Bionic Palm integrated food & Jatropha farming model

Bionic Palm Limited, Ghana STRATEGY BRIEF THE INTEGRATED FOOD & FUEL FARMING AGRIBUSINESS MODEL Young Jatropha intercropped with maize at the BPL test farm10/30/2012 1 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

A LEADER IN AFRICAN AGRICULTURE METHODSThe basic elements of the BIONIC philosophy: Highest level of ecosystem compatibility  Recovery of land formerly lost to erosion and depletion  Biodiversity  Soil improvement & water efficiency  Negative carbon footprint Socially responsible  Food security for Africa  Local economic development for poverty reduction Profitability for a sustainable business  Constant revenue optimization  Lowest per hectar capital expenditure in the industry10/30/2012 2 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

SATELLITE VIEW OF BPL LEASED FARM LAND Adibiawe North Lomobiawe North Adibiawe South Lomobiawe South Lomobiawe West Test Farm To Aflao To Tema/Accra10/30/2012 4 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

EARLY RESULTS OF OUR TEST PROGRAM Transformation of Savannah soil is clearly visibleDecember 2008 June 2009Before we started the test farm Single Jatropha hedges planted in Dec 2008 Maize planted first time in May 200910/30/2012 5 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

WHY WAS THIS MODEL DEVELOPED? Jatropha Curcas Linn (JCL) centered business model proved too risky  Stand alone JCL farm for Biodiesel is not profitable with current practices  Future, high value products not yet fully defined (Biojetfuel, Biorefinery)  Technologies for reduced production cost lag behind  Measures for drastic overall yield improvements are necessary  Increased mechanization required, especially for harvesting  Detoxification of press cake Early revenue streams had to be identified for better cash flow Multiple revenue streams had to complement each other Risk exposure needed reduction to an acceptable level Unquestionable levels of sustainability had to be achieved  Agronomic sustainability  Ecological sustainability  Social sustainability  Economic sustainability Food vs fuel discussion had to be addressed Africa specific issues required adaptation10/30/2012 6 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

THE CURRENT BIOFUEL GAP: CJO PRICES VS COST OF SEEDS Value chain is financially not working out for early producers Current use of Crude Jatropha Oil (CJO):  Biodiesel  Electricity and heat from cogeneration  Testing of future applications (Biojetfuel, Refining of specialty oils) Assume a cif Rotterdam price of US$ 1000 per MT (Unrealistic for biodiesel & CHP electricity generation!)  results in approx. US$ 900 FOB Africa Translates in ex mill price of US$ 750 – 850 depending on location Packaging for transport US$ 100 Processing US$ 60 Seeds plus transport US$ 600  4 MT seeds needed per MT of CJO  Assumed price of seeds at farm gate US$ 100 (doesn’t cover all of direct cost on a commercial farm!)  Shipping and handling of seeds US$ 50 Optimistic, current cash flow projection per MT of CJO is US$ - 10 to + 90 2011 update: Most recent price indications are pointing at an average price of USD 1000 at the mill gate to be possible by year end10/30/2012 7 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

JCL OUTLOOK IS POSITIVE JCL business will work when/if seed cost comes down and revenues go up Cost of seeds will come down, when  JCL specific mechanization technology becomes available  Combined harvesting and pruning  BPL has developed its own low cost technology  Improved agronomic methods lead to significantly higher yields  Core of BPL’s R&D program  High yielding domesticated cultivars become widely available (yield improvements 100% plus!)  Depreciation cost comes down due to reduced capital expenditure per ha - BPL is actively working on all these areas at its test farm and in a world leading Jatropha hybrid breeding program – see http://bionic-palm.com/jatropha for details Revenues will go up, when  Advanced (non-biofuel) uses of CJO go online which justify higher feedstock prices  Press cake becomes usable as animal feed (> value of min US$450 per MT)  Commercial chemical detoxification process announced for 2012/2013 (D1 et. al.)  First non-toxic, high yield hybrid cultivars from BPL’s own breeding program (Bionic JcL3.0) available now  CJO as feedstock for biorefineries becomes a reality in quantities  Biomass-to-fuel technologies are introduced to make use of JcL vast biomass production10/30/2012 8 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

SIMPLE JCL YIELD CALCULATION METHODBenchmark yield calculation for a mature, best practice JCL field (per ha) Factor to be verified in individual test plantings) (NB: Needs influenced by numbers Number of plants > planting pattern 1900 Harvests per year > climate x2 Number of branches > pruning technique x35 Number of clusters > soil quality, fertilizer x3 Fruits per cluster > pollination, bees x10 Seeds per fruit > --- x3 Seeds per kg > variety /1500 Oil extraction rate > technology, variety 25% (mechanical extraction) Theoretical maximum yield = 7980 kg seeds or 1995 kg10/30/2012 9 oil © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

FOOD AND FUEL AT A 7:3 PLANTING RATIO Polyculture instead of JCL with some intercropping Availability of multiple revenue streams to generate early income Integration of the best properties from all types of crops Full sustainability within minimum time frame 2nd Gen Biofuel and biochar from more than 25 MT/ha of dry waste biomass Overall negative carbon footprint through biochar sequestration Zero waste approach Synergies between various activities/revenue streams  Maximum JCL yield requires bees for pollination  Waste biomass handling produces fertilizer  BTL reduces fuel cost at farm and supplies energy for processing  Biochar for soil improvement potentially creates carbon credits Each revenue stream requires full management attention10/30/2012 10 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

FOOD AND FUEL THRIVING SIDE BY SIDE  Three excellent examples of the food - JcL symbiosis  Not the typical JCL intercropping approach Ground nuts (Peanuts) Egg plants (Aubergines) Hot pepper (Chili)10/30/2012 11 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

OVERVIEW OF THE IMPLEMENTATION PHASES Testing and preparation Slowly growing processing of JCL seeds Plantation Development Early plantation roll out (up to 1000ha) General plantation roll out of total area (up to 5000ha per farm) Food crop planting on maximum field size available for early revenue generation Proper clearing and plowing Soil Management Application of standard fertilizer and water management Use of Jatropha DOC replacing standard NPK Biochar program Roll out of bee hives and their population Additional Revenue Streams Charcoal production in kilns Carbon credits for CO2 sequestration10/30/2012 12 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

PROJECT MANAGEMENT PRINCIPLES A multi stream project requires strong complexity management Project needs break down into small, transparent sections Thorough testing prior to roll out is obligatory  Testing helps to adjust basic methods and techniques to the actual project environment  Specific crops react differently in a farm specific environment  Leadership team, supervisors and personnel need to be trained and tested Build a detailed business case based on realistic data  Plan with proven data only, no hearsay from the internet  In depth continuous risk assessment Permanently review and revise business model  New information from internal and external sources to be checked for relevance  Recognized errors and mistakes have to be corrected immediately Manage cost daily on detail level Build and improve revenue constantly Strong strategic model couples with everyday simplicity10/30/2012 13 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

PLANTATION DEVELOPMENT Adjust technology to local conditions  Manual labor vs. mechanization  Preference for manual labor • Often the lower cost alternative • Better quality plant handling • Supports social sustainability  Governed by • Availability of workforce • Time available for a certain job  Yield targets start very low  Below 60% of standards advertised  Preference for open pollinated planting material when ever possible Development of an outgrower program early on Social responsibility to be exercised all the way Strong focus on community relations10/30/2012 14 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

TESTING AND PREPARATION (PROJECT PHASE 1) Nothing has been taken for granted  Study of environmental conditions  Soil, nutrients  Climate  Water rain/irrigation situation  Local pests and rodents  Development of a first set of low risk cash crops (i.e. Maize, Sorghum, Millet)  Identify best Jatropha planting method  Timing  Equipment selection (types & numbers) Investment limited to the absolute essential  Use of locally available services  Labor before mechanization Low operating cost  Focus on essential information not perfection of operations Recording of all details and constant strategy review Identification and planning of all acquisition of equipment, resources and material for roll out Time required: 15 months10/30/2012 15 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

EARLY ROLL OUT (PROJECT PHASE 2) Detailed planning of all aspects in this phase Continuously improve business plan  Follow up on all assumptions made  Adjust to reality (cost, yields, market prices)  Permanent update of risk assessment Use enough land to reach stand alone profitability Planting approach  Limited number of cash crops used  Start systematic Jatropha maintenance / pruning  Start seed development program combining selection and breeding Continue testing  Test as many food crops as possible Continuously adjust strategy as needed Time required 12-18 months10/30/2012 16 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

GENERAL ROLL OUT (PROJECT PHASE 3) Further roll out to the final size intended at a suitable speed  Roll out speed depends on financing strategy and development of the relevant markets Firm strategy with little variance only should be built by now Change the plantation economics  Pass break even on developed land  Further expansion financed from cash flow only Plantation constantly remains in a profitable state Soil improvement program combined with permanent test efforts by now allows for higher value crops in the fields developed first10/30/2012 17 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

JATROPHA DOUBLE HEDGE PLANTING SYSTEM  After extensively testing many different planting patterns a double hedge row system was chosen  Best use of available space  Irrigation and fertilizer cross effects  Enables efficient mechanization for cash crops  Enables mechanical JCL harvesting  Main irrigation pipe and nitrogen fixing cover crop between rows Space for Space for Space for cash cash crops, cash crops, crops, i.e. Approx 1900 i.e. maize, i.e. maize, maize, sunf JCL plants per ha sunflower, sunflower, lower, sorg sorghum, sorghum, hum, soy, b soy, beans, soy, beans, eans, grou groundnut groundnut ndnut 1.2 m 1.2 m 1.2 m 1.2 m 10.0 m 10.0 m 10.0 m 3.0 m 3.0 m 3.0 m 3.0 m10/30/2012 18 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

FOOD CROPS BALANCED WITH JCL HEDGES It is a challenging task to determine the optimal split of land use between JCL hedges and food crops High flexibility is built into the double hedge system  Adjustments should be made based on selected crops  Degree of mechanization and equipment used We looked for a planting pattern that is adjustable later on Food crop area should be measured in a way that additional JCL hedges can be added later on  Example: 10m wide area can be split later by another double hedge in two 3,5m wide areas  Distances optimized for effective mechanical farming10/30/2012 20 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

FOOD CROP PLANTING PRINCIPLES Maize is our commercial baseline crop  Locally available market infrastructure with transparent prices Crop rotation is a necessity  Rotation crops will be determined year by year based on situation  Possible rotation cash crop examples: Sunflower, Sorghum, Soya  Castor as a high value oil plant  Many optional higher value crops have been successfully tested:  Water melon, egg plant, tomato, hot and sweet pepper, onions, groundnut, okro No till farming should be considered Crop selection based on market security and price levels  Detailed feasibility study before large scale planting  Logistical advantage  Focused on local food markets (Vegetables for Accra & Tema markets)  Replace imports on cash crops Irrigation program for best suited fields  During test operations we decided full irrigation will take precedence of speed of growth  3 to 4 high value planting seasons become feasible per year  Off (dry) season harvesting attracts extremely high market prices10/30/2012 21 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

PLANTING MATERIAL SELECTION PRINCIPLES African origin where ever possible Domesticated African if necessary Open pollinated seeds have preference over hybrids Strictly no GMO BPL actively supports African seed development initiatives BPL promotes an open seed exchange mechanisms for African farmers Out growers/smallholders will always be given a choice of open pollinated seeds BPL runs its own breeding/seed farming initiatives where suitable10/30/2012 22 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

JATROPHA PLANTING PRINCIPLES No proven superior planting material identified from “commercial” sources globally BPL’s own breeding platform is showing a range of positive results  Dedicated sub programs ready for role out to selected locations Agronomic practices and soil quality are key success factors  Difficult choice between seedlings, cuttings, direct seeding  Cuttings currently have the strongest arguments on their side  Fastest growth  Best selection possibilities  Near 100% success rate  Best pest resistance  By far the most economic planting method  Special test currently under way: direct seeding with pre-germinated seeds  JCL specific mechanization essential for JCL stand alone profitability Soil preparation and improvements  Initial one-time deep plowing to break heavy clay layers  Addition of biochar, microorganisms & mycorrhiza Water management  In high humidity climates rain is not essential for good growth Mulching is a simple way to  Measures to capture condensation are easy and advisable capture early morning humidity10/30/2012 23 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

SOIL MANAGEMENT STARTING POINT Tropical savannah soils are extremely low on nutrients and organic matter Unsustainable African agriculture practices have further degraded the soils through common slash and burn methods and migrant farming Resulting erosion adds to the problem  Burning sun quickly consumes organic matter  Wind and rain wash out the nutrients Effective soil management requirements  Increased shade with stronger vegetation  Stop erosion from wind and rain  Improved storage capacity for water and nutrients in the soil  Introduction of nitrogen fixing cover crops10/30/2012 25 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

SOIL MANAGEMENT IN THE MODEL Concept is based on continuous improvement cycles Jatropha hedges  Roots extract nutrients from lower levels of the soil  Increase humidity storage in root system and through more shade  Add organic matter and nutrients to top soil due to very fast growth  Reduce erosion by wind and heavy rains Fast growing cash crops  Add organic matter to the soil (i.e. corn stover)  Nutrients build up through fertilizer application  Reduced new weed build up saves water and nutrients Application of natural fertilizers  Animal manure  Nitrogen fixing crops Returning Jatropha press cake to the field  Adds high value nutrients and organic matter Biochar program in combination with microorganism build up  Builds up long term fertile soil (terra preta) for high value crops10/30/2012 26 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

USAGE OF FERTILIZERS IN THE MODEL It is essential to become sustainable on nutrient application ASAP Initially it is unavoidable to use standard NPK for the cash crops  Some positive side effect of surplus nutrients for the Jatropha hedges will occur As soon as Jatropha press cake becomes available it will replace NPK  Jatropha press cake has a nutritional value similar to that of chicken manure  Research data suggests that maize reacts better to Jatropha press cake than to NPK  Long term JCL press cake may also get useable as animal feed after detoxification Through a biochar/mycorrhiza program a completely new fertilization method will be designed Balanced crop rotation and cover crops will be utilized to reduce external fertilizer application needs and cost10/30/2012 27 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

WATER MANAGEMENT AND IRRIGATION Utilization of the high humidity (70 – 85% near year round)  Capturing the morning condensation is sufficient for growth all the way through the dry season  Shade from JCL bushes reduces evaporation from condensation water on the ground and the leaves Flood control measures  Drainage channels  Surface shaping Control of water logging Seedlings in a furrow mulched with y cashew leaves thriving  Planting pattern at the peak of the dry season Irrigation for selected fields  Drip or micro sprinklers  Wind and solar powered Overflow channel in a dam to avoid excessive flooding10/30/2012 28 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

BIOFUEL & CHAR The BIONIC GROUP’s microfuel technology  Products:  2nd generation drop-in diesel fuel from biomass feedstock  Biochar for soil improvement and carbon sequestration  Proven process which utilizes microwave and zeolite catalysts Biochar plus microorganisms create a new kind of top soil  Mixing of biochar with compost and microorganisms Possible side products  Char from the microfuel process is a high quality sought after product with very special properties ideal for replacing fossil carbon in many uses  Activated carbon for filter technologies  Replacing fossil coal in steel production with very high carbon credit potential  Carbon for tire manufacturers  Solid fuel for industrial boilers10/30/2012 29 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

ADDITIONAL REVENUE STREAMS Honey business  Excellent business in its own right  Positive side effects for Jatropha pollination  Additional possibility to generate jobs for community Solid fuel & Charcoal  Wood waste from clearing  Wood waste from pruning Jatropha Carbon credits  Copenhagen conference Dec 2009  Carbon credits for biochar will most likely be possible after 2012 Green energy & Biochar  Biofuel, optionally Biogas  Electricity from Biofuel or Biogas10/30/2012 30 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

CORE MODEL OVERVIEW • Soap production (local) Jatropha Oil • SVO for generators (local) to markets • SVO as transport fuel (local) • Biodiesel production (local& global) • Biojetfuel production (global) Press cake • Biorefinery feedstock (global) back to fields Jatropha seeds as fertilizer to oil press microfuel plant Waste Biomass Planted Field Biochar to fields for soil Diesel fuel for farm improvement and carbon equipment and Food credits sale to market Solid fuel (wood pellets) to market Charcoal Waste wood from to market clearingField preparation

REVENUE PROJECTION ON A PER HA BASIS Some indicative numbers on per ha revenues generated within the model (Based on a mature, stable state which should be reached after 5 years from development) Waste biomass from field preparation (brush branches and roots) US$ 100 Solid fuel for industrial boilers (one-time) Charcoal Cash crop sales (maize) US$ 1600  Multiples of this amount are possible with higher value crops like vegetables JCL oil sales US$ 1500 Honey sales US$ 50 JCL press cake (toxic)  cost reduction of fertilizers by US$ 150 Biomass to Biofuel for sale  cost reduction for fuel used at farm US$ 200 Biomass to Biochar for sale  assuming 25 MT dry mass/ha/year US$ 500 Waste biomass from field maintenance free supply in return for free biochar Carbon credits from biochar sequestration  assuming 2 MT per ha/year US$ 15010/30/2012 32 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

FULL SUSTAINABILITY BUILT INTO THE MODEL Economical Sustainability  Recovery of capital needed for land preparation will be reduced to 1.5 years  Improved early revenue generation  Reduction of preparation cost  It is our objective to break even on food crop revenues alone Environmental  Zero waste approach  No external fertilizers (as soon as internal supply cycles work)  No external energy  Carbon negative footprint through biochar sequestration Social  Fair, safe jobs for farming community  Outgrower/Small holder program  Agronomic assistance services  Supply of planting material  Elimination of marketing risk  Integrated microfinance opportunities10/30/2012 33 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

INDEPENDENT BPL R&D PROGRAMS Based on cooperation with first class organizations around the world  European genetic lab to develop DNA fingerprinting on a large selection of accessions in order to identify most promising material for breeding Focused on results that can be implemented quickly within the model Introduce no till farming practices and adapt to environment Improve JCL yields significantly  Transfer agricultural practices to JCL and adapt  Trial of various soil amendments  Trial of mycorrhiza inoculation  Trial of best suited nitrogen fixing cover crops under the hedges  Trial of growth regulators  Develop first in class hybrid seeds in a fully planned out crossing program  Very high potential  First results expected after 24-36 months  Parental material in place, first interspecific hybrids under investigation  Special focus on non-toxic planting materials10/30/2012 34 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

WHERE ARE WE TODAY DESIGN > TEST > BUILD > INTEGRATE > IMPROVE Initial test programs completed at a growth point of 150 ha Fund raising for 5000 ha expansion far advanced Currently maintaining & commercializing the 150 ha test farm Testing the roll out procedures going from 150 ha  200 ha Developing bee farming (with a partner) Preparation for professional kiln based charcoal production (with a partner) Completing the acquisition of additional 2500 ha farm land10/30/2012 35 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

WHERE ARE WE GOING FROM HERE DESIGN > TEST > BUILD > INTEGRATE > IMPROVE Rolling out min 100 ha per month year round (from mid 2011)  Kick off with completion of 1st financing round Start processing Jatropha oil (2011/2012)  Initial order for 500 MT of CJO under negotiation  Press cake will start to come back to fertilize maize Build up modern machine park (2011 through 2013)  Cost reductions mainly on harvesting cash crops Start microfuel project for waste biomass processing (2011/2012)  BTL fuel for farm equipment  Biochar starts coming to the fields in quantities Start an outgrower program on 40% of the BPL farm land (from 2011)  Small farmers to use similar technologies as developed in the BPL model  Far reaching support program to stop annual migration of fields10/30/2012 36 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

CONTACT US We usually have interesting opportunities available for investors We offer consulting and management services in all areas of our expertise BIONIC PALM LIMITED Accra, Ghana, PO Box GP14916 info@bionic-palm.com www.bionic-palm.com +233 245310298 Lake Volta, Ghana10/30/2012 37 © 2009, Bionic Fuel Knowledge Partners Inc., Oswego, NY, USA

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Bionic Palm integrated food & Jatropha farming model

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