Wednesday, November 19, 2008

Newsletter October 2008

Newsletter November 2008 Finca di Pacifico-2

The “Association of purchasers of plots of Pacifico Dos”, an association for purchasers participating in the Pacifico Dos project, was established in August of last year. The objectives of the association include representation of the interests of the members in connection with the acquisition by members of the relevant plots of land. We welcome this initiative and we are confident that it will benefit communications between ourselves and the plot owners. The management board of the association will also provide regular reports on the progress of the Pacifico Dos project.

Intermediate Harvest

The intermediate harvest was completed in full last month. The timbers involved included teak and melina. During the intermediate harvest the poorest and most bent trees are removed so that even better growth can be expected among the sound trees which remain. Since only the most bent and poorest quality trees are harvested at this stage it is to be expected that the yield per m3 is relatively low. The total return is $ 86,684.48, with costs of cutting, loading etc already deducted, which is more than we had initially calculated. The best, that is to say the straightest trees have been left in place, at around 300 - 400 per hectare.

Before the intermediate harvest could be completed it was necessary to carry out certain maintenance tasks. A number of temporary roads are laid to provide access to the area for the selection and cutting teams and their equipment. This task involved around 45 forestry workers. With the cost of hiring a bulldozer, wages, chainsaws and fuel and the expense of selecting the trees for cutting, this operation cost around $84,120. We will provide the VKK with a detailed breakdown of costs for this operation. Rio Grande Verde y Azul s.a. will bear an element of these costs themselves, namely $ 34,000.As reported above, the return on the intermediate harvest is $86,684.48. An element of this return will go to Rio Grande (in relation to the as yet unsold plots), and the remaining $ 26,911.46 will be transferred to the association in Costa Rica. The association will decide how these funds are to be allocated.

73.6% of the project has been sold, so that 73.6% of the return is destined for the association.26.4% of the project is as yet unsold, so that 26.4% of the return goes to Rio Grande.
The next intermediate harvest will take place in around 3 years, and will deliver appreciably higher profit per m3. In order to avoid any conflict of interest the next intermediate harvest must be organised by the association. It is amazing how quickly the remaining trees respond by expanding their crowns to fill the newly created space. This leads in turn to a rapid increase in the girth of the trunks.


A meeting was held recently with the team engaged in the implementation of the phased plan relating to the licences. Huite Zijlstra attended on behalf of arte Verde s.a., also present were Ing. J F Nicolas, Topographer Jose Orozco, Geologist Felipe Leon, Dr Alan Astorga and Jos van Veen. All the remaining steps came under discussion during the meeting. A company will be set up to manage the provision of water to the project. This is a statutory requirement in Costa Rica, and a private water supply company will therefore be set up for this purpose. The association will be shareholders in the company. Geologist Felipe Leon has investigated the quantity of water available on the Finca and in the immediate environment, and his findings indicate that there is ample water available for a large-scale project. The expectation is that steps 1 to 11 will be completed during the month of November (see the organigram included in the previous newsletter). If we can continue at this pace we will have completed all the necessary stages by March 2009, and we can make a start with the individual registration of plots on the land registry.


Maintenance In technical forestry terms, the Finca is currently in very good condition. We have experienced some difficulties in receiving the payments for forestry maintenance to Costa Rica, and it is probably a good idea for the association to jointly collect the as yet unpaid maintenance monies for 2008 (which will also save on bank charges), and then to swiftly transfer these to the maintenance company in Costa Rica. This is important because lack of maintenance can result in excessive weed growth between the healthy trees. This means that the vital moisture and nutrients are shared with the elephant grass, with negative consequences for the healthy trees. Maintenance is also important to allow the topographer to carry out his measurements, which are needed for the recording of the plots on the land registry. We would therefore urgently call your attention to the need to get the maintenance funds together as speedily as possible.
Prices Despite the international financial crisis, land prices in Costa Rica continue to increase. Costa Rica continues to be the most popular investment destination in Central America. We have observed this over a period of years, but we also hear similar reports from a variety of Chinese and American financial news sources. The prices of plantation timber have also risen explosively in the last year. Timber is a scarce resource, just like oil. It is also one of very few raw materials which has shown a steady increase throughout the last century, at around 6% per annum. In view of the fact that world population continues to increase, together with the pressure on raw materials from the new economies, you can anticipate that prices will rise with demand rather than falling. We can think in this connection with continuing expansion of economies like China, Russia and Brazil.

Questions from plot-holders: In this section we respond to questions from plot-holders.

  • Q- What will be the arrangements for distribution of profits if the trees are harvested again in a couple of years?
  • A- Because building will already be taking place on some plots by 2009, the profit from harvesting from a plot will go to the plot owner.
  • Q- What about water and power connections and so on?
  • A- Around $ 1,300 will have to be paid for each connection, regardless of the size of the plot. This is a one-off payment. The water and electricity consumed will also have to be paid for.
  • Q- When will harvesting be required again?
  • A- The next harvest will need to be done in around 3 years.

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