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Sino-Forest Signs Long-term Master Agreements to Acquire 266,000 Hectares of Plantation Forests in Shaanxi and Yunnan Provinces

May 30, 2011

TORONTO, May 30, 2011 /PRNewswire/ – Sino-Forest Corporation (TSX: TRE)
(“Sino-Forest”), a leading commercial forest plantation operator in
China, announced today that certain PRC subsidiaries of its
wholly-owned subsidiary, Sino-Panel (China) Investments Limited
(“Sino-Panel”), have entered into master agreements (the “Master Agreements“) for the purchase of plantation forests in Shaanxi and Yunnan
provinces with Bolin Forestry Co., Ltd. and Yuangao Forestry
Development Co., Ltd., respectively, who will act as the authorized
agents for the original forest rights holders.

Under the Master Agreements, Sino-Panel will, through its PRC
subsidiaries, acquire approximately up to 200,000 hectares and 66,000
hectares of matured (25 – 50 years old) plantation forest in Shaanxi
and Yunnan provinces, respectively. The average yield for both areas is
approximately 90 cubic metres (“m(3)”) per hectare.  The fibre acquisition is expected to take place over a
ten-year period at a price not to exceed RMB320 (US$49) per m(3) to the extent permitted under the relevant PRC laws and regulations.
The tree species are different kinds of pine, fir and other species
including birch, spruce and cedar.

In addition, in order to secure land for long-term replanting,
Sino-Panel, through its PRC subsidiaries, has pre-emptive rights to
lease the underlying plantation land at a price, as permitted under the
relevant PRC laws and regulations, not to exceed RMB525 (US$90) per
hectare per annum for 30 years from the time of harvest. The land lease can also be extended to 50 years as permitted under PRC
laws and regulations. The specific terms and conditions of purchasing
or leasing are to be determined upon the execution of definitive
agreements between the PRC subsidiaries of Sino-Panel and the
authorized agent upon the authorisation of original plantation rights
holders, and subject to the requisite governmental approval and
compliance with the relevant PRC laws and regulations.

Sino-Forest Chairman and CEO Allen Chan said, “Late last year, we
announced our intention to enter into agreements to acquire fibre on
300,000 hectares in central and western regions of China with payment
to be made over five years. After negotiating the details of the terms,
we decided to revert back to the master agreements’ structure of
“pay-as-we-acquire” as we believe that it offers Sino-Forest more
financial and operational flexibility. From a financial perspective,
the requirement to pay 30-year lease amounts up front under the
proposed new structure impacted our expected returns.”

“From an operating perspective, we are committed to long-term
sustainable replanting, and securing the right location for replanting
is paramount for Sino-Forest to achieve attractive long-term fibre
growth and yields. Therefore, we were not prepared to lock in land in
new regions without having certainty about the growing conditions,
which is achieved through trial replanting,” added Mr. Chan. He
concluded, “Wood fibre is becoming an increasingly valuable commodity
in China. Accordingly, Sino-Forest intends to continue to strategically
expand its plantations geographically in a sustainable and economically
viable manner. We also plan to increase our fibre inventory through the
accelerated replanting of up to 200,000 hectares over the next two to
three years.”

Shaanxi Province is situated in the heart of central China, neighbouring
Sichuan, Hubei, and five other provinces.  Shaanxi has rich and
diversified ecological plantation resources. It has a forest area of
8.5 million hectares and a forest coverage rate of 41.4%.  According to
China’s 12(th) Five-Year Plan, Shaanxi expects to expand its forestry coverage to 43%
by 2016 and has an annual allowable cut of approximately 6.3 million m(3) per annum. The province is relatively less affluent than China’s
coastal regions, but it has enjoyed high GDP growth over the last five
years, and is expected to continue to grow strongly. Sino-Forest’s
long-term vision is to develop regional wood markets in strategic
forest areas. We believe that establishing an operational foothold in
Shaanxi will support sustainable plantation development, enhance local
employment, and present other attractive business opportunities.

Note: As of May 30, 2011, the USD/Renminbi noon exchange rate published
by the Bank of Canada is USD1.00:RMB6.48.

About Sino-Forest Corporation
Sino-Forest Corporation is a leading commercial forest plantation
operator in China. Its principal businesses include the ownership and
management of tree plantations, the sale of standing timber and wood
logs, and the complementary manufacturing of downstream engineered-wood
products. Sino-Forest also holds a majority interest in Greenheart
Group Limited, a Hong Kong-listed investment holding company (HKSE:
00094) with operations based in Suriname, South America and New
Zealand, which is involved in responsible and sustainable log
harvesting, lumber processing and sales and marketing of logs and
lumber products to China and other countries around the world.
Sino-Forest’s common shares have been listed on the Toronto Stock
Exchange under the symbol TRE since 1995. Learn more at
www.sinoforest.com.

Please note: This press release contains projections and forward-looking
statements regarding future events. Such forward-looking statements are
not guarantees of future performance of the Company and are subject to
risks and uncertainties that could cause actual results and company
plans and objectives to differ materially from those expressed in the
forward-looking statements. Such risks and uncertainties include, but
are not limited to: changes in China’s and international economies and
in currency exchange rates; changes in market supply and demand for the
Company’s products, including global production capacity and wood
product imports into China; changes in China’s political and forestry
policies; changes in climatic conditions affecting the growth of the
Company’s trees; competitive pricing pressures for the Company’s
products; and changes in wood acquisition and operating costs.

SOURCE Sino-Forest Corporation


Source: newswire



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