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					               TFS SANDALWOOD
              YIELD PROJECTION
An independent trial conducted in 2004, supported by a 2008
trial conducted by TFS have confirmed that the projected yields
published in its PDS are on target.

The yields published in the TFS PDS are derived from the work of
Mr Peter Kimber (B Sc., Forestry 1st Class Hons) whose forestry
research career dates back to 1961. As Head of the Extensions
Branch of the Forests Department of Western Australia Peter was
instrumental in the planning and development of research planta-
tions of Indian Sandalwood in the ORIA in the early 1980’s. His
central involvement in the Government trials continued as Princi-
pal Operations Officer of the Department of Conservation and
Land Management (CALM) from 1985 to 1994. Peter brings
his extensive knowledge and experience to the role of Principal
Forestry Consultant to the TFS Group which he has held since

An independent trial in 2004, was conducted on a sample of
14yo trees grown on the Ord River Irrigation Area. The trees were
owned by the Forest Products Commission (FPC), and the results
were published in the Sandalwood Research Newsletter, March

The mean heartwood content of between 29% and 34% at the
two heights sampled in each tree is what is expected by TFS
at the age of 14, which is one third heartwood and two thirds
sapwood. In addition the mean heartwood oil yields in this trial
of between 2.9%-3.4% are consistent with the TFS PDS forecast
yields of 3.15%.

In 2008, TFS purchased various sandalwood trees aged 14
years, from private growers in Kununurra. At the same time TFS
harvested a sample of its oldest trees which were then 8 years
old. The trees from the private growers were in poor condition
and in fact the TFS 8yo trees were about the same size as the
14yo private trees.

Data from the 14 year old trees were used to predict the heart-
wood and oil yield of the TFS trees when they would be 14 yo.
This projection yielded approximately 21 kg of heartwood and
0.65 kg of oil which is consistent with the TFS PDS yields.

Note that these figures do not include yield from the butt and the
root mass of the tree, which is expected to add 20% to the total

Of particular interest from this trial is the superior growth rates
shown by TFS trees. Based on basal diameter measurements, the
TFS trees at age 8 were about the same size as the 14yo private
trees. In addition the TFS trees at 56% the age were already 75%
the size of the FPC trees which were the subject of the 2004 in-
dependent trial.

The quality of the oil from both trials met or exceeded the ISO
standard for Santalum album oil (Indian sandalwood). Based
on the high quality of the Kununurra grown Indian Sandalwood
oil, commercial offtake agreements have been entered into with
leading global natural cosmetics house Lush Cosmetics UK, and
Albert Vieille France.
                                          CHEERS – TO THE GOOD OIL
“Out of over 7,000 classified fragrances since 1750, 3212 (46%) contain Sandalwood notes,” said Alexandre Choueiri, Head
of Lancome UK, L’Oreal.

Results are in for the distillation quality trials, and the verdict is impressive.

Kununurra-grown trees ranging from 8 to 14 years were tested for oil quality at Albert Vieille’s Spanish distillation facility in April
2008. Results showed that despite the young age of the trees, the oil quality came up trumps and successfully met the international
standard for Indian Sandalwood oil (ISO 3518).

“This…shows that even with young trees, the oil is in the range of the usual quality of the Santalum album coming from India …
The smell…here again, we are in the pattern of typical Sandalwood notes,” said Georges Ferrando, Managing Director of Albert
Vieille SA.

As international interest in TFS trees grow, the samples and information generated from these trials will provide an important plat-
form for further research and give potential buyers a taste of what’s to come.

“This is very good news, really encouraging...,” said Georges.

                                                               AVG KUNUNURRA
                                     ISO 3518:2002
 SANTOL ALPHA                            41 – 55%                     43.62
 CIS BETA SANTOL                         16 – 24%                     18.64

                             TFS CORPORATION ANNOUNCES
21 February 2008

TFS Corporation (TFS), the Western Australian-based Indian sandalwood grower, is pleased to advise that it has signed an
agreement with Lush, the UK-based producer of fresh handmade cosmetics, for the supply of oil produced from TFS’s planta-

Since establishing in 1995, Lush Cosmetics has been driven by innovation and its ethics. Creators of pioneering beauty products
such as the fizzing bath ballistic, shower jellies and butter creams and solid shampoo bars, Lush places emphasis on fresh natural
ingredients like organic fruits and vegetables and operates a strict policy against animal testing. It supports Fair Trade and Com-
munity Trade initiatives and leads the cosmetics industry in combating over-packaging by running public awareness campaigns
and developing products that can be sold ‘naked’ to the consumer without any packaging. Lush currently has over 500 stores in
44 countries.

Key aspects of the agreement include:

•   Five-year term, commencing with the first date of supply.
•   Supply to commence upon the availability of the first commercial quantities of oil from TFS’s plantations, which is anticipated
    to occur by FY11.
•   Lush to purchase a minimum of 1 tonne of oil and up to a maximum of 15% of TFS’s oil production, in each 12-month pe-
•   Lush to create a new sandalwood-based product range using TFS’s oil, for marketing throughout their worldwide retail net-
In addition, the TFS Board has approved the issue of one million options to Lush, exercisable at $1.80 per share at any time within
three years of the first commercial oil delivery.

“This is a landmark deal for TFS, which confirms the quality and appeal of our sandalwood product,” said Frank Wilson, Execu-
tive Chairman. “We are particularly pleased to have concluded it with a party of such high standing as Lush, whose ethical and
socially responsible standards mirror those of TFS, as reflected in our commitment to the environmentally sustainable development
of our plantations.”

“We are also very pleased that the price struck under the Lush agreement reflects the conditions currently prevailing on the world
market,” Mr Wilson added.

“Following on from the collaboration agreement struck with Albert Vieille last year, the supply agreement with Lush demonstrates
that we are progressively putting in place the necessary steps to make the transition from pure plantation manager and owner,
through to a vertically integrated oil producer with blue chip customers in the global fine fragrance and cosmetics industry,” said
Mr Wilson.

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