Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Economy

Gunns: JVP negotiations are continuing …

image
Pic: Code Green

MARKET UPDATE

Trading Outlook

The company has revised its market guidance for the year ended 30 June 2012 with underlying earnings before interest and tax for the year expected to be approximately $30 million. The revision from the previous guidance is a reflection of the following factors:

• Marketing of hardwood sawn timber operations in Tasmania and Western Australia ceased in December 2011. The company is currently reviewing operations at its remaining hardwood timber business in Victoria.

• Operating performance from the softwood sawmills at Bell Bay and Tarpeena is being impacted by the downturn in activity in the housing sector. Market conditions in the South East Australian region have contracted further in November and December with import competition remaining strong. Production at both mills has been reduced to a two-shift basis to manage inventory levels. The earnings forecast is based on this market situation not improving in the balance of the 2012 financial year.

• A reduction in earnings from the forest products business of $10 million. This reduction is due to a reduction in forecast sales volume for the financial year to 2.2 million gmt and reduced processing margins and management fees resulting from forecast reductions in selling prices.

• Export woodchip volume for the 2012 calendar year is forecast in the range of 2.6-2.8 million gmt including softwood at 0.6 million gmt. Volume improvement is forecast to occur progressively through the 2012 calendar year, although pricing will remain under pressure. At the quoted 2011 calendar year benchmark price for Eucalyptus globulus ex Albany of $207.40 per bdmt, Australian hardwood fibre is approximately 15% out of the market in comparison to its competitors. This gap is driven by both the impact of the Australian dollar appreciation and availability of low cost wood out of South East Asian supply sources, notably Vietnam and Thailand. Forecasts for the 2012 calendar year are based on the business meeting market pricing. Demand for softwood fibre is improving with increasing interest from Chinese customers.

Reported earnings for the year will be impacted by non-operating items including:

• Costs associated with the sale and exit from business operations, currently estimated at $(2.5) million (pre tax).

• Revaluation and expenses associated with financial instruments, estimated at $(10.4) million (pre tax). $5.4 million of this cost is a non cash valuation adjustment.

• Revaluation of plantation related assets of $(89.1) million (pre tax) to reflect a reduction in current market stumpage value. This is a non cash valuation adjustment. These assets include standing timber and rights to future cash flow from investment in MIS projects.

These value assessments are unaudited and subject to review in the finalisation of the half-year accounts. Underlying earnings before interest and tax for the first half is expected to be approximately 40% of the full year forecast.

Finance Facilities

The company is in negotiation with its core debt facility providers to extend existing finance facilities until 31 December 2012. The company’s senior debt facility matures on 31 January 2012. The balance of this facility is currently $340 million with approximately $216 million to be re-financed following repayments from asset sale transactions.

Further information in respect of the facility extension will be provided when terms are finalised.

Asset Sales

Agreements for the sale of the Green Triangle forest estate have been executed, subject to conditions precedent including FIRB approval, with the transaction scheduled to settle prior to 31 January 2012. Net proceeds of the transaction of approximately $120 million will be applied to debt reduction. The company has a heads of agreement with a purchaser for the MIS loan book. The purchaser is currently finalising transaction due diligence with completion scheduled in January 2012. This transaction is expected to reduce debt by approximately $85 million through cash received and the retirement of securitisation facilities.

Pulp Mill Project

Negotiations to secure an equity investment partner for the Bell Bay pulp mill are continuing. Site earthworks for the project are proceeding on schedule and on budget and are expected to complete in March 2012.

Asset Valuation

Asset values are being reviewed in light of continuing asset sale processes and market conditions, specifically the decline in the market value of hardwood fibre. The review of hardwood plantation related assets will be finalised in preparing half year reports. Current estimates indicate a reduction in the value of these assets which comprises standing timber and interests in MIS schemes of approximately $89.1 million (pre tax). The carrying value of the Tasmanian forest estate and associated assets following this revaluation will be approximately $660 million. The effect of these valuation adjustments is to reduce the net tangible asset value per share to approximately 91 cents. These value assessments are unaudited and subject to review in the finalisation of the half-year accounts.

Or read online: HERE

• ABC Online:Activists try to ditch Gunns legal action

Posted December 22, 2011 15:20:27

Tasmanian anti-pulp mill campaigners are trying to withdraw a complaint against timber company Gunns in the Launceston Magistrates Court.

Last month Gunns pleaded not guilty to undertaking a development without a permit.

The group, Pulp The Mill, was alleging construction permits for the Tamar Valley pulp mill expired in August and Gunns had breached planning laws by starting work at the site.

The group is now trying to withdraw the complaint because the Tasmanian Conservation Trust has launched a similar case in the Supreme Court.

Lawyers for Gunns are arguing the Magistrates Court does not have the power to approve the withdrawal and the case should instead be dismissed.

ABC Online HERE

Pulp the Mill challenges validity of Pulp Mill permits

Pulp the Mill members Stephani Taylor and Anne Layton-Bennett represented the group today at Launceston’s Magistrate’s Court, in PtM’s substantive case against Tasmanian timber company Gunns Limited.

PtM’s legal representation was provided by conservation lawyer Vanessa Bleyer, and counsel Emrys Nekvapil.

The Magistrate heard argument and reserved his decision until 12th January 2012.

PtM has alleged that Gunns broke the law by continuing to develop the Long Reach pulp mill site when it had not substantially commenced the project by 30 August 2011, as required by the Pulp Mill Assessment Act 2007.

PtM agreed with Gunns’ submission that these were very serious allegations.

However, PtM asked the Court to grant it leave to withdraw the complaint because the same issues have now been raised in the Supreme Court by an unrelated organisation, Tasmanian Conservation Trust Inc.

It will leave the superior Court to determine the issues.

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34 Comments

34 Comments

  1. Barnaby Drake

    December 30, 2011 at 8:41 pm

    26.2.8M GMT may be possible given that export through Portland add to Gunns total. Phil Parsons

    Not likely though, seeing the good ship Orana is up for sale! Unless, of course, they have a contract with their old mate Evan Roley, to use Tas Ferries to carry the stuff?

  2. Dave Groves

    December 30, 2011 at 7:24 pm

    Agree to disagree mjf.

    You never know what you will find till you start digging….around 20 years of doing this is my experience.

    The benching etc was for the cut and fill (pic) not for roading.

    I have moved with the times….out of a cut throat industry where chances of getting paid seem slim at best.

    No longer am I covered in dirt daily, asbestos, silica and who knows what else.

    The engineers…..once again….20 years has taught me that by and large they have little comprehension of reality….so it may be apt for this project (no offence if you are a ginger beer with a few clues of course).

  3. mjf

    December 30, 2011 at 2:45 pm

    @ 31. Disagree, move with the times DG.

    . Silt fence is your 3rd last line of defence.
    . Cleared and windrowed and/or mulched vegetation is the 2nd last line.
    . An undisturbed vegetation buffer within a site is the final defence to offsite migration of silt/sediment.

    Its a fair bet the subsoil is composed primarily of clay with an increasing frequency/size of dolerite floaters at this site for several metres before hitting the parent dolerite proper. Your suggested separation of fill layers with bidim seems a little strange given a probably uniform composition and therefore having very few contrasts that may need to be separated.

    Like to see a comment from a Hazells civil engineer involved with the project right about now. Only so much can be interpreted from clandestine imagery.

  4. Dave Groves

    December 30, 2011 at 8:49 am

    My observations still stand.

    #30.

    A silt fence on a major project is the last line of protection, never the first.

    That fence should be well hidden in the bush and above that there would be all manner of detention and retardation contours in place.

    The batters created from cut and fill operations on the site would or should have been compacted into layers of between 100 and 200mm depending on the material used and there would be geo fabric membrane in layers throughout the ascent with reverse camber to drainage lines.

    On it goes, but the photos shown thus far show none of this process, completed or in progress.

    I guess the bottom line is that something here is not right and you can argue the toss over photos showing this or that, but I’ve spent too many years around these jobs and I know what I see.

    I feel for these contractors as they pour time and their money into this mere proposal, with no sign of a JVP anywhere.

    Have they been paid? Will they be paid? Is their work here all on a promise?

    If you have a lot of big gear, then your market is small and on this island, the need for such equipment is occasional.

    Perhaps they see it as a way to keep their gear moving and perhaps some dinero will come if they keep at it long enough.

    Would be interesting to see the logic.

    Gunns with a market cap of $106M……a quoted project of $3Billion….

    With the Liblabreen accord still fully supportive of this project and the only ones so far to sink (our) money into it, one must ask “are we being led into a bigger black hole than the one already created by our fearless leaders?”

    Roll that show on baby, roll that show……

  5. mjf

    December 30, 2011 at 12:25 am

    #29. I don’t have my own photos of the site but I’m also very unlikely to expend my time obtaining any as its none of my concern (or yours) how Gunns are undertaking their civil works.

    All too easy to grab images of earthworks in an incomplete and ‘in-progress’ state then attempt to fob them off as the final version which is exactly what went on with the Irwin – CG -October beatup (in my opinion).

    The most incriminating evidence provided there was a partially buried sediment fence. It may come as a surprise to most but that is not a showstopper nor a hangable offence as a moment- in-time condition. Buried or collapsed sed fences happen every day on every civil site in the country for various reasons but then become part of ongoing site maintenance. Could CG please confirm if the sed fence was not re-erected to specification and usefulness ? Had it been regularly maintained prior to collapse ? As they’re so handy with photography, a date stamped image from the same photo point will suffice as evidence.

    I do concur Garry that we could do with some fresh ones – topics that is.

  6. Garry Stannus

    December 29, 2011 at 3:44 am

    mjf at #18 wrote:

    “Wouldn’t you think Code green could be unbiased and provide a representative picture?”

    1 Wrong! … the photo was drawn from an earlier article published 13 Oct 2011 on TT at

    http://oldtt.pixelkey.biz/index.php?/article/code-green-demands-epa-investigation/

    This present article “Gunns JVP negotiations are continuing…” is not a Code Green article – I presume it was the TT Editor who has collated a number of news items and has then extracted the photo that mjf objects to from those present in the earlier article – no problem there, he just wanted a pic with some soil in it, presumably.

    2 Since earthworks have begun, Code Green has provided a number of pictures from within and without the site. A number of photos were published on TT in an article which was in effect a submission to the dam committee before the applications for fresh dam permits were decided on. They were able to be viewed on TT at

    http://oldtt.pixelkey.biz/index.php?/article/submission-gunns-application-for-permits-to-undertake-dam-works/

    Most of them of them were in a skydrive slideshow application and now seem no longer able to be opened in the article. Past their expiry date it seems, like the dam permits, until the dam committee did a Lazarus on them.

    By coincidence, mjf, the slideshow pics expired from the skydrive on the 24th of Dec a day after your comment. They contained a selection of representative images – from memory I was trying to show the various works that had been undertaken. You had three months to view them, but I suspect you don’t need to. Why not publish your own photos of the site – we could use some fresh ones.

  7. john hayward

    December 25, 2011 at 8:32 pm

    The cheapest source of woodchips would be from very large trees purchased at concessional rates from FT. Ergo, that’s what they’ll do.

    John Hayward

  8. William Boeder

    December 25, 2011 at 2:52 pm

    #26. Thank you Phil Parsons for your comment and the given fact that this figure of tonnes as was indicated by Greg LÉstrange, was in fact more-so related to its mainland wood-chipping activities rather than to my perception that it was to be from its Tasmanian activities alone.

  9. phill Parsons

    December 25, 2011 at 9:00 am

    2.8M GMT mat be possible given that export through Portland add to Gunns total.

  10. William Boeder

    December 24, 2011 at 5:33 pm

    And still the beguiling disclosures and media announcements flow like sump oil from the operational headquarters of Gunnd Ltd and their directors, (whom show they indeed have quite some difficulty in understanding the meaning of the word probity.)

    However, the bit I do not understand is the volume of woodchips, (2.8 million Gross Metric Tonnes) that Greg believes his dollar dazzling wood-chipping outfit will sell into the international wood-chip market?
    Will this be a sufficient guarantee that this volume will actually come to pass so to publish these figures, as they they seem to have some sort of fictional origin about them?

    To my way of thinking and calculating this is quite a large volume of forested product, particularly so when the hardwood timber product harvested from the Murchison region plantations appear to be no thicker than that of your average football field goal-post.

    Still they of the addled brains trust of this “almost down the gurgler despotic logging outfit,” should possess some means of affirming that this enormous volume of timber will arrive from their increasingly prickly gorse-bush infested hardwood plantations.

    Twill be interesting to observe what reality will show us as the steady roll of time ticks by to those figures presented by Greg LÉstrange, especially as he is the mightiest of all our wood-chipping moguls in the State of Tasmania?

  11. mountain man

    December 24, 2011 at 9:23 am

    Re #19. By using the word KRAFT one can only replace the K with a C and it is an acronym.
    The typical attitude of all involved in the stinking pulp mill.

    Can’t Remember A F….g Thing.

    Especially when it comes to permits etc.

  12. Tim Thorne

    December 23, 2011 at 10:12 pm

    Whatever “Affirnation Action poilcys” are, it must have taken them a long time to have any effect. Then we could ask why people couldn’t repay their loans, and discover that it was in many cases because they lost heir jobs. And why did they lose their jobs?

    Seems a bit simplistic to me to blame any one president. This whole sorry mess was set in train back in 1972 when the US went off the gold standard. Every US administration since Nixon has helped it along, but only by doing the bidding of those who profited from it. Never forget that some people made billions out of the so-called GFC.

    It was only a crisis if you were a working Joe or you wanted to build a pulp mill.

  13. john hayward

    December 23, 2011 at 4:27 pm

    I would urge Pulp the Mill to get the hell out of there, pronto.

    Counsel for Gunns, S McElwaine is seeking to block PtM’s attempted withdrawal from the case, based on duplication by TCT’s SC action.

    McElwaine is probably very confident. The magistrate is Tim Hill.

    Hill immortalised himself for me when he four times adjourned my attempt to extend a five year stalking restraint order I had obtained five years previously against a TCA respondent.

    The respondent failed to appear for the first four hearings. The police twice reported him fleeing into his house and failing to answer the door, and altogether made 23 attempts to serve him.

    Hill showed interest only in attempts to compel me to effect service on the respondent, despite the failure of the police to do so. Such attempts, which are not required of other RO applicants, would have cost me about $200 each. He refused to provide any explanation of his departure from normal procedure, where the police effect service.

    At the fourth hearing, Hill attempted to order a fifth hearing, which I flatly refused. He then adjourned the matter sine die, i.e.until further notice.

    A few days letter I received the written orders from the court which reported the sine die adjournment, but added the contradictory order that the Restrain Order be revoked.

    Justice can perhaps best be served by replacing the government which harbours such a system.

    John Hayward

  14. Clive Stott

    December 23, 2011 at 10:43 am

    Everything is going to plan.

    Greg has hurriedly posted off his additional Santa wish list to the North Pole for: overdesigned sediment basins, silt fenced topsoil stockpiles, hydromulched batters, polymer stabilised haul tracks, temporary berms and geofabric lined table drains.

  15. Dave Groves

    December 23, 2011 at 8:36 am

    #18. I was referring purely to the photo at hand.

    All I can see is rough overburden, siltation fence and bushland.

    Unless all of what I described has been “photoshopped” out of the image of course.

    As for “Code Green”, they seem to take a reasonable shot and I must hone my skills and see how they remove such things from photos.

  16. Karl Stevens

    December 23, 2011 at 12:10 am

    mjf 18. After 7 long years you probably do end-up with ‘overdesigned sediment basins’. Making the worlds most expensive KRAFT pulp takes a lot of ‘overdesign’. Notice how a company that was muscled-out of the Asian wood chip market by Thailand and Vietnam is deluded enough to think they can compete with a string of 3rd world countries in the global pulp market? Don’t give-up beating the drum for them mjf. We wouldn’t want an electronics industry or even a functioning medical system here now would we?

  17. mjf

    December 22, 2011 at 9:02 pm

    @11. The overdesigned sediment basins, silt fenced topsoil stockpiles, hydromulched batters, polymer stabilised haul tracks, temporary berms and geofabric lined table drains have all been purposely avoided before snaring this photo.

    Wouldn’t you think Code Green could be unbiased and provide a representative image ?

  18. Valleywatcher

    December 22, 2011 at 8:37 pm

    #15 (PLB) What on earth are “Affirnation Action poilcys”, pray tell. I’m all ears.

  19. Lester Barker

    December 22, 2011 at 7:00 pm

    Us Barkers will be happy to see the back of that paper mill. Last weekend me, cletus and the hound went huntin down behind the power station there and Cletus said why dont i go and drop a borrie in the damn at the Gunns site. Well considering Cletus ate an entire roasted bandicoot before we left Lefroy i can only guess what them bastards from hazells must of found on Monday. I reckon my shits too good to waste on Gunns.
    Good on them ferals to for sticking up that Taranne mob too.

    Lester&Rin; Barker
    Lefroy

  20. PLB

    December 22, 2011 at 4:42 pm

    Re: #9
    The GFC [Inspired by Bush Jnr cooking the rules.] Oh, if one had listened with both ears instead of just the left, Phill, one would of heard the GFC was instead inspired by the Affirnation Action poilcys of Bill Clinton which enabled the less able to obtain housing loans. Loans which they were unable to repay.

  21. john hayward

    December 22, 2011 at 3:28 pm

    If only Greg can drag this out a bit longer, he may be able to find a buyer for the whole project.

    With a fair number of fleeing dictators and Russian hoods looking for bolt-holes, it should be possible to find a partner for Ta Ann in a new cosmopolitan edition of Tas Inc.

    John Hayward

  22. Russell

    December 22, 2011 at 2:36 pm

    Re #11
    “Where is the EPA?”

    Probably at Gunns’ and FT’s xmas drinks.

  23. salamander

    December 22, 2011 at 2:21 pm

    Greg’s report didn’t mention the “community liaison group”, which shows how irrelevant he considers community approval and the social license to be, even when it is being managed and manipulated by the company to create the outcome Gunns want. Yet without it, Gunns have little hope of a JVP, and the lack of community support must be helping to deter takeover bids as well.

  24. Dave Groves

    December 22, 2011 at 10:03 am

    Regardless of what I think of this project in general terms….

    Yet again I refer to the earthworks.

    This photo shows a pile of earth dozed out apparently randomly in large volumes towards a thin strip of silataion fence.

    There appears to be no erosion benching, no detention areas, no retardation drainage swales, indeed no mitigation works in place of any descrition for erosion and slippage.

    I fail to understand on a proposed project of this size, how these measures are not apparent.

    The “cut and fill” is very poorly shaped and has no tell tale signs of benching, stabilisation, membrane and layered drainage, which are critical for a long term, successful stabilised earthworks.

    It would not have happened in my day.

    Disgraceful.

    Where is the EPA???????

  25. Barnaby Drake

    December 22, 2011 at 9:56 am

    With reference to my comment at #8 above.

    If Mr L’Estrange ever were to find a job with the government, I am sure he would make an excellent head of the Fox Task Force. With all his experience at tracking down elusive JVPs, finding a fox would be a dead cinch!

  26. phill Parsons

    December 22, 2011 at 8:38 am

    Gunns 50% equity is compromised by the amount the comapny owes making a 50% stake in the ulpmill made up of assets seems fictional.

    Perhpas a JVP will magically come along but with years before the global economy recovers from the GFC [Inspired by Bush Jnr cooking the rules.] methinks the compamy will have a long time to wait.

  27. Barnaby Drake

    December 21, 2011 at 11:51 pm

    “I’m sorry Sir, but we are broke. We can only pay a proportion of what we owe you. We have no more assets to sell and I know we still owe you another $216 million and that is a small proportion of the over $800 Million we owe in total. Yes, we also understand that by the end of the year there will be another chunk of interest to pay on that.”

    “I’m sorry you had to ask that question about the mill. We will have to admit that in the unlikely instance of the mill not proceeding, we will have to take the $240 Million we have already spent from the assets side and add it to the liabilities, and yes, I’m afraid so, it would put the company into liquidation, but we reckon it is a small risk. ‘Why’ you ask? Well, we are still negotiating with a potential JVP. I know we have had 25 previous goes at this, but this time we are sure it will happen. Why else would we be doing all these earthworks? ‘Illegal’you say? That’s just a matter of opinion. ‘Who by’? Only a Supreme Court Judge.”

    “And ‘the John Gay fiasco’? Well there again, we do admit if that is successful it could also cost the company a couple of hundred million as well, but we should soon get over that. We’ve put it all in the plan.” (smile)

    “What was that? What are we going to do for money for the 3 -5 years while the mill is being built? Well, maybe some of us could get a part-time job, like a Director of a GBE, or something.”

    “All it needs now, Mr Bank Manager, is for you to roll over the remaining debt we owe you for another year and cover us for a few other unforeseen circumstances and I’m sure our new Venture Partner will give us enough money to pay you and ALL our other creditors and we will all live happily ever after.”

  28. Katherine Hobman

    December 21, 2011 at 11:32 pm

    Santa is more real than the mythical JVP

  29. Clive Stott

    December 21, 2011 at 11:16 pm

    Greg, I am looking at the picture of those earth works. What a barren mess.
    Gunns really needs to employ a company that knows about trees to cover up that eyesore.
    The birds and animals that you must have driven out would thank you too.

  30. Karl Stevens

    December 21, 2011 at 11:02 pm

    These negotiations have been going on for so long they must be comparing after shave and who is wearing the most expensive watch by now.

  31. Russell

    December 21, 2011 at 9:58 pm

    Come on, Greg!

    While you’re stating your company’s financial and trading position a little closer to the truth, nobody believes you have a JVP, including your shareholders at 12c per share.

    Why are you wasting money kicking dirt around instead of paying your bills?

  32. Pete Godfrey

    December 21, 2011 at 7:21 pm

    The only reply that I can think of that is appropriate is a line that was used frequently in the movie, The Castle/
    “Tell him he’s dreaming”

  33. Mike Trimper

    December 21, 2011 at 7:08 pm

    Oh what a wonderful Xmas present we are about to witness.

    Projected profit is once again down the gurgler, and over the past years from the heady share price of $3.00 in 2007 we have witnessed the price steadily shrink to.12c per share today.

    After today’s profit announcement can the share price drop to 10c by close of business Friday?

    This will put this crummy little company in the 10 bit category.

    A Happy Christmas to all of the good people

  34. Jeremy Charleton

    December 21, 2011 at 6:27 pm

    I guess they have to make some announcement as their shares are continuing to fall!!! It seems that every time the price drops the JVP drivel crops up again.

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