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Silva Tree Paulownia Biomass Investment

Silva Tree Paulownia for Biomass Project

The Paulownia Biomass Project is a robust, safeguarded investment in renewable energy; operated by Citadel Trustees ST Ltd., structured by Katten Muchin Rosenman Cornish LLP, audited by BDO and project managed by Silva Tree Panama.

The project is designed to enable prospective investors to participate in returns from biomass produced from a newly planted forest in Panama. The forest will comprise a fast-growing tropical hardwood, Paulownia. Silva Tree Panama S.A. will act as project manager of the Paulownia Biomass Project and the Fund will be operated by Citadel Trustees ST Ltd. The object of the Fund is to create an attractive investment opportunity within the growing sustainable energy sector whilst generating environmental and climate change benefits.

A Growing Market for Biomass

The agreement reached at the European Council in March 2007 sets a European biofuels target of 10% of energy content by the year 2020* and, according to the European Commission for Agricultural and Rural Development, it is reasonable to assume that biomass could account for two thirds of this renewable energy target. Moreover, it is becoming clear that European and North American markets cannot produce sufficient biomass on a domestic level to meet their targets. For example, it is estimated that in 2005 (before the 2007 target was set) Great Britain imported a minimum of 54% of the total 1.4 million tons of biomass used for electricity production **

Silva Tree Biomass Investment

The first phase of the Silva Tree biomass investment is being developed as a Fund, operated by FSA regulated Citadel Trustees ST Ltd. and managed by Silva Tree Panama S.A. The legal structure has been built with the assistance of Katten Muchin Rosenman Cornish LLP. BDO has been appointed as auditor for the Biomass Energy Project both in Panama and the UK. The combined fee income of all the BDO Member Firms was US$5.026 billion in 2009. The global network has 1,138 offices in 115 countries and more than 46,000 partners and staff provide business advisory services throughout the world.

The first phase of the Silva Tree Biomass Project consists of 1200 hectares, out of which 1000 hectares will be used for the planting of Paulownia trees for biomass production. There will be four further phases to the project, namely Biomass for Energy Funds II, III, IV and V respectively. Silva Tree Panama will manage the 1000 Hectares and be responsible for harvesting, processing and transporting the biomass to the port of Panama. Silva Tree Panama will also supply Paulownia seedlings to the Paulownia Biomass Project I S.A. from a micro propagation laboratory in Panama which it owns and operates.

Silva Tree Panama will sell a 21 year usufruct (the right to derive all profit and benefit from the property) over the 1000 hectares of Panama Paulownia forest designated for the Fund to a newly incorporated Panama Company. One class of LP interests will be redeemable and the other non-redeemable.

The Fund will be wound up after the end of the 21 year period and it is expected that similar steps will be taken with respect to Paulownia Biomass Project I S.A. at this point.

The trees will be harvested in year 3 and subsequently every year, thus creating a regular, consistent supply of biomass for sale in the highly buoyant bio-fuels market. Silva Tree Energy S.A. has been incorporated for the development of a 10-20MW biomass facility which will convert the biomass produced by the project in a renewable energy supply. The feasibility of the facility is currently being studied with a view to begin construction within 3 years.

More information on the Silva Tree biomass investment is included in the project Factsheet and Information Memorandum, which will be available once the project has been launched, expected in Winter 2010.

* UK Department for Environment, Food and Rural Affairs "UK Biomass strategy 2007"

** Evaluating the Sustainability of Co-firing in the UK, report to DTI from Themba Technology Ltd, September 2006.