The Oil Mallee Company has just released an Offer Information Statement (OIS) to raise capital for research and development in a number of critical areas.

An OIS is like a prospectus but this document does not forecast returns on investment. The OIS outlines in detail the tasks in front of OMC and explains why the research and development is necessary.

The funds raised through the OIS will enable the industry to take the next step towards being a viable industry with corporate investors, mallee crop planting and management services, harvest and transport systems, processing and marketing.

Then there is a good chance the industry will be able to attract the funds to plant enough mallees to have a real impact on salinity on a regional basis. This will also provide income diversification for farmers.

The OIS offers all existing OMA/OMC mallee growers a chance to acquire some shares at half price. The number of shares available is related to the number of mallees planted. Roughly one 50c share is available for every ten surviving mallees which have been planted. Or, each grower gets a discount equivalent to about 5 cents for every surviving mallee planted. OMC will advise all mallee growers how many discount (50c) shares they are entitled to. Other shares can be purchased at one dollar per share in multiples of 1,000 shares. All existing mallee growers will be entitled to at least 1,000 shares for $500. The company hopes that many mallee growers will take up this opportunity so they can convert some of the initial risk taken in growing mallees into shares. The discount offer is available for six months after which the discount will be discontinued and the shares made available to other investors at a price of $1.00.

Gradually the infrastructure for the industry is being developed. For example:

OMC and Metasource (a Woodside subsidiary) are entering into a joint venture to engage the National Centre for Agricultural Engineering (NCAE) in QLD to upgrade our existing prototype harvester so it can deliver mallee biomass to the WPC processing plant in Narrogin. The harvester and transport services will then be further developed by the joint venture so that the industry has sufficient harvester capacity to supply several processing plants. OMC will contribute the intellectual property gained with the development of the existing prototype harvester and Metasource will fund the subsequent R & D.

OMC is working closely with Western Power Corporation to prepare agreements to supply mallee biomass to specification for the Narrogin demonstration scale plant. Wood chip size and consistency is an important factor for achieving the best and most valuable activated carbon. The target is to deliver 2,500 tonnes of biomass in the last 6 months of 2002 and then to be able to deliver 20,000 tonnes per year by the end of 2003. Also, OMC will provide the equipment for the separation of the leaf and wood and for the distillation of eucalyptus oil from the leaf.

OMC and Metasource have been preparing to plant up to one million mallees in Esperance this year in anticipation of a biomass power generation plant in Esperance. OMC is arranging the contracts between the farmers and Metasource. OMC is also organising the mallee planting and mallee crop management program. The plantings are expected to be on 5-6 farms with some farmers providing the land to plant over 300,000 mallees this year. Large scale planting is necessary to achieve low cost establishment and harvest.

OMC is in the process of forming a strategic alliance with an investment company with a view to duplicating the investor funded mallee crop planting program which has begun in Esperance. It is anticipated that farmers will be paid an annual rental on the area used for mallees for the term of the contract which should be about 20 years.

OMC is investigating supplying other tree crops with potential for planting in agricultural areas and is also considering mallee plantings in other states which have expressed interest in managing salinity through perennial crops planted in dryland areas.

The directors of the Oil Mallee Company anticipate presenting the OIS to farmer groups in the next few months. We hope you will attend and get familiar with the prospects for this new industry which could provide an assured income at a level that would be extremely helpful in years like this.

The Offer Information Statement is available from the OMC office – ring 08 9478 0340 or fax 08 9478 0333. It is also available on the oil mallee website – www.oilmallee.com.au .