Improved Forest Management and

Preservation Project of the Kuba Kingdom

Democratic Republic of Congo

COMEXAF INDUSTRIE

Investment Idea Note

The Improved Forest Management and preservation project of the Kuba Kingdom in the Democratic Republic of Congo focuses on 3 large parcels of primary forest in the heart of the Congo. Its objective is to develop sustainable forestry and agroforestry activities integrating a carbon capture component in the project. The project offers investment opportunities with an anticipated return on invest-

ment (ROI) of 100% over 10 years with capital expected to be repaid in 6 years .

The funds required will be utilized to launch new/updated logging activities, transformation process and develop a carbon component on both the forestry and agroforestry.

INTRODUCTION

PROJECT AREA COMEXAF owns two large timber concessions, each one spreading across 81,400

hectares of land located near the town of Domiongo in occidental Kasai. Over

60% of the concessions can be exploited for timber harvesting. They also have an

option on a third parcel which has an area of 80 000 hectares that could join the

project in a second phase. The potential project area is approximately 240,000

hectares.

PROJECT ACTIVITIES Carbon project It is important for COMEXAF to protect the resources and ensure that the entire

population of the territory benefits from future economic development. An

Improved Forest Management or REDD + project structure will be set up to allow

the preservation of an important part of the forest, while earning incomes

through the sale of carbon credits issued under the VCS standard. The goal of the

project is to slow down the permanent loss of primary forest and biodiversity by

defining the logging area and conservation area. The reduction in greenhouse gas

emissions due to the improved harvesting plan as well as the non-emissions due

to the creation of protected area will be converted in carbon offsets.

The project will be developed on one or two concessions of 80,000 hectares either as a combined REDD+ or two separate concessions under the IFM method-ology. Our initial calculation suggests that 2.1 M VCUs will be generated in the first 10 years. Preliminary studies will be conducted prior to the investment, which will include detailed financial calculation and the completed Project Idea Note (PIN).

PROJECT ACTIVITIES Forestry Activity

This activity aims to relaunch, structure and promote the sale of timber to inter-national markets through the implementation of sustainable forest management techniques while building a saw mill to process and convert the logs to lumber on site. The logging activity will be concentrated in the area closest to the town of Domiongo. An inventory has been done on the first concession in 1994 by officials from DRC government (DIAF). The report establishes the potential harvesting volume at 102,952 m3 per year. A pre-order from Canadian Wood dated February 21st 2014 for 20,000m3 of mixed timber has been signed for 4 762 500 value. According to the same report, the total inventory of this concession is 1.5M m3 making its estimated market value 357 M . Improved Forest Management practices will allow the project to benefit from the reforestation and the natural re-vegetation in order to maintain their harvesting target without deforesting on a permanent basis and negatively affect the biodiversity The project aims to build a saw mill in order to maximize the value of the wood, create local employment and increase revenues and profit.

Our vision of forestry

At COMEXAF, we strongly believe in implementing sustainable forest management by ensuring the safeguarding, maintaining of the

woodlands ecosystem and its functions for the improved production of goods and services. The proper consideration of

environmental factors; namely the natural qualities of the site is essential to optimise forest culture in accordance with the Forest

Principals (UNCED, 1992). Our approach makes it possible to responsibly exploit the forest at its best whilst also preserving and maintaining its potential for renewal, therefore realising ecological

resilience. COMEXAF already started the application to be member of Forest Stewardship Council (FSC) and World Wide Fund for Nature (WWF ).

MARKETS

PROPOSED STRUCTURE As owner of the rights over the forest, COMEXAF is the manager of the project. COMEXAF was founded in 1984 and have managed forestry activities in the project area in the 80s and 90s. COMEXAF is now managed by Ferdinand Minga and Germain Kot, both sons of the local leader, his Majesty Nyimi Kwete Lukengu MboKashanga of the Kuba Kingdom. As main administrators of the project, Messrs. Minga and Kot bring a wealth of local knowledge while having an in depth understanding of the international business process.

Agroforestry based on commodities value chains

In order to assure decent revenues for the communities and forest preservation compatibility, two types of crops will be grown. The main crop will be cocoa while coffee will round it out. The choice of crop will be determined by regional climate and rain patterns of the regions. To maximize revenues, assure stability leading to sustainable agriculture, the project will be centered on a cooperatives or central of cooperatives model, who will be responsible for the transformation and export of the crop. Pricing stability is always a concern and for this reason we aim to have the crop certified Fairtrade, organic or other similar type of certifications to reduce the pricing risk. The project will adopt the best organic farming practices to reduce the negative impacts on the soil, protect the biodiversity, and reduce the use of chemical products; therefore increasing the value of the crop. The production areas will be on land managed by COMEXAF where the land use contracts will be signed between the producers and the organization. Under the agreement, COMEXAF will keep a % of the exported value as well as all the rights regarding shade trees planted for the project. Through the sale of carbon credits and other activities, COMEXAF will finance the crop planting and required infrastructure to insure the success of the supply chain. The crop harvested will belong to the producers under the condition that they look after the trees and that the crop is managed by the cooperative.

COMEXAF will work closely with these project partners: ECOTIERRA - www.ecotierra.co Based in Canada, Ecotierra is a project developer of environmental and sustainable development reforestation projects which integrate and offer considerable socio-economic benefits to the communities in which they operate.

Ecotierras team combines decades of international experience in a wide range of fields, such as environmental project management, sustainable development, organic agriculture, international trade, fair trade certification, finance, cooperative development and community education.

Ecotierra has developed a "sustainable offset" approach to their project development strategy using revenue derived from environmental assets (carbon credits) to finance concrete sustainable development activities. Ecotierra is directly involved in the development of projects and also partners with other organizations on major projects in Latin America.

PROPOSED STRUCTURE

Canadian Wood - www.canadianwood.ca

As a major world class wood trading company, Canadian Wood trades over 240M (C$) annually. We have a letter of intent regarding the purchase of 6M (USD) for 2014 and 10M (USD) for 2015.

Riocap - www.riocap.ca Riocap specializes in corporate finance and M&A. They have been retained to create the financial structure of the project.

KPMG - www.kpmg.com/ca KPMG provides Audit, Tax and Advisory services. Discussions are underway to retain KPMG as the global accountant and auditor of the project.

Johnson & Vermette - www.johnston-vermette.com Johnston-Vermettes is a Canadian Engineering firm that provide multidisciplinary engineering services through all the phases of industrial projects. COMEXAF retained Johnston & Vermette for engineering services.

PROPOSED STRUCTURE Implementation plan main activities:

1. Initial on site studies will be conducted by COMEXAF & ECOTIERRA teams;

2. COMEXAF will enter into a loan agreement with Althelia Fund;

3. COMEXAF will integrated Althelia in their administrative structure (board);

4. COMEXAF will begin logging activities;

5. ECOTIERRA will begin the development of an IFM or REDD + project under

VCS and CCBS standards;

6. COMEXAF will build the saw mill to process the log into lumber;

7. COMEXAF will allow local farmers to develop agroforestry on leased land

with clear rights over the crops;

8. A cooperative composed of small scale farmers will be created by the

project partners in order to develop the coffee and cocoas value chains;

9. Both forestry and carbon activities will generate returns on investment

for Althelia.

PROJECT & INVESTOR CASH FLOW - USD$

FINANCIAL FORECAST