OAK VALLEY TRUFFLE BUSINESS LTD

The Offer
Investors are invited to subscribe for minimum parcels of 5,000 Shares and thereafter in multiples of 1,000 Shares in Oak Valley Truffle Business Ltd at $1.00 per share.

Each minimum parcel costs $5,000. Applications must be for a minimum of 5,000 Shares and thereafter in multiples of 1,000 Shares. There are 4,600,000 Shares on offer under the Prospectus.

Minimum Subscription
There is no minimum subscription level applicable to this Prospectus. In the event that any portion of the Shares offered under this Prospectus are not subscribed for then the Company will proportionately reduce the number of shares it subscribes for in Truffle Properties Limited.

The Lease also provides for a reduction in the area of the Truffle Lot in equal proportion to the under subscription of Shares under this Prospectus. Any reduction in the area of the Truffle Lot will result in the same proportionate reduction in the Rent. The Truffle Manager has agreed in writing with the Company to reduce, in such circumstances, the Management Fees by the same proportionate reduction in the area of the Truffle Lot.

For example if this Prospectus only results in the issue of 2,300,000 Shares then the number of shares taken up in Truffle Properties Limited will be reduced by 50% to 289,410, the area leased by the Company under the Lease will be reduced by 50%, the Rent will be reduced by 50% and the Management Fees will be reduced by 50%.

The Company and its Business
The Company was incorporated on 11 July 2008 and its objective is to build shareholder wealth through acquiring shares in Truffle Properties Limited, to lease a Truffle Lot from Truffle Properties Limited, for approximately 20 years, and by entering into a Truffle Operations Agreement with Oak Valley Gourmet Pty Ltd to cultivate the Truffle inoculated oak and hazel trees to be planted by the Land Owner on the Truffle Lot for the purpose of harvesting Truffles and hazelnuts for sale, to carry out and perform the Truffle Investor’s obligations to the Land Owner under and pursuant to the Lease (other than the payment of money), and to carry out such duties and obligations during the Term of the Truffle Operations Agreement; being to manage the long term commercial cultivation of Truffle inoculated oak and hazel trees for the purpose of Harvesting Truffles and hazelnuts for sale until 30 June 2029.

On expiry of the Lease and Truffle Operations Agreement, on 30 June 2029, the Company will continue to derive income from the production, harvesting and sale of Truffles and hazelnuts through its 21.16% shareholding in Truffle Properties Limited. Truffle producing oak trees are expected to continue to generate Truffles for approximately 100 years and the life expectancy of hazel trees is 30 years. The Company will also benefit from any increase in value of the assets owned by Truffle Properties Limited. Whilst there have been significant recent discussions and statements at Federal Government level on the subject of an emission trading scheme for Australia there is not sufficient information currently available to quantify the likely financial benefits to Truffle Properties Limited with respect to carbon credits.

Holders of shares in Oak Valley Truffle Business Ltd participate in dividends and the proceeds in winding up of the company in proportion to the number of Shares held. At shareholder meetings, each ordinary share is entitled to one vote when a poll is called; otherwise each shareholder has one vote on a show of hands. The dividend policy of the Company is to distribute 100% of its after tax profits to shareholders, subject at all times to that being in the best interest of the company and its shareholders as a whole.

Within 60 days of full subscription under this Prospectus, or on 31 March 2009, whichever date occurs first, a general meeting of the shareholders of the Company will be convened to elect three new directors of the Company. The current directors of the Company have agreed to resign at the proposed general meeting of shareholders to facilitate the election of three new directors by the Company’s shareholders.

About Truffles
The truffle is an edible fungus that grows underground through a symbiotic relationship with the roots of specific host trees. They have a pungent aroma and taste that can permeate and enhance many foods such as soups, dips and pates, salads, sauces and dressings, omelettes and main meals. They may also be served whole. The mystique and gourmet experience associated with their unique aroma, flavour and taste accounts for their demand by consumers and high market value. When the tree and the fungal filaments reach maturity, usually after about five years, the fruiting body or truffle is produced and occurs seasonally thereafter.

Truffles have always existed in their natural habitat in Europe and are highly-prized. The Greeks and Romans attributed them as having healing and aphrodisiac powers, while today they are regarded as the pinnacle of haute cuisine and are revered by gourmons worldwide.

Truffles can be described as ‘gourmet mushrooms’. They have a pungent, intense, earthy fragrance and lend a unique flavour to food. They occur naturally, mainly in France and Italy, and are sometimes referred to as ‘black gold’ or ‘black diamonds’ because of their scarcity and worth.

Fresh truffles are available in Europe between December and February, and the Western Australian production season is the opposite of the European season offering marketing and exporting opportunities. The gourmet’s dream of extended availability of fresh truffle is now a reality.

Truffle Growth Conditions
In contrast to most edible fungi in the market place, the truffle fungus grows completely underground, developing from the mycelium, a network of filaments invisible to the naked eye. The truffle fungus represents a mushroom that develops underground. It lives symbiotically in association with roots of trees, nourishing its tree partner with minerals such as phosphorus while receiving organic substances such as sugars in return. Only hazel and some varieties of oak trees can support the black truffle, which in turn has limited their distribution to the natural occurrence of the species to areas of southern Europe. Black truffles grow in soil that is shallow, free draining and with a high limestone content. The climate must have distinct seasons, hot in summer and cold in winter. Only when these conditions are met will the black truffle grow and produce its subterranean mushrooms. The French Black Truffle occurs naturally on calcareous soils in France and limited occurrences in Italy, Spain and Portugal at an elevation of 100 to 1000 metres between latitude 40°N and 47°N.

Truffle Cultivation
Truffle consumption has been part of French culture since the middle ages. The folklore of their formation had been attributed to claps of thunder and to theories not far from the realm of fairy tales. This contributed to a limited scientific knowledge on truffle formation until recent times. In fact, harvests from natural forests had provided the bulk of production in the nineteenth and early twentieth centuries. Production estimates of 2,000 tonnes per annum have been made. For this reason, there was limited opportunity for peasants who were content with the natural harvest of the truffles to understand about production of truffles. The two World Wars destroyed much of the collecting grounds and vegetation supporting truffles. This resulted in the collapse of the truffle industry in the 1930’s. Now typically between 50 and 100 tonnes are harvested each year. In 1984, because of the extremely dry summer, only 10 tonnes were produced. The decline in truffle production has continued in the twenty-first century. The reported harvest in France in 2006/07 was around 13 tonnes.

In the past two decades, knowledge in the cultivation of the black truffle has resulted in the establishment of artificial trufferies throughout France and countries in the Mediterranean. The first artificial trufferie was established in south western France with transplanted oak seedlings raised from the base of trees where truffles had been collected in the past. However, this hit miss system has now been largely replaced by raising raising infected seedlings in controlled conditions in glasshouses. Understanding the factors leading to the successful production of truffles under hazel and oak trees has been a focus of research which led to the successful establishment of trufferies in countries other than France.

In the northern hemisphere including France and Italy many of the newly established trufferies have been invaded by other naturally occurring truffle species (there are over 70 different species found in Europe). In the southern Hemisphere there are no commercial truffle species found naturally. Consequently, monocultures of selected truffles species can be established.

In 1991, the first black truffles were produced outside Europe when oak trees inoculated with truffle spores produced their first crop in Oregon, USA. A 70 hectare trufferie was established in Texas in 1991. In 1984 the Crop and Food Research Organisation in New Zealand commenced work to establish artificial trufferies. The winter of 1993 saw the first production of commercial truffles in New Zealand confirming the feasibility of producing them in the southern Hemisphere. This was followed by the establishment of a number of small trufferies in Tasmania in 1994. The first black truffle grown in Australia was dug up in June 1999. It weighed 125gms. Since this time actual production from Tasmania is not accurately known. Market intelligence suggests production quantities have increased spasmodically.

Manjimup Truffles
Hazel Hill Pty Ltd began the establishment of a twenty-one hectare trufferie in Manjimup, Western Australia in 1997. Hazel and oak trees were planted in two plantings in 1998 and 1999.

Manjimup was selected because of its ideal summer/winter temperature profile using climate matching data of truffle producing areas in France. He believed that hotter summers and mild winters were required for optimum production.

Over the last five years, Hazel Hill has produced increasing amounts of truffle. The 2007 harvest, in excess of 320 kilograms, was particularly exciting with the harvest volume increasing exponentially over the past five years. The 2008 harvest is in full swing and at the time of issue of this Prospectus 568 kilograms had been harvested. The most significant aspects of the harvests were the size of truffles found and where they were discovered. The largest truffle, found in June 2005, weighed in at over one-kilogram. Also a number of other truffles were found weighing between three-hundred and six-hundred grams. The key factor in producing truffles of this size and quality has been a specific management treatment to the areas where these truffles grew.

The Land Owner’s property is situated in the same valley, approximately three kilometres west along Seven Day Road from the Hazel Hill property.