The ownership of U.S. industrial forestlands has dramatically changed since the 1980s. Whereas forest product companies had been the dominant owner of such lands and sent that timber to their mills, now the lands are owned by investment management organizations and trusts that manage the land to maximize returns. Some of these organizations, however, are delivering returns and helping to conserve the land. T r e n d s i n
he United States has seen a major shift in industrial forestland ownership inthe last twenty-five years, due to the breakup of forest product companies Tand the ensuing divestiture of their lands to other types of private buyers.
Until the 1980s, publicly traded, vertically integrated forest product com- panies owned and managed not only large tracts of working the remaining nine, seven were TIMOs and two were REITs. In forests but also the nearby facilities that processed the trees coming 2010, only one of the top fifteen U.S. forestland owners was a tra- off those tracts. The forests were viewed as essential sources of ditional owner, while ten were TIMOs and four were REITs.1 In fiber for their mills. However, beginning in the late 1980s, various addition, since 1995, more than half of the nation's 68 million pressures catalyzed divestures of timberland, and the publicly acres of private industrial timberland has changed hands, most traded forest product companies narrowed their focus, concen- within the period from 2000 to 2005.2 trating on the production and distribution aspects of the business. What caused this vast change in ownership? Five major reasons New kinds of owners, called timber investment management underlay the shift. First, owning forests was no longer a strategic organizations (TIMOs), evolved from these substantial timberland necessity for traditional forest product companies. Previously, the sales. TIMOs manage timberland investments for private institu- volume of trees cut from the property was being driven by the tional investors and high-net-worth individual investors through mill's demand instead of the market. These companies realized separate accounts or private comingled funds, as well as public that they could make a larger profit by focusing on one part of timber real estate investment trusts, known as REITs, a publicly the business, such as manufacturing, instead of spreading their traded version of TIMOs. The primary goal of TIMOs and REITs efforts across multiple lines of business. They also found that in is to maximize returns to their investors through management some cases they could find cheaper fiber from forestland owners of timberland assets.
other than themselves. The scope and speed of this change in ownership is impressive.
Second, in the 1980s Sir James Goldsmith discovered that he In 1981, all fifteen of the largest forestland owners in the United could make a quick profit by taking over companies using short- States were traditional forest product companies. By 2004 only term debt to capitalize his purchases. He would then break the six of these fifteen were traditional forest product companies; of companies into their component parts and sell them off to the B Y P E T E R R . S T E I N

A deal involving one of the nation's oldest conservation groups and two relatively new ones, the state of New Hampshire, and a TIMO made thepreservation of areas like this in the Connecticut Lakes area in northern New Hampshire possible. highest bidder. He is famous for purchasing companies like Crown companies were taxed twice: once at the company level and again Zellerbach and Diamond International, both traditional forest at the investor level. For TIMOs, which are often structured as product companies that no longer exist. As part of this strategy, limited liability companies or limited partnerships, taxes are passed he sold the forest ownerships in various packages to TIMOs and through to their investors, who only have to pay taxes once, typ- REITs and then sold the processing facilities to other paper com- ically at the capital gains rate. This incentivized many taxable enti- panies. Anticipating his attacks, many forest product companies ties to invest in timberland through TIMOs.
preemptively sold off their fee-owned timberland themselves, Finally, timberland was "discovered" by institutional investors usually with some long-term wood-supply agreements with the who were attracted to the fundamental characteristics of the new owners. This greatly reduced the attractiveness of leveraged asset. Timber, compared to the traditional asset classes of equity buyouts like those engineered by Goldsmith.
and fixed income such as stocks and bonds, is a relatively low-risk Third, changes to generally accepted accounting principles investment because it correlates negatively with other markets (GAAP) in the United States established mandatory reporting and provides reduced volatility and superior risk-adjusted returns.
methods for all publically traded companies. In essence, the revised It also allows for investors to diversify their overall portfolios and GAAP stated that from an accounting standpoint trees neither invest in alternative real assets. Ultimately, timber is an inflation appreciate nor depreciate. In other words, for the publicly traded hedge because trees continue to grow in size regardless of the forest product companies, the value on the books of the trees at state of the economy and therefore timber serves as a mechanism purchase was the same as the value on the books of the trees to preserve capital within a portfolio. when harvested after ten years of growth. Any gain that camefrom the growth of trees was added to the balance sheet but not THE RISE OF THE TIMO
as forest appreciation. These new rules resulted in an underval- Given the flood of institutional money and the interest of high uation of timberland assets and thus lowered reported returns to net worth investors in timberland in the 1990s and 2000s and the investors. TIMOs, as privately owned entities, were exempt from divestiture by the traditional forest product companies, TIMOs this reporting requirement. and REITs now own a significant amount of private forestland Fourth, returns on timberland for traditional forest product in the United States. The number of TIMOs in existence has also 84 FOREST HISTORY TODAY SPRING/FALL 2011
grown dramatically. In 1990 only two or three TIMOs existed,nationwide, while today more than 25 TIMOs buy, own, manage, Timberland Transaction Volumes
and sell timberland. As of the end of 2010, TIMOs managed more in Thousands of Acres from 1991 to 2004
than $44 billion in private capital for both domestic and interna- tional timberland. Of this capital, about 43 percent of the com-mitments were from public pension funds. Foundations and endowments made up the next largest portion, at 19 percent.
High net worth individuals and families contributed 7 percent ofthis capital. All told, TIMOs own and manage more than 23 mil- lion acres nationwide, with a market value of $29 billion in the Thousands of Acres TIMOs, unlike traditional forest owners, have comingled fund , "TIMBERLAND TRANSACTIONS" terms usually in the ten- to fifteen-year range, which means large timber tracts are traded at a higher frequency today than undertraditional ownership. This has resulted in a much more active tim- ber market in recent years. However, timber transactions have qui- THE CAMPBELL GROUP eted since the 2008 economic downturn. The figures to the right,showing the volume of transactions made over the last two decades,illustrate how transaction frequency began to increase around 1996, Timberland Transaction Volumes
peaked during 2006–2007, and have since been very low. in Millions of Dollars from 1999 to 2011
The implications of TIMO ownerships for timberlands are profound. Due to the short fund duration, TIMOs have a strong financial incentive to sell their lands for the highest price at the end of the term so they can realize a favorable return for investors at the end of this relatively short ownership frame. This often results in selling portions of the holding for "highest and best use" purposes (i.e., development), which can lead to fragmentation of the larger forest landscape. This growing trend has been dis-turbing to conservationists and forest workers who aim to keep forests as forests.
Millions of Dollars ,3000 WFCES AND THE ROLE OF TIMOS
The working forest conservation easement (WFCE) is a tool used by a handful of TIMOs that allows them to earn a competitive return on timberland investments while preventing forest parceliza- tion. WFCEs are conservation easements that apply to forestlands RISI; ADAPTED FROM RA actively managed for the goods and services associated with theland, such as timber resources, recreational opportunities, and albeit with some harvesting restrictions and often the requirement ecosystem services including carbon sequestration. In other words, to get certified as a sustainable timber manager. WFCEs are often when a TIMO or another buyer purchases a tract of timberland, bought by interested parties—conservation nongovernmental it acquires a "bundle of rights" that includes recreational rights, organizations (NGOs), land trusts, or state and federal natural water rights, mineral rights, timber rights, development rights, resource agencies—through a combination of public money (fed- and many more. The owner can choose to retain these rights by eral and state) and philanthropy. Common public sources used owning the land and all its associated rights or else choose to to purchase these WFCEs are the Forest Legacy Program and transfer or tie up any number of these rights in the form of a state appropriations and bond acts, which in a sense are similar WFCE. For example, an owner can choose to retain timber har- to Weeks Act funding that was used a century ago to establish vesting rights but capture the development rights in a WFCE, national forests in the East. which means that the owner forgoes the opportunity to subdivide This investment strategy has become a model of public-private or develop the property in the future but can continue managing partnerships that are achieving land conservation at the landscape the timber resource sustainably. In doing so, the landowner can scale. Thus conservation easements are now a preferred tool for then be compensated for what it is giving up while retaining own- conservation groups; according to a 2010 study by The Nature ership of the land and the right to sustainably harvest timber. Conservancy, organizations are looking to stretch their dollars WFCEs can be donated or sold. If they are donated, the owner by purchasing development rights through easements instead of will receive significant income tax and estate tax benefits. For buying land outright. Frequently conservation groups are finding TIMOs with extensive investments by tax-exempt institutions, that through easement purchases they can accomplish their con- selling WFCEs is the sole avenue for securing adequate compen- servation objectives and be involved in more deals. According to sation. The Lyme Timber Company and a handful of other The Nature Conservancy, while easements were rarely used before TIMOs have succeeded in doing just this, thereby receiving a 1976, in 2003 they accounted for 70 percent of the land protected return of capital on a portion of an investment early on in its life, by the organization but only accounted for 50 percent of the while still enjoying the benefits of a pure timberland investment, money spent on land protection that year.4 FOREST HISTORY TODAY SPRING/FALL 2011 85
Among TIMOs the Lyme Timber Company pioneered this strategy of partnering with conservation NGOs and state agenciesthat have an interest in conserving certain forestland areas. In many cases, Lyme is chosen as a partner for conservation interestsbecause it can bring private capital to a deal up front and hold theland while its conservation partners assemble public and privatemoney to purchase the easement on it; it is also willing to managetimber according to the terms of the WFCE. This usually meansthat Lyme obtains Forest Stewardship Council certification for each property it owns and manages. In doing so, it is able to main-tain a steady cash flow, realize a return on its investment fromthe easement sale, and eventually sell the easement-encumberedland for a reduced price to another investment entity such as aTIMO or public timber REIT. Lyme did just this in a deal in northern New Hampshire that resulted in the conservation of the Connecticut Lakes HeadwatersForest. This was a high-profile conservation deal, where Lymepartnered with the state of New Hampshire and conservationNGOs to achieve a strong financial return for its investors and asuccessful conservation outcome for the public.
International Paper (IP), a large traditional forest product company
and forestland owner, at one time owned more than 11 million
of acres of forestland in the United States, along with numerous
saw, pulp, and paper mills. Along with other vertically integrated The Lyme Timber Company
forest product companies, it began selling off large portions of its forest holdings in the 1990s. One such forest holding that came on the market was located at the northern tip of New Hampshire, Northern New Hampshire surrounding the Connecticut Lakes, the headwater lakes to theConnecticut River. The Nature Conservancy retaining a conservation easement. This 171,000-acre forest makes up nearly 4 percent of the entire Overall, this successful conservation deal would not have been land area in New Hampshire and was critical to the rural forest- possible without a number of converging factors, including the based economy in the North Country. As the primary watershed following: 1) large tracts of high-priority conservation land coming of the Connecticut River, it is also of critical importance for water up for sale by a divesting paper company; 2) Lyme Timber sup- quality all the way down its course through New England. Located plying private capital for the deal; 3) many partners, including north of the White Mountain National Forest, it could have been public-sector, nonprofit, and for-profit groups, bringing different a target for Weeks Act funding in the beginning of the twentieth strengths to the endeavor; and 4) working-forest conservation century. At that time the timber resources on the property were easements making the deal affordable and successful in the view aggressively harvested and thus the forest was emblematic of the of local economic development interests as well as state natural cut-over landscapes that advocates of the Weeks Act were using resource agencies. As a result, a TIMO—an economic tool so to make a case for its passage. However, instead of becoming a instrumental in transforming land ownership patterns over the national forest, it remained in private ownership and came up for last two decades and so worrisome to conservationists—ultimately sale almost one hundred years later. enabled conservationists to retain a critical tract of forestland, In 2001, the state of New Hampshire, responding to concerns intact and in perpetuity. about this property being sold for purposes other than a workingforest, assembled a team of conservation groups to negotiatewith IP. However, neither the conservation organizations nor the Peter R. Stein is managing director of the Lyme Timber Company. Many state had enough money to purchase the property. So the partners, thanks to Sarah Mahlab at the Lyme Timber Company for her work in including the state, the Trust for Public Land, the Society for the helping prepare this article. Protection of New Hampshire Forests, and The NatureConservancy, turned to the Lyme Timber Company, which couldprovide the much-needed up-front capital for a future conservation 1. Statistics are based on company filings, company websites, and Timberland The deal closed in 2003. Lyme purchased 146,000 acres con- 2. Jane Braxton Little, "Timberlands Up for Grabs," currently with the sale to the state of New Hampshire of a com- High Country News, January 23, 2006.
prehensive working-forest conservation easement over the same 3. TimberLink, LLC. "Timberland Assets under Management as of 30 June tract. At the same time, The Nature Conservancy purchased the 2011. Survey of 23 timberland investment managers." remaining 25,000 acres of former IP land to establish a wildlife 4. Ethan Smith, "Landlocked," Nature Conservancy (60) 1 (Spring 2010): 12. management area, which it later transferred to the state, with 86 FOREST HISTORY TODAY SPRING/FALL 2011


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Cobre Montana NL POWERING A CLEAN ENERGY FUTURE Presentation to the Annual General Meeting 24 November, 2014 For personal use only DISCLAIMER Cobre Montana NL This presentation is for information purposes only. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction. This presentation may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction. This presentation does not constitute financial product advice and has been prepared without taking into account the recipients investment objectives, financial circumstances or particular needs and the opinions and recommendations in this presentation are not intended to represent recommendations to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All securities transactions involve risks which include, amongst others, the risk of adverse or unanticipated market, financial or political developments. Certain statements contained in this presentation, including information as to the future financial or operating performance of Cobre Montana NL ("Cobre Montana" or "the Company") and its projects, are forward-looking statements. Such forward-looking statements are necessarily based upon a number of estimates and assumptions that, whilst considered reasonable by Cobre Montana, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies; involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements; and may include, among other things, statements regarding targets, estimates and assumptions in respect of potash and phosphate production and prices, operating costs and results, capital expenditures, ore reserves and mineral resources and anticipated grades and recovery rates, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions. Cobre Montana disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. The words "believe", "expect", "anticipate", "indicate", "contemplate", "target", "plan", "intends", "continue", "budget", "estimate", "may", "will", "schedule" and other similar expressions identify forward-looking statements. All forward-looking statements made in this presentation are qualified by the foregoing cautionary statements. Investors are cautioned that forward looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements. Such factors include, but are not limited to: competition; mineral prices; ability to meet additional funding requirements; exploration, development and operating risks; uninsurable risks; uncertainties inherent in ore reserve and resource estimates; dependence on third party smelting facilities; factors associated with foreign operations and related regulatory risks; environmental regulation and liability; currency risks; effects of inflation on results of operations; factors relating to title to properties; native title and aboriginal heritage issues; dependence on key personnel; and share price volatility and also include unanticipated and unusual events, many of which are beyond the Company's ability to control or predict. COMPETENT PERSON'S STATEMENT The information in this report that relates to reporting of Exploration Results based on and fairly represents information and supporting documentation prepared by Adrian Griffin, who is a member of