Papyrus Australia Ltd recently announced it has entered into an agreement with the Egyptian Banana Fibre Company (EBFC), a company incorporated in Egypt. The principals of EBFC have long term expertise in banana growing, timber and wood trading and manufacture as well as packaging and paperboard manufacturing. This development follows an announcement to the market on 16 March 2011 that Papyrus Australia in conjunction with EBFC released a catalogue demonstrating veneer products (floorboards and decorative panels) produced from banana tree trunks utilising the Papyrus Australia methodology and process from veneers sourced from the Papyrus Australia Walkamin Demonstration Factory in Far North Queensland.
The parties have agreed to document and accept the terms of the exclusive licence, which will be consistent with the terms of the agreement, by 30 June 2011. The Chairman of Papyrus Australia Mr Ted Byrt said "This development is an important step forward for Papyrus Australia. Papyrus Australia has been engaging with various entities in Egypt for the past several months and the markets established by the Egyptian Banana Fibre Company, utilising veneers produced in Australia and shipped to EBFC, has encouraged EBFC to join with Papyrus Australia in creating a commercial entity in Egypt to produce and sell banana veneer products into the Egyptian and European marketplaces. I am pleased that our managing director Mr Ramy Azer was able to validate the success of EBFC during his recent trip to Egypt and to negotiate the key elements of the agreement."
Members and investors should note that although the entering into this agreement is important, significant work still needs to be done to complete satisfactory commercial arrangements to the mutual benefit of the parties concerned as identified and including the timings attached thereto in the agreement and as noted in this Announcement. The Company also advises that the Memorandum of Understanding with Tawazon For Solid Management SAE (Tawazon) in Egypt as announced to the market on 3 December 2011 remains active although negotiations slowed during the recent political difficulties. Mr Azer reported from his recent visit that Tawazon’s prime interest is in developing a banana fibre panel factory in Egypt and with the establishment of Papyrus Egypt comes the opportunity to supply Tawazon with the banana fibre raw material for its proposed panel factory. The deal with Tawazon is not expected to be finalised before September 2011.
The Board of Papyrus Australia has also determined to scale back the Walkamin Demonstration Factory’s operation in Far North Queensland to 1 week in every 4 but with increased productivity in the week of full scale operation. This decision has been taken with the support of the host farmer and EBFC, the current purchaser of the veneer product. Development activities, including that relating to panel, and equipment maintenance are now concentrated in the non production weeks. This decision significantly reduces the cost of operation, thus preserving available working capital, whilst only moderately impacting on the supply of veneer to EBFC.
