Mediterranean Olives Project 2008

BENEFITS
Water and Irrigation
Irrigation water will be sourced from bores which draw underground water from the Loddon Deep Lead, which is not part of the Murray Darling Basin. At present, there is no restriction on the full water licence allocation to the Estate, nor is there any current discussions of such a restriction in the future;

Olive expertise
The Project Manager has engaged De Masi Olive Groves Pty Ltd as the Principal Sub-contractor for the Project. De Masi Olive Groves Pty Ltd is associated with the Di Masi group of companies which have a long association with the olive industry in Italy. In addition an Italian educated and based olive expert with Australian olive growing experience, Mr Rocco Frezza, is the Principal Horticultural Consultant;

Italian Cultivars
Italian cultivars which are prospectively the most suitable varieties for the climate, soil, water and overall environment at the Project’s location at Serpentine, Victoria will be planted;

Extra Virgin Olive Oil
The olive oil aimed to be produced will be of the highest “extra virgin” quality;

Estate
The soil and climate of the Estate have been assessed as most suitable for growing olives generally and for the chosen olive cultivars in particular;

Sales Contracts
By the time of the first harvest of olives in this Project the total volume of olives produced from the Estate will be sufficient to permit the Project Manager to consider one or more of the following markets for the olives and for the olive oil

(a) a “boutique” style for sale within Australia and/or for export;
(b) export on a “non boutique” basis under its own label; and
(c) sale to domestic purchasers.

The ultimate decisions will depend on what appears to be the best way to optimise the prices achieved, which may vary during the life of the Project;

Pooling of Proceeds
Pooling of proceeds from harvest. By pooling the harvest and net proceeds, the risk of less productive Grove Allotments is spread across, and borne by, all Growers;

Agriculture Insurance
Insurance against loss or damage to growing olives;

Joint Venture Growers
The structure of the Project allows two applicants to participate in the Project as joint venture Growers who contribute in different ways but share the proceeds in equal shares;

Taxation
Growers should be entitled to an immediate tax deduction being 100% of the total Application Amount payable. Product Rulings to that effect have been issued by the Australian Taxation Office.

THE PROJECT
The Project involves the cultivation of olive groves for the harvesting and sale of extra virgin olive oil over a period of approximately 23 years, terminating on 30 June 2031. However, so far this company has sold olive oil from previous projects only for domestic use, but is actively pursuing export options as volumes from these projects continue to rise.

The Mediterranean Olives Project ARSN 095 573 872 (“Project”) is a managed investment scheme registered under the Corporations Act 2001. Mediterranean Olives Estate Limited ACN 091 024 396 (“Project Manager”) is the Responsible Entity and manager of the Project.

The Project is to be carried on at Serpentine, near Bendigo in central Victoria (“Estate”). The Project Manager leases the Estate from an associate, Mediterranean Olives Land Pty Ltd ACN 087 862 771 (“Land Owner”) pursuant to a Head Lease. The Project Manager will then sublease, under the Grove Lease, the Estate to Growers in one hectare allotments (“Grove Allotments”).

Each Grower will enter into Project Agreements with the Project Manager. The Project Agreements consist of a Grove Lease, a Management Agreement and an Irrigation Lease and Licence Agreement.

Pursuant to the Management Agreement, the Project Manager will provide administration, maintenance, marketing and selling services, harvesting and sale services, and transportation services to the Grower. Pursuant to the Irrigation Lease and Licence Agreement, the Project Manager will lease to each Grower the irrigation system required.

Each Grove Allotment’s olives will be jointly harvested, processed and sold with each Grower being paid a proportion of the gross sale proceeds based on the proportion of Grove Allotments that the Grower subleases, less the Grower’s expenses and outstanding liabilities under the Project Agreements.

If unforeseen expenses in relation to fertiliser and/or insect issues arise, the Project Manager is entitled to convene a meeting of all Growers. The Growers may, by majority vote, agree to meet such expenses, in which case these expenses will be borne between the Growers in proportion to the number of Grove Allotments held in the Project by each Grower.

FINANCE
Growers are able to borrow from Mediterranean Olives Financial Pty Ltd, a company associated with the Project Manager.

The loans from Mediterranean Olives Financial Pty Ltd will be for a period of over five years at an indicative fixed interest rate of approximately 11.95% per annum on the reducing principal. Under the terms of the loan, Growers will be required to pay interest and repay principal as set out below by way of direct debit. Instalments of principal may be repaid earlier than on the dates set out without penalty.

There is no loan establishment fee payable in respect of this finance package.

Growers are able to borrow up to 80% of either:

(A) both the Application Amount and the fees payable on 31 October 2008 (both exclusive of GST) ie a loan of $18,660 per hectare; or

(B) only the Application Amount (exclusive of GST) ie a loan of $11,640 per hectare.