FORESTAL NACIONAL, S.A. Y SUBSIDIARIAS

BASE
This Forest Group was founded since 1994, two years after the incentives and regulated the activity of reforestation in the Republic of Panama were established, by means of the Law Not. 24 of November 23rd, 1992 and the executive Decree Not. 89 of June 8th, 1993 that regulates such law.

OBJECTIVE
Its main interest is to maintain the equilibrium between the industrial activity and the preservation of the environment. It is thus, that the fundamental objective of the business is to develop reforestation projects with the species Tectona Grandis (Teak), as main species due to its high commercial value and its growing demand to national and international level, what guarantees the total placement of the production expected with very good profit value; in other words, market security in this product called TEAK exists.

At present we have developed such projects of reforestation in the provinces of: Darién, Coclé and Colón.

Besides it has entered with success in the production of plants bye owning Breeding Grounds located in Santa María, district of Penonomé, province of Coclé, and in Coronado.

Currently the breeding ground of Santa María is considered the largest one of the country, with capacity to produce approximately a (1) million plantones per year in the Canadian plantones system of production forest called "Root directed", with two variant: one called "vent blocks" and another “tenants", that do faster, healthy and effective the growth of the planton of Teak.

Some additional objectives that are inside our fundamental interest are:

1. Contribute to the economic and social development of the rural population.
2. Increase of the value and benefit of the surfaces covered with stubble.
3. Provide permanent employment to the region’s population.
4. Help the protection of the forests and slow down the colonizations.
5. Establish the bases of commodity that permit the wood demand supply.
6. Promote the creation of industrialized businesses that dedicate to the transformation of the commodity.
7. Contribute to the country’s reforestation increment, by divulging and assessing on the benefits of the law that encourage the forest plantations.

BACKGROUND
In recent years the national industry of woods processing in Panama have enlarged the importing of wood, mainly originating from Canada, United States, Chile and Honduras.

And this is certain, since each day the demand of wood and timber-yielding products for the industry of transformation grows higher, just as they report it the FAO and the International Organization of Tropical Woods, OIMT, where they assure that the consumption of woods, specially the tropical woods, always goes in increase.

It is indisputable that the reforestation in Panama is currently catalogued among the activities that more environmental, economic, and social benefits, they contribute to our population of the rural zones.

Among the main benefits is the one that provides jobs to the rural population, stabilizing it and avoiding in good measure the migration toward the cities and the colonization of the valuable existing natural forests in the region.

Another benefit is to reduce the destruction of our natural forests, improving the environment with the plantation of thousands of new lungs in the region and the consequent protection of the soil, water and wild fauna. At the same time promotes the reforestation to supply the demand of wood and forest products in a next future, since our forests are reduced in quantity and quality each year.

Another important reason of the boom for reforestation itself is due mainly to the promulgation of the Law of fiscal incentive. The incentives of the law are notable and they provide the investors the security in the management and exploitation, industrialization and commercialization of the reforested plantation.

In consideration to the socioeconomic purposes, Grupo Forestal (Forest Group) was created, lead by Geo Forestal, S.A. as the operating business responsible for carrying out, the programs of reforestation, so much own, as to third parties.