tor for timber project - due diligence scope

8/7/2019 TOR for Timber Project - Due Diligence Scope

1/5

Terms of Reference (TOR) to conduct

Due diligence for a Timber Project


2/5

1. Brief Contextual Background

Briefly who is PAIH;

Who is SSI and what relationships the two companies have or attempting to build.

What has necessitated the need for the Timber Project due diligence.

1.1 Timber Project Business Appraisal

Goal

What is the overall goal of the Timber Project due diligence exercise?

Assignment Goal/Purpose:

Reference Number:

Contracting Company: PAN AFRICAN INVESTMENT HOLDINGS (PAIH)

Contact Person: Innocent Maphosa/Andrew Sibanda, Position

title: X

Contact details:

Key Partners to be Consulted 1. SSI :Contact details:

2. XX: Contact Details

3. YY: Contact details

4. Any other

(it is important to inform the consultant of key

partners to be consulted)

Consultancy assignment

duration

7 days

Tentative start date:

Tentative completion date:

Budget R5000 inclusive of fees, travel, accommodation

and meals?


3/5

Key Focus Areas and Specific Objectives of the Timber Project due

diligence exercise

1. Understanding & Analysis of Timber Tender Contract won by SSI

1.1What is the nature of the contract?

1.2What are its specific conditions? (social, economic, legal, technological

and environmental)

1.3What is the duration of the contract and what are the implications?

1.4What is the size of the concession area, and what volumes of timber can

be harvested there from?

1.5What is the value of the concession contract and what criteria is used tovalue it? What are the pros and cons of it?

1.6Using your expertise and experience, add any other key areas worth

investigating

1.7 Documentation to be reviewed include:

a. The contract document itself

b. The Forestry commissions tree count

2. Analysis of Investment already made by SSI

2.1. What does SSI have relevant to the Timber Project? What has SSI

invested to-date in the Timber project (acquisition of license & periodic

payments to Tsholotsho Rural District Council, skills, finance, equipment,

materials and supplies, well researched Timber project information).

2.2. Using internationally accepted methods of valuation, determine the true

current value of the of the Investment made to-date.

2.3. SSI has work in progress regarding the Timber contract. What does itentail? Assess the following:

a. All plant equipment and tools currently available, by ownership, value

and Trailers currently being fixed, if owned by SSI

b. Other plant/equipment currently owned and operated by SSI

c. Payments/Deposits already made by SSI (and the related balances) to:


4/5

i. The Forestry Commission

ii. Tsholotsho Rural District Council

iii. Towards the Environmental Impact Assessment (EIA)

iv. Towards the approved Timber cutting plan

3. Assessment of the economic viability of the SSI Timber business

project

3.1. Carry out a value chain analysis of the SSI Timber business project and

assess the economic viability.

a. Costs of establishing the saw mill and related operations as detailed in

the SSI plan

b. Production costs per cubic meter of timber

c. Selling price for a cubic meter of timber

d. Zimbabwean market for the timber (planks)

e. Regional and international markets for hardwoods, especially TEAK

3.2. Carry out Cost-benefit analysis f the Timber industry in Zimbabwe

3.3 What are the key products and by products of the Timber business

project?

3.3. Who are the key players/actors( seller, buyers and consumers) in the

Timber market in Zimbabwe?

4. What are the basic specific requirements (licenses, skills, finance, plant &

equipment, materials and supplies skills, finance, equipment, materials and

supplies, etc) to assembly and start operating a viable Timber business

project in Zimbabwe?

5. Analyze the existing SSI Timber Business Plan and make recommendations

on findings

6. Carry out verification of basic operation costs per month for the first three

months provided by SSI and the estimated Total initial project capital

requirement.

7. Return on investment calculations


5/5

8. Considering all the findings from your appraisal of the SSI Timber business

Project, produce a proposed 2-year business plan.

4 Required expertise

The assignment is expected to be conducted by experts in the timber

(especially hardwood) sector and industry. Further, knowledge of business

appraisal, asset valuation and understanding of timber markets is critical.

These skills can be in one person or more than one people.

5 Duration of assignment

The assignment is expected to be done within 7 days, and acceptable reports

submitted on or before the end of February 2011.

6 Reporting instructions

1. The consultant shall be required to submit a draft report to PAIH

management for comments.

2. The consultant shall produce final report by incorporating comments and

observations from PAIH and present it in the form of a CD and 2 bound hard

copies.

tor for timber project - due diligence scope

Documents