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Project tambora august 2016

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AIMED AT DEVELOPING SMALLHOLDER CAPACITY IN EAST INDONESIA TO ACHIEVE INDONESIA'S FOOD SELF SUFFICIENCY GOALS

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Project tambora august 2016

  1. 1. “PROJECT TAMBORA” Unique Agri-Business Opportunity East Indonesia August 2016
  2. 2. Introduc)on •  FAC Consul)ng (the “Founder”) is seeking equity investor partners for “Project Tambora”, a greenfield agriculture project in Indonesia (NTB ); •  Despite an abundance of water and fer)le land, Indonesia remains a net importer of many food crops and is far from achieving its long-stated goal of food self-sufficiency; •  The Project aims to take advantage of the chronic undersupply of domes)cally produced vegetables by producing staple vegetable crops throughout the year; and •  Export quality sweet corn, shallots and chilli will be retailed within Indonesia, primarily Java and regional export markets.
  3. 3. “Equity partners” share common objec)ves and vision Commercial objecHves •  Develop the business to achieve + 100% IRR over 10 years, producing export quality staple vegetable crops throughout the year - thus taking advantage of the the chronic undersupply of domes)cally produced vegetables. Environmental and Sustainability policy •  Implement sustainable Good Agricultural Prac)ces (GAPs) aimed at pes)cide-free produce and avoiding prac)ces that may impact the environment; and •  Where possible, fossil fuel systems will be replaced with clean or renewable energy systems to minimize our carbon foot print. Corporate and Social responsibility •  We aim to provide at least 150 full )me jobs to the surrounding community; •  We recognize the need to develop local smallholder capacity and produc)vity and support our communi)es in delivering smallholder export quality produce to high end markets; and •  By demonstra)ng our commitment to Corporate Social Responsibility we aim to align our business values, purpose and strategy with the needs of our clients, whilst embedding such responsible and ethical principles into everything we do.
  4. 4. INDONESIA OVERVIEW STAPLE FOOD – VEGETABLE PRODUCTION
  5. 5. Indonesians consider chili and shallots as staple foods and demand for sweet corn is increasing •  More than 80% of Indonesia’s vegetable produc)on originates from Java; •  Short rota)on vegetable crops are produced in rota)on with rice, the main crop; •  Java climate is “wet-tropical” – typically unpredictable prolonged wet and dry periods; •  Adverse site condi)ons (Soils and climate) in Java result in limi)ng yield by at least 50%. The Founder iden)fied significant opportunity to produce high value and high demand vegetables (sweet corn, shallots and chili) in East Indonesia, and have developed a cap)ve logis)c solu)on that should address transporta)on challenges
  6. 6. Java is the main vegetable producer and market for vegetables Vegetable crops require well drained soils - whereas rice thrives in saturated soils •  Mechanized land prepara)on is not possible on paddy fields. Consequently poor quality seedbed prepara)on affects yield and high labor cost for manual land prepara)on; and •  Unseasonal heavy rain affects Indonesian Chili, Shallot and sweet corn supply (higher prices) because of these site condi)ons Conclusion: Vegetable yield potenHal is limited by “rice paddy” site condiHons
  7. 7. Adverse weather (rainfall distribu)on) is another key limi)ng factor for chili, shallot and sweet corn produc)on in Java Java is located in wet-tropical climate •  Prolonged wet season (7-8 months) and dry season (3-4 months); •  Very wet periods (+200mm/month) are common for 4 to 5 months in a year; •  Prolonged wet weather (+ 150mm/month) + cloudy condi)ons affect yield and quality; and •  Prolonged dry weather (without irriga)on) also result in reduced yields. Java Malang – East Java Under supply of staple food and poor quality are the main drivers of supply fluctuaHons & volaHle prices
  8. 8. Dry sub-tropical climate is beger suited to year-round vegetable produc)on East Sumbawa rainfall distribu)on is more predictable: •  ± 150mm/month over 4 months and only 1 very wet month in a year (+200mm); •  Minimal interference is an)cipated to the plan)ng and harves)ng schedules therefore minimal impact on supply and quality is expected; •  Dry month rainfall distribu)on ranges from 0 to 60mm per month; and •  With irriga)on, dry sub-tropical climate of Sumbawa is beger suited for year-round vegetable produc)on. East Sumbawa - Indonesia Dompu – Dry Sub-tropical Climate •  Main rainfall distribu)on over 6 mths: ± 1,100mm •  Greater levels of solar radia)on (less cloud cover) Private owned land (HGU 1,142 Ha) located in Dompu is ready to be acquired
  9. 9. Market Research
  10. 10. Tradi)onal wet markets and small stalls account for 85% of retail trade Ministry of Trade (the MOT) Regula)on No. 70 of 2013: •  80 % of all goods sold at each “Modern Store” must comprise locally produced goods; •  The regula)on favors local producers of high quality produce to access modern stores; •  Modern retailers account for 15% of the retail market; •  Super and hypermarkets represented 60% of modern retail outlets and retail market share con)nues to increase; and •  “Modern Stores” do not offer favorable payment terms (+ 60 days) for producers.
  11. 11. Chili Market
  12. 12. Indonesia fresh chili produc)on is limited to 4-5 months in a year (avoiding wet and very dry seasons) •  The main chili produc)on period is tradi)onally during wet & marginally dry periods (May-June and Sept-Oct); •  Under op)mum cold storage condi)ons, Chili shelf life is limited to 2-3 weeks and less than 3 days without post harvest pre-cooling and cold storage (tradi)onal produc)on); •  Project Tambora intends to produce chili all year round and the cold chain will be developed targe)ng maximum shelf life; and •  Addi)onal area will be developed to take advantage of tradi)onal low supply periods © Document copyright of FAC Rainfall'Distribution Index Java'Rainfall Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Smallholders'Planting'Plan Smallholders'Harvesting'Plan Java'Chili'Prices Sumbawa'Rainfall Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec E.Sumbawa'Irrigated'Planting E.Sumbawa'Harvesting'Plan Java'Chili'Prices 2.5'Ha'per'Week 2.5'Ha'per'Week Higher'Price Lower'Price Higher'Price Lower'Price Higher'Price Sumbawa'Chili'Production'Plan' Malang'E.Java'L'Traditional'Chili'Crop'Production' Rainfed'Crops Irrigated'Crops' Limted'Production Harvest'Peak Limited'Production Harvest'Peak Limited'Production Higher'Price Lower'Price Higher'Price Lower'Price Higher'Price Very'Wet'Months Wet'Months Marginal'Dry'Months Very'Dry'Months Over'200mm'Rain 100'L'200mm'Rain 50'L'100mm'Rain <'50mm'Rain
  13. 13. Project Tambora Base Case model is based on Indonesian chili market demand and tradi)onal (wet) market prices for Java •  The market prefers fresh chili (80%) compared to dried chili (20%); •  Three types of chili are consumed: -  Red Chili (50%) -  Bird’s Eye Chili (42%) -  Green chili (8%); •  Small (Birds Eye Chili) retail price/kg is higher compared to large and green chili; •  Large red chili is in greatest demand during religious fes)ve seasons; and •  Tradi)onal wet market prices (Jan-Feb 2015) range from Rp 15,000 – Rp 40,000/Kg (variable quality) Red Chili harvested area 2001 - 2011 Project Tambora revenue for export quality chili is conservaHvely based on Rp 17,000/kg
  14. 14. High-end market opportuni)es will be explored to increase revenue based on superior quality and regular supply •  Small (Birds Eye Chili) is typically more expensive than large chili and red chili is more expensive than the green chili varie)es; and •  Jan-Feb 2015 Jakarta supermarket prices range from Rp 99,000 to Rp 159,000 per Kg. Project Tambora aims to retail + 50% export quality chili to local high-end wholesalers and export markets
  15. 15. SHALLOTS
  16. 16. Shallots produced in Java are tradi)onally harvested from May to July (avoiding very wet and very dry seasons) Java shallots are typically planted in wet months (February to April) on ex-paddy sites and harvested from May to July (marginally dry months). •  Shallots have low tolerance to prolonged wet soil condi)ons (not suited to very wet months) and during the drier months requires irriga)on (500-600mm); and •  Shallots produc)on will target periods of reduced supply (September to April). © Document copyright of FAC Rainfall'Distribution Index Java'Rainfall Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Smallholders'Planting'Plan Smallholders'Harvesting'Plan Java'Shallot'Prices Sumbawa'Rainfall Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec E.Sumbawa'Irrigated'Planting E.Sumbawa'Harvesting'Plan Java'Shallot'Prices Higher'Price Lower'Price Higher'Price 2.5'Ha'per'Week Malang'E.Java'K'Traditional'Shallot'Crop'Production' Rainfed'Crops Limted'Production Harvest'Peak Limited'Production Medium'Price Lower'Price Higher'Price Sumbawa'Shallot'Production'Plan' 2.5'Ha'per'Week Very'Wet'Months Wet'Months Marginal'Dry'Months Very'Dry'Months Over'200mm'Rain 100'K'200mm'Rain 50'K'100mm'Rain <'50mm'Rain
  17. 17. Project Tambora model for shallot produc)on is also based on Java market demand and Java tradi)onal market prices •  Wet Market average prices range from Rp 15,000 to Rp 40,000/kg over the year. During periods of cri)cal shortage, tradi)onal wet prices exceed Rp 40,000/Kg; •  Government controls import permits, and in recent years allowed imports of 60,000 Mt; and •  Feb 2015 supermarket price for Shallots averaged Rp 75,000/Kg (retailed in 500g bags) Project Tambora revenue for export quality shallot is conservaHvely based on Rp 18,500/kg
  18. 18. SWEET CORN
  19. 19. Indonesia sweet corn is mostly grown on ex-paddy sites avoiding extremely wet and extremely dry seasons •  East West seeds report total sweet corn acreage in Indonesia at 75,000 Ha (yields average < 10 Mt/ Ha); •  Most sweet corn is planted as a short season crop prior to rice or arer rice coinciding with drier months; and •  Significantly less sweet corn is produced from July to January resul)ng in 20-30% higher prices East Java Malang Indonesian wet tropical regions have 3 corn produc)on seasons: -  1st crop November to February (49%) -  2nd crop March to June (37 %) -  3rd crop July to September (14%)
  20. 20. Java sweet corn is typically grown in rota)on with rice during very wet and wet seasons •  Java sweet corn (ex-paddy sites) produc)on and prices are affected by adverse rainfall; •  Sweet corn yields are retarded by heavy and prolonged rain (poor drainage condi)ons) that combine with prolonged cloudy condi)ons. Project Tambora aims to produce export quality sweet corn throughout the year, taking advantage of reduced producHon in Java and NTB from July to December Rainfall'Distribution Index Java'Rainfall Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Smallholders'Planting'Plan Smallholders'Harvesting'Plan Less'Prod. Limited'Production Java'Sweet'Corn'Prices Medium'Price Sumbawa'Rainfall Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec E.Sumbawa'Irrigated'Planting E.Sumbawa'Harvesting'Plan Java'Sweet'Corn'Prices Medium'Price Sumbawa'Sweet'Corn'Production'Plan' 2.5'Ha'per'Week 2.5'Ha'per'Week Lower'Price Medium'Price Higher'Price Lower'Price Medium'Price Higher'Price Harvest'Peak Less'Production Rainfed'Crops Irrigated'Crops' Water'limitations Rainfed'crop Very'Wet'Months Wet'Months Marginal'Dry'Months Very'Dry'Months Over'200mm'Rain 100'O'200mm'Rain 50'O'100mm'Rain <'50mm'Rain Malang'E.Java'O'Traditional'Sweet'Corn'Production' © Document copyright of FAC
  21. 21. Compared to most other staple vegetables without op)mum cold storage condi)ons, sweet corn shelf life is less than 36 hours •  Sweet corn shelf life under op)mum cold storage condi)ons (0-2°C) is limited to 6 to 10 days and less than 36 hours without op)mum cold storage condi)ons; •  For this reason supply is limited to smallholder produc)on in close proximity to market; and •  Variety selec)on takes into considera)on Consumer preference (sweet tas)ng) and producer preference (high yield, disease resistance and long shelf life);
  22. 22. Project Tambora aims to be Indonesia’s leading producer and preferred supplier of affordable super-sweet variety •  Sweet corn is tradi)onally retailed in wet markets (with husk on) in open containers or by weight whereas in supermarkets, sweet corn is usually retailed in vacuum packed containers without the husk; •  Tradi)onal wet market prices are driven by local supply and quality: Prices range from Rp 1,500 to Rp 2,500 per cob equal to Rp 9,000 – Rp 25,000 / kg •  During Jan-March 2015 (tradi)onally peak supply period), Jakarta supermarkets were retailing pre-packed sweet corn at Rp 19,900/Kg; and •  Project Tambora recognize an export market opportunity for processed sweet corn products - our land capacity and capability suits large scale sweet corn produc)on Project Tambora revenue for export quality sweet corn is conservaHvely budgeted at Rp 9,000/kg
  23. 23. Project Tambora budgeted price/kg for export quality produce to bulk wholesalers and traders is considered “conserva)ve” Fresh Rp Price/kg Rp Price/kg Rp Price/kg Produce Wet Market Supermarket Project Tambora Chili 15,000- 50,000 75,000 – 150,000 14,0000 ------------------------------------------------------------------------------------------------------------ Shallots 20,000- 50,000 50,000 – 85,000 18,500 ------------------------------------------------------------------------------------------------------------ Sweet corn 9,000 – 25,000 20,000- 30,000 9,000
  24. 24. AlternaHve Crops Export Market – Snack Food Indonesia imports > 100,000 Mt/Ann
  25. 25. Alterna)ve high value vegetable crops will be produced on a smaller scale to evaluate feasibility and market demand Edamame (Vegetable Soybean) •  Vegetable soybean (Edamame) is an ideal crop rota)on op)on (adds nitrogen to the soil) and is grown on a large scale in East Java for Asia’s high- value export market (snack food); and •  Produce that do not meet export quality standards is oren retailed in supermarkets at Rp30,000 to Rp 40,000/kg. Garlic •  Indonesia meets 90 percent of its garlic demand from imports, with domes)c produc)on standing at 13,000 tons per year; •  Market prices: Rp 50,000 – Rp 100,000/kg Soybean and garlic will be produced on small scale (trial crops) to evaluate site suitability, varie)es and to demonstrate supply capability for poten)al local and export markets.
  26. 26. PROJECT TAMBORA MARKETING STRATEGY •  Project Tambora’s marke)ng strategy is based on retailing sweet corn, chili and shallots in bulk to wholesalers and traders from cold storage warehouse facili)es in Java; •  Small volumes (non-export quality) may be retailed from farm gate to local traders for retailing to local markets (Sumbawa, Lombok and Bali); and •  Medium and long-term objec)ve aim to secure regular orders from high-end markets. ATI$$ Warehouse$ ATI$$ Farm$ Weekly$$Sea$Freight$ Export market opportuni)es for processed sweet corn (canning and/or frozen) and edamame (frozen products) would be explored (to u)lize all available land)
  27. 27. PRIVATE LAND AVAILABLE FOR ACQUISITION
  28. 28. Privately owned land suitable for year-round irrigated cash cropping is available for acquisi)on •  There is an opportunity to acquire a local company located on the island of Sumbawa, Nusa Tenggara Barat (NTB) Indonesia; •  The Company owns two adjoining HGU’s measuring a total of 1,142 Ha; and •  At least 70% of the HGU area (800 Ha) is considered suitable for irrigated cropping; Our Base Case model is based on developing irriga)on on 120 Ha, providing significant opportunity for expansion
  29. 29. Landscape and topography is comparable to temperate savannah and desirable for intensive mechanized agriculture •  Approximately 70% (800 Ha) is considered arable and these soils comply with Soil Class I characteris)cs (Australian standards); •  Our Base Case model assumes the development of 120 Ha for irrigated cash crops; •  The remaining arable land (680 Ha) will be developed based on market demand; and •  Infrastructure will be developed on non-arable land. Above&Road&Landscapes& Below&Road&Landscapes&
  30. 30. Site suitability assessment was conducted in 2014 Site Assessment concluded: ü  Site is located in a sub-tropical climate and with approximately 800 Ha arable land; ü  Climate, soils and topography suits sweet corn, chili and shallots all year round (all three crops are common to this region); ü  Soils are favorable for repeated irrigated cropping (virgin and deep sandy loam); ü  Presence of a large under-ground aquifer (water source for irriga)on); ü  No occupa)on by communi)es (no access to water), the area is sparsely populated; and ü  More than 2km of deep-water coastline offers opportunity to establish a deep water port.
  31. 31. The dry sub-tropical climate is well suited to year round produc)on of Chili, shallots and sweet corn Month Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Kempo:Rainfall 220 225 220 190 100 0 0 0 0 85 155 140 Min:Temp 21 21 21 21 20 18 18 19 20 20 21 21 Max:Temp 30 30 30 30 30 30 30 31 31 31 30 30 Rain:days 22 20 18 19 13 0 0 0 0 5 14 23 Eto 5 5 5 5 6 6 6 6 6 6 5 5 High:RH Key Climate Indicators •  Annual Rainfall Sub-tropical rainfall: 1,300mm Wegest months: December – February (20- 23 rain days) Dry months (no rain): Jun – Sept •  Temperature - Summer Temperatures Max 31°C / Min 21°C - Winter Temperatures Max 31°C / Min 18°C Mean Daily Temp: 24°C Key Site Indicators •  Well drained soils •  Slight slope Site suitability criteria Dompu / Kempo Data Sweet corn, Chili & Shallot requirements Summer Temp Range Winter Temp Range Mean Daily Temp Summer: Max 31°C / Min 21°C Winter: Max 31°C / Min 18°C Mean Daily Temp: 24°C Maximum: 30-32 Minimum: 10-18 Optimal: 20 -30 Seasonal Rainfall Annual Rainfall Summer: 1,200 – 1,250 mm Winter: 100- 150 mm 1,335 mm 3.5 to 4 Ml/Ha (Drip irrigation) Frequent applications Susceptible to water logging Solar radiation % Jan- Feb: 42% - 49% Mar- Dec: 69% - 93% Maximum solar radiation required Relative humidity % Jan- May: 79% - 84% June - Dec: 66% - 77% High humidity increases the incidence of fungal disease Wind Speed (Knots) Ranges from 1 – 7 Knots Susceptible to strong winds Evaporation (mm/day) Jan- May: 5 mm (Summer) June - Dec: 6 mm (Winter) Sufficient supplementary irrigation at various stages of growth Soils Sandy loam (well drained) Virgin soil (pH to be tested) Well drained loam - sandy loam Ph range 5.8 to 7.5 Topography 0 to 2% Slight slope is preferred
  32. 32. The proposed East Sumbawa site is suitable for year round cash cropping Shallots, chili and sweet corn are common smallholder crops in Sumbawa (Bima, Dompu and Sumbawa Besar). Smallholder produc)vity is limited by inadequate access to water for irriga)on and distance to the main markets in Java (high cost and high losses of perishable produce). Founders have developed solu)ons that address cold supply chain and logis)c challenges. Site suitability criteria Proposed Property Comment Climate: Sub-tropical dry climate. ✔ Climate is not considered extreme for the proposed cropping program. Adverse (high rainfall) conditions are not frequent Soils: Virgin, deep sandy loam soils ✔ Chili, shallots and sweet corn require well- drained soil – ideally sandy loam. Irrigation potential: The property is located above a large aquifer – reported ground-water potential 8-15 liters per sec (borehole potential 800m3/day) ✔ Approximate 3,500m3/Ha water is required to produce one crop. Maximum requirement for 120 Ha estimated at 4,700m3/day from boreholes during dry season (peak demand). Community conflict: Low risk of community conflict or illegal occupation (limited access to water) ✔ Good potential to support surrounding community farmers through out-grower programs Existing access & infrastructure: Nearest town is 50km away, nearest Port is 30km away and both are connected by new asphalt road. Reliable and good mobile telecommunication services are available but no access to state electricity supply. ✔ Basic services and all-weather access is available On site power generation options include solar, gas (LPG) and diesel power Cold supply chain logistics: No available cold supply chain services ✘ Propose to establish our own cold supply chain (farm to warehouse) Market access: Long distance by road to the main market (Java). Sea freight options are limited. Nearest Port is 30km away ✘ Sea freight is potentially cheaper and quicker than road transport. Propose long term charter of a suitable vessel - weekly service to / from Java Opportunity to develop a deep water jetty on site
  33. 33. The property has unlimited access to ground water (produc)ve aquifer) Reference: Sumbawa Hydrogeological map (2001) The proposed property is located in an area defined as “Moderate Produc)ve Aquifer” (Light Blue) yielding 5 to 10 liters per second” (Poten)al = 800 m3/day)
  34. 34. Modern drip irriga)on systems op)mize water u)liza)on and allows fer)lizer applica)on via irriga)on at any )me •  Peak water requirement for 120 Ha is es)mated at 8,400 m3 per day, based on evapora)on of 7 mm/day, no rainfall and 100% of plant water requirement; •  10-12 boreholes may be required; •  The proposed irriga)on system is designed in 30 Ha Blocks (4); •  Each block will have its own water storage and water supply infrastructure (boreholes, borehole pumps, irriga)on pumps, fer)ga)on injectors and backup generator); and •  Solar powered pumps will be used to minimize pumping costs. Project Tambora intends to design rainwater harvesHng system that includes construcHon of a large storage dam to reduce the requirement for groundwater extracHon
  35. 35. PROJECT TAMBORA STARTUP DEVELOPMENT SCHEDULE Year 1 Development ac)vi)es include: •  Land Acquisi)on •  Site development and planning •  Temporary accommoda)on & offices •  Boreholes and tes)ng •  Irriga)on storage dam construc)on •  Installa)on of drip irriga)on systems •  Buildings & infrastructure construc)on •  Equipment purchases •  Container jegy construc)on •  Pack house and cold storage construc)on •  Security infrastructure •  Java Warehouse setup •  Phased vegetable produc)on
  36. 36. The startup development schedule is aimed at achieving full produc)on (2.5 Ha per week) commencing Q4 •  1st commercial crop may exclude sweet corn (not viable to ship small quan)ty to Java); •  1st crop revenue is expected commencing Q3; •  Full produc)on (2.5Ha/week) is set to commence in Q4 / retailing in Q1 of year 2; •  Flexible produc)on scale – adjusted to suit site development progress and market demand; •  Ini)al accommoda)on and office infrastructure will be containerized (quick and easy); and •  The container jegy should be ready for use by Q4. Year% Quarter Q1 Q2 Q3 Q4 Land%Acquisition Construction Irrigation Equipment%purchases Port%Construction Site%preparation 1st%Crop%(1%Ha/week)%E%%Chili%&%Shallots 1st%Crop 2nd%Crop%(2%Ha/week)%E%Sweet%corn,%Chili%&%Shallots 2nd%Crop Full%Production%(2.5%Ha/week)%E%%Sweet%corn,%Chili%&%Shallots Full%Prod. Plant%Trial%Crops%E%Garlic%&%Soybean 1st 2nd 3rd Retail%1st%Crop%E%%Chili%&%Shallots 1st%Crop Retail%2nd%Crop%Sweet%corn,%Chili%&%Shallots 2nd%Crop Retail%2.5%Ha/WeekE%%Sweet%corn,%Chili%&%Shallots Retail%Trial%Crops%E%Garlic%&%Soybean 1st 2nd Year%1 Acquisition/DD HGU/Extension Accomodation///Stores///Offices///Roads///Pack/house///Security Boreholes///Dams///Drip/Irr.
  37. 37. The 2 year development schedule is aimed at comple)ng construc)on and building a large storage dam for irriga)on •  Arer Year 1 the farming opera)on needs to have iden)fied full )me staff and field workers who will require on site accommoda)on and facili)es that include medical and educa)onal facili)es for their immediate families; •  A large water storage dam will be constructed on the property to capture rainwater runoff (reduce dependence on boreholes); and •  By year 2, the farm is ready to increase produc)on scale to suit local, regional and export market demand and establish livestock enterprise (beef feedlot & abagoir) to u)lize crop residue and processed waste. Year% Quarter Q1 Q2 Q3 Q4 Land%Acquisition Construction Irrigation Equipment%purchases Port%Construction Site%preparation Full%Production%(2.5%Ha/week)%I%%Sweet%corn,%Chili%&%Shallots Y2%I%Q1 Y2%I%Q2 Y2%I%Q3 Y2%I%Q4 Plant%Trial%Crops%I%Garlic%&%Soybean Y2#$#Q1 Y2#$#Q2 Y2#$#Q3 Y2#$#Q4 Retail%2.5%Ha/WeekI%%Sweet%corn,%Chili%&%Shallots Y1%I%Q4 Y2%I%Q1 Y2%I%Q2 Y2%I%Q3 Retail%Trial%Crops%I%Garlic%&%Soybean Y1#$#3rd#crop Y2#$#Q1 Y2#$#Q2 Y2#$#Q3 Year%2 Rainwater%Harvesting%Dam Staff%&%Labour%permament%accommodation
  38. 38. Our “Base case” assumes year-round produc)on of sweet corn, chili and shallots of equal area Sweet%Corn Chili Shallots Soybean Garlic Weekly&Planting 2.5&Ha 2.5&Ha 2.5&Ha Weekly&Harvesting 2.5&Ha 2.5&Ha 2.5&Ha Budget&Yield 18&Mt/Ha 14&Mt/Ha 15&Mt/Ha Potential&Yield 22>25&Mt/Ha 20&Mt/Ha 25>30&Mt/Ha Budget&Weekly&Production&(Mt) 45 35 37.5 Potential&Weekly&Production&(Mt) 55 50 62.5 Budget&Weekly&Shipments 45 35 37.5 Potential&Weekly&Shipments 55 50 62.5 Budget&Weekly&Retail 45 35 37.5 Potential&Weekly&Retail 55 50 62.5 Main%Crops Trial%Crops 0.5&Ha 0.5&Ha Production%Plan Land%Use%/%Crop%Options Sweet%Corn Chilli Shallots Variety Golden%Sweet Birds%Eye%&%Large SAREN%TSS Growing%Days% 80#$#85#Days 110$120#Days 70#$#90#Days Budgeted%Yield%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% Potential%Yield 18Mt/Ha####################### 20$25Mt/Ha 14Mt/Ha##################### 18$22Mt/Ha 15Mt/Ha################# 20$30Mt/Ha Stocking 75,000#/#Ha 30,000/Ha 160,000/Ha Water%Requirement 3,500#m3/Ha 3,500#m3/Ha 3,500#m3/Ha Full%Production%@%2.5%Ha/Week
  39. 39. COLD SUPPLY CHAIN AND LOGISTICS
  40. 40. Cold supply chain must include post-harvest pre-cooling and op)mum cold storage from farm to retail Logis)cs Temperature Control (Refrigera)on) Cold Chain Logis)cs + = Farm ProducHon Transport Warehouse Cold Storage Wholesalers Pre-Cooling Pack house Cold Storage • Farm • Pack house • Pre-Cooling • Grading • Packing ProducHon • Container Trucks • Reefer Containers • Cold Storage Road Transport to Local Port • Loading • Shipping • Off-Loading Sea Freight to Java Port • Transfer to Cold rooms • Delivery to Warehouse • Road Transport Road Transport to Java Warehouse • Produce retailed to Wholesalers and Traders collected from the Warehouse Java Cold Storage & Retail Fresh Produce Op)mum Temp Maximum Shelf Life Sweet Corn 0 – 2°C 6 – 8 Days Chili 7 – 10 °C 14 – 21 Days Shallots 0 – 2°C + 6 months © Document copyright of FAC
  41. 41. Cold supply chain requirements include post-harvest pre-cooling, pack house cold storage, reefer cold storage and warehouse cold storage Hydro-chiller Cold Rooms Reefer Containers Swap Body Reefer Container
  42. 42. SHIPPING Example: 140 TEU Vessel (20 Reefer points)
  43. 43. Example Vessel: SHIFlag: Faeroe Islands Built: Orskov Staalskibsverft AS, Denmark 1989. Class: Bureau Veritas 1A1 Ice B, E0, KMC. Deadweight: 3,223 Mt Gross tonnage: 2,469 Mt Loa: 87,05 m Beam: 14,50 m. Draught: 6.1 m Container capacity: 140 TEU capacity 20 reefer plugs Project requires long term )me charter of a small reefer vessel that is geared with side-thrust capability •  Cargo cranes: 2 x 15Mt Maritime hydraulic cranes 1 Maritime hydraulic crane of 50Mt •  Hatch covers: 2 hatches type Kvaerner folding type each 20.70 x 10m / 4 x 2.50m •  Flush steel pontoons on deck 2 and 3 Box hold. •  Frozen cargo capacity: 2200 tons of frozen fish (can be used for other frozen product). •  Refrigerator equipment: Sabroe refrigerating plant -27 C Tropic, 80m3/Hr air circulation. •  Main engine: MAK type 8MU 453 C, 2400 kw/3260 bhp at 560 rpm •  Service speed: 12.5 knots •  Fuel oil consumption: 6,6 tons of MDO per 24 hours. •  Shaft generator: Stamford MHC 434 E, 255 kva. •  Require tub boat support when docking (no side –thrust capability)
  44. 44. Shipping costs (long term )me charter) es)mated at US$ 25,271 per trip •  Time charter quote received from a local shipping agent; •  Interna)onal )me charter rates for < 200 TEU Vessel = US$ 20/TEU/Day; •  Our Base Case Time Charter cost (shipping 12 x 20r Reefer Containers) = US$ 55/TEU/day; •  Significant cost saving opportunity by increasing the number of containers per shipment. Shipping'Cost'Criteria Rp'Costs Re0flagging'Cost'(Rp) 420,000,000'''''''''''' Monthly'Time'Charter'Costs'(Rp) 850,000,000'''''''''''' Bunker'Cost '''at'1,500L'per'Day'@'Rp'12,000/L' Port'Charges '''at'Rp'5'million'/'Loading'or'Discharge Time'Charter'Rp'Costs/Trip 221,250,000'''''''''''' (4#Trips/Month) 'Bunker'Cost'(Rp)' 72,000,000'''''''''''''' 4#Shipping#Days/Trip Port'Charges'(Rp) 10,000,000'''''''''''''' Per#Trip Total'Costs'per'Trip'(Rp) 303,250,000'''''''''''' USD#25,271 Estimated'Rp'Cost'per'Kg 3,032.50'''''''''''''''''' (based#on#10,000kg#Container) Monthly'Costs'(Rp) 1,213,000,000'''''''' Time%Charter%Cost%US$%per%TEU%per%day 59.03%%%% 10#Containers#per#trip# Time%Charter%Cost%US$%per%TEU%per%day 19.68%%%% 30#Containers#per#trip Time%Charter%Cost%US$%per%TEU%per%day 11.81%%%% 50#Containers#per#trip Time%Charter%Cost%US$%per%TEU%per%day 5.90%%%%%% 100#Containers#per#trip
  45. 45. Our Base Case assumes no 3rd party cargo is included in shipments to and from Java Project Tambora - Base Case freight costs @ Startup Phase 1: Rp 7,500 / Kg (4 Reefer containers/week) @ Startup Phase II: Rp 3,192 / Kg (10 Reefer containers / week) Full Produc)on (1 year): Rp 2,554 / Kg (12 reefer containers / week) Phase&1 Phase&II Full&Operation Time%Charter,%Bunker,%Port%Costs%(USD/trip) $25,271 $25,271 $25,271 ATI%Containers%per%Week 4 10 12 3rd%Patty%Containers%per%week Trip%TurnHAround%(ATIHSurabyaHATI) ATI%Weekly%Fresh%Produce%(Kgs) 40,000%%%%%%%%% 95,000%%%%%%%% 118,750%%%%%%%%%% ATI%Produce%Budget%Cost%per%Kg Rp7,581 Rp3,192 Rp2,554 Business%Plan%Budget%(Rp/Kg) Rp7,581 Rp3,192 Rp2,554 Additional%Container%Space%Available%to%SBY 94 90 85 BASE&CASE:&East&Sumbawa&to&Surabaya&(Fresh&Produce&only)&One&Way 5H6%Days
  46. 46. Inclusion of 3rd Party cargo would reduce transport costs to < Rp 500/kg •  Commodity road transport from Dompu to East Java cost Rp 850 – Rp 1,200/kg (1 way); •  3rd Party dry-bulk cargo commodi)es includes 100,000 Mt animal feed corn (May – Sept); •  Other commodi)es (10,000 – 20,000 Mt/Ann) include coffee, cashew and rice; and •  Return cargo from East Java include cement, sugar, fer)lizer, seed and common goods. Project Tambora aims to partner with a local shipping agent to achieve freight costs < Rp 500/kg (50% Capacity to Java and 20% capacity from Java). 3rd party cargo can be loaded / discharged at Kempo & Calabai (public ports). ATI$to$Surabaya 30%$Capacity 50%$Capacity 80%$Capacity Surabaya$to$ATI 20%$Capacity 20%$Capacity 20%$Capacity Time$Charter,$Bunker,$Port$Costs$(USD/trip) $25,271 $25,271 $25,271 ATI$Containers$(TEU)$per$Week 12 12 12 3rd$Patty$Containers$per$week 38 58 88 Trip$TurnIAround$(ATIISurabyaIATI) Weekly$Fresh$Produce$(Kgs) 118,750$$$$$$$$$$ 118,750$$$$$$$$ 118,750$$$$$$$$$$$$$ 3rd$Party$Dry$Cargo 380,000$$$$$$$$$$ 580,000$$$$$$$$ 880,000$$$$$$$$$$$$$ Total$Payload$per$Shipment$(2Iway) 498,750$$$$$$$$$$ 698,750$$$$$$$$ 998,750$$$$$$$$$$$$$ ATI$Produce$Cost$per$Kg Rp608 Rp434 Rp304 Additional$Container$Space$Available$to$SBY 70 50 20 5I6$Days East$Sumbawa$to$Surabaya$(Farm$&$3rd$Party$Cargo)$B$Two$Way
  47. 47. Ini)ally fresh produce will be shipped via Kempo port to a cold storage warehouse in Java To minimize transport costs and minimize supply chain losses, Project Tambora intends to develop a cold supply chain from farm to the Java warehouse (point of retail). Loading port op)ons were evaluated: •  The nearest ac)ve container port is located at Badas in Sumbawa Besar (55 Nm from Kempo). This op)on would incur addi)onal transport costs and longer )me to market; and •  The nearest seaport (inac)ve) is located at Kempo (the immediate preferred op)on)
  48. 48. Project Tambora plans to develop a cold supply chain that includes on-site port infrastructure To control transport costs and to ensure regular/scheduled weekly shipments to Java, the cold supply chain will be developed from pack house to the Java warehouse •  Bathometric chart illustrates a deep water coastline suitable for deep-water port; •  On-site port infrastructure eliminates the reliance on public road and public port infrastructure and road transport costs will be reduced; and •  The deep-water jegy must be capable of loading and off-loading vessels requiring berthing depth of 7-10 m
  49. 49. To achieve 6 day turn-around, Gresik Port (Surabaya) was iden)fied as the preferred discharge port •  Gresik – Small local port is considered most suitable for discharging container cargo from geared vessels (less possibility of port conges)on); •  It is located in close proximity (10km) to JIIPE Industrial Complex (ATI Cold Storage Warehouse op)on); •  Export shipments can be redirected via TJ Perak (10 km away); and •  Air freight exports are possible (Surabaya Interna)onal Airport) (30km from JIIPE).
  50. 50. GOOD AGRICULTURE PRACTICES (GAPs) GAP requirements to achieve budgeted produc)on and export quality include: •  Scheduled plan)ng, irriga)on, fer)liza)on, IPM, weed control and harves)ng; •  Expert management is required; •  Adequate labor supply for field ac)vi)es (150-160 per day); and •  Stand – alone logis)cs and cold supply chain to achieve weekly shipments to Java
  51. 51. PRODUCTION COSTS & YIELDS
  52. 52. Mechanized harves)ng provides opportunity to reduce labor requirements and harves)ng costs
  53. 53. Mechanized harves)ng prac)ces would reduce labor requirements and harves)ng costs Processing Industry Fresh Market
  54. 54. FINANCIAL & INVESTMENT ANALYSIS
  55. 55. Management team would include experts in vegetable produc)on, logis)cs and marke)ng CEO$ P.Botha$ Finance$&$Admin$$ General$Manager$ Accountant$ Human$Resources$$ Manager$ Marke?ng$$ General$Manager$ (Expat)$ Opera?ons$$ General$Manager$ (Expat)$ Senior$Agronomist$$ (Expat)$ Division$Managers$ Sweet$corn$Manager$ Chili$Manager$ Shallot$Manager$ Irriga?on$Manager$ Laboratory$ Soil$&$Nutrients$ Pack$House$ Manager$ Maintenance$ Manager$ Logis?cs$$ General$Manager$
  56. 56. More than 50% of required CAPEX (US$ 2.9) is required for land acquisi)on and infrastructure development Note: Current owner is willing to consider outright sale or an Equity posi)on in the Company
  57. 57. INVESTMENT ANALYSIS •  10 Year Arer Tax Cashflow •  Tax @ 28 % •  Discount Rate @ 10% •  Overheads = 22% of total costs
  58. 58. Budgeted investment returns (IRR 40%) are based on conserva)ve market prices and abnormally high shipping costs © Document copyright of FAC Year USD 0 1 2 3 4 5 6 7 8 9 10 P&L Yr1 Yr2 Yr3 Yr4 Yr5 Revenue 1,780,333 8,352,785 8,603,369 8,861,470 9,127,314 9,401,133 9,683,167 9,973,662 10,272,872 10,581,058 Crop%input%and%marketing%costs (2,328,469) (4,572,121) (4,705,289) (4,838,458) (4,971,627) (5,104,795) (5,237,964) (5,371,132) (5,504,301) (5,637,469) SG&A (852,247) (1,241,595) (1,276,239) (1,311,922) (1,348,676) (1,386,532) (1,425,525) (1,465,687) (1,507,053) (1,549,661) EBITDA (1,400,383) 2,539,070 2,621,840 2,711,090 2,807,011 2,909,806 3,019,679 3,136,843 3,261,518 3,393,928 Depreciation (229,947) (229,947) (241,065) (243,196) (245,327) (247,458) (105,777) (105,777) (105,777) (105,777) ProfitBbeforeBtax (1,630,330) 2,309,123 2,380,776 2,467,894 2,561,684 2,662,348 2,913,901 3,031,066 3,155,740 3,288,150 Tax%@ 28% 456,492 (646,554) (666,617) (691,010) (717,272) (745,457) (815,892) (848,698) (883,607) (920,682) ProfitBafterBtax (1,173,837) 1,662,568 1,714,159 1,776,884 1,844,413 1,916,890 2,098,009 2,182,367 2,272,133 2,367,468 CashBflow EBITDA (1,400,383) 2,539,070 2,621,840 2,711,090 2,807,011 2,909,806 3,019,679 3,136,843 3,261,518 3,393,928 Income%tax 456,492 (646,554) (666,617) (691,010) (717,272) (745,457) (815,892) (848,698) (883,607) (920,682) Working%capital 0 Capex: Purchase%of%land (834,242) Other%capex (1,689,936) (235,642) (49,634) (49,973) (50,322) (50,682) (51,053) (51,434) (51,828) (52,233) (52,233) CashflowBbeforeBfinancing (2,524,178) (1,179,532) 1,842,881 1,905,250 1,969,757 2,039,057 2,113,295 2,152,352 2,236,317 2,325,678 2,421,013 Equity Equity%financing 3,600,000 CashflowBafterBfinancing 1,075,822 M1,179,532 1,842,881 1,905,250 1,969,757 2,039,057 2,113,295 2,152,352 2,236,317 2,325,678 2,421,013 Opening%cash%balance 1,075,822 1,075,822 T103,710 1,739,171 3,644,421 5,614,178 7,653,235 9,766,530 11,918,882 14,155,200 16,480,878 Retained%cash 1,075,822 T1,179,532 1,842,881 1,905,250 1,969,757 2,039,057 2,113,295 2,152,352 2,236,317 2,325,678 2,421,013 Closing%cash%balance 1,075,822 M103,710 1,739,171 3,644,421 5,614,178 7,653,235 9,766,530 11,918,882 14,155,200 16,480,878 18,901,890 IRR Equity%investment (3,600,000) 0 0 0 0 0 0 0 0 0 0 Free%cashflow%after%financing 1,075,822 (1,179,532) 1,842,881 1,905,250 1,969,757 2,039,057 2,113,295 2,152,352 2,236,317 2,325,678 2,421,013 CashflowBavailableBtoBs'holders (2,524,178) (1,179,532) 1,842,881 1,905,250 1,969,757 2,039,057 2,113,295 2,152,352 2,236,317 2,325,678 2,421,013 EquityBIRR 40% NPV $7,229,845
  59. 59. Three “upside opportuni)es” have been iden)fied that would poten)ally increase IRR in excess of 150% Three priority upside opportuni)es excluded from the budgeted “Base Case” model include: 1.  Reduce shipping costs by including 3rd party cargo with ATI cargo (+ 30% IRR); 2.  Premium prices (25%) are achievable for export quality produce (+26% IRR); 3.  Increased farm produc)on from 120 Ha to 240 Ha in Year 3 (+50% IRR). Increase farm producHon to 240 Ha Target 25% price premium for export quality produce Include 3rd Party dry bulk containerized cargo with fresh produce Base Case: 120 Ha + High Shipping Cost + below average price for export quality sweet corn, chili and shallots IRR 40 % IRR 74 % IRR 100 % IRR 150 % Years 1-2 Year 3
  60. 60. By including 3rd party dry bulk cargo, IRR can be increased by 30% (based on conserva)ve market prices) from 120 Ha © Document copyright of FAC Year USD 0 1 2 3 4 5 6 7 8 9 10 P&L Revenue 1,780,333 8,352,785 8,603,369 8,861,470 9,127,314 9,401,133 9,683,167 9,973,662 10,272,872 10,581,058 Crop%input%and%marketing%costs (1,166,483) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) SG&A (852,247) (1,241,595) (1,276,239) (1,311,922) (1,348,676) (1,386,532) (1,425,525) (1,465,687) (1,507,053) (1,549,661) EBITDA (238,397) 4,631,391 4,847,331 5,069,749 5,298,839 5,534,802 5,777,843 6,028,177 6,286,020 6,551,598 Depreciation (229,947) (229,947) (241,065) (243,196) (245,327) (247,458) (105,777) (105,777) (105,777) (105,777) ProfitAbeforeAtax (468,344) 4,401,445 4,606,266 4,826,553 5,053,512 5,287,344 5,672,066 5,922,399 6,180,242 6,445,820 Tax%@ 28% 131,136 (1,232,404) (1,289,755) (1,351,435) (1,414,983) (1,480,456) (1,588,178) (1,658,272) (1,730,468) (1,804,830) ProfitAafterAtax (337,207) 3,169,040 3,316,512 3,475,118 3,638,529 3,806,887 4,083,888 4,264,127 4,449,774 4,640,991 CashAflow EBITDA (238,397) 4,631,391 4,847,331 5,069,749 5,298,839 5,534,802 5,777,843 6,028,177 6,286,020 6,551,598 Income%tax 131,136 (1,232,404) (1,289,755) (1,351,435) (1,414,983) (1,480,456) (1,588,178) (1,658,272) (1,730,468) (1,804,830) Working%capital 0 Capex: Purchase%of%land (834,242) Other%capex (1,689,936) (235,642) (49,634) (49,973) (50,322) (50,682) (51,053) (51,434) (51,828) (52,233) (52,233) CashflowAbeforeAfinancing (2,524,178) (342,903) 3,349,353 3,507,603 3,667,991 3,833,173 4,003,293 4,138,231 4,318,077 4,503,319 4,694,536 Equity Equity%financing 3,600,000 CashflowAafterAequityAfinancing 1,075,822 (342,903) 3,349,353 3,507,603 3,667,991 3,833,173 4,003,293 4,138,231 4,318,077 4,503,319 4,694,536 Debt Drawdown 0 0 0 0 0 0 0 0 0 0 0 Repayment 0 0 0 0 0 0 0 0 0 0 CashflowAafterAfinancing 1,075,822 N342,903 3,349,353 3,507,603 3,667,991 3,833,173 4,003,293 4,138,231 4,318,077 4,503,319 4,694,536 Opening%cash%balance 1,075,822 1,075,822 732,919 4,082,272 7,589,876 11,257,867 15,091,040 19,094,333 23,232,563 27,550,640 32,053,960 Retained%cash 1,075,822 V342,903 3,349,353 3,507,603 3,667,991 3,833,173 4,003,293 4,138,231 4,318,077 4,503,319 4,694,536 Closing%cash%balance 1,075,822 732,919 4,082,272 7,589,876 11,257,867 15,091,040 19,094,333 23,232,563 27,550,640 32,053,960 36,748,495 IRR Equity%investment (3,600,000) 0 0 0 0 0 0 0 0 0 0 Free%cashflow%after%financing 1,075,822 (342,903) 3,349,353 3,507,603 3,667,991 3,833,173 4,003,293 4,138,231 4,318,077 4,503,319 4,694,536 CashflowAavailableAtoAs'holders (2,524,178) (342,903) 3,349,353 3,507,603 3,667,991 3,833,173 4,003,293 4,138,231 4,318,077 4,503,319 4,694,536 EquityAIRR 74% NPV $17,570,383
  61. 61. Achieving 25% premium on market price for export quality produce shipped with 3rd party cargo would increase IRR by 26% © Document copyright of FAC Year USD 0 1 2 3 4 5 6 7 8 9 10 P&L Revenue 2,225,417 10,440,981 10,754,211 11,076,837 11,409,142 11,751,416 12,103,959 12,467,078 12,841,090 13,226,323 Crop%input%and%marketing%costs (1,166,483) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) (2,479,799) SG&A (852,247) (1,241,595) (1,276,239) (1,311,922) (1,348,676) (1,386,532) (1,425,525) (1,465,687) (1,507,053) (1,549,661) EBITDA 206,686 6,719,588 6,998,173 7,285,116 7,580,667 7,885,085 8,198,635 8,521,592 8,854,238 9,196,862 Depreciation (229,947) (229,947) (241,065) (243,196) (245,327) (247,458) (105,777) (105,777) (105,777) (105,777) Profit?before?tax (23,260) 6,489,641 6,757,108 7,041,920 7,335,340 7,637,627 8,092,858 8,415,815 8,748,460 9,091,085 Tax%@ 28% 6,513 (1,817,099) (1,891,990) (1,971,738) (2,053,895) (2,138,536) (2,266,000) (2,356,428) (2,449,569) (2,545,504) Profit?after?tax (16,747) 4,672,541 4,865,118 5,070,183 5,281,445 5,499,091 5,826,858 6,059,387 6,298,891 6,545,581 Cash?flow EBITDA 206,686 6,719,588 6,998,173 7,285,116 7,580,667 7,885,085 8,198,635 8,521,592 8,854,238 9,196,862 Income%tax 6,513 (1,817,099) (1,891,990) (1,971,738) (2,053,895) (2,138,536) (2,266,000) (2,356,428) (2,449,569) (2,545,504) Working%capital 0 Capex: Purchase%of%land (834,242) Other%capex (1,689,936) (235,642) (49,634) (49,973) (50,322) (50,682) (51,053) (51,434) (51,828) (52,233) (52,233) Cashflow?before?financing (2,524,178) (22,443) 4,852,854 5,056,210 5,263,056 5,476,090 5,695,497 5,881,201 6,113,336 6,352,436 6,599,126 Equity Equity%financing 3,600,000 Cashflow?after?equity?financing 1,075,822 (22,443) 4,852,854 5,056,210 5,263,056 5,476,090 5,695,497 5,881,201 6,113,336 6,352,436 6,599,126 Debt Drawdown 0 0 0 0 0 0 0 0 0 0 0 Repayment 0 0 0 0 0 0 0 0 0 0 Cashflow?after?financing 1,075,822 N22,443 4,852,854 5,056,210 5,263,056 5,476,090 5,695,497 5,881,201 6,113,336 6,352,436 6,599,126 Opening%cash%balance 1,075,822 1,075,822 1,053,379 5,906,234 10,962,443 16,225,499 21,701,589 27,397,085 33,278,286 39,391,622 45,744,058 Retained%cash 1,075,822 V22,443 4,852,854 5,056,210 5,263,056 5,476,090 5,695,497 5,881,201 6,113,336 6,352,436 6,599,126 Closing%cash%balance 1,075,822 1,053,379 5,906,234 10,962,443 16,225,499 21,701,589 27,397,085 33,278,286 39,391,622 45,744,058 52,343,184 IRR Equity%investment (3,600,000) 0 0 0 0 0 0 0 0 0 0 Free%cashflow%after%financing 1,075,822 (22,443) 4,852,854 5,056,210 5,263,056 5,476,090 5,695,497 5,881,201 6,113,336 6,352,436 6,599,126 Cashflow?available?to?s'holders (2,524,178) (22,443) 4,852,854 5,056,210 5,263,056 5,476,090 5,695,497 5,881,201 6,113,336 6,352,436 6,599,126 Equity?IRR 100% NPV $26,582,970
  62. 62. Increasing farm produc)on from 120 Ha to 240 Ha in Year 3 together with premium market prices and lower shipping costs, provides opportunity to exceed IRR 150% © Document copyright of FAC Year USD 0 1 2 3 4 5 6 7 8 9 10 P&L Revenue 4,450,833 10,440,981 21,508,421 22,153,674 22,818,284 23,502,833 24,207,918 24,934,155 25,682,180 26,452,645 Crop%input%and%marketing%costs (1,166,483) (2,479,799) (4,959,598) (4,959,598) (4,959,598) (4,959,598) (4,959,598) (4,959,598) (4,959,598) (4,959,598) SG&A (852,247) (1,241,595) (1,659,110) (1,705,499) (1,753,279) (1,802,492) (1,853,182) (1,905,393) (1,959,169) (2,014,560) EBITDA 2,432,103 6,719,588 14,889,713 15,488,577 16,105,408 16,740,743 17,395,138 18,069,165 18,763,413 19,478,488 Depreciation (229,947) (229,947) (241,065) (243,196) (245,327) (247,458) (105,777) (105,777) (105,777) (105,777) Profit?before?tax 2,202,156 6,489,641 14,648,648 15,245,382 15,860,081 16,493,285 17,289,360 17,963,387 18,657,635 19,372,710 Tax%@ 28% (616,604) (1,817,099) (4,101,622) (4,268,707) (4,440,823) (4,618,120) (4,841,021) (5,029,748) (5,224,138) (5,424,359) Profit?after?tax 1,585,553 4,672,541 10,547,027 10,976,675 11,419,258 11,875,165 12,448,339 12,933,639 13,433,497 13,948,351 Cash?flow EBITDA 2,432,103 6,719,588 14,889,713 15,488,577 16,105,408 16,740,743 17,395,138 18,069,165 18,763,413 19,478,488 Income%tax (616,604) (1,817,099) (4,101,622) (4,268,707) (4,440,823) (4,618,120) (4,841,021) (5,029,748) (5,224,138) (5,424,359) Working%capital 0 Capex: Purchase%of%land (834,242) Other%capex (1,689,936) (235,642) (49,634) 310,027 (50,322) (50,682) (51,053) (51,434) (51,828) (52,233) (52,233) Cashflow?before?financing (2,524,178) 1,579,857 4,852,854 11,098,118 11,169,548 11,613,903 12,071,570 12,502,682 12,987,589 13,487,042 14,001,896 Equity Equity%financing 3,600,000 Cashflow?after?equity?financing 1,075,822 1,579,857 4,852,854 11,098,118 11,169,548 11,613,903 12,071,570 12,502,682 12,987,589 13,487,042 14,001,896 Debt Drawdown 0 0 0 0 0 0 0 0 0 0 0 Repayment 0 0 0 0 0 0 0 0 0 0 Cashflow?after?financing 1,075,822 1,579,857 4,852,854 11,098,118 11,169,548 11,613,903 12,071,570 12,502,682 12,987,589 13,487,042 14,001,896 Opening%cash%balance 1,075,822 1,075,822 2,655,679 7,508,534 18,606,652 29,776,200 41,390,103 53,461,673 65,964,355 78,951,944 92,438,986 Retained%cash 1,075,822 1,579,857 4,852,854 11,098,118 11,169,548 11,613,903 12,071,570 12,502,682 12,987,589 13,487,042 14,001,896 Closing%cash%balance 1,075,822 2,655,679 7,508,534 18,606,652 29,776,200 41,390,103 53,461,673 65,964,355 78,951,944 92,438,986 106,440,882 IRR Equity%investment (3,600,000) 0 0 0 0 0 0 0 0 0 0 Free%cashflow%after%financing 1,075,822 1,579,857 4,852,854 11,098,118 11,169,548 11,613,903 12,071,570 12,502,682 12,987,589 13,487,042 14,001,896 Cashflow?available?to?s'holders (2,524,178) 1,579,857 4,852,854 11,098,118 11,169,548 11,613,903 12,071,570 12,502,682 12,987,589 13,487,042 14,001,896 Equity?IRR 153% NPV $56,508,037
  63. 63. Several other upside opportuni)es would significantly increase the projected investment returns Livestock Enterprise Increased Yields Increase area Chili & Shallot On Farm sales Reduce ferHlizer costs Reduce harvesHng costs Increase total producHon Add Soybean & Garlic Processed foods Crop residue & processed waste is u)lized as low cost animal feed (Beef or Pork Feedlot) Shallots & Chili 6-8 months in a year Non-export quality produce (no shipping cost) Apply compost produced on farm Develop Smallholder Out-growers Canned sweet corn & frozen edamame for exports Mechanized harves)ng Sweet corn & Shallots Addi)onal crops are good for Diversifica)on
  64. 64. PROJECT TAMBORA

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