The Cochabamba Project Ltd. is an industrial and provident society that was formed to enable socially minded investors to invest in the reforestation of one of the world’s most valuable and bio-diverse habitats - the Bolivian Amazon Rainforest - whilst also providing poor communities with genuine sustainable alternatives to farming that would otherwise lead to further deforestation and loss of biodiversity.

The Cochabamba Project Limited

Offer for Ordinary Shares Offer Number 7 Issue date: 1st November 2012 Closing date: 31st January 2013

industrial and provident society

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This invitation to subscribe for shares in The Cochabamba Project Limited is not regulated, to the extent that it is taking deposits by issuing withdrawable shares. Therefore, the money you pay for your shares is not safeguarded by any de-positor protection scheme or dispute resolution scheme. Our shares are not “investments” for the purposes of the Financial Services and Markets Act 2000. You do not there-fore have the level of protection that you might otherwise be offered by the Act. In particular, this document does not need approval (and has not been approved) by an “approved person” under Section 59 of the Financial Services and Markets Act 2000. This issue of shares is not regulated by the Financial Services and Markets Act 2000 or subsidiary regulations. This document is not regulated by the Prospectus Regulations 2005. Those regulations do not apply because there is a specific exemption for industrial and provident societies that conduct their business for the benefit of the community. Should The Cochabamba Project Ltd get into financial difficulty: • We may have to suspend your rights to withdraw your shares • We may have to write down the value of your shares • You may lose all the money you pay for your shares • You should buy shares only with money you can afford to have tied up, without interest, and without capital apprecia-tion, for several years or longer. You should buy shares only with money that you are prepared to lose. Can you afford to be without the money you pay for these shares? If not, do not buy the shares. The documents that are available for your inspection are as follows: • The Rules of The Cochabamba Project Ltd • The contracts relating to investments in the ArBolivia project • Financial Accounts for the period to 31/10/2011 These are available on our website or you may inspect them, during normal business hours at the registered office (shown below) with prior arrangement

Important Notice

Registered office: 52a High Street, Beighton, Sheffield, S20 1ED Advisers and Bankers Accountants: Barber Harrison Platt, 2 Rutland Park, Sheffield, S10 2PD Solicitors: Coffin Mew, 22 Kings Park Road, Southampton, SO15 2UF Bankers: The Co-operative Bank, PO Box 250 Skelmersdale, WN8 6WT Contact: David Vincent, Contact Address: 100 Whirlowdale Road, Sheffield, S7 2NJ. Tel: 0114 2368 168 Email: david.vincent@cochabamba.coop Website: www.cochabamba.coop

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Letter from the founder................................................................... Executive Summary........................................................................ About The Society.......................................................................... ArBolivia………………………………………..………………………. Distinguishing Features of Forestry Plantations….………………… Social Benefits…………………………............................................ Environmental Benefits………………............................................. Financial Background & Employment of Funds ............................. Main Risk Factors & Controls………………………………………… Information for the Issuance of Shares……………………………… Terms and Condition of Applying for Shares……………………….. FURTHER READING: Background to the Arbolivia Project ………………………....……... Carbon Credits and Environmental Services ................................. The Society’s Directors, Advisory Committee……. Risks .............................................................................................. Interests and Partnerships.............................................................. Application Form for individuals……………………………………… Nominee Appointment Form………………………………………….

Contents

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Dear Investor After more than two decades in financial services, and fourteen years advising on ethical in-vestment, the collapse of the stock market in 2008 finally persuaded me that there has to be a better way for ordinary people to put capital to work in order to tackle the major so-cial and environmental issues of our time. The Society itself was established in March 2009 and since then we have all witnessed the alarming fragility and volatility of financial markets, along with growing social unrest and the devastating consequences of continuing, unbridled consumerism and the loss of our natu-ral habitat and climate change. Yet over the same period, the society has channelled over £3m to support over 750 families from disadvantaged communities across the Bolivian tropics in a spirit of international co-operation, as an example of how enterprise can be conducted for the wider benefit of society rather than a select few. The Year 2012 has been designated United Nations’ “International Year of the Co-Operative. It also marks a decade since the start of the FAO-funded pilot project in the Cochabamba Tropics, which resulted in the establishment of the ArBolivia project itself in 2007. Timber from some of the first trees planted in 2002 is now being harvested by our project partners, Sicirec Bolivia, using a new portable sawmill, financed by the society. The ArBolivia project in which the Society invests, covers so much more than commercial forestry. It is a whole new model of co-operative enterprise, land management and conser-vation that combats poverty, empowers communities and tackles the root cause of defores-tation, which is a major cause of climate change at both a local and global level. This model can serve as a template for international co-operation and for land management projects throughout the Amazon region and the wider developing world. As the founder of The Cochabamba Project Ltd I believe that the Industrial and Provident Society model provides the most appropriate structure available for socially minded investors in the UK and beyond to achieve their social and environmental objectives whilst maintaining the prospect of a reasonable financial return. This is because the social objectives of the soci-ety are the reason for its existence and are enshrined in its rules. It is a democratic and transparent institution in which both its members and its officers are duty bound to make the society’s social objectives their priority. We invite you to join with us, to help us achieve the economies of scale we need and to make it easier for us to repay those who had the courage and commitment to support us at the start of our journey. Your participation will help us to maintain the forestry parcels that have been planted to date and increase the number of forestry parcels under management thereby helping more families to share in the benefits of the ArBolivia programme I hope you are able to support our efforts and look forward to welcoming you as a partner. Yours faithfully

David Vincent

Letter From The Society’s Founder

Page 5 Executive Summary

This document details and contains an invitation to subscribe for shares in The Cochabamba Project Ltd. The Cocha-bamba Project Ltd (Society) was established in March 2009 as an Industrial and Provident Society for the Benefit of the Community. Your money will fund a public-spirited “not-for-profit organisation which was formed for the specific pur-pose of supporting a reforestation project which commenced operations in 2007 and is known as ArBolivia. This venture is a true partnership with Bolivian farmers, as net revenues from the timber are shared equally between the society and the farmers, with the former providing investment capital and the latter providing land and labour. Arbo-livia has been acknowledged for its role not only in mitigating the impact of climate change but also in providing quanti-fiable benefits both for the communities in which it operates and for biodiversity in the region. The society is now seeking to raise finance for additional activities in 2013 and to build reserves for the financial year 2013/14, towards the end of which, it also expects to receive its first substantial timber revenues. Shareholder funds are used to pay the on-going project costs associated with growing trees until they are ready to be harvested for timber. The society expects to repay investors in the future from these revenues, which on current projections of our existing forestry assets will exceed £10,000,000 in the next 20 years alone, before allowing for any increase in timber prices. In addition we also expect to sell carbon credits, which will make a very significant contribution in the early years. Whilst substantial revenues are predicted for the 2014/15 season, the society is also mindful that it has obligations to existing holders of both shares and loan stock. For this reason the directors do not currently intend to approve any with-drawals for new shareholders at least in the first five years of investment. As a not-for-profit society, a significant pro-portion of our funds are used for social rather than commercial objectives. In addition, whilst we are fully focussed on achieving profitability as soon as practicable, any eventual surplus after paying interest to members will be used to benefit the local communities in Bolivia. The Amazon Rainforest is almost unquestionably one of the most valuable and important single habitats on our planet making a vital contribution in maintaining the balance of oxygen in our atmosphere and providing unrivalled biodiver-sity1. Over the last few decades, however, the western fringes of the Amazon have been the scene of some of the most aggressive deforestation in the world2. Driven by desperation, migrants have moved down from the Andes and have now been granted official title to land within the perimeter of the rainforest, enabling them to exploit the valuable timber and establish smallholdings to eke out a living from the land3. After decades of adopting poor agricultural practices and without the capital to invest in a viable alternative, smallholders are still forced to continue their “slash and burn” meth-ods in order to maintain their meagre existence. Without an economically viable alternative, these problems will persist. The Society is investing in just such an alternative – the ArBolivia Project. This has been established to tackle the multi-ple problems of poor land management, deforestation and poverty, and is the culmination of many years of consultation between local co-operatives, regional and international development agencies and ecological consultants. The Soci-ety’s investment not only makes a clearly quantifiable contribution to combating climate change through the sequestra-tion of carbon, but it is also contributing to the protection, repair and enhancement of biodiversity in the region. Most importantly, however, it is providing substantial and sustainable economic benefits to many individual families and local communities in Bolivia. If we reach our current funding target, your investment will help us not only to continue supporting our current partner families and maintaining our current forestry parcels, it will also allow us to embark on further planting with those farm-ers who have already proved their commitment and skills as well as bringing new families into the ArBolivia fold. Investing in The Cochabamba Project Ltd should be seen primarily as a social rather than a financial investment. The society may only pay a low rate of interest on shares and, in certain circumstances, may not pay interest at all. However, the Society intends to be able to pay interest on shares, which itself will accrue each year at the same inter-est rate applicable to ordinary shares and to pay this when shares are eventually withdrawn. Interest in the previous two years has been declared at 7.5%. We would like – but cannot promise- to maintain this rate for the current year but are minded to reduce the rate slightly once our timber revenues are known. This document is important and requires your detailed attention. We are happy to answer questions and provide further information as required. However, if you require personal financial advice you should consult an Independent Financial Adviser, who is sufficiently experienced in this specialist field. A list of advisers who have previously dealt with the soci-ety is available on request.

Page 6 About The Society

The society owns the rights to a 50% share in the revenues from 1068 of the 1200 hectares currently under manage-ment, which are expected to commence in 2013/4. In addition it also owns the rights to over 300 tonnes of verified emissions reductions (as at 31st October 2011) relating to approximately 85% of the hectares planted to date. The re-mainder of the timber rights and carbon credits are owned by the Sicirec Mixfund and Sicirec BV (see page 24). The current directors of the society are David Vincent, John Fleetwood and Daniel Brewer, who between them, have considerable experience and expertise in advising on sustainable forestry and other investments with a high social im-pact (see page 21 for director profiles). The society has also appointed an advisory committee to provide guidance to the directors on different aspects of the project. We are currently fortunate to have two of the leading experts in their fields on our advisory committee –, David Jackman and leading environmental academic, Mike Berners-Lee (see page 21 for profiles). The society was formed to provide a mechanism for socially minded individuals and organisations to pool their financial resources in order to fund a commercial forestry operation incorporating exemplary social and environmental stan-dards. Membership of the society is afforded to holders of ordinary shares. These shares can be withdrawn in accor-dance with the society’s rules but cannot be sold or transferred and there is no prospect of them ever being worth more than their nominal value). One of the unique characteristics of forestry is the length of time between the initial capital investment and the receipt of eventual revenues, resulting in the need to carry forward substantial losses until they are overtaken by subsequent revenues. The industrial and provident society model was adopted as a means of overcoming this barrier to investment due to its ability to award interest to individual investors in each financial year from year one, without reference to the actual accounting profit or loss achieved in any particular year. In this way the society is able to reward all investors fairly from the very first year whilst also reducing the level of tax payable by the society once its revenues start to come on-stream. As at 31st October 2012 the society was still waiting for a final report from Rainforest Alliance which, if favourable would confer accreditation for the society’s carbon credits under the CarbonFix standard. This in turn would release a contractual payment from the German company, Forest Finance and allow us to agree a major new contract for the future. A major factor that will influence the long term financial return on the society’s investments in the ArBolivia pro-ject is how quickly the project is able to expand. The society’s forecasts are based on plans to increase the commercial forestry to 3,000 hectares over the next six years. If these plans are undermined the society may not be able to deliver the returns needed to meet its liabilities in full. Conversely if we are able to expand further the internal rate of return should increase significantly. In any event the Society also has significant costs which need to be taken in to account in setting the annual rate of interest, including the cost of finance, marketing costs, administration, legal costs and direc-tors’ salaries, as outlined. These costs may increase as the Society grows and will obviously impact on the society’s profitability.

Members of our 2012 trip with directors, John Fleetwood (top step, left), David Vincent (Navy T shirt) + Arbolivia’s manager, Anko Stilma (top step, right)

The Cochabamba Project Ltd is an Industrial and Provident So-ciety for the Benefit of the Community and operates on a ‘one member one vote’ principle, irrespective of the size of a mem-ber’s shareholding. The society is governed by its rules which are available on the society’s website at www.cochabamba.coop. The purpose of the society is to benefit the rural communities of the departments of Cocha-bamba, Santa Cruz, Beni and La Paz in Bolivia. The directors intend to achieve this by investing the society’s funds for the foreseeable future in the ArBolivia project. The society was formed on 9th March 2009. As at 31st October 2012 the society had issued share capital of £1,992,184 and had over 400 members, including Rathbones Investment Man-agement and Ethical Investments Ltd, who act as nominees on behalf of a number of private clients. The society also has loans and loan stock amounting to £1,171,653 as at 31st October 2012.

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Prospective Interest In determining the level of interest awarded to members, the directors will primarily take into account the society’s in-tention to contribute financially to the community, with the expectation of a social dividend, rather than any personal financial reward. However, the directors are also mindful of the need to pay an interest rate sufficient to attract and re-tain capital over an extended period with a significant level of risk. With these points in mind the directors believe that it will be able to award interest in the range of 5 – 7.5% each year, depending on the scale of the project and the speed at which it is able to expand. However the longer term increase in the value of the Society’s assets cannot in any way be guaranteed and the rate of interest will continue to be reviewed each year. The directors expect to recommend to its members an interest rate of 7.5% until the society can show how well its predictions on timber revenues have been in reality. Once we have the benefit of actual timber sales and are subsequently able to forecast future timber revenues more accurately we intend to reduce the rate offered in line with the reduced risk to investors. We expect significant revenues to begin in 2014/15 and the trend will be for revenue lev-els to increase steadily from then on although there will be one or two odd years where no revenue is expected. This return is in no way guaranteed and is dependent upon a number of factors. Furthermore, in the absence of actual revenue, interest will be accrued until the member chooses to withdraw his/her holding. The directors will review this policy in due course and will endeavour to pay out interest from revenues as soon as this becomes practicable. For investors who require income to be paid out, the society offers loan stock from time to time, although a lower rate will apply in order to reflect the lower risk compared with ordinary shares. We are also willing to offer individual terms to self declared “Sophisticated Investors” or clients introduced by an authorised financial adviser. Please contact the society for further details. Investors should be aware that they are responsible for declaring interest payments through their Self Assessment return and are liable to tax on their interest when it is actually received. Further details of the anticipated management costs and timber revenues for each year until 2046 are available on re-quest. One of the main attractions for many of our members is the opportunity to be directly involved with the society and its activities. Our members are our best ambassadors and their efforts are vital in keeping the costs of running the society to a minimum. For the first time this year we have offered a trip for members to visit the project and see at first hand how the society’s funds are being put to work. A report of their experiences is available on the society’s website. In addition if prospective investors wish to ask any of them about their impressions of the project, they have all indicated their willingness to answer questions in person. (Please contact the society in the first instance ).

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ArBolivia

Managing over 750 widely dispersed farmers (as at 31st October 2012) in what can be quite a difficult environment with poor communications, poses something of a challenge and requires a sizeable team of technicians and managers to ensure that quality standards are met. It is also important to maintain good relations with farmers, many of whom have little or no educa-tion. This necessitates much higher costs than would normally be associated with a project of this size and inevitably success is not always guaranteed. However the resulting social and environmental benefits also mean that it is able to compensate for these additional costs by attracting funding from the sale of carbon credits and environmental services (see page 20), without which the project certainly would not have been possible.

For example the society has recently financed the purchase of a portable sawmill (right) that will enable Sicirec Bolivia to achieve a better price for our farmers’ timber by reducing the waste associated with larger mills and also cutting out a significant link in the supply chain. The project is also notable for its partnerships between NGOs, international governments, farmers’ groups, forestry experts, investors and academics (see Interests and Partnerships page 24 for further details).

The Society’s funds are used to support the Arbolivia Project, which is pioneering a new model of community based land management including cash crops, conservation and also an element of commercial forestry, which is intended to act as a catalyst for investment, as distinct from reliance on aid.

The net proceeds of the commercial forestry operations are to be shared equally between the investor (i.e. the society) and farmer.s This package of practical and financial support gives farmers sufficient economic incentive to reforest part of their land and also removes their need to continue the regular clearance of more prime tropical rainforest. Technical assistance is provided to the farmers so that they can derive a better income from their land as a whole and can also manage it in a more ecologically sustainable manner.

Project areas shown in RED

Intercropping is encouraged so that farmers can cultivate both food crops and timber on the same plot of land, whilst predominantly native species of trees are used in a patchwork of different tree types. Instead of planting one non-indigenous tree type in a concentrated area,19 different species have been planted ( with varying degrees of success) on widely dispersed small plots of land. The resulting biodiversity gains together with the focus on putting farmers’ interests at the heart of the project, make Arbolivia a very special forestry project that stands out from other ‘sustainable’ forestry schemes (see pages 10 & 11 for further details). ArBolivia is managed on the ground by the Sicirec Bolivia, a company limited by guarantee established in Bolivia by – but independent from - Sicirec Group BV, a firm of Dutch forestry professionals with considerable experience of assessing and managing tropical forestry projects around the world. The society is also supporting Sicirec Bolivia to develop a range of commercial activities that enhance its own security and add value to the ArBolivia project as a whole.

Left: Trail bikes are the most efficient mode of transport for our technical advisers

Above: Tejeyeque with coffee and beans

Page 9 Distinguishing Features of the Forestry Plantations

The commercial forestry enterprise undertaken by the ArBolivia project is very different from more conventional forestry plantations, even those that are termed ‘sustainable’:

The forested land is not owned by the project manager. Each forestry parcel is owned by an individual small-holder.

As at 31st October 2012 the forested areas consisted of over 2,000 separate tree lots spread across 4 sepa-rate federal states. This geographic distribution and isolation of individual parcels means that any incidence of fire, disease or insect attack is confined and will have little or no impact on other forestry parcels, providing highly effective natural, risk management.

Farmers now choose from 12 native tree species. (At the start teak was also made available due to the lack of high quality native seed.) This range of indigenous tree species on widely dispersed plots contrasts starkly with the norm of monoculture plantations where “identikit” trees stretch monotonously in to the horizon.

By aggregating supplies for timber merchants ArBolivia can secure much higher prices than individual small-holders are able achieve by themselves. Current esti-mates indicate a premium of at least 300% and as much as 800% for more mature timber sold for export .

Smallholders therefore have huge incentives to look after their forestry parcels. There are also a range of additional safeguards to ensure that smallholders fulfil their contrac-tual obligations.

Some of the species take only 10 years to mature but the most valuable timber species may take up to 40 years – far longer than any commercial forestry enterprise can entertain, so the ability to generate carbon credits and other environmental services whilst the trees are growing is extremely valuable (as well as revenue from thinnings).

Each smallholder will receive 50% of the net timber reve-nues from the trees he/she plants and maintains as well as receiving regular payments and technical support in managing the whole of their land.

This diversity is not only good for the environment but it means that smallholders are able to select species to match the exact conditions of their land, ensuring that survival rates and yields are optimised.

Food and cover crops are planted between trees to provide additional revenues, maintain fertility and re-duce the amount of labour required for mainenance.

The high levels of technical expertise and management demanded by this model serve to reduce significantly the risk of disease or poor growth. The cost of this addi-tional skilled manpower is compensated by accredita-tion for carbon credits, which should only be awarded (although many argue that this is not always the case) to projects which would not otherwise be commercially viable and also provide additional social benefits (improved livelihoods) and environmental benefits (improved soils and biodiversity).

From: www,arbolovia.org

Just 4 of the 18 native tree species grown

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Increased incomes for poor farmers - Profits are shared between local farmers and investors. The livelihood of local subsistence farmers is central to the vision and operation of the project. By participating in the project smallholders can expect to treble their earnings on their forested land over the 40 year project term. Smallholders are also bene-fitting from both financial and practical assistance to increase efficiency and the yields on their remaining land through agro-forestry (e.g. cocoa and citrus fruits) and through collective bargaining and fair trade principles.

Improved Agricultural Management – Arbolivia works with smallholders to improve agricultural management prac-

tices, thereby reducing deforestation and improving smallholder incomes. Technical & Marketing Support - Smallholders receive one-to-one practical advice and support on all aspects of

farm management, including land use, crop and stock selection as well as marketing support. Labour saving— ArBoliivia provides access to both hand tools and power tools as well as providing cover crops

and other farming methods which reduce the physical effort required to carry out work in the harsh and debilitating conditions of the Amazon jungle.

Employment – in addition to the staff employed directly ArBolivia contributes to additional employment in local com-

munities, for example seasonal work in its nurseries and the maintenance of its vehicles.

Social Benefits

The Arbolivia Project is remarkable for its high social and environmental impacts, many of which have been independently verified under the Plan Vivo certification process. These include the following:

NGO Alliances - ArBolivia has also fostered relations with other NGOs and development projects, such as Cordaid and Idepro (see below)

Microcredit - ArBolivia is working with the Dutch NGO, Cordaid and the Bolivian development organisation Idepro,

Education and Capacity Building - Many additional social benefits are provided through a programme of education and capacity building, which makes use of existing social structures such as community committees, farmers co-operatives and other NGOs working in the area. For example, training on fire risks and control is an important additional weapon against “slash and burn” farming methods. The Society also seeks to promote the integrated approach of the project on websites, publications and presentations for schools, community and business organisations.

Support of local communities - In the longer term, the directors believe that significant surpluses of revenue may accrue over and above the amounts needed to retain capital for investors. Any such surplus profits after the payment of reasonable interest to members will be used by The Cochabamba Project Ltd to benefit the local communities in the areas in which the project operates.

Equality—ArBolivia plays an important role in promoting equality, particularly between genders and ethnic groups. A large proportion of our smallholders are female and women are well represented on the forestry committees.

Page 11 Environmental Benefits

Avoided deforestation – the project addresses the root causes of deforestation by providing a real economic alter-

native to further deforestation and by improving agricultural practices. Enhanced biodiversity – By using a wide range of indigenous species of trees, intercropping and working with over

750 farmers on widely distributed plots, as well as creating wildlife corridors, biodiversity is substantially enhanced. Nature conservation - A conservation project has been initiated to plant 400,000 trees in designated conservation

areas. The objective is to counter the loss of biodiversity by repairing dedicated areas and corridors in order to pro-vide a network of secure habitats and thoroughfares. Much of the conservation work is focussed on controlling ero-sion from increased local flooding during the wet season (which is itself a direct consequence of deforestation).

Intercropping - Many of the trees are inter-planted with other crops to improve fertility, reduce labour, provide struc-

tural support, competition for growth and increased yields per hectare. Locally sourced seed - The project only buys locally sourced seed. ArBolivia certifies the best seed trees, which

then provide a source of income for the owner and a financial incentive to preserve the tree for the future. Carbon capture – ArBolivia’s contribution to the sequestration of carbon has been verified through a number of in-

ternational standards. It was one of the first three forestry projects in the world to receive approval as a “Clean De-velopment Mechanism” under the terms of the Kyoto protocol, although Bolivia has since withdrawn from this pro-gramme. It has since been certified under both the Plan Vivo and is the final stages of verification under the Car-bonFix standards. This means that the carbon absorption of the project has been independently verified to a very high order.

Many of these benefits have been independently verified and it is possible, through ArBolivia’s comprehensive online database and Google Earth, to connect with individual farmers on the project’s website (www.arbolivia.org) by viewing the individual parcels, details of the farmers and also tree species associated with individual plots.

Commercial planting for The Cochabamba Project started in 2007 and the society has acted as the principle financier of ArBolivia’s activities since 2009. Costs have mainly been related to Sicirec Bolivia’s team of 16 technical advisers, who travel around the project areas to give technical advice and assistance to the farmers. There are an equal number of office based staff who support them and deal with the monitoring, reporting and administration. Employment costs have increased due to both new labour regulations and the impact of inflation which has been at around 10% for the past 2 years in Bolivia. Despite this, the project has been financed for over 5 years now and we are now only one year away from receiving our first significant timber revenues. However the level of revenues is still very unpredictable because Sicirec Bolivia is in many cases attempting to open new markets for timber .which has not been sold at all or has previously been overexploited and is no longer available. For example, eucalyptus is an exotic plantation grown species that has been used widely in Bolivia for telegraph poles, since it is important that the poles are of 1st quality – i.e. they are straight. Sicirec Bolivia is hoping to sell a large quantity of its early timber as an alternative to eucalyptus but the proportion will depend on the quality. This is pertinent because the price of 2nd quality timber can be as little as 10% of the price for 1st quality timber but we will not know the outcome until the trees are ready for harvesting. Similarly, there are huge differences in the price of carbon credits from different sources and the market has been depressed for a few years now. However we believe that one recent development will have a very positive influence on our progress: We have been working for more than a year now on achieving accreditation under the CarbonFix standard in order to facilitate sales into the German market through our partners, Forest Finance. In September, only a week after the validation visit by Rainforest Alliance, it was announced that the CarbonFix Foundation had been acquired by The Gold Standard Foundation, with a view to launching a new Gold Standard Land Use & Forestry module in 2013, based on the CarbonFix model.

Gold Standard is widely regarded as the most prestigious form of accreditation but for this reason it has until now fought shy of the land use sector because of the complexities and reputational risks involved. As a consequence many of the

largest resellers, particularly in the UK ,have refused to support forestry projects in the past or will only buy credits which sequester their carbon within a maximum period of 10 years. As a registered Carbon Fix project we are now also a Transition Project for the new Gold Standard and once ArBolivia completes the transition process, which will be subject to further verification, this should open many doors for us to sell our credits much more easily.

In short, our revenues remain extremely uncertain at least in the short term. However we remain convinced that our exceptional social and environmental credentials will serve us well in the face of future market developments. On the issue of costs, our original maintenance agreement provided for fixed monthly payments that would not be adjusted for inflation. This was a deliberate measure to place the onus on Sicirec Bolivia to keep costs under control. Moreover, the level of monthly payments was actually designed to reduce each year to reflect the lower levels of maintenance required as our planted trees matured. However with inflation running at around 10% for the past two years together with a shared interest in Sicirec Bolivia becoming more commercially oriented we feel this is no longer appropriate or realistic. In addition our current contract only budgeted for a part time commitment from our Dutch project manager in Bolivia, Anko Stilma, whereas in practice he has devoted all his time and energy to our cause. In particular we rely on him to prepare the detailed technical reports required by Plan Vivo, CarbonFix and now Gold Standard as well as proposals for grants and developing commercial possibilities for Sicirec Bolivia.

Page 12 Financial Background & Employment of Funds

Serebo planted in 2002 as part of the FOA project- harvested and sold under contract by Sicirec

£0

£500,000

£1,000,000

£1,500,000

£2,000,000

£2,500,000

1/11/09

1/1/10

1/3/10

1/5/10

1/7/10

1/9/10

1/11/10

1/1/11

1/3/11

1/5/11

1/7/11

1/9/11

1/11/11

1/1/12

1/3/12

1/5/12

1/7/12

1/9/12

1/11/12

Issued Share Capital

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With these points in mind we have decided to revise our business plan from the one shown in our previous offer document. Rather than reducing our capital raising efforts, we are now seeking to capitalise on the popularity of previous offers and maintain the level of investment in real terms. This will allow us to initiate a programme of modest expansion, which would double the number of hectares under management over the next six years. If we do not do so the risk is that a combination of increasing costs coupled with lower than anticipated revenues could mean that we may not be able to generate sufficient revenues to meet our current commitments, particularly over the next 5 – 10 years. In contrast, the benefits of maintaining current levels of investment are very substantial: The cost of further planting with existing farmers is relatively minor, since monitoring visits can be combined and no additional staff or vehicles will be required. The planned 200 hectares in 2013 is expected to cost £30 - £40,000, depending on whether new or previous areas are selected. In addition to future timber revenues this should immediately generate a further 40 – 50,000 tonnes of carbon credits for sale. Even at a fraction of the anticipated sales price we would easily cover our initial outlay and gain valuable liquidity with which to meet our interest and redemption commitments. In each of the following 5 years we hope to plant a further 300 hectares a year, with corresponding resulting benefits. Once again however, we cannot guarantee the sale of these credits. Our current contract stipulates that our payments to Sicirec Bolivia will decrease annually on 1st July 2013 from $42,000 to $ 36,000 and to $31,000 in the following year (with a double payment in December in line with Bolivian employment laws). However we now wish to maintain our payments at the current level and also allow for increasing future payments to take account of inflation. We also wish to revise our project manager’s remuneration package to reflect his extreme dedication and expertise. As a result we now need to increase our current reserves to take account of these changes to our budget for 2012/13 as well as building reserves for following years. We have said above that we are committed to helping Sicirec Bolivia establish itself as an independent, commercial enterprise. We have already taken some steps in this direction by facilitating the purchase of a portable saw-mill in July, which our members saw in action during their visit. The new machine allows Sicirec to access smaller and more remote forestry parcels and then extract and process timber, which would not be commercially viable using conventional machinery and practices. In addition, by carrying out the initial processing ourselves, we eliminate one link in the supply chain and can share the benefits with our smallholders. Initial trials have been conducted on parcels planted under the FAO pilot project and if successful will be extended both to our own smallholders as well as other independent forest owners on a fully commercial basis. We hope to be able to use any funds in excess of our basic target to facilitate similar investments in the future, although each such proposal will be considered on its merits. We are therefore seeking to raise a sum of £460,000 over the next 12 months to 31st October 2013. If we are able to meet this target we will be able not only to plant the 200 hectares planned by May 2013 but we will also be able to prepare seedlings for a further 300 hectares to be planted the following year. This target is below the amount raised in each of the 4 previous years of our existence, even without allowing for any other receipts from loan stock and private loans, carbon credit sales, tree planting certificates, grants and donations. We should therefore be able to use any of these additional sources of finance to fund further expansion and development as outlined above. However, we remain mindful that the total budget for Arbolivia is actually more than we are contracted to pay to the project, with additional costs currently estimated at about $200,000 a year. This is because ArBolivia is committed to a range of activities which do not relate solely to the maintenance of the Society’s timber and it has agreed to seek finance for these non-commercial activities through its own endeavours. To this end, Sicirec Bolivia has already secured contracts with one of the leading domestic timber companies in Bolivia. It has secured a number of grants and is developing a strong and productive relationship with a number of NGOs In summary we will employ investors funds to ensure that our trees mature successfully whilst also investing in the development of our end markets We will also try to increase our planting sensibly as funds allow. Full financial projections and scenarios are available on request.

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Investment in the society should be regarded as long term in nature and involving a substantial degree of risk. Accord-ingly, investors should consider carefully all the information set out in this prospectus and the risks attaching to their investment in the Society including, in particular, the risks described on pages 22- 24. As a result of these risks you may lose the value of your shares and any interest accrued. The directors consider that the following are the most im-portant risks to the project.: The project may not be able to secure sufficient funding to meet ongoing running costs and as a result, may place

the project in financial jeopardy. The project depends in part on revenues from the sale of carbon credits and / or environmental services to help

fund the maintenance of the trees and farmer payments and meet interest and redemption commitments over the next ten years at least until timber revenues reach sufficient levels. Should the market for these credits and services deteriorate or disappear it would at best take longer than predicted to pay back investors and at worst the project may become unviable.

ArBolivia is pioneering the introduction or reintroduction of a number of native tree species into the domestic and international timber market. Future volumes, quality, end uses and prices for these timbers are all unknown and estimates are based on comparisons with other current commercial timbers. There is a risk that one or more of the species being developed does not meet Sicirec Bolivia’s expectations.

However, the directors will seek to protect against such risks through the following: Maintaining a balance of funding and revenue sources including equity investment, debt instruments,sales of car-

bon credits, payments for environmental services and timber revenues. The level of annual funding we need to maintain for the next five years is significantly lower than the amounts achieved each year to date,

Working with a number of partners to secure long-term investment and grant funding helping Sicirec Bolivia to diversify by developing ancillary forestry services on a commercial basis. Adopting conservative estimates of future timber prices based on local market prices and low annual increases. In

addition the society is able, after consultation with the forestry manager, to time the harvesting of trees to benefit from the most favourable market conditions

Close cooperation with the local population, non-governmental organisations and the Bolivian Government Careful site selection, matching of species and soil types and use of natural flood-resistant tree species Legal contracts with farmers and collective organisations of farmers, including permanent land use restrictions and

long term financial incentives Forestry committees consisting of representatives from the participating farmers have been established as part of

the risk management strategy. An Arbitration Board is made up of 2 members of Sicirec Bolivia and 2 members from the participating farmers. This board has binding powers to settle disputes between farmers and the project

Fair trade principles: The scale of the project gives Sicirec Bolivia better access to markets than for individual farm-ers alone. In addition operational costs can be shared, resulting in prices, which might be 3 to 8 times higher than those achievable by acting independently. Although farmers only receive 50% of the higher price, there is a very clear financial incentive for them not to break their contractual obligations through “back door” sales.

Please note: By law we cannot offer a generous interest rate. As the project will not receive sufficient timber revenues to pay out interest and all carbon credit revenues will

be used to subsidise maintenance costs as far as possible any interest awarded has to be accrued until the shares are withdrawn. Each year’s interest rate is set at the discretion of the directors and is not guaranteed.

Shares in this industrial and provident society cannot be sold or traded and there is no prospect of them ever being worth more than their nominal value.

After the initial five year period, you may be able to withdraw your shares on 180 days notice. If you withdraw your shares The Cochabamba Project Ltd will not repay more than you originally paid for your shares (over and above any interest due).

The value of your shares may fall. Although shares in this industrial and provident society are withdrawable, you may not be able to withdraw your

shares if the Society does not have sufficient funds available at the time you want to withdraw them. In some circumstances, the directors may be compelled to write down the value of your shares. Should you then

wish to withdraw your shares, you should expect to receive only their written down value. As an industrial and provident society, The Cochabamba Project Ltd does not need to be authorised by the Fi-

nancial Services Authority to take deposits by issuing these withdrawable shares.

Main Risk Factors & Controls

Page 15 Information For The Issuance Of Shares

The Society is offering 1m of new ordinary £1 shares available for purchase to fund the maintenance of trees growing in the existing 1,200 planted hectares for the period 1st November 2012 to 31st t October 2013. The society is seeking to raise approximately £460,000. However it is expected that a considerable proportion of this amount will be received from the sale of carbon credits or environmental services. Each ordinary share in The Cochabamba Project Ltd has a nominal value of £1.00. The minimum shareholding for an individual is £1,000 and the maximum (set by law) is £20,000. The initial closing date for the current offer is 31st January 2013, although this may be extended in due course. The offer is open to: Individuals over the age of 16 Trusts, including a bare trust arrangement for children Self Invested Personal Pension Plans Nominee Services Corporate entities, groups and associations Please read this section carefully – it sets out the details of becoming a member and investor in The Cochabamba

Project Ltd. Legal Information This document is issued by The Cochabamba Project Ltd, registered number 30642R, as an Industrial and Provident Society incorporated in England and Wales on the 9th March 2009 under the Industrial and Provident Societies Act 1965. The Cochabamba Project Ltd is a Society for the benefit of the community. Shareholdings The minimum shareholding which you can apply for under this prospectus is £1,000 and the maximum (except for other industrial and provident societies) is £20,000. Larger sums can be made available to the society as donations, grants or loans. The society also has a smaller amount of loan stock available from time to time for investors who prefer income to be paid out but are prepared to accept a lower rate of interest). Please contact the Secretary at the registered address for further information. All applications are subject to the terms set out in the Rules of The Cochabamba Project Ltd. There is only one class of ordinary withdrawable share. The shares are not transferable. Subject to the 5 year holding period, the shares are withdrawable on 180 days notice. In the case of joint investments, all investors concerned must agree to a withdrawal. Shares will be repaid at the original price (subject to the comments hereafter). The Directors of The Cochabamba Project Ltd have the right to change the notice period for withdrawals, or to suspend withdrawals, but this action would only be taken under exceptional circumstances or if the Project Managers were unable to meet redemption requests and new investor capital was not sufficient to meet redemptions. The Directors have the right to write down the value of shares, if the liabilities of The Cochabamba Project Ltd (and its share capital) should exceed the value of its assets. Shareholders who then withdraw their shares will only receive the written down value of their shares. In the event of The Cochabamba Project Ltd ceasing to trade, shareholders will be re-paid up to a maximum of £1.00 for every £1.00 share owned, once all creditors have been repaid n full. Please see the “risk factors section” below. Nomination option In the event of the death of a shareholder, the repaid value of the shares will normally be added to the estate for probate purposes. For investments up to £5,000 you may elect to nominate a recipient for the value of the shares and thus (under current legislation) remove the value of the shares (up to £5,000) from your estate for probate (but not tax) purposes. A nomination form is provided on page 26. Voting Each member has one vote regardless of the size and value of their shareholding. Investor members will be kept informed of the activities of the Cochabamba Project Ltd through an occasional newsletter, a website, the annual reports and the Annual General Meeting. Interest Provision is made in The Cochabamba Project Ltd Rules for paying interest on the share capital at such rate or rates as may be determined by the board of directors from time to time. In line with the Rules, the directors intend to award interest in order to provide a reasonable incentive for investors to maintain their support for the activities which contribute financially to the local communities in Bolivia. Therefore, whilst the directors will bear in mind the level of risk of investing in a developing country and the potential illiquidity of forestry assets, investors should not expect an interest which mirrors the returns of fully commercial investments.

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Your Application You cannot withdraw your application for shares after we receive your application form. The directors do not have to accept your application for shares. They may decide not to issue shares to you or may allocate you less shares than you applied for. They do not have to give any reason for their decision. Your application will be considered for approval at the first convenient Board of Directors meeting after the closing date for the offer, and therefore you should not ex-pect an immediate response. Your Payment The directors will acknowledge receipt of your cheque and application (where possible by email). They may cash your cheque as soon as it is received. The Cochabamba Project Ltd will hold your money on trust for you in a separate ac-count until the directors consider your application. The directors will return your money to you (within twenty eight days of the Board of Directors meeting at which we consider your application) if they decide not to issue shares to you. If they decide to issue fewer shares to you than you applied for, they will return the balance to you (within twenty eight days of that Board of Directors meeting). The money will belong to The Cochabamba Project Ltd (and the directors will no longer hold it on trust for you) as soon as the directors issue shares to you (to the extent that they take it as pay-ment for shares). The company will not pay you interest on any money it returns to you. Charges & Running Costs There are no charges made on your investment but the considerable costs of attracting capital and the costs of running the Society will be paid for by the Society and this will be taken into account when setting the annual interest rate. Ac-counts for the financial year 31/10/2010 to 31/10/2011 are available at www.cochabamba.coop or on request. Accounts for the financial year 31/10/2011 to 31/10/2012 will also be made available as soon as they are finalised. In particular you should note the following costs, which still apply: The Directors are currently paid £500 per month each plus expenses. Mr Vincent acts as company secretary for which he is paid an amount equal to £2.50 per member on the register. Ethical Investments receives a payment of 8% of any sums raised for the Society, from which it may agree to pay

financial advisers and other introducers an introducer’s fee of up to 3% Advertising and direct promotional costs are anticipated to be in the region of £10,000 for the current share issue. Withdrawal of Shares Our rules allow for shares to be withdrawn at the discretion of the board, subject to 180 days’ notice which allows the directors time to plan the most appropriate method of realising the capital required. In addition the directors will not allow withdrawals in the first five years unless there are extenuating, unforeseen circumstances and the society has the cash resources to do so without putting the wider interests of the society and its members at risk. These restrictions apply because there will be no significant timber revenues until the 2014/15 season (1st July – 30th June), and hence no income to repay investors until that time. However it also needs to reserve cash in order to meet its maintenance commitments until there is sufficient revenue from timber sales to meet both maintenance costs, interest payments and demands for withdrawals We have planned for redemptions amounting to 5% of share capital per annum from 1st November 2014. The society aims to provide for additional withdrawals above this level in a number of ways: The society owns the rights to a large volume of carbon credits which can be sold to generate cash. The society is free to sell its timber rights to other parties in order to raise capital to fund redemptions. The society may raise capital to meet redemptions through a further share or loan stock offer. However, the Directors of The Cochabamba Project Ltd have the right to suspend withdrawals should the society have difficulty in raising cash through these means. The Directors also reserve the right to scale down and/or refuse some applications. Shares cannot be listed on any market and cannot be sold or transferred to any other party.

Terms & Conditions for applying for shares

Your promises to us You promise that: • Your cheque will be honoured on presentation. • You, as an individual, are at least 16 years of age. • You have authority to sign the application form. If you are signing it for another person, you will provide the director with evidence of your authority to sign if they ask to see it. • You will supply us with proof of your identity and address, if we ask for it. We may need to do this to comply with the Money Laundering Regulations 2003. We may have to hold back your shares until we see this. Demutualisation – protection from “carpet-baggers” You may not benefit financially from your shares if The Cochabamba Project Ltd converts, or transfers its business or is wound up. In this case, the only financial benefits you may receive from your shares are: • The possibility of interest (at a low rate) • The possibility of the return of the money you pay for your shares The directors draw your attention to your obligations under rule 14 regarding the windfall if the Society converts, transfers its business, or is wound up. Should any greater financial benefit come into your hands, it will belong to such charity or community benefit Society as we may nominate from time to time. You are to hold the benefit on trust for that charity or community benefit Society. To secure that (and your obligations under Rule 14.2 of our Rules) you appoint as your attorney the person holding office (from time to time) as our Secretary. That appointment is irrevocable. Your at-torney has power to sign – on your behalf – an undertaking for which we may ask in accordance with Rule 14.3. Waiver Of Interest Option. Many investors have said that they do not wish to receive interest at all and would prefer the saving to go towards maximising the impact of the society. If you wish to waive the interest awarded to you, please tick this box on the appli-cation form Carbon Credit Retirement Option. We are conscious that some potential investors oppose the practice of carbon offsetting. We estimate that the level of financial subsidy conferred by the sale of carbon credits equates to the amount of interest that members are due to receive over a five year period. We therefore offer an option for members who do not wish to benefit from this financial subsidy to waive their entitlement to interest for this period. The society will then remove the corresponding number of VERs from the official register so that they cannot be sold in future. In this way opponents of the carbon market can make a very positive contribution without conflicting with their stance. Monthly / Annual Payment Option If you wish to become a member but cannot afford the minimum investment in one lump sum you may pay for your shareholding by annual or monthly instalments by setting up a standing order to the Society, as directed on the applica-tion form. There is no minimum payment as such but no shares will be issued until you have paid our minimum sub-scription of £1,000. You will receive an annual statement based on your holding on 31st October each year. Any inter-est will also be awarded annually based on your holding at that date. No interest will be awarded until payment for the minimum number of shares has been received. Joint holdings / Groups Shares may be held jointly in the names of up to four persons. For unincorporated associations shares must be held in the joint names of two or more persons. The association cannot hold shares in its own name but the holders of its shares may ask the society to note the association’s name and address in the society’s register of members. We also accept applications from companies, trusts, SIPPs and other incorporated bodies. Please ask for a separate form. Directors’ declaration. The Directors whose names are set out above accept responsibility for the information contained in the Offer Document. To the best of the knowledge of the Directors, who have taken all reasonable care to ensure that this is the case, the information contained in this document is in accordance with the facts and does not omit anything likely to affect its import. Applicable Law The law of England applies to these terms. The courts of England and Wales have non-exclusive jurisdiction. You will be bound by the rules of The Cochabamba Project Ltd (as may be amended from time to time) if the directors issue shares to you.

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FURTHER READING

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In 1995, the Food and Agriculture Organisation of the United Nations (FAO), the European Union and the Belgian gov-ernment together with the regional government in Bolivia began funding the reforestation of 2000 hectares as part of the regional sustainable development programme. The aim of this program was to promote and implement economi-cally viable and labour-intensive land-use and forest resource management practices in the Cochabamba Tropics in the form of plantation forestry, agroforestry, silvopastoral systems and sustainable management of residual forests. In 2002 the Centro Tecnico Forestal (Cetefor), a Bolivian foundation set up to attract international investment into sus-tainable forestry and farming development, signed an agreement with Sicirec BV, an experienced firm of consultants specialising in sustainable tropical forestry from the Netherlands. Sicirec’s brief was to create a comprehensive pro-gramme, which would qualify as a Clean Development Mechanism activity. In order to deliver the project on the ground Sicirec Group established a separate, independent company, Sicirec Bolivia Limitida, which is registered in Bolivia. (Sicirec Group does not own shares in Sicirec Bolivia but is represented on its board of directors. This ensures that, in the event of the demise of Sicirec Group, no charge would be levied against the assets of Sicirec Bolivia.) The formal name of this joint venture vehicle was the “Asociación Accidental Cetefor Sicirec” (AACS). In practice Cetefor has suffered like many NGOs from lack of funding and this partnership is to all intents and purposes redundant with Sicirec Bolivia having a majority on the board of the AACS and complete control of the project and its finances. AACS was established in order to execute contracts with individual smallholders, apply for accreditation as a Clean Development Mechanism (CDM) and receive funding from the sale of resultant carbon credits, known as Certified Emissions Reductions. After 6 years of monitoring and research relating to the whole portfolio of activities ArBolivia received a positive validation report from the Designated Operational Entity (DOE) in 2007 resulting in the registration of the first official CDM-AR Small Scale Activity (registration number 2510)4 in 2009. An Emissions Reduction Purchase Agreement (ERPA) was signed by the Flemish government for the forward purchase of credits. A total of 8 separate Project Design Documents (PDDs) covering a combined surface of 6,000 hectares were to be submitted for registration under UNFCCC regulations. A further 1,200 hectares were also to be dedicated to conserva-tion activities outside the remit of CDM activity. However at the end of 2009 only the first of these PDDs had received a Letter of Approval (LOA) from the Bolivian government. Following the failure of talks at the Copenhagen summit in November 2009 the Bolivian government withdrew its support for CDM, meaning that ArBolivia could no longer count on further LOAs and would therefore no longer be able to deliver the certification required by the Flemish government under the ERPA. This meant that ArBolivia had to seek alternative certification in order to sell its credits in the voluntary market, where approval from the host country is not needed. A new submission for current and projected activities was subsequently made for certification under the Plan Vivo standard, which was granted on 31st May 2011. In consideration of its funding commitment to the ArBolivia project the rights to 84% of these credits were then trans-ferred to the society and the remainder to Sicirec BV and the Sicirec MixFund. The society has since signed a new ERPA with the German company, Forest Finance GmbH and has received an initial payment for delivery of the first 10,000 tonnes. In addition, Forest Finance has assisted with a further submission for certification under the Carbon Fix Standard which is more widely known in Germany. It has further agreed to purchase and pay for a minimum of 25,000 tonnes of Carbon Fix credits on certification. As at 31st October we were awaiting the independent verification report by Rainforest Alliance following their site inspection which was completed in the first week of September. The society has also sold smaller volumes with a number of other clients However the CarbonFix Foundation has recently been acquired by the Gold Standard Foundation, with a view to devel-oping its own Forestry standard, based on the CarbonFix model. As such Arbolivia has been granted the status of Transition Project for the new Gold Standard Land Use and Forestry module, which is due to be launched in Q2 2013. Gold Standard is widely regarded as the most prestigious carbon standard and should therefore improve ArBo-livia’s chances of selling high volumes of its credits at a premium price. The availability of marketable carbon credits means that the society should be able to generate cash revenues earlier than originally anticipated. However the cur-rent market for credits remains depressed and the directors would prefer not to rely on carbon credit sales for its imme-diate funding requirements. The society is planning to increase its commercial forestry activity to approximately 3,000 hectares of commercial tim-ber within small, isolated parcels owned by roughly 1000 smallholders who belong to co operatives within the depart-ments of Cochabamba, Santa Cruz, Beni and La Paz. Sicirec Bolivia is also seeking further finance to develop agro-forestry (cocoa and citrus fruits) and conservation areas within the project areas.

Background To The Project

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Whilst both the society and its partners in Bolivia recognise the criticisms levelled against what is loosely termed the “carbon market” it is undeniable that the many social and environmental impacts, which ArBolivia delivers, are in every sense “additional” to profit centred investment. And would simply not be possible without some form of financial sub-sidy. We will therefore continue to pursue all means of generating the subsidies needed to secure the future of the ArBolivia project and optimise the non-commercial impacts it brings about. There are two distinct markets for carbon credits – the compulsory market and the voluntary market: The compulsory market includes buyers from the 39 developed countries, who signed up to the Kyoto protocol and are obliged under the agreement to pay for credits when they exceed the limit for emissions laid down in the agreement . The most common type of compliance credit is a CER (Certified Emission Reduction unit) which originates from pro-jects in developing counties. Certification and overall approval of these abatement projects and their credits is known as the Clean Development Mechanism (CDM). In order to gain accreditation CDM projects must demonstrate: The amount of carbon they lock up for the long term after taking account of all “leakage” (caused, for example by relocating the damaging activities elsewhere) A positive effect on biodiversity A positive and sustainable effect on local communities, based on full consultation and agreement “Additionality” – i.e. that the project would not have gone ahead without the financial subsidy afforded by credits. It is extremely difficult for forestry projects not only to fulfil the conditions for CDM status but also to be able to evaluate them and as such very few reforestation projects have achieved accreditation to date— ArBolivia was one of the first three. However, following the Copenhagen summit in 2009 the Bolivian government withdrew support for the CDM sys-tem and as a result ArBolivia lost any prospect of being able to sell its CERs under CDM. It has nevertheless been independently audited and has been shown to have met all the exacting quality standards required to do so. ArBolivia subsequently sought verification for Voluntary Emissions Reductions (VERs) for sale in the voluntary market In consideration of the society’s commitment to continue funding ArBolivia at that stage the project the majority of the rights to carbon credits were transferred to the society, which is now an authorised reseller of ArBolivia VERs Plan Vivo

Plan Vivo is a UK based foundation which provides accreditation for VERs solely from forestry projects which can demonstrate a high level of community involvement, social benefits and positive environmental creden-tials, such as the use of native species. A vital factor for projects themselves is that Plan Vivo’s VERs can be sold as soon as verification is granted—i.e. at the start of the project when finance is most needed to pay for planting and establishment. Certification under the Plan Vivo standard was granted on 31st May 2011.

CarbonFix / Gold Standard CarbonFix is a non-profit organisation registered under German law, whose statu-tory purpose is to foster climate forestation projects and aims to increase the amount of sustainably managed forests and decrease global CO2 levels. Gold Standard is arguably the most prestigious carbon standard in the world. Due to the same complexities mentioned above, Gold Standard had not developed a module for land use and forestry. However Gold Standard acquired the CarbonFix Foundation in September, with a view to launching its own module in May 2013. A week before the announcement Rainforest Alliance had completed an inspection of the ArBolivia project for Accreditation under the CarbonFix standard but as at 31st October we were still awaiting the final report. However, ArBolivia is now officially a “Transition Project” for the new Gold Standard Land Use & Forestry programme and we believe that this will allow us to sell our VERs at a premium in the market and in much larger volumes than before. The Climate Action Plan In light of on-going criticism of the existing carbon trading market and the failure of the international community to agree alternative mechanisms for reducing carbon emissions (and deforestation in particular), a growing number of organisa-tions are committing to sponsoring tree planting schemes, without linking their investment to levels of carbon seques-tration. The society also offers such as scheme, which it calls the “Climate Action Plan”. As part of the plan, the VERs relating to the certified trees are retired from the carbon credit register in order to avoid accusations of “double count-ing”. For further details visit www.climateactionplan.co.uk

Carbon Credits & Environmental Services

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The Society’s Directors

David Vincent David began his career in financial services in 1988 and established his firm Ethical Investments in 1996 with a view to advising on investments which incorporated social and environmental criteria. Together with John Fleetwood he co-founded the Ethical Investment Association, a trade association for independent financial advisers with a specific inter-est in socially responsible investment and he remained as a member of its steering committee until 2008. David be-came involved in forestry investment in 2003 and has worked as a consultant for the Quadris Environmental Fund. In 2009 David took the decision to relinquish his authorisation as an independent financial adviser in order to promote direct investment in specific social / environmental projects. The Cochabamba Project Limited is the first of such pro-jects and was established in March 2009

John Fleetwood John has been involved in the financial services industry since 1991, initially as an independent financial adviser specialising in ethical investment, and latterly developing ethical investment port-folios that focus on investing in solutions to social and environmental challenges. John’s com-pany, Ethical Money, provides consultancy services to a number of ethical fund and portfolio man-agers and has increasingly focussed on investments with a high social or environmental impact. Daniel Brewer Daniel is one of the founder directors of Resonance Limited. The organization was founded in 2002 by Daniel Brewer and the Dawe Charitable Trust as a financial intermediary to match values-led Investors with high impact businesses. It has particular, but not exclusive, expertise in raising risk capital for property acquisitions and development, sustainable energy businesses, busi-nesses employing marginalized people and businesses tackling global poverty. To date Reso-nance has introduced over £10m of investment to around 20 social enterprises. Daniel also acts as a non-executive director for a small number social enterprises. Advisory Committee David Jackman David is the author of the FSA’s Training and Competence rules and was part of the management team that set up the FSA. Previously he was in charge of T&C, internal training and consumer education at IMRO and had related roles at SFA and the Securities and Investment Institute. David started his career in banking. The first CEO of the Skills Council for Financial Services (FSSC), David chairs the British Standard’s Committee for Financial Services and is closely involved with the continuing develop-ment of T&C, especially in the institutional sector. As first ‘Business Ethics Adviser’ for FSA David pioneered principles-based regulation and Treating Customers Fairly (TCF). He joined Com-plance.co.uk Group in October 2006 to steer the development of services particularly focussing on business principles and ethics. Mike Berners-Lee Mike is a director of Small World consulting group which brings together environmental and busi-ness expertise, to enable strategic and value enhancing responses to climate change. Mike is an expert in greenhouse gas footprinting and organisation development and author of “How Bad Are Bananas?: The carbon footprint of everything”. Conflicts of Interest The Directors and the service providers may have conflicts of interest in relation to their duties to the Society. However, each shall, at all times, act in accordance with their obligation to act in the best interest of the Society. The following is a summary of the present conflicts of interest of the Society’s Directors and service providers: Mr Vincent holds the maximum number of shares and additional loan stock in the society. Ethical Investments Ltd,

which is solely owned by Mr Vincent ,also holds loanstock in the society. Mr Fleetwood is a member and holds loan stock in the society Mr Brewer is connected to a private investor who has provided a loan to the society Ethical Investments Ltd. is entitled to a payment of 8% on the sale of shares in the society and a payment of 4% on

the sale of any carbon credits. Any profit resulting from this is shared equally between Ethical Investments Ltd and Ethical Money Ltd, the company owned by Mr Fleetwood.

THE FOLLOWING RISK FACTORS DO NOT PURPORT TO BE A COMPLETE EXPLANATION OF ALL OF THE RISKS IN-VOLVED. POTENTIAL INVESTORS SHOULD READ THIS OFFERING DOCUMENT IN ITS ENTIRETY BEFORE DETERMINING WHETHER TO SUBSCRIBE FOR SHARES. Liquidity The liquidity of investments held by the Society cannot be guaranteed and, in certain circumstances, any illiquidity may prevent the redemption of investments. The directors have the right to refuse redemption requests, so unlike a com-mercial fund it is not possible for a run of redemptions from the society’s own members to trigger a forced sale of as-sets. The Society’s liquidity depends on the flow of revenues from carbon credits, environmental services and timber sales. In the event that the Society wishes to realise any of its forestry assets prior to reaching full maturity (and there-fore the highest value) it may have to accept a significantly lower value or may not be able to find a willing buyer at all. Similarly it may not be possible to sell sufficient credits at an acceptable price within a specific time scale. Particularly if both problems occur together, this may result in delays in redeeming members’ shares or a significant reduction in the value of the redemption proceeds, which the directors may not consider to be acceptable for the majority of members. Valuation Risk Given the nature of ArBolivia’s activities it is virtually impossible to estimate accurately the potential future revenues from its timber assets and therefore equally impossible to place a current value on the society’s assets. The society’s valuation model creates an intrinsic value based on cash flow forecasts many years into the future. This may not be representative of the market value of these assets, particularly where assets have to be sold quickly as an emergency measure. Similarly the voluntary market for carbon credits is still young and the range of prices that have been achieved to date is enormous. There can therefore be no guarantee that either assets can ultimately be realised at a value sufficient to cover the society’s share capital and accrued interest. In the event that there is a forced sale of for-estry or carbon assets prior to anticipated maturity, the assumptions made in the valuation model will not all continue to apply and the Net Asset Value of the Society and any redemptions proceeds will be affected accordingly. In addition, the unquoted nature of the Society’s investments may mean that they may be difficult to realise in a timely manner or at all. Valuations of the Society’s assets are made on projections provided by ArBolivia and other third parties. The direc-tors endeavour to evaluate all such information or data but are generally not in a position to confirm the completeness, genuineness or accuracy of such information. Country Risk The Society invests in the rights to forestry assets located in Bolivia. Investments in developing markets such as Bolivia may, among other things, carry the risks of less publicly available information, more volatile markets, a greater likeli-hood of severe inflation, corruption, unstable currency, inadequate investor protection, contradictory legislation, rudi-mentary, unpredictable, incomplete, unclear and changing laws, lack of established or effective avenues for legal re-dress, lack of standard financial or commercial practices, disclosure and confidentiality customs characteristic of devel-oped markets, and lack of enforcement of existing laws and regulations. Investing in Bolivia also creates greater expo-sure to economic structures that are generally less diverse and mature. It may also be difficult to obtain and enforce a judgment. There is also the possibility of expropriation or confiscatory taxation, imposition of withholding or other taxes on dividends, interest, capital gains or other income, limitations on the removal of funds or other assets of the Society, political changes, government regulation, social instability or diplomatic developments (including war), all of which could affect adversely the country’s economy or the value of the society’s investments in Bolivia. Physical risks associated with timber Natural causes such as fire, insect infestation, extreme weather, disease and other causes beyond the control of the Society may have an impact on the timing of harvests, or reduce the volume and value of timber harvested from the Society’s parcels. This in turn may adversely affect the Society’s operations and financial condition. For example, infes-tation by certain insects could necessitate the early harvesting of affected trees. Extreme drought conditions could re-duce the survival rate of trees planted within a year of the drought conditions. Prolonged periods of adverse weather could negatively affect the quality of the timber produced or negatively affecting the value of the harvest. The Society will not maintain insurance for any loss to its timber from natural disasters or other similar causes, which is consistent with normal industry practices. In addition, it is inevitable given the number of individual farmers on whom the society depends that some of the farmers will not last the distance for one reason or another. Physical Risks associated with carbon Loss of timber stocks also directly affect the levels of carbon stored and thus the validity of some of the credits owned. Plan Vivo and CarbonFix both insist on ArBolivia withholding a buffer of available credits to act as an insurance against any such failures. This buffer is set at 30% of the total credits available for sale. This means that should the trees which

Risks Page 22

Page 23

produce specific credits fail, they can be replaced by trees from other locations in order to preserve the validity of the credits in question. In line with industry practice the Society does not therefore maintain insurance for any loss to its credits from natural disasters or other similar causes. All forestry parcels are formally registered on the official land use register and they must therefore be used only for the registered purpose, i.e. forestry. This means that leakage cannot occur as it would involve a change of land use within the smallholding, which would be ruled out under the terms of the contract with the project. The most likely cause of a failure through lack of management control is a lack of funding. However even then it is unlikely that the landowners would cut down their trees before the end of the qualifying period. This is because they would still have a legal obliga-tion to continue growing trees on the land and it would be a criminal offence to clear fell trees in order to put the land to alternative use. In addition the hard work has already been done and the rewards are significantly higher than tradi-tional crop revenues. Economic risks associated with timber The Society’s operating revenues are dependent on prevailing market prices for wood products, which can fluctuate over time and are affected by changes in supply and demand, especially within a particular geographic area. De-creases in demand, increases in supply, or both, may reduce timber prices, which in turn may reduce the Society’s revenues and affect its ability to fund redemption requests and pay interest. The industries that use these various wood products drive the demand for them. Each market prices the product in a manner that is largely independent from the other markets. It is possible that all markets could deteriorate simultaneously, and negatively affect the ability of the Society to fund redemption requests and interest payments. The number of timber sellers and the volume of timber available for sale determine the supply of timber. Historically, increases in timber prices have caused forest owners to increase their timber cutting. An increase in supply may partly offset price increases. Changes in government regula-tions and restrictions could adversely affect operating results and timber prices. Certain government agencies have the ability to affect the market for timber due to their forestry holdings. Any substantial increase in sales of timber from gov-ernment lands could reduce timber prices. Alternatively, government imposed conservation and environmental restric-tions, whether federal, state, or local, could result in a reduced ability to harvest from our plantations. Future and exist-ing environmental laws and regulations could adversely affect the Society’s revenues. The supply of timber available for harvest may also be affected by, among other things, environmental and other legal restrictions on harvesting. Regulations could also diminish the residual value of the assets of the Society. The Society’s operations may also be subject to laws and regulations specifically governing forestry operations and health and safety. These laws could im-pose significant costs, penalties and liabilities on ArBolivia for violations, whether or not ArBolivia caused or knew about them, which could adversely affect the society’s own operating results. Future regulations may cause the Society to alter certain aspects of its investment strategy and may adversely affect the Society’s operating results and financial condition. Environmental laws and regulations may become more restrictive in the future. A specific issue for ArBolivia, as previously mentioned, is that we are seeking to create or recreate markets for a num-ber of native species. Future volumes, quality, end uses and prices for these timbers are all unknown and estimates are based on comparisons with other current commercial timbers. There is a risk that one or more of the species being developed does not meet expectations. Economic risks associated with carbon credits The carbon credit market is still relatively young and is vulnerable to high levels of volatility. This may be due to changes in national and international regulation and agreements or public and corporate reaction to developing aware-ness of the market. There is also a risk that the project’s chosen standards may be superceded by more popular or more readily marketable standards. Personnel Risks The ability of the Society to achieve its investment objective is significantly dependent upon the expertise of the current directors of both the society and its partner organisations. The Society is also reliant upon the skills of its other non-executive Directors and the loss of any of these persons could reduce the Society’s ability to achieve its planned in-vestment objectives if no suitable replacement is identified and appointed in a timely manner.

Currency Risk The Society will primarily invest in rights to a share in timber revenues which are denominated in US dollars and, thus the equivalent sterling value of these assets will fluctuate in line with exchange rates. Similarly the society’s monthly payments to Sicirec Bolivia is in US dollars.

Page 24 Interests and Partnerships

Title Risk Whilst the individual parcels of land upon which the forestry assets are planted are owned by a large number of individ-ual smallholders and it is part of the independent certification process to verify title to the land upon which the forestry assets are planted, there may be an adverse impact on the value of the forestry assets in the event of any dispute aris-ing out of such joint ownership or leasehold possession. Legal, regulatory and tax risks Legal and regulatory changes, particularly those concerning taxation, could occur that may adversely affect the Soci-ety. Changes in the regulation of industrial and provident societies may adversely affect the value of the Society’s tim-ber rights Laws governing transactions and contractual relationships are or may be new and largely untested in Bolivia. There can be no assurance that this difficulty in protecting and enforcing rights will not have a material adverse effect on the Society’s investments INTERESTS & PARTNERSHIPS The following organisations are associated with the ArBolivia Project and/or the society: Sicirec Group: The Sicirec Group is based in The Netherlands and has been one of the leading environmental consultancies in its field for over 20 years with experience of designing and managing successful commercial projects in developing countries in Latin America, South America and Africa. Sicirec Investment Management BV is responsible for finding the finance necessary for the further expansion of the ArBolivia project. The group’s website at www.sicirec.org Sicirec Bolivia Limitida / Sicirec Bolivia SA: Sicirec Bolivia Limitida is the independent company established under Bolivian law to manage the ArBolivia project. Its current directors are Popko van der Molen (also CEO of Sicirec Group), Anko Stilma, managing director and David Vincent, who represents the interests of the society. Sicirec Bolivia Limitida does not have any shareholders and as such its assets are fully protected in the event of the demise of Sicirec Group. However, in order to facilitate future insti-tutional investment the process of restructuring as a “Sociedad Anonima” is already underway. The society would con-tinue to be represented as a shareholder in the new company. The company’s website is www.sicirec.bo Sicirec Mixfund This is the forestry investment fund managed by Sicirec Investment Management and authorised in the Netherlands. It has an interest in 130 hectares of the 1400. Under a recent agreement the society has now acquired the carbon credits relating to these hectares in exchange for a commitment to pay the Mixfund’s share of the maintenance costs. Further information about the Sicirec Mixfund can be found at www.sicirec.org Ethical Investments Ltd: Sheffield based Ethical Investments undertakes to promote the share offer and to provide administrative services to the Society (www.ethicalinvestments.co.uk). Ethical Investments also provides specialist services to facilitate and support socially responsible investment projects in the UK and abroad, having advised on tropical forestry investment since 2003.

Food and Agriculture Organisation of the UN FAO leads international efforts to defeat hunger by helping developing countries and countries in transition modernize and improve agriculture, forestry and fisheries practices and ensure good nutrition for all. FAO provided the finance and technical expertise for a pilot project, which formed the basis of the ArBolivia project. The FAO’s project leader, Anko Stilma has since become the project leader for Arbolivia and has recruited a number of key staff from that time. Forest Finance / CO2OL Forest Finance is one of the leading developers of Carbon Forestry projects in Germany. It’s subsidiary CO2OL advised corporate clients on carbon foot-printing and reduction and offers carbon credits from the highest quality forestry pro-jects as a means of offsetting unavoidable emissions. In addition to setting up its own projects it has assisted ArBolivia in submitting its proposal for CarbonFix certification and is committed to selling the society’s credits to fulfil demand from its growing client base.

Application Form for individuals

To become a member of The Cochabamba Project Ltd requires the purchase of shares. Each share costs £1.00. Each shareholding member has one vote, regardless of the size of their shareholding. For this offer, the minimum shareholding is £1,000. The maximum permissible shareholding is £20,000. Applications and payment must be received at the society’s office no later than 5.00 pm on 31st January 2013. I / We wish to become a member of The Cochabamba Project Ltd in accordance with the rules, & apply for:

□ £1,000 □ £3,000 □ £5,000 □ £20,000 □ Other £………………………….of shares and

□ enclose payment for that amount (cheques payable to The Cochabamba Project Ltd)

□ have instructed my bank to make a BACs transfer with the following reference………………………….

to account number 65348590, sort code 08-92-99.

□ I/we wish to pay the above amount by instalments. I/we have instructed my/our bank to set up a

standing order consisting of ……….. equal payments of £……… commencing on (date)……………

and finishing on (date)…………………to account number 65348590, sort code 08-92-99 .

Carbon Credit Retirement Option (See page 17)

□ I / we do not wish to benefit from carbon credit subsidies and will forego interest for 5 years on this

investment in exchange for the appropriate number of carbon credits being removed from the market. Waiver of Interest Option See page 17)

□ I / we wish to forego interest on this investment until further notice.

Name and address For joint applications, all applicants (up to 4 persons) must sign. (please photocopy this form if there are more than 2 joint applicants). Full name(s): ……………………………………………………………….

……………………………………………………………….

……………………………………………………………….

Telephone: ……………………………………………………………….

E-mail: ……………………………………………………………….

How did you first hear about the society? ....................................................

Nomination form If you are investing £5,000 or less and wish to nominate a person to whom you wish your shares to be transferred to on your death, please tick the box and complete the “Nominee Appointment Form” overleaf. Agreement I am at least 16 years old. I agree to be bound by the Terms and Conditions included in the prospectus and the Rules of The Cochabamba Project Ltd. I understand that the Society’s Board may reject my application and does not have to tell me why it has been rejected. Data protection & money laundering The data provided by you on this form will be stored within a computerised database. This data will only be used for The Cochabamba Project Ltd purposes and will not be disclosed to a third party. It is a term of the offer that to ensure compliance with the Money Laundering. Regulations 2003, The Cochabamba Project Ltd may at its absolute discretion require verification of identity from any person seeking to invest. Signed as a deed Please sign here:……………………………………………………………………….Date: ………………………. A witness to your signature must sign here: ………………………………………..Date: ………………………. Please return, enclosing if appropriate your cheque, made payable to ‘The Cochabamba Project Limited’,

to: The Cochabamba Project, Cedar House, 100 Whirlowdale Road, Sheffield, S7 2NJ.

Nominee Appointment Form

This form should only be completed if you are investing £5,000 or less and you wish to nominate a person (or persons) to receive your shares on your death. Your full name:……………………………………………………………………….. Address: ……………………………………………………………………….. ……………………………………………………………………….. ……………………………………………………………………….. (We will use this address when we write to you) You can nominate a person (or persons) to whom you wish your shares to be transferred on your death. If this form does not provide for your requirements you may write to us separately with your individual instruc-tions. We will respect those wishes, providing they are clear and so far as the law and our Rules permit). If you are a joint holder and you do not wish your holding to pass to the other joint shareholder(s) then you must complete this form. You may nominate a person (or persons) to whom you wish your joint sharehold-ing to be transferred on your death. Please name your choice of nominee(s) below.

I understand that it may not be possible for The Cochabamba Project Ltd (the Society) to action this request and I and my heirs will not hold the Society responsible for its actions. I understand that these instructions can only be revoked or amended by my giving clear written instructions to the Secretary of the Society at the registered office. I understand that trustees will need to be appointed if my nominee is under 16 years of age. Signed as a deed Please sign here:………………………………………………………………………Date:……………………….. A witness to your signature must sign here:………………………………………..Date:……………………….. Please return to: Ethical Investments Ltd, Cedar House, 100 Whirlowdale Road, Sheffield, S7 2NJ.

1st Nominee 2nd Nominee

Share of holding % %

Full Name

Address

References 1. http://assets.panda.org/downloads/facts___figures.pdf 2. http://rainforests.mongabay.com/deforestation/2000/Bolivia.htm 3. http://www.boliviainfoforum.org.uk/inside-page.asp?page=43 &section=2 4..http://cdm.unfccc.int/UserManagement/FileStorage/H56C84P7GYEWT9U3XDNB1ZVFSORLQA

Phone: 555-555-5555

Fax: 555-555-5555

E-mail: someone@example.com

Contact: David Vincent

Address:

100 Whirlowdale Road

Sheffield

S7 2NJ

tel: 0114 2368 168

Email: dav@ethicalinvestments.co.uk

Web: www.cochabamba.coop

The Cochabamba Project

The Cochabamba Project Limited

industrial and provident society