David Brand NRF

1. Hancock Natural Resource Group (Australia) Institutional Investment in Forests in Australia David G. Brand, Ph.D. Director, New Forests Program Hancock Natural Resource Group Level 19, 821 Pacific Hwy Chatswood 2067 (02) 9884-8202(tel) (02) 9411-1315 (fax) dbrand@hnrg.com.au 6 May 2004

2. 2 Important Note The material in this presentation is provided for information purposes only. While the information comes from sources believed to be reliable, Hancock Natural Resource Group (Australia) does not warrant the accuracy or completeness of the information provided. Any projections, forecasts or forward looking statements in this presentation are a function of many assumptions and may in fact be wrong. This presentation is not an offer of investment advice or an offer to sell securities

3. Hancock Natural Resource Group (Australia) Australian arm of HNRG Inc., a subsidiary of Toronto-based Manulife Financial Services (NYSE/TSE:MFC). HNRG is part of the Global Investment Management Group, which manages approx. $200 billion for both in-house and third party clients HNRG currently manages $US 3 billion in assets on behalf of over 50 institutional clients (1.2 million ha of forest in USA, Australia and Canada) HNRGA established in 1998 with acquisition of Hancock Victorian Plantations (HVP) from Victorian Gov’t. Further acquisition of plantations from Paperlinx in 2000. HNRGA awarded first Forest Stewardship Council Certification for HVP in February 2004 HNRGA received AFSL licence in March 2004 Our business model is to provide excellent risk adjusted returns from the forestry asset class to our institutional investor base

4. The New Forests Program Established in 2001, based in Sydney Aim is to extend the forestry investment model to encompass emerging opportunities to commercialise environmental services and support reforestation-based investment Need to establish a ‘made in Australia’ business model for investment in the forestry sector Tax system and government policies are oriented to support expansion of plantation forestry base Limited deal flow in mature plantation estates (only 3 or 4 government assets) that are analogous to US Timberland Investment Model Critical national issues of climate change, dryland salinity and biodiversity loss need systematic commercial solutions—forests can contribute to these issues We are beginning to find investment structures that can support growth in institutional forestry investment in Australia

5. Many regions have wood supply deficits… Projected supply deficit for Murray Valley Region to 2019 if all planned mill expansions proceed Source: URS Forestry

6. Chinese Timber Imports are expanding rapidly, exhausting SE Asia and the Russian Far East… Source: Xiufang Sun, Forest Trends

7. Add to this the need for reforestation…

8. Land clearing is leading to a substantial decline in water quality in Australia….

9. Need for commercial solutions Major environmental issues are a result of the failure to ‘price’ environmental externalities Forests provide key environmental benefits Absorption of carbon dioxide Regulation of hydrological cycle to reduce spread of salinity Biodiversity conservation and enhancement These markets are emerging steadily, as the public, governments and business understand the costs associated with business as usual But can this be profitable…..?

11. Growing moves by business, including voluntary measures, pre-compliance, and retail carbon trade Global Carbon Trade To 2003 Source: Natsource LLC, The World Bank

12. And market prices are firming… NGAC Pricing ($AUD/tonne CO2e) Approximately 1,000,000 tonnes of NGACs have now been transacted Source: NextGeneration Energy 2004

13. Capitalizing on environmental externalities in forestry investment Figures in AUD$ (Assume NPV based on 9% real discount rate, hypothetical case) Land leasing Originalinvestment Renewable energy Carbon Credits Timber & Pulp Water credits / salinity Potential net gain X 100 X 80 X 60 50 40 20 60 -60 0 -20 --40 Source: Swiss Re --60

14. Generalized investment Model Land Leases Wind Rights, Bio-energy Forestry Co Investor Equity Carbon Buyer Debt Water Quality buyer Forest Product Buyers

15. Investment Opportunities Everything we do is private equity and all our investments are targeted to qualified wholesale investors These investments, like all forestry investment, should be considered relatively illiquid We have a range investment structures to serve investor needs: Separate Accounts These New Forests Investments are limited, but there is room for more investors Another approach is an investment that combines both traditional timberland with a portion of New Forests investments We can establish portfolio’s within Australia or internationally diversified Commingled funds HNRGA is acting as asset manager for ASIF Other possibilities may emerge

16. Summary The New Forests Program represents a new class of Forestry Investment—designed to reflect the investment environment and specific opportunities of Australia This is an emerging sector, but likely to see substantial growth in coming years. Returns will be competitive with traditional timberland and infrastructure area, but with unique linkages to areas of sustainability, new markets and sectoral rationalisation