As of December 31, 2011, Proteak had 4,408 ha planted with teak trees located in the Mexican states of Jalisco, Nayarit, Tabasco and Chiapas. The Company has also acquired 1,956 ha of established plantations in Colombia and Costa Rica as well as in Mexico to improve its inventories profile by adding older plantations to its portfolio. The Company established 1,000 ha of new plantations in 2011 and plans to continue adding an average of 1,000 ha/year over the next few years.

The total project cost amounts US$ 113.6 million. The proposed IFC investment consists of a US$ 15 million A Loan and a US$ 15 million B Loan.

15.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity

* These investment figures are indicative

Proteak is based in Mexico and has subsidiaries in Costa Rica and Colombia. The expansion of the Company includes rural areas in Costa Rica, Colombia, and Mexico among other countries in Latin America.

Climate change mitigation: IFC financing will support the Company in establishing teak plantations and supporting the growth of the existing planted area, which will directly result in a significant carbon sequestration. Moreover, since land reserves and land to be acquired comprise mainly ranch lands that have been degraded due to over-grazing of livestock, the Project will have a considerable impact on soil regeneration.

Employment generation: The Project is expected to create direct and indirect employment (number of jobs to be created and wage levels) and contribute to poverty reduction in remote rural areas.

Strong demonstration effect: Successful implementation of the Project will demonstrate the long term viability of sustainable forestry projects in regions with favorable weather and soil conditions for forestry, and degraded land available.

Frontier regions: The Project involves direct investment and job creation in remote rural areas of Costa Rica and Colombia, and frontier regions in Mexico such as the states of Nayarit, Tabasco and Chiapas.

Long-term partnership: IFC will provide tailor-made, flexible, long term financing products which are not readily available in the market especially considering that Proteak is a relatively young company operating in a sector that requires particularly long term investment horizons and an adequate grace period for the implementations of its plans.

Demonstration effect: This investment is expected to ease access to debt in the long term as IFC will be the first lender to Proteak after Financiera Rural, the governmental institution that supports the agri- and forestry sectors in Mexico.

Resource mobilization: IFC will also seek the mobilization of funds from international banks under the proposed B Loan.

Best practices in social & environmental practices: IFC''s investment will assist in improving Proteak''s current environmental and social practices in line with industry best practices.

South-south investment: This Project will support a leading growing forestry Mexican company in its expansion to Central America and Colombia.

This is a Category B project in accordance with IFC’s Policy on Social and Environmental Sustainability. The E&S risks and impacts associated with the proposed project can be prevented or mitigated through the combined use of a proactive environmental and social management system, application of established EHS safeguards and mitigation measures proven effective by other companies in the region, and use of internationally-recognized and externally-verified forestry practices. Environmental and social issues reviewed during appraisal included:

- Current status of the company’s environmental and social management systems;
- Proposed OHS management practices of the Company and its contractors;
- Identification and conservation of natural and critical habitats and protection of ecosystem services;
- Prevention, detection and suppression of fire in plantation operations;
- Energy use, efficiency and GHG emissions associated with all aspects of project development;
- Management of hazardous materials, including all agrochemicals and operational petrochemicals;
- Proposed approach and tools for community engagement during plantation establishment and operations.

The Company proposes avoiding and mitigating environmental and social impacts by establishing clear operational procedures and management systems for the screening of land acquisitions or leases to ensure compliance with each countries’ environmental requirements as well as compliance with WBG EHS requirements and conformity with Forest Stewardship Council’s Principles & Criteria.