PRIMA COLOMBIA HARDWOOD INC. AND PACIFIC LUMBER EXECUTE FORMAL AGREEMENT TO JOIN FORCES IN COLOMBIA

TSX-V: PCT

VANCOUVER, May 5 /CNW/ - Prima Colombia Hardwood Inc. (TSX-V: PCT) ("Prima") is pleased to announce that pursuant to the LOI reported on March 4, 2011, it has entered into a formal agreement (the "Agreement") with Pacific Lumber S.AS. ("Pacific") to join forces in Colombia to further develop Prima as a major international tropical hardwood timber development, production and marketing company.

The Agreement with Pacific anticipates the potential addition of rights to harvest up to 31.5 million cubic meters pursuant to timber concessions to be obtained by Prima through the efforts of Pacific (or approximately 10 times Prima's current timber reserves).

Pacific is part of Blue Pacific Assets Corp. with extensive expertise in developing highly successful natural resource projects in Colombia.

"Concluding this agreement with Pacific is an important milestone for Prima in its goal to increase its timber reserves", says Donald P. Hayes, CEO.

Prima's timber reserve under its current license is 3,121,720 cubic meters from an area of 44,596 hectares. All Prima forestry concession are intended to be operated following the highest standards of sustainable forestry and environmental management.  Prima brings over 30 years of forestry experience and dedication to best environmental operating practices and working with local communities and governmental agencies.

The Agreement provides that Pacific and Prima will work exclusively together on timber acquisition and to further the business interests of Prima in Colombia.

This will be achieved by:

  1. Pacific obtaining timber concessions, licenses or other exclusive binding rights to harvest timber from communities or other third parties for Prima; and
  2. Pacific working to further the business interests of Prima by providing operating, regulatory, community and other support.

In consideration of these efforts, Prima will issue up to a maximum of 60 million common shares in the capital of Prima, which currently would represent 17.83% of the issued and outstanding shares of Prima after their issuance.

The shares will be performance based and issued at a rate of 1.9 Prima Shares for each 1.0 cubic meter of timber that Prima acquires the exclusive right to harvest by entering into concessions as a result of the efforts of Pacific.

The Agreement remains subject to applicable regulatory approvals, including the approval of the TSX Venture Exchange.

About Prima Colombia
Prima Colombia Hardwood Inc. is a TSX Venture Exchange-listed Canadian based forest products company focused on international tropical hardwood timber development, production and marketing.  Prima Colombia's initial operations are located near Bahia Solano, Department of Choco on the west coast of the Republic of Colombia.  The harvesting will be carried out using sustainable, selective, low intensity, helicopter logging which is both highly regarded as having low environmental impact and involves no 'clear cutting'.

Forward-Looking Information
This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Examples of such statements include statements pertaining to timing of and revenue from current and proposed timber development, operations, production and marketing.

There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements and information are based will occur. Forward-looking statements and forward-looking information are subject to a variety of known and unknown risks, uncertainties and assumptions, including those discussed in Prima Colombia's quarterly and annual management's discussion and analysis and under "Risk Factors" in Prima Colombia's Filing Statement dated September 17, 2010, which are available at www.sedar.com under Prima Colombia's profile, and any of which may cause the actual results, performance or achievements of Prima Colombia to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this news release.  Some of the factors which could affect future results and could cause actual results to differ materially from those expressed in the forward-looking statements and information contained herein include: general economic, market, business and governmental conditions; lack of operating history; results of operations and development activities; continued availability of capital and financing; reduced demand for timber (cyclical nature of industry); availability of necessary equipment or the failure of equipment or processes to operate as anticipated; transportation, development, construction and production delays; anticipated and unanticipated costs; accidents; the regulatory and foreign environment and the timing and possible outcome of regulatory matters, including governmental approvals; political instability in Colombia; property title disputes or claims; environmental risks, including natural disasters; reclamation expenses; labour disputes and other risks of the timber industry; and any of the assumptions below not being correct.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect, including, but not limited to: cutting permits are issued on a timely basis; tree cutting commences in May; heavy lift helicopter arrives and harvesting commences in July; other equipment is delivered on a timely basis; and customer trial orders are fulfilled.

The factors identified above are not intended to represent a complete list of the factors that could affect Prima Colombia.  Additional factors are noted in Prima Colombia's quarterly and annual management's discussion and analysis and under the heading "Risk Factors" in the Filing Statement dated September 17, 2010 available at www.sedar.com under Prima Colombia's profile. Further, should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievement may vary materially from those expressed or implied by the forward-looking information contained in this news release. Forward-looking statements and information are based on the beliefs, estimates and opinions of management at the date the statements are made and are subject to change without notice. These factors should be carefully considered and viewers are cautioned not to place undue reliance on forward-looking information, which speaks only as of the date of this news release.  Other than as required by law, Prima Colombia does not undertake to update forward-looking statements or information if management beliefs, estimates or opinions or other circumstances should change, or to reflect events or circumstances that occur after the date of this news release or to reflect the occurrence of unanticipated events. All forward-looking information attributable to Prima Colombia herein is expressly qualified in its entirety by the cautionary statements contained in or referred to herein.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

SOURCE Prima Colombia Hardwood Inc.

For further information:

Donald P. Hayes  
Chief Executive Officer & Director  
Suite 880-1090 West Georgia Street   Tel: 604-630-7600
Vancouver, British Columbia    Fax: 604-630-7610
V6E 3V7      www.primahardwood.com
   
Fred Leigh  
Vanguard Shareholder Solutions  
Suite 1205 - 1095 West Pender Street  Tel: 604-608-0824
Vancouver, British Columbia    Fax: 604-688-0854
V6E 2M6      www.vanguardsolutions.ca

 

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Prima Colombia Hardwood Inc.

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