Foreign Investment Review Board (FIRB) has approved an investment agreement between Western Australian sandalwood grower TFS Corporation and a US-based institutional investor.

TFS Corporation made the announcement today.

Under the investment management agreement, TFS Corporation will manage a 180-hectare Indian sandalwood plantation to be planted this year.

The US-based firm is expected to invest an estimate of $20 million, excluding bonuses to TFS. The investment could increase to another $100 million if an option is exercised to plant an extra 180 hectares per annum for the next five years to 2015.

The IMA is subject to and conditional upon the settlement of a related acquisition agreement with TFS.

Under the deal, TFS is paid an upfront payment for the purchase of the land and establishment of the plantation, annual payments for plantation management, and a performance bonus upon a hurdle rate of return being achieved by the investor.

TFS Corporation announced the investment deal last May 26.

Indian Sandalwood sits in the high return category compared to traditional hardwood and softwood products. The heartwood trades for in excess of $110,000 per tonne on average, having risen at a compounding rate of over 18 per cent per annum over the past 18 years.

(Advertorial) How to maximise CFD's trade: entry and exit with Bollinger Bands