Subject: Fwd: How to make money in forestry....
From: "Rob Walker" <[email-masked]>
To: "Hunter Biden" <[email-masked]>
Date: Thu, 12 Nov 2015 13:06:20 -0600

---------- Forwarded message ----------
From: "James Gilliar" <[email-masked]>
Date: Nov 12, 2015 11:05 AM
Subject: Fwd: How to make money in forestry....
To: "Rob Walker" <[email-masked]>
Cc:

*James Gilliar*
President and managing partner
Email: [email-masked]
Skype ID: james.gilliar

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I asked the direct question

Begin forwarded message:

*From: *michael richards <[email-masked]>
*Date: *5 November 2015 at 19:21:08 GMT+1
*To: *James Gilliar <[email-masked]>
*Subject: **How to make money in forestry....*

James,

the two minute guide to how to make money from forestry…

The underlying model is just one of ‘land value transformation’ - taking
land that is currently valued in one way, proving a business model on it
that shows an increased value for that land, and then taking the arbitrage
value between the two.  For forestry, that means that we can generally
create an immediate asset value of c.$1,000 for each hectare of land to
which we acquire land rights. For us, signing a lease for 50,000 hectares
in effect instantly creates an asset of c.$50 million on the balance sheet
of a company into which we then bring funding to establish operations,
which then translates into a corresponding equity holding of that amount
for the founders of the forestry business based on that land, realisable
through the value of the company shares.

Typically, one can obtain at either no cost or very little cost, the rights
to large areas of previously forested rainforest land across Africa in
particular, where the original trees have been cut down and the land left
in a degraded state. Logging companies come in, destroy vast swathes of
land, take out the timber, and leave environmental devastation behind.
This land is left unused and degraded, and if it continues in that state,
degrades further as time goes on.  The top soil becomes eroded and
depleted; river banks formerly protected by the forest areas become
unstable and wash away; animal habitats, food supplies and pathways are
destroyed; and weather patterns are changed, with decreases in rain fall
and desertification.

Vast areas of such land exist - many millions of hectares across Africa -
but currently they represent problems for local governments rather than
being seen as an asset. They are a reputational issue with the local
communities, who have seen their historic forests destroyed, which
previously were a source of firewood and bushmeat, but with no compensating
value for the local community.  Their community assets have gone, and they
have been left with degraded land, and weather changes that reduces the
fertility of their farm land.  This is a pressing issue with the current
governments particularly in Liberia and Guinea Bissau, where the previous
governments leased vast areas of pristine forests to Chinese companies, who
left the land barren and destroyed, causing great public outcry.

Such land is however still extremely valuable for reforestation, being
typically in areas with high rainfall and great growing conditions.  The
mixed model we use combines replanting all of the riverine and
environmentally sensitive areas, including animal corridors, with
indigenous tree species so as to bring back a natural habitat, protect the
water table and eliminate soil erosion and wash out, together with planting
other areas of commercial forestry species which: creates significant
sustainable employment for the local communities; provides wood fuel for
stoves, reducing the further pressures on deforestation; creates commercial
timber for construction, transmission poles and furniture; and provides
wood biomass for energy generation.  It is a genuine win on all fronts, and
is loved by the local communities, who feel these benefits directly, and by
the local politicians who are seen to be bringing this value to their
communities.

The model can be applied successfully to virtually any area of previously
forested land within the tropics - but the returns are greatest and the
land especially valuable where it has high rainfall good communications
links and is relatively flat.

Why does a forestry model create value in this way? Simply because the
growing conditions are so good in tropical rainforest belt, that the rate
of growth of trees is far higher than in North America or Europe -
typically 6  times as fast.  That means that trees that might take 40+
years to bring to harvest in Europe, we can grow and bring to harvest in
7-8 years.  The industry average rate of return for forestry in the tropics
is an IRR of 25%, reflecting the fast growth rates, and low cost of land
and labour.

As a model, there is no effective limit to the scale at which we could roll
this out - we just need to get the land.  There is still massive net
deforestation across the globe year on year, so wood is becoming a more and
more scarce resource, and will continue to be so. Timber prices continue to
rise, and the forestry sector outperforms the stock market year after
year.  Plantation forestry doesn’t come anywhere near to compensating for
the millions of hectares of forest lost year on year on year.  Moreover, if
trees aren’t being put in the ground now, they wont be there to harvest in
future years - scarcity will increase, and prices will continue to rise.

We have already have the people, skills and experience to be able to roll
this out - we have established routes to finance who are keen to finance
additional operations - we just need the land!  And to get land, well who
better than a group of entrepreneurs with good political contacts around
the world.

Of course, the model can be improved upon, and in any area where we can not
only get land but existing wood biomass also - by way of existing but
poorly managed plantations, or defunct rubber or palm oil plantations for
example - that can increase the value enormously.  In general, local
governments and communities greatly undervalue their existing forestry and
plantation assets, and do not have the skills and resources to manage them
effectively.  By passing those across to us, we bring them into productive
use, creating employment and all the other benefits mentioned above - but
in so doing realising the full value of those assets, and again creating up
front value simply by being able to realise that value on our balance
sheets up front.

Hopefully that outlines what you needed James, but let me know if you would
like detail on any part of the above,

all the best,

Mik