of these cash funds provides a level of
security that resources will be available to provide access
to land and management services over the Project term. This
significantly reduces management risk.”
Adviser Edge April 2009
HOW MUCH WILL IT COST?
The costs per Forestry interest are as follows:
Payable on subscription
Minimum of 2 Forestry
(GST is not required, see
PDS Section 6 Taxation)
There will be no other ‘Ongoing Fees’ in this project.
Insurance, covering your Forestry interest may be arranged
When your timber from your Forestry interest is processed
and ultimately sold certain fees will be deducted prior to
the proceeds being distributed to the Investors:
Deferred Contribution: 4.22% of Gross Harvest
Harvest costs: 14.57% of GHP
Marketing costs: 6.24% of GHP
100% TAX DEDUCIBILITY
Investors are entitled to an immediate income tax deduction
being 100% of the total application monies payable. ATO
Product Rulings PR 2009/17 issued on 22nd April 2009 confirm
that all Investors will be entitled to deductions for all
costs of participating in the KTC Mahogany Project 2009
incurred during the term of the Project, provided the
Project is implemented in the manner detailed in the PDS.
Any ‘borrowing’ costs will be independent of the project,
please consult your accountant or financial adviser.
A copy of the Product Ruling is available above.
While a Product Ruling provides a degree of certainty for
participants in relation to their entitlements to taxation
benefits, no Product Ruling is a guarantee or endorsement of
the reasonableness or viability of the project as an
investment or of the reasonableness of commerciality of the
WHY INVEST IN AUSTRALIAN GROWN
The market for quality decorative timbers like Mahogany,
continues to grow as the decline in the logging of native
tropical forests continues around the world. Recent studies
have shown there is a potential to grow plantation mahogany,
within the tropical zones of Australia of a quality that
will fit into existing domestic and overseas markets.
Australia’s reliance on imports for tropical and decorative
timbers provides a further impetus to develop a sustainable
industry and, working with the governments 2020 vision for
the plantation and timber sectors. Australia is one of the
few environs in the world that has both the tropical climate
and the political stability to support high value
plantations of mahogany.
As well as providing excellent market prospects,
participation in a Mahogany plantation also has many local
environmental benefits. The establishment of hardwood
plantations in Australia reduces the harvesting pressure on
native forests throughout the world, particularly on the
tropical forests of Asia and the South Pacific.
Additionally, plantations help relieve salinity and soil
erosion and create a sink for greenhouse gasses. Government
The Federal Government has recently renewed its backing for
the “2020 Vision” of trebling plantation forest areas in
Australia in the period from the mid 1990’s to 2020 to 3
million hectares. Under this policy, a targeted average of
80,000 hectares are required to be planted each year. The
industry is currently short of that target, hence the
government support of these types of projects through
WHY KIMBERLEY TIMBER CORPORATION
The board of the Project Manager includes directors with
relevant forestry expertise and proven performance in the
management of large agricultural and community projects.
Additionally, the Forestry Manager has developed a domestic
market and has established contacts with overseas timber
merchants who have expressed significant interest in the
quality of ‘Kimberley Mahogany’.
The Project Manager consults and is advised by Mr Gary
Sexton, who is a leading expert in growing Mahogany in
Australia. Mr Sexton also is a leading expert in genetic
development of Khaya senegalensis (African Mahogany) within
Australia, and has been responsible for the development of
government assisted farm forestry projects to the
establishment of large MIS plantations in both Queensland
and the Northern Territory.
THE RESPONSIBLE ENTITY
KTC Securities Ltd is the Responsible Entity of the Project
and is responsible for the operation and management of the
Project. The Responsible Entity is an unlisted public
company and is part of the Kimberley Timber Group.
The Kimberley Timber Group company has an independent
Advisory Board with industry and corporate experts. The
directors of the Responsible Entity have extensive expertise
in agriculture, business management rural property,
corporate governance and management of R&D operations.
PROJECT RISKS & SAFEGUARDS
As with any business activity, and more particularly,
plantation forestry, there are inherent risks due to matters
beyond the control of the Project Manager. Additionally, the
Project is subject to the ordinary commercial risks of a
medium term venture. The risks associated with agriculture
and in particular Mahogany plantations, include such things
as natural disasters, suitability of land, seedling and
forestry techniques, disease, insects and the ever changing
harvesting and processing technology. Other broad risks
would fall under the categories of market, regulatory and
financial. For a full outline of the risks of this project
refer to the PDS.
To minimise these risks and enhance the prospect of
producing high value Mahogany sawn timber a plantation
management and procedures plan is prepared that clearly
establishes the standards and outcomes expected for the
forestry, harvesting and processing operations.
The plantation manager is highly experienced having three
prior new mahogany plantings through wholesale managed
investment projects and a mature mahogany stand that is
commercially ready for harvest.
FACTORS AFFECTING PROJECT RETURNS
There are a range of factors that affect returns of
plantation Forestry projects many of which are beyond the
control of the Project Manager.
For more information relating to the factors affecting
returns please refer to the PDS, in particular the
Independent Forestry Expert’s Report. This information
should provide you with sufficient material upon which you
can make your own assessment of the merits of investing in
This document is a summary only. Please ensure that you
read the PDS and Financial Services Guide in full before
deciding to participate in the KTC Mahogany Project 2009.
This document contains general securities advice only which
does not take into account any person’s investment
objectives, financial situation or particular needs. Before
participating you should assess the suitability of the
project to your needs and consult a professional if