Mile End, South Australia, 28 June 2011 -- Papyrus Australia Ltd has entered into an agreement with the Egyptian Banana Fibre Company (EBFC), a company incorporated in Egypt. The principals of EBFC have long-term expertise in banana growing, timber, and wood trading and manufacture, as well as packaging and paperboard manufacturing. This development follows an announcement to the market on 16 March 2011 that Papyrus Australia, in conjunction with EBFC, released a catalog demonstrating veneer products (floorboards and decorative panels) produced from banana tree trunks using the Papyrus Australia methodology and process from veneers sourced from the Papyrus Australia Walkamin demonstration factory in far north Queensland.

The parties have agreed to document and accept the terms of the exclusive license, which will be consistent with the terms of the agreement, by 30 June 2011. Ted Byrt, chairman of Papyrus Australia, said "This development is an important step forward for Papyrus Australia. Papyrus Australia has been engaging with various entities in Egypt for the past several months and the markets established by the Egyptian Banana Fibre Company, utilizing veneers produced in Australia and shipped to EBFC, has encouraged EBFC to join with Papyrus Australia in creating a commercial entity in Egypt to produce and sell banana veneer products into the Egyptian and European marketplaces."

Although entering into this agreement is important, significant work still needs to be done to complete satisfactory commercial arrangements to the mutual benefit of the parties concerned. In addition, the memorandum of understanding with Tawazon For Solid Management SAE (Tawazon) in Egypt, as announced to the market on 03 December 2011, remains active although negotiations slowed during the recent political difficulties. Tawazon’s prime interest is is reported to be in developing a banana fiber panel factory in Egypt and with the establishment of Papyrus Egypt comes the opportunity to supply Tawazon with the banana fiber raw material for its proposed panel factory. The deal with Tawazon is not expected to be finalized before September 2011.

The board of Papyrus Australia also has determined to scale back the Walkamin demonstration factory’s operation in far north Queensland to one week in every four, but with increased productivity in the week of full-scale operation. This decision has been taken with the support of the host farmer and EBFC, the current purchaser of the veneer product. Development activities, including that relating to panel, and equipment maintenance are now concentrated in the nonproduction weeks. This decision significantly reduces the cost of operation, thus preserving available working capital, while only moderately affecting the supply of veneer to EBFC.