Newsletters

19 July 1999

Dear Shareholder,

The way it’s been raining this weekend, you’re probably wondering why you bought into the irrigation scheme. Rest assured, though, with climate change accelerating the way it is, time will soon prove how wise you’ve been.

Share Certificates: Please find herewith Share Certificates to be placed somewhere safe; you won’t have to produce them to prove ownership, but they should be well protected.

Construction

Main Canal - Pleased to report that Doug Hood Limited have completed it to the stage that it can now be said to be operationally complete (but not tested); by that we mean that the fish screens and intake have been installed, all of the bridges and culverts along its full length are in place and the canal itself has been built to dimensions that should allow the full design volume to flow.

Distributary Races - Monthly progress as outlined at the Special General Meeting in Cust has generally been maintained and it is expected that they will be completed on schedule this September.

"East of Cust" - We are still looking for a cost effective solution acceptable to everyone in this area. It has been a difficult and costly exercise but we are now confident that an economic solution may have, finally, been found.

Fences, seeding and general clean up - There is obviously still much to do in these areas but because so much of it is weather dependant we are not pushing the Contractors, except where necessary. They are being encouraged not to attempt anything until ground conditions improve in a month or two in order to achieve the best result.

Siphons - The Eyre and Cust River siphons have been fabricated and will be installed as soon as conditions allow. About a week’s work in each case.

Additional Water: As a consequence of the applications we hold for about 1000 new Water Shares, we have applied for a Resource Consent to use an additional 1.5 cumecs (3,000 Ha) of our 12 Cumec Resource Consent. Nothing to report as yet. We anticipate issuing these, subject to Shareholder approval, at a premium over the initial 11,000 shares of the first Prospectus.

CRC Regional River Plan: we have some serious concerns with respect to changes that, if introduced, would adversely impact on the reliability of our supply during February and March. Hearings regarding the Plan were to be held in early July during which your company planned to vigorously oppose certain provisions of it. At the last moment these hearings were postponed until an as yet unknown date.

Water Storage: With a view to improving the reliability of supply of the scheme we are seeking expressions of interest from three suitably qualified Consultancy’s to research the possibility of finding, funding and constructing a complementary storage area(s) with a view to water harvesting and thereby improving the scheme’s reliability.

Operational Issues: As a part of each newsletter in future we plan to highlight a few fundamental principles that are pre requisites for an efficient, trouble free operation.

Hereunder the first of them.

Water abstraction: In order to ensure the efficient flow of the water throughout the system irrigators will be required to give the Company not less than 48 hours notice of their intention to begin or finish irrigating. The intent here is to ensure that the races are always carrying the flow appropriate to the demand in order to avoid the flooding/depletion of downstream properties.

Appropriate phone and fax contact numbers, with appropriate backup details, will be given you before the season starts.

Continuous abstraction: The scheme is designed in the expectation that irrigators will take their full entitlement on a continuous basis and in conformity with the CRC requirement of 0.45L / sec / hectare. The pump installed as a part of your system must be sized accordingly. Obviously, for example, taking twice that amount of water for half the time would result in both unacceptable surges and deficits of water downstream.

Monitoring: you are required, as per your Water Supply Agreement, to monitor the abstraction of water to the satisfaction of the Company (+/- 5%). Be sure that whoever supplies your pump includes a suitable flow meter in the package.

Annual Water Charge: As you know the cost of $51 per hectare annual charge starts to run as soon as the scheme is declared operational, or water become available to your property (whichever is later), irrespective as to whether or not you are ready to use it.

It has now been decided that the following payment regime, originally communicated to you in draft form May 6^th, 1999, will apply. Now that we are totally confident that water will be available to all areas this September (with a couple of possible exceptions), you can expect to receive an invoice before the end of September for payment by October 20^th, 1999.

1 to 10 shares Pay in full October

11 to 50 shares pay 50% in October and February

Over 50 shares Pay 1/3 in October, January and April

A Direct Debit option will be available.

Site Visit: Now that Doug Hood limited have effectively left the intake area we are pushing to get the area tidied up and safety fencing erected. As soon as this is completed we will be hosting another Shareholder site visit.

Official Opening: We are now considering when and in what form this most important function should take. If you have a view regarding this please contact the writer.

Economic and other Activity: As I go around the district I am now getting some insight into just what an impact the scheme is having in terms of increased economic activity and employment opportunities. More even than I had anticipated, even though your Board visited several other comparable irrigation schemes in the South Island. I see some pretty tight deadlines out there but those that are pushing for an early start seem confident that they will be ready when the water flows.

Farmer Co-operation: We have had to gain access to over four hundred farms during the construction of the main canal and the distributary races. I am happy to report that in only about five instances, none of them really serious, have we had some minor opposition from land holders. That has been one of the most gratifying aspects of the construction phase in my view. A community largely at peace with itself and co-operative in its attitude to its neighbours. It augurs well for the future.

Yours sincerely,

Donald J. Young,
Chairman