Jun 12, 2013. /Lesprom Network/. Klabin's Board of Directors has approved the Executive Officers’ proposal for the construction of a new plant in the city of Ortigueira, in the State of Paraná, Brazil, with the capacity to produce 1.5 million tonnes of pulp per year, 1.1 million tonnes of which of hardwood pulp and 400 thousand tonnes of softwood pulp (“Project Puma”), as the company said in a press release received by Lesprom Network.

The Company believes that the Project Puma differs from other ongoing pulp projects due to the flexibility of producing two types of fiber in the same plant and for enabling the supply of the Brazilian market of fluff pulp, which is currently imported. Additionally, it will be possible to obtain a lower cost in the production of the two fibers, as well as to benefit from excellent inbound and outbound logistics and to produce 144MW of surplus energy.

The Company currently owns 107 thousand hectares of planted forest with pine and eucalyptus that will ensure the wood supply for this plant. The average distance between the forests and the plant is 74km, ensuring competitiveness and low cost of the wood transportation. The transportation of part of the production will be made through railroad to the port of Paranaguá (State of Paraná).

The implementation of Project Puma, which is expected to begin on the 1Q 2016, represents an important step for Klabin, in light of the significant increase of its production capacity, which will not only supply the markets of pulp, but will also enable future expansions in packaging paper machines, as well as provide operational gains and positive impacts in its financial results.

As previously disclosed, the Company’s management had been conducting negotiations with investors in order to implement Project Puma through the establishment of a new company that would be called Klabin Celulose, which would receive the Company's contribution of 107 thousand hectares of planted forests located in the State of Paraná, as well as financial resources from the investors, whilst preserving majority control by the Company. Under such structure, the investors would have the right to withdraw from Klabin Celulose within a certain period, under conditions pre-established in contract.

Although the implementation of Project Puma through Klabin Celulose is feasible and in the Company’s interest, the management believes that, with the implementation of the Proposal, it becomes more interesting that the Project Puma be developed directly by Klabin, what, in the management’s opinion, will better address the interests of the Company and its shareholders.