algae biodiesel and sponge iron investment proposal peru 250million usd noe

ARKESA E.I.R.L.Phone: 51-992456967 email: [email protected]: JR. BALTAZAR CARAVEDO 157,

URB. MARISCAL CACERES, LIMA 36, PERU

EXECUTIVE RESUME FOR THE INSTALLATION OF SPONGE

IRON PLANT IN PERU, JOINTLY WITH BIODIESEL PLANT FROM

ALGAE OIL (USING CO2 GAS PRODUCED IN IRON PLANT TO

FEED THE ALGAES TO OBTAIN OIL FOR BIODIESEL)

1. WE ARE A PERUVIAN COMPANY, OUR MAIN BUSINESS IS THE PRODUCTION AND

INTERNATIONAL TRADING OF STEEL RAW MATERIALS SUCH AS BITUMINOUS COAL AND

METALLURGICAL COKE, ITS MANAGEMENT IS THE HOLDER OF SEVERAL IRON MINING

PROPERTIES IN PERU.

2. COMPANY OWNS SEVERAL IRON MINERAL DEPOSITS CONCESSION TITLES WITH MORE THAN

67,000 HECTARES OF MINERAL OF HIGH CONCENTRATION OF IRON (Fe=64%, P=0.042%),

DISTRIBUTED IN THE SEVERAL PLACES OF PERU.

3. THERE ARE ANTHRACITE COAL DEPOSITS NEAR TO THE IRON ORES CONCESSIONS (120 to 200

KMS OF DISTANCE) WITH THE QUALITY AND RESERVES ENOUGH TO DEVELOP THE SPONGE

IRON PROJECT. WITH FIXED CARBON = 76-82%, ASHES = 15-20% AND VOLATILE = 3-6%. WITH

THIS COAL IS PRODUCED THE SPONGE IRON FOR ANY STEEL INDUSTRY, AND THE PRODUCED

CO2 GAS IS USED TO INJECT IN THE ALGAE PLANT TO PRODUCE OIL, IN TURN THIS OIL IS

USED TO PRODUCE FINALLY THE BIODIESEL.

4. TO MAKE BIOFUEL (BIODIESEL) FROM ALGAE, SUNLIGHT AND A LARGE SOURCE OF CARBON

DIOXIDE CO2 ARE NEEDED. ONCE CONSTRUCTED THE GREENHOUSES FOR THE ALGAE, THE

CULTURE TAKES A MONTH AND THE HARVEST BEGINS TO THE 40 DAYS (THAT IS 10 DAYS

LATER) AND AFTER IT IS HARVESTED THERE EVERY DAY, THE 365 DAYS OF THE YEAR. A VERY

IMPORTANT THING FOR OUR CASH IS THE VALUE OF BIOMASS OR GRAZES OF ALGAES. WE

HAVE CALCULATE BELOW EXECUTIVE RESUME WITH A ALGAES BIOMASS SELLING PRICE OF

1,000 USD DOLLARS THE TON OF BIOMASS, BUT THE FAO FINISHES PUBLISHING A NEW PAPER

WHERE IT SAYS THAT THE PRICE OF REFERENCE NOW IS OF 15,000 USD DOLLARS THE TON,

USED AS FOOD FOR HUMANS, AND ALSO FOR ANIMALS, SUPERIOR IN NUTRIENTS TO THE FISH

MEAL SO THE PRICE SHOULD BE EQUAL OR BETTER.

5. OIL COST PER TON IS OF 284 USD DOLLARS AS MAXIMUM (ALGAE OIL), AND CAN BE

DECREASED UNTIL 150 USD DOLLARS DEPENDING OF THE PLACE WHERE IS LOCATED THE

PLANTS, CLIMATE, SALTS APPLIED, ETC, IT IS A MATTER OF FURTHER STUDIES TO KNOW

EXACTLY THE FINAL COST, BUT BELOW EXECUTIVE RESUME WAS MADE BASED IN THE

HIGHEST COST OF 284 USD DOLLARS.

6. ALSO, BELOW EXECUTIVE RESUME WAS MADE BASED IN THE HIGHEST SELLING PRICE

BIODIESEL OF 1,126 USD DOLLARS PER TON, BEING THAT CURRENTLY (JULY 2009) THE

PERUVIAN COMPANIES IS PURCHASING THE BIODIESEL AT CIF PRICE OF 832 USD DOLLARS

BIODIESEL AND IRON BUSINESS, PERU email [email protected], Eng. Noe Rodriguez. skype noerods 1


URB. MARISCAL CACERES, LIMA 36, PERUPER TON, BUT THE DECREASED BIODIESEL PRICE IS COMPENSATED WITH THE ELEVATION OF

ALGAE BIOMASS, AS WAS STATED IN THE ABOVE 4 PARAGRAPH.

7. INTERESTED INVESTOR WOULD BE WILLING TO PAY A DOWNPAYMENT TO ENTER IN THIS

BUSINESS, THIS DOWNPAYMENT IS DEPOSITED IN A FIDUCIARY BANK (ESCROW) JOINTLY

WITH THE INVESTMENT COMMITMENT AMOUNT, SO THE TITLES OF IRON CONCESSIONS PASS

TO THE CONSORTIUM (JOINT VENTURE 50/50), SO THE FIDUCIARY BANK IS A GUARANTEE

THAT BUSINESS IS DONE FAIRLY.

8. WE NEED A INVESTOR WILLING TO INVEST (IN SEVERAL PARTS, NO NEED TO INVEST THE

WHOLE QUANTITY AT ONCE) AN INITIAL AMOUNT OF 10 MILLIONS DOLLARS (TO MAKE THE

EXPLORATION, DIAMOND DRILLINGS, ETC), PREVIOUS TO DEVELOP THE SPONGE IRON

PROJECT, CONSIDER THAT NOW WE ARE OFFERING FOR THIS CURRENT PROJECT WITH 6

IRON CONCESSIONS IN WHICH THERE IS EXTENSIVE LAND, 5,400 HECTARES (100 KMS NEAR

TO THE SEA), WITH A MINIMUM EXISTENCE OF 300 MILLIONS TONS OF IRON ORES (HOWEVER

THE REAL QUANTITY CAN SURPASS THE 1000 OR 2000 MILLIONS TONS OF IRON ORES) EXACT

QUANTITY TO BE DETERMINED FURTHER BY THE DIAMOND DRILLINGS.

9. ALSO, WE NEED A INVESTOR WILLING TO TAKE (ACCEPT) THE 50% OF THE SHARES IN THIS

JOINT VENTURE BUSINESS, REMAINING 50% OF THE SHARES ARE FOR THE IRON

CONCESSION OWNERS. OTHER RATE AS 51/49 IS POSSIBLE (SO INVESTOR HAS THE

CONTROL) BUT WHEN CONTRACT IS MADE BY ESCROW OR FIDUCIARY BANK AGREEMENT.

10. WE HAVE ONE TECHNOLOGY TURNKEY PROVIDER OF PROVED TECH TO PRODUCE OIL FROM

ALGAE (AND AFTER TO BIODIESEL), NOW THEY HAVE A WORKING PLANT OF 100.000 TONS OF

BIODIESEL PER YEAR (FROM ALGAE OIL) TO VISIT AND REVIEW, ALSO WE HAVE THE RAW

MATERIALS AS COAL, IRON ORES, NATURAL GAS, DESERT ZONES, AND MORE IN PERU TO

PRODUCE SPONGE IRON AND OIL FROM ALGAE.

11. FIND IN THE NEXT PAGES THE APPROXIMATE INVESTMENTS NEEDED FOR THE WHOLE

PROJECT, SPONGE IRON FOR CO2 GAS, ALGAE PLANT FOR OIL, AND BIODIESEL PLANT FOR

FINAL PRODUCT:

Business Indicators: for 250 millions investment for 10 years project

NPV of Cash Flow US$ 3,276,216,273 Net Present Value

IRR 165.5% Internal Rate of Return

Profitability Index 14.10 benefit - cost ratio

Simple Payback 8.8 time returns investment back

Discounted Payback 9.5 months returns investment back

(READ IN PAGE 13, THE CASH FLOW TO CALCULATE THE TABLE BUSINESS INDICATORS)




INVESTMENT TO PRODUCE OIL 60.000 TONS PER YEAR, OIL FROM ALGAE

AND GAS ANHYDRIDE CARBONIC CO2 FROM THE SPONGE IRON PLANT

Area land: 300 hectares

OIL PLANT INVESTMENT (ALGAE CULTURE AND OIL EXTRACTION)

initial investmentitem Unit cost Quantity Total cost

GREEN HOUSE 99MTS X 10MTS

$ 19,400.00 2000 $ 38,800,000.00

TRANSPARENT NYLON ROOF $ 1.00 2520000 $ 2,520,000.00WHITE NYLON FOR POND FLOOR

$ 1.50 2376000 $ 3,564,000.00

centrifuge to dry algae $ 10,000.00 120 $ 1,200,000.00CEMENT PREMOLDED WALLS

$ 4.00 600000 $ 2,400,000.00

WATER RECIRCULATING SYST.

$ 1,000.00 4000 $ 4,000,000.00

ILUMINATION SYSTEMlamps & transformers $ 25.00 40000 $ 1,000,000.00lamp housing $ 100.00 40000 $ 4,000,000.00ilumination instalation $ 3,000.00 200 $ 600,000.00CO2 air pumps $ 198.00 2000 $ 396,000.00CO2 GENERATOR 40000 $ 0.00C02 INJECTION SYSTEM $ 500.00 2000 $ 1,000,000.00OIL EXTRACTION SYSTEM $ 300,000.00 20 $ 6,000,000.00LAND X Ha $ 20,000.00 300 $ 6,000,000.00BOILER INSTALATION $ 10,000.00 40 $ 400,000.00BOILER $ 30,000.00 40 $ 1,200,000.00HARVESTING SYSTEM $ 1,200.00 2000 $ 2,400,000.00PERIMETRAL FENCE $ 50.00 32000 $ 1,600,000.00ELECTRIC CARTS $ 6,500.00 200 $ 1,300,000.00EMPLOYEE QUARTERS $ 8,000.00 40 $ 320,000.00WATER INFRASTTRUCTURE $ 5.00 225000 $ 1,125,000.00water valves $ 10.00 2000 $ 20,000.00WATER TANKS pvc 170m3 $ 15,000.00 40 $ 600,000.00water supply and pump $ 7,000.00 40 $ 280,000.00PUMPS $ 500.00 40 $ 20,000.00START-UP MINERALS $ 6,893,370.00 1 $ 6,893,370.00OIL PIPING to bio plant $ 500,000.00 1 $ 500,000.00oil extraction infrastructure $ 50,000.00 20 $ 1,000,000.00TOTAL $ 89,138,370.00

THE TURNKEY TECH COMPANY PROVIDER CHARGES 10% FEE ROYALTIES LIFETIME,

MEANS IN ETERNUM, FOR THIS ALGAE OIL TO BIODIESEL PLANT.




Monthly costs, and Oil cost per ton

Monthly cost U$S x pond x project x day x month Energy

cost quantity quantity cost costMINERALS 1 $ 33,095.66 992,869.65ELECTRIC ENERGY CONSUMTION

Cost per kw/h kw/h x day

WATER CIRCULATION $ 0.05 4.5 4000 $ 952.94 $ 28,588.24 18,000.00CO2 air pump $ 0.05 2.6 2000 $ 275.29 $ 8,258.82 5,200.00ALGAE ILUMINATION $ 0.05 55.68 2000 $ 5,895.53 $ 176,865.88 111,360.00electric carts loading $ 0.05 0 200 $ 0.00 $ 0.00 0.00PUMPS for algae harvesting $ 0.05 3 2000 $ 317.65 $ 9,529.41 6,000.00CENTRIFUGAL WATER EXTRACTION

$ 0.05 110 120 $ 698.82 $ 20,964.71 13,200.00

OIL EXTRACTION machinery $ 0.05 280 20 $ 296.47 $ 8,894.12 5,600.00LIGHTING AND GRAL. $ 0.05 0.15 2000 $ 15.88 $ 476.47 300.00

TOTAL CONSUMPTION X DAY 159,660.0Kw/h day

BOILER COST $ 0.10 3700000 1 $ 12,333.33 $ 370,000.00CO2 GENERATION COST $ 40.00 20 40000 $ 53,333.33 $ 1,600,000.00SALARY $ 1,000.00 1 200 $ 200,000.00 $ 200,000.00ROYALTY FOR ALGAE X ton of oil

$ 20.00 1 $ 8,628.44 $ 258,853.32

TOTAL $ 315,843.35 $ 3,675,300.62

Oil cost per ton = $ 283.97Oil cost = 283.97 USD dollars per ton (can be decreased further)

BIODIESEL PLANT INVESTMENT TO PRODUCE 60.000 TONS PER YEAR

Item Units INCIDENCE BUDGETMeasure AJUSTED

Dollars5000 oil and biodiesel tanks 4 19.25% 5,089,562.00Electric energy instalation 1 7.32% 1,935,482.00automatization * 1 7.20% 1,903,270.00350 stainless steel tanks for metanol y metila. 3 6.23% 1,647,096.00tanks 25 reactors * 6 5.27% 1,394,400.00valves and measurement instruments 1 5.19% 1,372,000.00pavements 45000 4.43% 1,170,000.00centrifuges 4 4.69% 1,239,040.00tanks for 1000 glicerol 2 3.56% 940,952.00tanks 300 decanters for resins * 4 3.49% 923,870.00Detailed ingineering plans * 1 4.54% 1,200,000.00civil constructions (galpon) 1 2.96% 781,656.00ingineering (plant installation) * 1 2.93% 774,194.00bases 55 2.57% 679,308.00plumbing * 1 2.20% 580,645.16Soil movements 45000 1.65% 435,483.88Water instalation 1 1.22% 322,580.64laboratory (measurement devices) 1 1.85% 490,322.58Land (4,5 hectares) 4.5 0.99% 261,290.32tanks 35 stainless steel for metoxide * 2 0.96% 254,838.00instalation of fire proof net 1 0.85% 225,806.46centrifuges pumps* 1 1.36% 360,000.00tank 50 stainless steel recovery of Metanol * 1 0.66% 175,482.00Motor electropump jockey (fire proof) 1 0.53% 140,000.00offices and laboratory 1 0.52% 137,778.00guard 1 0.32% 83,730.00cerco perimetral 600 4.54% 1,200,000.00tanks 25 jacketed to heat with Oil * 2 0.29% 77,419.36boilers 2 0.57% 149,920.00pumps capacity 10000m3 / in 48hours 4 1.09% 288,000.00



URB. MARISCAL CACERES, LIMA 36, PERUscales 2 0.39% 104,232.00Soil studies 1 0.06% 16,258.00environmental impact studies 1 0.05% 13,484.00software y hardware * 1 0.23% 60,000.00electric energy instalation blueprints * 1 0.00% 0.00Antifire instalation blueprints * 1 0.00% 0.00environmental impact studies (preliminary) 1 0.04% 10,400.00TOTALS 100% 26,438,500.40

INVESTMENT FOR SPONGE IRON PLANT TO PRODUCE THE CO2

GAS FOR THE ALGAE PLANT

Information regarding the iron mining concessions:

1. WE HAVE OBTAINED AGREEMENTS OF SUPERFICIAL LAND USE, WITH THE COMMUNITIES

NEAR TO OUR IRON CONCESSIONS.

2. IN ORDER TO OBTAIN A SUITABLE APPROACH WITH THE COMMUNITIES, WE HAVE PUT IN

PRACTICE A TEST OF ECOLOGICAL FERTILIZATION IN THE COMMUNITIES NAMED IN MAIZE AND

POTATO, WHOSE RESULTS TO THE DATE THEY HAVE BEEN DESCRIBED BY THE FARMERS OF

“MIRACLE IN THE ANDES” SO THAT ALTHOUGH NOT YET HAS BEEN HARVESTED, THE VIGOR,

THE HEIGHT, THE DIAMETER OF STEMS, HAVE DUPLICATED THE TRADITIONAL REGISTRIES

AND IT IS HOPED TO SURPASS 3 TIMONTH THE YIELD IN HARVESTS. ADDITIONALLY, WE ARE

ON THE VERGE OF FINISHING CONSTRUCTING A HYDRAULIC METAL WHEEL THAT IS TO

PRODUCE ELECTRICAL AND MECHANICAL ENERGY FOR THE COMMUNITY OF CHUMBIVILCAS

IN THE CUSCO.

3. THE GEOLOGIC STUDIES OF OUR COMPANY SHOW A 300 MILLIONS OF METRIC TONS OF

MAGNETOMETRIC RESERVES OF IRON ORES (IN OTHER CONCESSION WE HAVE RESERVES AT

SIGHT), AND MORE THAN 2000 MILLIONS OF METRIC TONS OF PROBABLE RESERVES IN THE

UNDERGROUND, WE HAVE DEVELOPED AN AIR STUDY OF MAGNETOMETRY IN ALL THE ZONE

OF THE PROJECTS WERE ASKED, FOR TO THE STATE ON THE BASIS OF THE MAGNETIC

ANOMALIES, THAT THE INDICATED STUDY PRESENTED. FURTHER IT IS NEEDED TO INVEST IN

DIAMOND DRILLINGS.

ALSO WERE MADE NUMEROUS TRENCHES AND SAMPLINGS OF THE MINERALIZED BODIES AT

SIGHT, THE WHICH PRESENT THE NEXT AVERAGE ANALISYS AS FOLLOWS:

% Fe % S % Cu % SiO2 %P % As

64.20

64.96

0.012

0.023

0.031

0.025

2.00

5.06

0.034

0.042

NIL

0.08

4. IN RELATION TO THE BODIES MINERALIZED UNDERNEATH THE SURFACE AND OBSERVED IN

THE AIR MAGNETOMETRIC STUDY, ONE SETTLES DOWN THAT THE POTENTIAL RESERVES CAN

SURPASS A MINIMUM OF 4000 MILLIONS TONS.

5. THERE ARE TWO ANTHRACITE COAL DEPOSITS NEAR TO THE IRON ORES CONCESSIONS (120

to 200 KMS OF DISTANCE) WITH THE QUALITY AND RESERVES ENOUGH TO DEVELOP THE



URB. MARISCAL CACERES, LIMA 36, PERUSPONGE IRON PROJECT. WITH FIXED CARBON = 76-82%, ASHES = 15-20% AND VOLATILE = 3-

6%.

6. WITH THE HIGH DISTANCE OF SOUTH AMERICA TO THE ASIAN IRON MARKETS AND WITH THE

CHANGING PRICES OF PETROLEUM THEN THE FREIGHT COSTS OF MINERALS IS PART OF THE

COMPETITIVE VISION TO DIMINISH SUCH HIGH FREIGHT COSTS. AND THE SOLUTION IS TO

MANUFACTURE SPONGE IRON WHERE IT IS CONDENSED IN A LOW VOLUME OF 1 TON OF

SPONGE IRON THE WEIGHT OF 1.7 TONS OF IRON ORES PLUS THE 0.6 TONS OF ANTRACITE

COAL (2.3 TONS RAW MATERIALS INTO 1.0 TON OF SPONGE IRON). ALSO THE PRICE OF 1 TON

OF SPONGE IRON IS 4 TIMONTH THE PRICE OF RAW IRON ORES. CURRENT FOB PRICE OF 1

TON OF SPONGE IRON IS 280 DOLLARS VERSUS THE 70 DOLLARS OF 1 TON OF RAW IRON ORE

(FOB PRICE), ALSO CONSIDER THAT THE FREIGHT FROM AMERICA TO ASIA IS OF 30 DOLLARS

PER TON. SO IN CASE TO SEND RAW IRON ORES THE FREIGHT HAS HALF VALUE THAN THE

ORE ITSELF, THAT DOES NOT HAPPEN IF WE SELL AND EMBARK SPONGE IRON.

7. STAGE 1 PLAN IS TO INSTALL A TURNKEY PLANT WITH A CAPACITY OF 500 THOUSANDS TONS

PER YEAR OF SPONGE IRON. CONNECTED TO THE BIODIESEL PLANT PLANT WITH A CAPACITY

OF 60 THOUSANDS TONS PER YEAR OF BIODIESEL, FOR WHICH THE IRON ORE AND

ANTRACITE COAL RESERVES WOULD BE ENOUGH FOR 50 YEARS OF SPONGE IRON

PRODUCTION. THERE ARE ENOUGH ROADS TO TRANSPORT BY TRUCKS THE PRODUCTS

UNTIL THE SEA PORT (9 HOURS OF JOURNEY), AND THE CURRENT INTERNATIONAL PRICE OF

SPONGE IRON, LET TO PAY THE TRANSPORT COSTS BY TRUCKS, HOWEVER THERE ARE FIRM

PLANS FOR THE WHICH THE NEXT YEARS THE PERUVIAN GOVERNMENT (WITH THE HELP OF

OVERSEAS INVESTORS) WILL PUSH THE CONSTRUCTION OF A RAILWAY FROM APURIMAC AND

CUSCO TO THE COAST, AND A MODERN PORT ALSO.

8. THE TENTATIVE COSTS OF OPERATION, TRANSPORT AND EMBARK FOR THE SPONGE IRON

(CRUDE STEEL, DRI) PRODUCTION WOULD BE THE FOLLOWING:

- OPERATION MINE AND PLANT OF CRUSHING OF 1.700 kgs. OF IRON MINERAL US$ 9.00

- OPERATION MINE, TRANSPORT, COSTS FOR 600 KGS. OF ANTHRACITE US$ 25.00.

- OPERATIONN OF REDUCTION (DRI), ELECTRICAL ENERGY, US$ 40.00

- TERRESTRIAL TRANSPORT OF THE (DRI) WITH OWN VEHICLES US$ 40.00

- BOARDING COST US$ 6.00

- TOTAL COST (FOB) X METRIC TON US$ 120.00

9. IN THE MATTER OF THE PRICE OF IRON SPONGE DRI IN THE CURRENT INTERNATIONAL

MARKET AT 2009, IT IS REGISTERED IN US$ 280,00 BY METRIC TON, THUS THE GROSS MARGIN

OF UTILITY BY METRIC TON OF SPONGE IRON, WOULD BE THE FOLLOWING ONE:

LOW MIDDLE

HIGH

PRICE US$/TM 260.00 280.00 300.00

TOTAL COST (FOB) US$/TM 120.00 120.00 120.00

140.00 160.00 180.00



URB. MARISCAL CACERES, LIMA 36, PERU10. CONSIDERS, THE INSTALLATION OF 2 SPONGE IRON PLANTS (TWO MODULES OF 250.000 TONS

PER YEAR, EACH MODULE) WITH TOTAL CAPACITY OF 0.5 MILLIONS METRIC TON, FOR WHICH

THE FOLLOWING INVESTMENT IS CONSIDERED:

TOTAL INVESTMENT FOR SPONGE IRON PLANT OF 500.000 METRIC TON

OF CAPACITY PER YEAR

(PRODUCE 500.000 METRIC TON OF GAS CO2 PER YEAR FOR THE OIL AND BIODIESEL PLANT)

IT IS NEEDED TO MAKE a STUDY TECHNICAL AND A MORE EXACT ECONOMIC STUDY,

NEVERTHELESS THE ESTEEMED INVESTMENT BUDGET IS THE FOLLOWING:

- PREOPERATIVE COSTS (SCOOPING) US$ 1’000,000.-

- TURNKEY COMPLETE 4 PLANTS (FROM CHINA) US$ 62’000,000.-

- TRANSPORT EQUIPMENT US$ 45’000,000.-

- GENERAL FACILITIES, OTHER EQUIPMENTS AND MATERIALS US$ 12’000,000.-

SUB-TOTAL US$120’000,000.-

- WORKING CAPITAL (90 DAYS) US$ 15’300,000.-

(85,000 TM X 3 X US$ 120)

TOTAL INVESTMENT US$ 135’300,000.-

US$ 135.3 millions dollars

THE PROFITS PLAN PER YEAR, TAKING THE LOWER PRICES IN THE INTERNATIONAL MARKET

IS AS FOLLOWS :

INCOME PER YEAR:

500,000 TM X US$ 350 X TM US$ 175’000,000.-

EXPENSES PER YEAR:

500,000 TM X US$ 120.00 X TM US$ 60’000,000.-

GROSS PROFIT PER YEAR US$ 115’000,000.-

NOTE: IT WAS NOT CONSIDERED THE FINANCIAL COSTS, THE WHICH WILL BE PROJECTED TO 10

YEARS OF OPERATION WITH 2 YEARS OF GRACE.

11. AS IT HAS BEEN ANTICIPATED, THE TERM OF AMORTIZATION OF THE CREDIT WOULD BE OF 10

YEARS, WITH 2 YEARS OF GRACE, FOR WHICH THE FOLLOWING PICTURE APPEARS:

LUMP SUM OF GROSS UTILITIES IN 10 YEARS US$ 700 MILLONS

AMOUNT OF THE CREDIT US$ 135.3 MILLONS

CONSIDERED OF THE SERVICE OF THE CREDIT US$ 41 MILLONS



URB. MARISCAL CACERES, LIMA 36, PERUIN 10 YEARS WHEN REFUTING

TOTAL US$ 176.3 MILLONS

12. IT IS ESTEEMED THAT THE GROSS UTILITIES, AFTER THE PAYMENT OF THE FINANCIAL

SERVICE AND BEFORE THE PAYMENT OF TAXES IN 10 YEARS OF OPERATION WOULD BE

SUPERIOR TO US$ 1000 MILLION. IN THE MATTER OF INFRASTRUCTURE THE REFERRED

PROJECT, DOES NOT REQUIRE TO INSTALL RAILROAD, NOR TO CONSTRUCT PORTS OF

EMBARKATION, BECAUSE THE EXISTING HIGHWAYS AND PORTS WOULD BE USED AND

ENOUGH, UNTIL PREFERABLY REALISING THE BOARDINGS BY THE PORT OF MATARANI -

PERU, WHICH IS A NON GREATER DISTANCE OF 560 KM, OF THE LOCALITY WHERE THE PLANT

OF DIRECT REDUCTION WOULD BE LOCATED.

13. THE SPONGE IRON EXPORTS (CRUDE STEEL), WOULD BE DIRECTED MAINLY TO NATIONAL

MARKETS AND OTHERS OF SOUTH AMERICA, LIKE ARGENTINA, COLOMBIA, CHILE AND THE

USA MAINLY, BECAUSE THESE MARKETS CONSUME VOLUMONTH VERY SUPERIORS AS A

WHOLE TO THE CAPACITY OF PRODUCTION OF SPONGE IRON, FIXED FOR THE PRESENT

PROJECT.

14. IN RELATION TO THE MARKET OF CHINA, IT IS KNOWN THAT 75% OF THE STEEL AND IRON

MINERAL IMPORTS (CAST IRON AND SPONGE IRON) ARE DIRECTED TO SATISFY THE INTERNAL

DEMAND OF THAT COUNTRY AND A 25% FOR THE DEMAND OF PRODUCT MANUFACTURE FOR

EXPORT, THEREFORE HAVING ITSELF EVEN DECLARED THE FINANCIAL CRISIS TO MARCH

2009, CHINA, CONTINUOUS NEVERTHELESS INCREASING ITS IMPORTS OF IRON AND STEEL,

WITH REFERENCE TO THE PRESENT PROJECT, WITH THE INSTALLATION OF LATER PLANTS OF

SPONGE IRON AND MAJOR PRODUCTION, IT IS ESTEEMED THAT THE MARKET OF CHINA, WILL

BE ALWAYS IMPORTANT, BECAUSE EVERY YEAR THAT COMONTH, THEIR NEEDS WILL BE

MAJORS.




CONCLUSION DATA

Biodiesel profits. Profit average in 1 year of operation USD 88,000,000 Oil cost manufacture per ton (1.5USD gallon) USD 283.97 ROI or TIR 58.14% Price biodiesel for sale per ton (3.0USD gallon) USD 555.00 Production of biodiesel per month 5000 tons Production of algae biomas per month 5885 tons

Sponge iron profits. Profit average in 1 year of operation USD 115,000,000

Sum of profits. Biodiesel profits. USD 88,000,000 Sponge iron profits. USD 115,000,000

Total profits per year average USD 203,000,000

TOTAL INVESTMENTS SPONGE IRON PLANT (CO2 GAS PRODUCER) USD 135’300,000 ALGAE AND OIL INVESTMENT USD 89’138,370 BIODIESEL PLANT INVESTMENT USD 26’438,500

TOTAL USD 250’876,870

TOTAL INVESTMENT : USD 250 millions dollars

TOTAL PROFITS PER YEAR AVERAGE : USD 203 millions dollars

If interested contact us :

Regards.

Eng. Noe Rodriguez

Company: ARKESA

Email: [email protected]

Phone Peru: 511-392-2233

Cell: 511-992456967

USA Fax: 1-928-543-4830

Skype.com ID is: noerods



URB. MARISCAL CACERES, LIMA 36, PERURESUMED DATA OF ALGAE PLANT AND BIODIESEL PLANT

Ref. Number

Description value

1 Biodiesel selling price per ton, USD 1.126 2 Glycerol selling price per ton , USD 400 3 Oil price, litre , USD 0.263 4 Alcohol price, litre , USD 0.961 5 Catalyst price per kg , USD 0.564 6 Alcohol quantity 1,941,399.90 7 Oil quantity 12,942,666.00 8 Catalyzer quantity 647,133.30 9 Glycerol quantity 1,035,413.28 10 Soybean oil price tn, per litre 0.263 11 Exchange rate 1 U$S in Peruvian soles 3.000 12 Oil price, ton in U$S 283.97 13 Biodiesel price, U$S 1.000 14 Catalyzation calculation: 3,5 g/litre 647,133.30 15 Alcohol calculation: 15% 1,941,399.90 16 Initial investment 14,705,882 17 Bank interest rate, loan 0.00 18 Infrastructure of biodiesel plant investment 26,438,500 19 Sales commissions 0.000 20 % of glicerol obtained 8.00 21 Professional Fees, external 11,765 22 Biochemist, fees 1,471 23 Director, fees 4,412 24 Workers salaries, average 882 25 Janitors, salaries 441 26 Admin. Salaries 735 27 Office boy 441 28 Collector 735 29 Green bonds U$ 5 ($15) X 1000 litres 9.10 30 Janitors, quantity 2 31 Workers, quantity 19 32 Percentage export retention 20.00 33 Retentions, recuperation 2.50 34 Tax on earnings % 35.00 35 Electricity 96,247.06 36 Steam 39,977.99 37 Freight Oil Ref. to plant per m³ 0.00 38 Freight from plant to port per m³ 0.00 39 Loading, off-loading and tankage, price 0.00 40 Catalyzer percentage 5.000 41 Alcohol percentage 15.00 42 Freight Oil Ref. to plant per m³U$S 0.00 43 Freight from plant to port per m³U$S 0.00 44 Gross income Tax 0.00




45 Value Added Tax 0.00

46 Soybean oil, price per ton before taxes 283.97 47 Bank admin. Rate and debits tax 2.50 48 Tankage price, per ton in U$S 0.00 49 Biodiesel Plant value in U$S 26,438,500.40 50 Inflation rate, projected 1.02 51 Insurance on Capital, rate 50,497.41 52 Maintenance rate on capital 0.00144 53 Admin. Miscellaneous initial expenses 441 54 Security, initial expenses 5,882 55 Commercial expenses, initial 2,941 56 Rents paid 4,412 57 construction and lab per1000mts³ 0 58 Oil tanks, cubic mts as required 0 59 Tanks per 1000 m³ 0 60 cost of plant every 1.000 mts 2,042,740 61 cost construction and lab per 1.000 mts. 0 62 Electricity 60,600.00 63 Power cost of per KW/hour 0.05 64 Water consumption per ton 6,472.63 65 cost water for steam (una tn) 0.21 66 KW/hour per ton 242.40 67 Water, quantity per m³ (ton) 500.10 68 Preliminary oil value 283.97 69 New oil value 283.97 70 Increase 1.00000 71 IGV tax 10,5% 0.105 72 IGV tax 21% 0.21 73 IGV tax 27% 0.27 74 Recuperation 655,500.01 75 % Insurance on construction 0.0045 76 Liability insurance 0.0024 77 Insurance for civil resp during operation 4,235.00 78 insurance for civil resp during contruct. 4,235.00 79 Insurance on transport 14,828.43 80 Life Insurance & ART 15.09 81 Base price of Biodiesel BD 1.000 82 Exchange rate euro in AR pesos 4.59 83 resins quote in USD $ per Kg 14.00 84 resins pero Kg at 0,1% 12,942.67 85 resins percentage 0,1% 0.0010 86 USD $ exchange rate for conversion 3.00 87 algae ponds and biodiesel plant (sum) 89,138,370.00 88 real cost of biodiesel plant 26,438,500.40 89 external employees 10.00 90 oil security coeficient 1.00




91 conversion coef per 1000 tons 60.674

92 percentage of biodiesel to bonds 25.00 93 green bonds per ton 2.40 94 Insurance on construction 47,985.88 95 other insurance operating 19,060.48 96 piping to port 1,000,000 97 pond depth 0.50 98 oil yeald per kg of dry algae 30.00%99 gliycerol price in USD $ per ton 400.00

100 price for algae cake per ton USD $ 1,000.00 101 algae grs per liter 1.50 102 salts security coeficient 1.00 103 Increment in cost of plant of biodiesel 2.00




Net Cash Flow Year Year Year Year Year Year Year

10 YEARS 0 1 2 3 4 5 6 7 8 9 10 Totals

Net Capital Costs

Capital Project Sponge Iron and algae oil to biodiesel in Peru

$ (250,000,000) $ - $ - $ - $ - $ - $ -

$ (250,000,000)

(not included downpayment)

Total Capital $ (250,000,000) $ - $ - $ - $ - $ - $ - $ (250,000,000)

Operating and Maintenance Costs

Expenditures of sponge iron make $

(60,000,000) $

(60,000,000) $

(60,000,000) $

(60,000,000) $

(60,000,000) $

(60,000,000) $

(60,000,000) $

(60,000,000) $

(60,000,000) $

(60,000,000) $ (600,000,000)

Port operations (500.000 tons year) $

(3,500,000) $

(3,500,000) $

(3,500,000) $

(3,500,000) $

(3,500,000) $

(3,500,000) $

(3,500,000) $

(3,500,000) $

(3,500,000) $

(3,500,000) $ (35,000,000)

Expenditures of algae oil, biodiesel $ 163,861,478 $ 107,853,435 $ 108,004,699 $ 108,202,235 $ 108,446,677 $ 108,446,677 $ 108,446,677 $ 108,446,677 $ 108,446,677 $ 108,446,677 $ 1,138,601,909

Escalation of Costs $ 2,007,230 $ 1,791,879 $ 2,724,044 $ 3,684,902 $ 4,678,086 $ 5,670,582 $ 6,682,927 $ 7,715,519 $ 8,768,763 $

(13,906,146) $ 29,817,784

Total Costs, Expenditures $ - $ 102,368,708 $ 46,145,314 $ 47,228,743 $ 48,387,137 $ 49,624,763 $ 50,617,259 $ 51,629,604 $ 52,662,196 $ 53,715,440 $ 31,040,531 $ 533,419,693

Revenue and Operating Benefits

Sales sponge iron (350USD ton) $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 175,000,000 $ 1,750,000,000

Algae oil, biodiesel, glycerin sales $ 180,438,959 $ 476,360,767 $ 474,394,267 $ 474,394,267 $ 474,394,267 $ 474,394,267 $ 474,394,267 $ 474,394,267 $ 474,394,267 $ 474,394,267 $ 4,451,953,862

Escalation of Benefits $ 7,819,657 $ 28,975,132 $ 43,809,857 $ 59,060,348 $ 74,646,349 $ 90,575,243 $ 106,854,572 $ 123,492,046 $ 140,495,545 $ 157,873,121 $ 833,601,870

Total Benefits and Revenue $ - $ 363,258,616 $ 680,335,899 $ 693,204,124 $ 708,454,615 $ 724,040,616 $ 739,969,510 $ 756,248,839 $ 772,886,313 $ 789,889,812 $ 807,267,388 $ 7,035,555,732

Cash Flow Before Taxes $ (250,000,000) $ 465,627,324 $ 726,481,213 $ 740,432,866 $ 756,841,751 $ 773,665,379 $ 790,586,768 $ 807,878,443 $ 825,548,509 $ 843,605,252 $ 838,307,919 $ 7,318,975,425

Income Tax Calculation

Depreciation Expense $ (50,000,000)

$ (80,000,000)

$ (48,000,000)

$ (28,800,000)

$ (28,800,000)

$ (14,400,000) $ - $ - $ - $ -

$ (250,000,000)

Operating Cost $ 102,368,708 $ 46,145,314 $ 47,228,743 $ 48,387,137 $ 49,624,763 $ 50,617,259 $ 51,629,604 $ 52,662,196 $ 53,715,440 $ 31,040,531 $ 533,419,693

Operating Benefits $ 363,258,616 $ 680,335,899 $ 693,204,124 $ 708,454,615 $ 724,040,616 $ 739,969,510 $ 756,248,839 $ 772,886,313 $ 789,889,812 $ 807,267,388 $ 7,035,555,732

Net Income Taxes $ - $ (124,688,197) $ (193,944,364) $ (207,729,860) $ (218,412,525) $ (223,459,614) $ (232,856,030) $ (242,363,533) $ (247,664,553) $ (253,081,576) $ (251,492,376) $ (2,195,692,627)

Cash Flow After Taxes $ (250,000,000) $ 340,939,127 $ 532,536,849 $ 532,703,007 $ 538,429,226 $ 550,205,766 $ 557,730,738 $ 565,514,910 $ 577,883,956 $ 590,523,676 $ 586,815,544 $ 5,123,282,797



URB. MARISCAL CACERES, LIMA 36, PERUDiscounted Cash Flow (After Tax)

$ (250,000,000) $ 315,684,376 $ 456,564,514 $ 422,876,821 $ 395,761,555 $ 374,460,799 $ 351,464,971 $ 329,972,518 $ 312,212,720 $ 295,408,859 $ 271,809,138 $ 3,276,216,273

Business Indicators: for 250 millions investment for 10 years project

NPV of Cash Flow US$ 3,276,216,273 Net Present Value

IRR 165.5% Internal Rate of Return

Profitability Index 14.10 benefit - cost ratio

Simple Payback 8.8 time returns investment back

Discounted Payback 9.5 months returns investment back




CASH FLOW FOR THE BIODIESEL BUSINESS FOR THE YEAR FIVE (as example only)

Main Account Item Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Totals

Initial Balance 982,578,562

1,013,078,056

1,043,575,728

1,074,071,539

1,104,565,454

1,135,057,435

1,165,515,399

1,196,028,293

1,226,539,160

1,257,047,959

1,287,554,649

1,318,059,187

1,348,526,152

Income Sales 12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

155,311,992

Initial investment 1

Collection from Sales 12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

12,942,666

155,311,992

2

Exports 323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

3,882,800

3

Other ( Green Bonds) 70,667

70,667

70,667

70,667

70,667

70,667

70,667

70,667

70,667

70,667

70,667

70,667

848,003

4

Glicerol 310,624

310,624

310,624

310,624

310,624

310,624

310,624

310,624

310,624

310,624

310,624

310,624

3,727,488

5

algae cake 25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

25,885,332

310,623,984

6

Value Added Tax Recup.

-

-

-

-

-

-

-

-

-

-

-

-

-

Total Income 39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

39,532,856

474,394,267

Total Available 1,022,111,418

1,052,610,912

1,083,108,583

1,113,604,395

1,144,098,310

1,174,590,290

1,205,048,254

1,235,561,149

1,266,072,016

1,296,580,815

1,327,087,504

1,357,592,042

1,822,920,419

Expediture Operative

10

Salaries 39,743

40,538

41,349

42,176

43,019

65,819

43,879

44,757

45,652

46,565

47,497

72,670

573,664

11

Social Charges 13,115

13,377

13,645

13,918

14,196

21,720

14,480

14,770

15,065

15,367

15,674

23,981

189,309

12

Raw Material - Ethyl Alcohol

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

1,865,457

22,385,483

13 Oil 3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

3,403,056

40,836,674

14

Catalyzers 365,031

365,031

365,031

365,031

365,031

365,031

365,031

365,031

365,031

365,031

365,031

365,031

4,380,369




15 Electricity 9

6,247 96

,247 96

,247 96

,247 9

6,247 9

6,247 9

6,247 9

6,247 9

6,247 9

6,247 9

6,247 96

,247 1,15

4,965

16 Steam 3

9,978 39

,978 39

,978 39

,978 3

9,978 3

9,978 3

9,978 3

9,978 3

9,978 3

9,978 3

9,978 39

,978 47

9,736

17 Cooling water

1,275 1

,275 1

,275 1

,275

1,275

1,275

1,275

1,275

1,275

1,275

1,275 1

,275 1

5,294

18 Maiantenance 3

8,071 38

,071 38

,071 38

,071 3

8,071 3

8,071 3

8,071 3

8,071 3

8,071 3

8,071 3

8,071 38

,071 45

6,857

19 Amortization of plant

20

Insurance 23,619

23,619

23,619

23,619

23,619

23,619

141,712

21

Bank Administration rate

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

323,567

3,882,800

22

Fees 10,544

10,755

10,970

11,190

11,414

11,642

11,875

12,112

12,354

12,601

12,854

13,111

141,422

181,197

181,197

181,197

181,197

181,197

181,197

181,197

181,197

181,197

181,197

181,197

181,197

2,174,368

Non Operative

30

Rents and Services 4,412

4,412

4,412

4,412

4,412

4,412

4,412

4,412

4,412

4,412

4,412

4,412

52,941

31

Administration Salaries

3,900

3,978

4,057

4,138

4,221

6,459

4,306

4,392

4,480

4,569

4,661

7,131

56,291

32

Social Charges Admin.

1,287

1,313

1,339

1,366

1,393

2,131

1,421

1,449

1,478

1,508

1,538

2,353

18,576

33

Other Admin. Expenses

1,054

1,076

1,097

1,119

1,141

1,164

1,187

1,211

1,235

1,260

1,285

1,311

14,142

34

Professional Fees 11,765

11,765

11,765

11,765

11,765

11,765

11,765

11,765

11,765

11,765

11,765

11,765

141,176

35

Fixed Sales salaries -

36

Sales Commissions -

-

-

-

-

-

-

-

-

-

-

-

-

37

Social Charges Sales -

-

-

-

-

-

-

-

-

-

-

-

-

38

Other Commercial Expenses

7,170

7,314

7,460

7,609

7,761

7,916

8,075

8,236

8,401

8,569

8,740

8,915

96,167

39

Gross Revenue Tax -

-

-

-

-

-

-

-

-

-

-

-

-

40

Security 14,340

14,627

14,920

15,218

15,522

15,833

16,150

16,473

16,802

17,138

17,481

17,830

192,334

41

Freight Oil ref. to plant

-

-

-

-

-

-

-

-

-

-

-

-



URB. MARISCAL CACERES, LIMA 36, PERU-

42

Loading, Off-Loading & Tankage

-

-

-

-

-

-

-

-

-

-

-

-

-

43

Freight to Port -

-

-

-

-

-

-

-

-

-

-

-

-

44

Export Charges (Retentions)

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

2,588,533

31,062,398

45

Tax on earnings

46 a 51 Infrastructure 52 Investments in Plant

-

Total Expediture 9,033,361

9,035,184

9,037,044

9,038,941

9,040,875

9,074,892

9,019,961

9,021,989

9,024,057

9,026,166

9,028,317

9,065,890

108,446,677

Net Monthly 30,499,494

30,497,671

30,495,812

30,493,915

30,491,980

30,457,964

30,512,894

30,510,867

30,508,799

30,506,690

30,504,538

30,466,965

365,947,590

Current Cash Position 1,013,078,056

1,043,575,728

1,074,071,539

1,104,565,454

1,135,057,435

1,165,515,399

1,196,028,293

1,226,539,160

1,257,047,959

1,287,554,649

1,318,059,187

1,348,526,152

1,714,473,742

53 Interest on Capital -

-

-

Final Cash Position 1,013,078,056

1,043,575,728

1,074,071,539

1,104,565,454

1,135,057,435

1,165,515,399

1,196,028,293

1,226,539,160

1,257,047,959

1,287,554,649

1,318,059,187

1,348,526,152

1,220,358,941

If interested, contact me:



URB. MARISCAL CACERES, LIMA 36, PERURegards.

Eng. Noe Rodriguez (authorized agent)

Company: ARKESA

Email: [email protected]

Phone: 511-392-2233

Cell: 51-992456967

USA Fax: 1-928-543-4830

Skype.com ID is: noerods


algae biodiesel and sponge iron investment proposal peru 250million usd noe

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