African mahogany plantation manager Kimberley Timber Corporation Ltd is gearing up for an initial public offering on the Australian Securities Exchange with a pre-IPO raising of between $1 million and $3 million.
African mahogany plantation manager Kimberley Timber Corporation Ltd is gearing up for an initial public offering on the Australian Securities Exchange with a pre-IPO raising of between $1 million and $3 million.
The interim raising is a precursor to the IPO, which is expected within the next 12 months and will raise sufficient funds for the company to substantially increase its land holding in the country’s north.
Kimberley Timber currently holds 300 hectares under African mahogany plantings in the Ord River Irrigation Area through the acquisition of a mature plantation in 2005.
The company has since raised money through the managed investment scheme structure, and together with a small share raising has raised $1.6 million to date.
It currently has an option to purchase more land across the state’s north and into the Northern Territory, which would take its land holding to just under 6,000 hectares.
Managing director Rick Ferdinands said the company holds the largest commercial ready mahogany plantation in Australia, and is the only one doing commercial trials of African mahogany.
He said the company would continue to purchase land in the north, with the MIS structure continuing to play a key role in expanding its plantations.
“Ideally we want 10,000ha over the next five years and we’ll be raising funds to facilitate the purchase of that land,” he said.
The company is also assessing the possibility of building a mill to process its own product.
In addition to African mahogany, the company also holds a 150ha Indian sandalwood plantation.
But Mr Ferdinands said the company would be putting new sandalwood plantings on hold while it focused on African mahogany.
He said natural sources of African mahogany throughout Africa have been gradually drying up, leaving a major void of supply into key international markets.
“We’re focusing on mahogany at the moment mainly because of the huge world demand for tropical timbers,” he said.
“We don’t have enough volume to supply the demand coming from overseas.” With its mature plantation holding 10-year-old mahogany, the company also had a three-year commercial trial to prove the stability of the timber.
“It’s surprised us how stable the timber is, even at seven years we’re making floors and furniture.
It’s very encouraging,” Mr Ferdinands said.
African mahogany is mainly used in the production of flooring, particularly in the domestic market, with wall panelling and furniture popular in export markets.
Mr Ferdinands believes the abundant water supply in the Ord presents major opportunities for the state’s agricultural industry.
“The possibilities [for the region] are endless really,” he said.
“There is sufficient area to satisfy both plantation and broad-acre agriculture.” The emerging African mahogany industry in the state’s north joins fellow established tropical timber, sandalwood, as a major emerging industry in the region.
Perth-based TFS Corporation Ltd is the world’s largest managed sandalwood plantation owner and is also one of the major irrigated land holders in the north of WA, with a land bank of about 3,100 hectares suitable for Indian sandalwood cultivation.
Planting its first Indian sandalwood in Kununurra in 1999, TFS will have more than 2,330ha of sandalwood planted after the 2008 planting is complete.
