Risks and OpportunitiesEvery investment opportunity involves a careful examination of all risks and securities, which each investor should review. Reforestation risks could be comprehended as follows:

Future Price Trend

The return of investment depends on future log, timber and lumber price development. EcoBosques expects an upward tendency. Nonetheless, fluctuations might occur. ITTO -International Tropical Timber Organization- has reported an average increase on teak price in euros of +8,5% per annun.

Reduced production and harvest quantity

As timber is a nature dependent product, production levels could be influenced by natural disasters, drought, extreme storms amongst others. Such occurrences could reduce and affect production levels. EcoBosques volume expectations are in line with already harvested plantations in our areas. Costa Rica has more than 80 years experience on sustainable plantations such teak and other species.

AON, a worldwide risk advisor lider, has developed the following report by countries.

AON Report

Quality and Professional forestry management

This is also a critical point, lower quality than expected has an influence on timber and log prices. EcoBosques has a full team of Forestry and agricultural engineers working in the plantations on a day to day basis. FSC and GAP standards (Good Agricultural Practices) are met in order to maintain quality.

Natural hazards

Risk of financial loss from a damaging natural event surely exists in timber investments. Yet, 12 years of historical loss data reinforce what we have believed all along—that the risk of loss from a natural event has been very small, averaging 0.04 percent (4 basis points) of loss per year. Moreover, our data show that geographically diversifying managed Timberland holdings can contribute to both lowering the magnitude and frequency of a major financial loss from damaging natural events. Source: Hancock

Timber investors are often concerned about financial loss from natural hazards such as fires, storms, insects and disease outbreaks. These concerns are often fueled by reports in the news media of catastrophic events. Natural catastrophes such as these typically occur, however, in high-risk locations where institutional investors and EcoBosques clients purposefully own less timberland.

Most large forest fires, occur in the dry regions. Institutional investors generally own timberland in the much wetter western side of the Cascade mountain range. Catastrophic events also tend to occur on passively managed timberland. Institutional timberland properties are intensively managed. These properties have relatively little woody debris on the forest floor to fuel long, hot fires. They are typically thinned of competing vegetation to allow for maximum growth of the remaining timber. These two activities combined greatly reduce the likelihood of damaging natural events.

Moreover, EcoBosques has an insurance policy in place to mitigate several natural disasters. Our plantations are located in humid rainforest with tropical and sub-tropical climates.

Premature sale

There could be a risk lack of market availability before harvesting for anticipated or premature sales. EcoBosques has established a secondary market for its clients http://www.forestry-exchange.com/ . It is an online market site for trading trees and stocks from companies of forestry investment. We offer forestry investment title holders (from EcoBosques EcoForests) the opportunity to obtain liquidity (premature sale) on their investment before maturity period.

Currency risk

Timber sales occur on world markets dominated by the US dollar. As payments occur in mostly Euros’ the exchange rate between these two influences the revenue. Nevertheless, teak prices on ITTO are quoted in euros.

Company future

16 years is a long way. We know that very well. EcoBosques is a fully audited company by BDO International. Our business structure is transparent and we are a profit making company with a strong and solid balance sheet. 11 large Timberland properties are held in assets to ensure solvency and security.