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Amazon Mining Holding


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  • 1. AMZ : TSX-V Innovative Potash Fertilizer for Brazil’s Growing Market Edition VAMZ : TSX-V
  • 2. DisclaimerThis presentation contains certain “forward looking statements”, which include but is not limited to,statements with respect to the future financial or operating performance of Amazon Mining Holding Plc (the“Company”), its subsidiaries and its projects, statements regarding use of proceeds, exploration prospects,identification of mineral reserves, costs of and capital for exploration projects, exploration expenditures,timing of future exploration and permitting, requirements for additional capital, government regulations ofmining operations, environmental risks, reclamation expenses, title disputes or claims, and limitations ofinsurance coverage. Forward looking statements can generally be identified by the use of words such as“plans”, “expects”, or “does not expect” or “is expected”, “anticipates” or “does not anticipate”, or “believes”,“intends”, “forecasts”, “budget”, “scheduled”, “estimates” or variations of such words or phrases or state thatcertain actions, event, or results “may”, “could”, “would”, “might”, or “will be taken”, “occur” or “beachieved”. Forward looking statements involve known and unknown risks, uncertainties and other factorswhich may cause the actual results, performance or achievements of the Company to be materially differentfrom any future results, performance or achievements expressed or implied by said statements. There can beno assurances that forward-looking statements will prove to be accurate, as actual results and future eventscould differ materially from those anticipated in said statements. Accordingly, readers should not placeundue reliance on forward-looking statements.AMZ : TSX-V 2
  • 3. AMZ : TSX-V• Listed in the Toronto Stock Exchange (AMZ : TSX-V) • 31,899,304 shares outstanding • 34,949,990 fully diluted shares • ~C$18m cash available• Owns high grade, open pit-able, Potash deposit • 105.1Mt @ 10.3% K2O of Potash inferred resources • 15 Bt of geological potential• Location of Cerrado Verde • 200 km from Brazil’s largest fertilizer distribution district • 300 km radius from 30% of local Potash demand (approx $1 billion annually)• Preliminary Economic Assessment results: • Estimated Capex: US$196.8m • Estimated Opex: US$41.80/t • Estimated Potash production: 2013 AMZ : TSX-V 3
  • 4. AMZ : TSX-VShares Issued 31,969,970 Share Price $10.00 0.9Options 2,912,135 $9.00 0.8Warrants 208,686 $8.00 0.7 $7.00Diluted 35,090,791 0.6 $6.00 0.552 week: Hi/Lo C$9.25/C$0.93 $5.00 0.43-month daily average volume: 110,406 $4.00 0.3Market Cap (at $8.00) C$256 million $3.00 0.2 $2.00Cash Position ~C$17 million $1.00 0.1Debt $0 $0.00 0 Feb-10 May-10 Aug-10 Nov-10 Feb-11 AMZ : TSX-V 4
  • 5. ManagementCristiano Veloso President, CEO• 10 years experience; Brazilian entrepreneur and founder of Amazon Mining; ex Banco do Brasil S/A, CEMIG; LL.M International Business Law (UEA, UK), Law (UFMG, Brazil) & Business Management (ETFG/MG, Brazil)Maurício Sampaio Vice President Operations• 30 years experience; ex President of Brazilian Agribusiness Association; Operations and Marketing Director for Bunge Fertilizantes, largest fertilizer distributor in Brazil; Operations Director for Fertiza (acquired by Mosaic/Cargill); Agribusiness advisor to Accenture and CJ Company; Marketing Consultant for Tortuga Cia Zootécnica Agrária; MBA in Agribusiness (USP, Brazil)Pedro Ladeira Vice President Engineering• 17 years experience; ex Operations Director at Cementos Minetti; Process and Production Manager for Holcim Brazil; Manufacturing Engineer at Rhodia-Ster; MBA in Business Administration (Fundação Dom Cabral, BH); B.A.Sc., Chemical Engineering (UFMG, MG). Completing a Masters in Technical Co-Processing, Chemical Engineering (UFMG, MG)Jed Richardson Vice President Corporate Development• 10 years experience; ex Mining Analyst with Sprott/Cormark Securities and RBC Capital Markets, Mining engineer with Alcan Aluminium; B.A.Sc., Mining Engineering (University of Toronto, Canada)Ysao Munemassa Exploration Manager• 41 years experience; ex BP Minerals, VALE, Union Carbide, INCO, Teck Cominco, Newmont Gold; Geologist (USP, Brazil)Dr Derek Fray Metallurgical Consultant• 45 years experience; University of Cambridge Professor & Director of Research, Chairman of Royal Society of Chemistry; Committee member of Royal Academy of Engineering, Institute of Materials, Minerals & Mining; PhD (London University), M.A. (Cambridge University) AMZ : TSX-V 5
  • 6. Independent DirectorsPeter Gundy Chairman• MSc Economics (London School of Economics, UK), LL.B. (McGill University, Canada), B.A. (University of Western, Canada); Former appointments include; Chairman of Neo Materials Technologies Inc. (1992-2008); Vice President of Brascan Inc; Executive Vice President, Finance of Potash Corporation of Saskatchewan Limited and Chairman of Renaissance Securities Inc. Currently co-proprietor of Veritprop Ltd. In Toronto.Dr Getulio Lamartine de Paula Fonseca• B.Sc., Economy (Uni. Federal de Minas Gerais, Brazil); Brazilian Deputy Minister of Environment (1994); Former appointments include; General Director National Department of Power & Water Supply; Executive-Secretary (Industrial Development Council) Industry & Commerce Ministry; Served as a member of the advisory boards of Vallourec & Mannesmann, Siderbrás, Usiminas Mecânica, CPRM & Ferbasa; Acted as a consultant to Klabin S/A, Abrafe, Bank of Montreal, Samarco (CVRD/BHP), KLM Aerocarto, Alcoa, Cataguazes-Leopoldina, Odebrecht, Abrace, Acesita & CBCC – Dow Corning.Dr Henrique Brandão Cavalcanti• B.Eng., Civil Engineering (McGill University, Canada); Former appointments include Brazil’s Minister of the Environment (1994), Deputy Minister of Mines Energy (1967-69), Deputy Minister of Interior (1969-74). Has held senior posts at Electrobras, Brazilian Steel Corporation, International Environmental Bureau in Geneva and CAEMI. Has Represented Brazil at the United Nations and World Health Organization.Dr Renato Gomes• LL.B., (Faculdade de Direito da Universidade Federal de Minas Gerais, Brazil), LL.M., (London School of Economics, UK), PhD. Candidate (Georgetown University, USA); Director of the ABCI Institute (Brazilian International Trade Scholars) and researcher at Georgetown University, where his work focuses on the Brazilian government, its development agenda, and foreign investment. Lawyer and member of Brazilian and Portuguese Bar Associations.AMZ : TSX-V 6
  • 7. 1 “Supermarket to the World”• Brazil has almost 20% of world’s • The great agricultural frontier is undeveloped potential arable Brazil’s Cerrado, or Savannah land away from the Amazon forest Undeveloped Potential Arable Land 600 Amazon Available 500 Brazil Millions of Hectares Planted 400 300 Cerrado 200 100 0 South Brazil US Russia China India Source: Food and Agriculture Organization, UN America• Brazil has world’s largest • Climate allows for multiple crops renewable fresh water reserve during the year NOTE 1AMZ :Miracle of Cerrado” The Economist , August, 26, 2010 “The TSX-V 7
  • 8. Potash is a Problem Import vs. Domestic Fertilizer Supply Brazil’s Increasing Agribusiness100% 25% 7% • Brazil is the world’s fastest 80% 31% 55% growing potash consumer 60% 40% 75% 93% • Brazil’s poor soils and crop mix 69% 20% 45% make potash a very important 0% nutrient NPK Total Nitrogen Phosphate Potash Dependency on Imported Potash Import Domestic • Potash ranks in the top ten of Brazil 2008 Total Imports (US$173.2BB) Brazilian imports by dollar value (2008 #6, 2009 #10) Potash, 2% • Brazilian government targets Rest of Insecticides, Imports, 1% NPK, 1% 2020 to be fertilizer-independent Nitrogen, 92% 2% • Brazil is to be ranked #1 globally Phosphate, 1% Sulfur, 1% for potash imports in 2020 at 7.15 million tonnes of K2O* * Source: FERTECON report (FERTECON, 2009, /15/).AMZ : TSX-V 8
  • 9. Location of Cerrado Verde Market • Approximately 58% of Brazilian demand for fertilizer is located within Minas Gerais and adjacent states • Potash is imported mainly from Canada and Russia Infrastructure • Paved highways • Rail (Campos Altos) • Electricity • Natural GasAMZ : TSX-V 9
  • 10. 100km of Potash at surfaceVerdete Slate• Glauconite and Sericite are Potash minerals occurring at surface• Potassium rich rock (“Verdete”) is distributed over an area approximately: 100km x 6km x 20m to 80m thick• Potentially billions of tons of rock grading greater than 10% potassium• Potential Mining Operation: open pit, friable rock, no overburden• Initial NI 43-101 Inferred Resource of 105.1 million tonnes grading 10.3% using 7.5% cut- off (see March 8, 2010 release)AMZ : TSX-V 10
  • 11. Strong Project EconomicsNI 43-101 Preliminary Economic Production Rate 1.1Mtpy 2.2MtpyAssessment Completed NPV (10%) US$455.4m US$858.1m• PEA studied open pit mining and pyrometallurgy process to create the NPV (12%) US$339.1m US$652.6m ThermoPotash product IRR 32.9% 40.2%• (see October 28, 2010 release) Operational Cost US$41.80/t US$36.36/t CapEx US$155.3m US$218.4mPotential Cost Savings Contingency US$23.3m US$32.8m• Integration of natural gas discovered Pre-construction US$18.2m US$18.2m Total CapEx US$196.8m US$269.4m nearby instead of pet coke for heating fuel source Payback 2.38 years 1.87 years• Utilization of Amazon’s limestone deposits in lieu of purchasing at market price• Removal of ICMS1 value-added taxes NOTE 1 Tax on the Circulation of Goods, Interstate and intercity Transportation and Communication Services Pilot plant rotary kiln at Phoster Tecnologia de Aglomerações AMZ : TSX-V 11
  • 12. Process and Operating CostsThermoPotash Production Process Estimated Operating Cost (1.1mtpy) 1. Mining •Energy • Verdete Slate comes from open pit and the $18.45 •petroleum coke, electricity limestone comes from suppliers in the •Raw Materials surrounding area or Amazon quarry $2.35 •limestone 2. Grinding • Verdete slate and limestone are ground by $8.91 •Labour upright rod mill 3. Mixing $1.80 •Maintenance • The ground verdete and limestone are mixed and 4% moisture is added $5.50 •Equipment Operation 4. Pelletization and Drying • Material is rolled into pellets by disc $1.76 •Marketing pelletizers, and dried by exhaust gas from the •Non-Operating Expenses rotary kiln $4.79 •administration, marketing 5. Rotary Kiln and Quenching • After drying, pellets go into the rotary kiln to be heated to 1250oC and rapidly cooled US$41.80/tonne 6. Packaging of ready ThermoPotash productAMZ : TSX-V 12
  • 13. Pricing Estimates Bahia Mato Grosso 325,181t/y 895,043t/y $141.61 $189.85 $93.98 $130.13 Goias 495,687t/y Marketing Study $142.64 Cerrado Verde $112.98 Minas Gerais 896,051t/y • Agroconsult conducted an $182.31 $160.04 independent market study to understand potential sale price andMato Grosso do Sul 246,621t/y market size of ThermoPotash $179.47 $122.20 Parana 778,171t/y Sao Paulo • The prices were derived exclusively on $131.01 $63.68 722,513t/y $131.77 how blenders can optimize NPK $90.92 formulas using ThermoPotash and keep raw material costs equal • Delivery-adjusted price (in blue) Highlighted Market adjusts for delivery costs to the Annual Market Potential: 4,359,267 tonnes Potential Sale Price: US$179.47/t1 blenders in the state and inter-state Delivery-adjusted Price: US$122.20/t1 taxes NOTE 1 Weighted-average (See October 26, 2010 release) AMZ : TSX-V of the highlighted market 13
  • 14. Incorporated into NPKThermoPotash part of Existing Blends Benefits to farmers• Potential to replace 581,236 tonnes • Provides potash in a slow release of imported KCl in the region form• With no change to final fertilizer • Provides substantial doses of other application quantities or techniques macronutrients • Reduces limestone use for pH correction Benefits to blenders • Overseas imports price is set 2 months before it arrives at facility, plus possible port delays • 60% of fertilizer consumption occurs in 4 month window • Long haul transport creates fine powder out of granules unsuitablePorto de Santos for application AMZ : TSX-V 14
  • 15. Benefits of ThermoPotashNutrient Availability Tests (See August 11, 2010 release) Measured K2O levels in sandy soil as a function of potassium source• Tests showed that ThermoPotash provided Kg/ha of K2O KCl ThermoPotash statistically equivalent nutrients to plants as 0 0.04 0.04 KCl• Calcium and magnesium were available to 200 0.25 0.24 plants, two key macronutrients not available 400 0.41 0.38 in KClLimestone Replacement Tests (See October 14, 2010 Brazil Fertilizer vs. Limestonerelease) Consumption 2009• Brazilian farmers used 21 million tonnes of Limestone 21.0 limestone to correct soil pH levels• Salt-based fertilizer such as KCl makes soil Fertilizer 3.2 3.4 2.6 more acidic• Every tonne of ThermoPotash used reduces 0.0 5.0 10.0 15.0 20.0 25.0 MM tonnes limestone required by 490 kg K2O P2O5 N - AMZ : TSX-V 15
  • 16. Benefits of ThermoPotashSlow and Controlled Release (See October 15, 2010 release)• High rainfall in Brazil makes slow release fertilizers more useful, as the slow release fertilizers are not easily dissolved and washed away by water• Resin tests confirmed the slow release properties of ThermoPotash • 25% of the available potash released in the sandy soil • 40% of the available potash released in the clayey soil• The market for slow release Average Annual Rainfall fertilizers is established and growing worldwide Minas Gerais, Brazil 1416 • Producers enjoy a 30-70% Iowa, USA 882 premium on the slow release products over the price of the Shandong, China 614 nutrients in the regular Uttar Pradesh(plains), India 896 products 0 250 500 750 1000 1250 1500 Rainfall (mm/yr) AMZ : TSX-V 16
  • 17. Benefits of ThermoPotashPotassium Leaching Tests (See December 16, 2010 release)• Tests established that ThermoPotash (TK) suffers minimal nutrient loss as a result of leaching, whereas KCl loses 26% under the same conditions• The superior behaviour of TK over KCl can be explained by its low solubility in water, which still effectively delivers nutrients to plants Source of K – Doses of 300 kg/ha Soil Type KCl ThermoPotash ThermoPotash Control (granular) (Powdered) (granular) (without K) ------------------- K leached, grams per column ----- ---------------- Sandy 2.31 (26.2%) 0.28 (0.3%) 0.26 (0.0%) 0.26 (15% loamy) Clay 2.09 (26.0%) 0.08 (0.3%) 0.07 (0.1%) 0.06 (40% loamy) Note: Figures in parentheses represent the percentage of K from the fertilizer applied that was lost through leaching AMZ : TSX-V 17
  • 18. Time for Something Different Verdete Carnallite Sylvinite 0m 500 - 1000m 1000 - 1500mDepth Open Pit Mining Solution Mining Conventional UndergroundGrade 10-13% K2O 10-14% K2O 20-25% K2OTime 2 yrs 5-7 years 7-10 yearsCap-Ex $200 million $1-2 billion $2-3 billion Energy Costs Fluid and Boreholes Conventional MiningOp Cost Low mining costs Solution Separation Flotation SeparationProduct ThermoPotash KCl KCl 18AMZ : TSX-V
  • 19. Apatita Phosphate Project• Promising drilling results on 2 of 3 prospects identified mineralized phosphate between 0.01% and 9.57% P2O5 with widths of between 1m and 22m (see release dated November 22, 2010)• Additional drilling to be completed on 5 additional prospects with a plan to establish 43-101 compliant resource estimates on the two prospects that have already shown promising resultsAMZ : TSX-V 19
  • 20. Apatita Phosphate ZoneAMZ : TSX-V 20
  • 21. Recent DevelopmentsConventional Potash from Verdete (see December 2, 2010 release)• A patent application has been filed in the UK for the production of conventional potash fertilizers, muriate of potash (KCl) and sulphate of potash (SOP) from verdete slate• The technology was developed by Dr. Derek Fray , Professor and Director of Research at the University of Cambridge, UK AMZ : TSX-V 21
  • 22. Brazilian Government SupportSpecial Tax Treatment for Cerrado Verde Project (see December 22, 2010 release)• Secretary of Finance from Minas Gerais State Government has approved a special tax treatment for the Cerrado Verde potash project• This benefit will reduce capital and operational expenditures for the Company’s proposed ThermoPotash production. In addition, it will reduce sales tax on ThermoPotash itself• The special tax treatment is defined as: • Suspension of “ICMS” tax payable on imports of foreign goods (currently 18%), on imports of foreign raw materials and purchases of domestic raw materials • effective tax load of 4% payable on sales of ThermoPotash, SOP and KClAMZ : TSX-V 22
  • 23. Development Partnerships ArcelorMittal to Fund Agronomic Trials (See Sept. 22, 2009 release) •Agreement represents a first step in developing corporate demand for ThermoPotash. ArcelorMittal has 170,000ha of cultivated eucalyptus forests for charcoal production. Agrifirma to Undertake Agronomic Trials (See Nov. 24 & Dec. 9, 2009 release) •Agreement secures real world field trials of ThermoPotash for use in corn and soy plantation, also as part of process for conversion of Cerrado scrubland for commercial cultivation. Agrifirma is a Jersey-based land fund with 42,000ha of farmland in Brazil. Sekita to Fund Agronomic Trials (See March 22, 2010 release) •Agreement establishes a relationship with one of the largest Brazilian vegetable producers. ThermoPotash to be tested in real world conditions for use with various vegetables. Its farms are located less than 10km from the Cerrado Verde Project. Included in Sugarcane Fertilizer Taskforce (See August 4, 2009 release) •ROCKAPL (‘Rock’ Arranjo Produtivo Local) is a collaborative effort between government and private enterprise focused on developing fertilizer alternatives for sugarcane destined for ethanol production. Brazil to Fund Metallurgical tests on Verdete (See May 4, 2009 release) •Brazil’s Centre for Mineral Technology (“CETEM”) agreed to fund and conduct metallurgical tests on Verdete.AMZ : TSX-V 23
  • 24. AMZ : TSX-V www.amazonplc.comAMZ : TSX-V