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Geosynthetic Clay Liner Investment Opportunity and Analysis

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I was going to co-invest into this business with a friend but the guy who will run the show bailed out at the last round to talks wasted all my efforts but nevertheless I ended up learned so much about geo-synthetic clay liner and it use :)

  • very interesting plz contact me bogdan.potapenko@me.com
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Geosynthetic Clay Liner Investment Opportunity and Analysis

  1. 1. Geosynthetic Clay Liner Investment Opportunity and Analysis Geosynthetic Clay Liner (GCL) manufacturing investment opportunity, market information and cost analysis 2012 Mehmet Cetin IZOBENT 2/29/2012
  2. 2. 2 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT
  3. 3. 3 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Table of Contents Executive Summary.................................................................................................................................6 Geosynthetic Clay Liner and Components..............................................................................................7 Geosynthetic Clay Liner (GCL).............................................................................................................7 Bentonite ............................................................................................................................................8 Sodium Bentonite ...........................................................................................................................8 Worldwide and Local Bentonite Production...................................................................................9 Geotextile..........................................................................................................................................10 Applications...................................................................................................................................10 Woven Fabric ................................................................................................................................10 Nonwoven Fabric ..........................................................................................................................10 Geomembranes ................................................................................................................................11 Manufacturing ......................................................................................................................................12 Manufacturing Process .....................................................................................................................12 Typical Product Specifications ..........................................................................................................12 Raw Materials ...................................................................................................................................12 Manufacturing Line...........................................................................................................................12 Space Requirements .........................................................................................................................13 Production Line.............................................................................................................................13 Material Storage ...........................................................................................................................13 Power Requirements ........................................................................................................................13 Personnel Requirements...................................................................................................................13 Production Capability Estimation .....................................................................................................13 Competition ..........................................................................................................................................14 CETCO................................................................................................................................................14 Naue..................................................................................................................................................14 Eurobent ...........................................................................................................................................14 Izomas...............................................................................................................................................14 Projects Examples.................................................................................................................................15 GCL Deployment in Mining Projects .................................................................................................15 GCL Deployment in Real Estate Projects...........................................................................................15 Market Outlook and Trends..................................................................................................................17 Market Structure...............................................................................................................................17 Worldwide Market............................................................................................................................17 Turkish GCL Market Size ...................................................................................................................18
  4. 4. 4 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Mining ...........................................................................................................................................18 Waste Management .....................................................................................................................18 Liquid Containment.......................................................................................................................19 Coal Ash Containment ..................................................................................................................19 Shale Oil and Gas ..........................................................................................................................19 Sales, Growth and Expansion Strategy .................................................................................................20 Sales Strategy and Focus...................................................................................................................20 Collaboration and Turnkey Project Delivery.....................................................................................20 Develop New End Markets and Applications for Our Products........................................................20 Focus on Sales and Operational Excellence......................................................................................21 Selectively Pursue Investment and Acquisition Opportunities.........................................................21 Business Risks........................................................................................................................................21 Cost, Revenue, Profit and Financial Outlook ........................................................................................22 Scenario 1..........................................................................................................................................22 Assumptions..................................................................................................................................22 Equipment Investment .................................................................................................................22 Power Requirement and Cost.......................................................................................................22 Space Requirement and Rent Cost ...............................................................................................22 Raw Material Cost.........................................................................................................................22 Personnel and Field Selling Cost ...................................................................................................22 Scenario 2..........................................................................................................................................23 Assumptions..................................................................................................................................23 Equipment Investment .................................................................................................................23 Power Requirement and Cost.......................................................................................................23 Space Requirement and Rent Cost ...............................................................................................23 Raw Material Cost.........................................................................................................................23 Personnel and Field Selling Cost ...................................................................................................23 Cash Flow Projection.........................................................................................................................24 Assumptions..................................................................................................................................24 Scenario 1......................................................................................................................................24 Scenario 2......................................................................................................................................24 References ............................................................................................................................................25 Abbreviations........................................................................................................................................26
  5. 5. 5 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Figure 1 - Worldwide bentonite production...........................................................................................9 Figure 2 - Bentonite production in Turkey..............................................................................................9 Figure 3 - Geotextile needle punching production line ........................................................................12 Figure 4 - Containment liner installation at the Sukhaybarat Gold Mine in Saudi Arabia....................15 Figure 5 - Runway widening construction at the Toulouse-Blagnac Airport in France ........................16
  6. 6. 6 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Executive Summary Bonding clay to geosynthetic materials has created an economical, long-term solution for many applications. Geosynthetic clay liners (GCLs) are hydraulic barriers made of clay bonded to a single geosynthetic layer or to multiple geosynthetic layers. GCLs are used primarily as substitutes for compacted clay liners (CCLs), providing significant advantages in cost, ease of installation, and performance. Primary applications include surface impoundment, secondary containment and landfills. The products have been used commercially for over 10 years. GCL use has grown steadily, and standards have been authored to address swell and fluid-loss index testing, determination of flux, manufacturing, sampling, installation and more. Demand within Turkish market has been steadily growing even though the market can still be considered as virgin for GCL. Growth in recent years has been due to regulatory changes making GCL’s use mandatory for containment and landfill applications. However GCL can be and has been positioned in variety of different sectors which are untapped within Turkey. Situation is very similar within surrounding markets. Hence while leveraging existing organic market growth while having opportunity to develop additional verticals and regions offer additional revenue potential and lower business risk. We believe Turkey is well situated for GCL production. Availability of all raw and semi finished products within local market will allow us manufacture quality GCLs at competitive prices. There is already steadily growing market demand for GCLs with further untapped sub verticals waiting to be captured. Although initial barriers to entry is rather low our market knowledge, current end user & channel alignment in addition to lean manufacturing setup will be well positioned to tackle existing competition and win further local and regional markets. Our aim is capturing 30% of the market within 2 years and 75% within 5 years. We are currently looking for financing and equity capital. We would be pleased to have the opportunity to further present our plan and discuss potential collaboration and investment scenarios and strategies. Yours Sincerely, Mehmet Cetin
  7. 7. 7 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Geosynthetic Clay Liner and Components Geosynthetic Clay Liner (GCL) Bonding clay to geosynthetic materials has created an economical, long-term solution for many applications. Geosynthetic clay liners (GCLs) are hydraulic barriers made of clay bonded to a single geosynthetic layer or to multiple geosynthetic layers. Because of its low permeability, swelling capacity and relative abundance, natural sodium bentonite is the preferred clay component of GCLs. A wide range of materials, including geotextiles and geomembranes, are used to carry and encapsulate the clay. Also, they provide the product with structural support. GCLs are used primarily as substitutes for compacted clay liners (CCLs), providing significant advantages in cost, ease of installation, and performance. Primary applications include surface impoundment, secondary containment and landfills. The products have been used commercially for over 10 years. GCL use has grown steadily, and standards have been authored to address swell and fluid-loss index testing, determination of flux, manufacturing, sampling, installation and more. A geosynthetic clay liner (GCL) is a woven fabric-like material, primarily used for the lining of landfills. It is a kind of geomembrane and geosynthetic, which incorporates a bentonite or other clay, which has a very low hydraulic conductivity. The resulting lower permeability slows the rate of seepage out of the landfill. Due to environmental laws, any seepage from landfills must be collected and properly disposed of, otherwise contamination of the surrounding ground water could cause major environmental and/or ecological problems. The lower the hydraulic conductivity the more effective the GCL will be at retaining seepage inside of the landfill. Bentonite composed predominantly (>70%) of Montmorillonite or other expansive clays, are preferred and most commonly used in GCLs. A general GCL construction would consist of two layers of geosynthetics stitched together enclosing a layer of processed sodium bentonite. Typically, woven and/or non-woven textile geosynthetics are used, however polyethylene or geomembrane layers or geogrid geotextiles materials have also been incorporated into the design or in place of a textile
  8. 8. 8 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT layer to increase strength.GCLs are produced by several large companies in North America, Europe, and Asia. The United States Environmental Protection Agency currently regulates landfill construction and design in the US through several legislations. Bentonite Bentonite is an absorbent aluminium phyllosilicate, essentially impure clay consisting mostly of montmorillonite. There are different types of bentonite, each named after the respective dominant element, such as potassium (K), sodium (Na), calcium (Ca), and aluminium (Al). Experts debate a number of nomenclatorial problems with the classification of bentonite clays. Bentonite usually forms from weathering of volcanic ash, most often in the presence of water. However, the term bentonite, as well as a similar clay called tonstein, has been used for clay beds of uncertain origin. For industrial purposes, two main classes of bentonite exist: sodium and calcium bentonite. In stratigraphy and tephrochronology, completely devitrified (weathered volcanic glass) ash-fall beds are commonly referred to as K-bentonites when the dominant clay species is illite. Other common clay species, and sometimes dominant, are montmorillonite and kaolinite. Kaolinite-dominated clays are commonly referred to as tonsteins and are typically associated with coal. Sodium Bentonite Sodium bentonite expands when wet, absorbing as much as several times its dry mass in water. Because of its excellent colloidal properties, it is often used in drilling mud for oil and gas wells and for geotechnical and environmental investigations. The property of swelling also makes sodium bentonite useful as a sealant, especially for the sealing of subsurface disposal systems for spent nuclear fuel and for quarantining metal pollutants of groundwater. Similar uses include making slurry walls, waterproofing of below-grade walls, and forming other impermeable barriers, e.g., to seal off the annulus of a water well, to plug old wells, or to line the base of landfills to prevent migration of leachate. It is also used to form a barrier around newly planted trees to constrain root growth so as to prevent damage to nearby pipes, footpaths and other infrastructure. Sodium bentonite can also be "sandwiched" between synthetic materials to create geo-synthetic clay liners (GCL) for the aforementioned purposes. This technique allows for more convenient transport and installation, and it greatly reduces the volume of sodium bentonite required. Various surface modifications to sodium bentonite improve some rheological or sealing performance in geoenviromental applications, for example, the addition of polymers.
  9. 9. 9 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Worldwide and Local Bentonite Production Figure 1 - Worldwide bentonite production Figure 2 - Bentonite production in Turkey Top ten bentonite production countries Country Bentonite Production (tons) World 14,600,000 1 United State 4.620,000 2 China 3,200,000 3 Greece 1,100,000 4 Turkey 600,000 5 Russia 500,000 6 Italy 470,000 7 Mexico 435,273 8 Brazil 419,214 9 Germany 363,998 10 Arjantina 256,165
  10. 10. 10 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Geotextile Geotextiles are permeable fabrics which, when used in association with soil, have the ability to separate, filter, reinforce, protect, or drain. Typically made from polypropylene or polyester, geotextile fabrics come in three basic forms: woven (looks like mail bag sacking), needle punched (looks like felt), or heat bonded (looks like ironed felt). Applications Geotextiles and related products have many applications and currently support many civil engineering applications including roads, airfields, railroads, embankments, retaining structures, reservoirs, canals, dams, bank protection, coastal engineering and construction site silt fences. Usually geotextiles are placed at the tension surface to strengthen the soil. Geotextiles are also used for sand dune armoring to protect upland coastal property from storm surge, wave action and flooding. A large sand-filled container (SFC) within the dune system prevents storm erosion from proceeding beyond the SFC. Using a sloped unit rather than a single tube eliminates damaging scour. Erosion control manuals comment on the effectiveness of sloped, stepped shapes in mitigating shoreline erosion damage from storms. Geotextile sand-filled units provide a "soft" armoring solution for upland property protection. Geotextiles are used as matting to stabilize flow in stream channels and swales. Geotextiles can improve soil strength at a lower cost than conventional soil nailing.[citation needed] In addition, geotextiles allow planting on steep slopes, further securing the slope. Geotextiles have been used to protect the fossil hominid footprints of Laetoli in Tanzania from erosion, rain, and tree roots. In building demolition, geotextile fabrics in combination with steel wire fencing can contain explosive debris. Geotextile composites have been introduced and products such as geogrids and meshes have been developed. Overall, these materials are referred to as geosynthetics and each configuration—- geonets, geogrids and others—-can yield benefits in geotechnical and environmental engineering design. Woven Fabric A woven is a cloth formed by weaving. It only stretches in the bias directions (between the warp and weft directions), unless the threads are elastic. Woven cloth usually frays at the edges, unless measures are taken to counter this, such as the use of pinking shears or hemming. Woven fabrics are worked on a big loom and made of many threads woven on a warp and a weft. It is stretchy only along the bias Nonwoven Fabric Nonwoven fabric is a fabric-like material made from long fibers, bonded together by chemical, mechanical, heat or solvent treatment. The term is used in the textile manufacturing industry to denote fabrics, such as felt, which are neither woven nor knitted. Nonwoven materials typically lack strength unless densified or reinforced by a backing. In recent years, nonwovens have become an alternative to polyurethane foam.
  11. 11. 11 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Applications Nonwoven fabrics are broadly defined as sheet or web structures bonded together by entangling fiber or filaments (and by perforating films) mechanically, thermally or chemically. They are flat, porous sheets that are made directly from separate fibers or from molten plastic or plastic film. They are not made by weaving or knitting and do not require converting the fibers to yarn. Typically, a certain percentage of recycled fabrics and oil-based materials are used in nonwoven fabrics. The percentage of recycled fabrics varies based upon the strength of material needed for the specific use. Conversely, some nonwoven fabrics can be recycled after use, given the proper treatment and facilities. For this reason, some consider nonwovens a more ecological fabric for certain applications, especially in fields and industries where disposable or single use products are important, such as hospitals, schools, nursing homes and luxury accommodations. Nonwoven fabrics are engineered fabrics that may be a limited life, single-use fabric or a very durable fabric. Nonwoven fabrics provide specific functions such as absorbency, liquid repellence, resilience, stretch, softness, strength, flame retardancy, washability, cushioning, filtering, use as a bacterial barrier and sterility. These properties are often combined to create fabrics suited for specific jobs, while achieving a good balance between product use-life and cost. They can mimic the appearance, texture and strength of a woven fabric and can be as bulky as the thickest padding. In combination with other materials they provide a spectrum of products with diverse properties, and are used alone or as components of apparel, home furnishings, health care, engineering, industrial and consumer goods. Non-woven Materials used in Geotextiles  soil stabilizers and roadway underlayment  foundation stabilizers  erosion control  canals construction  drainage systems  geomembrane protection  frost protection  agriculture mulch  pond and canal water barriers  sand infiltration barrier for drainage tile  landfill liners Geomembranes Geomembranes are a kind of geosynthetic material made up of impermeable membranes. Their uses include solid waste containment (such as landfill liners), mining, and water containment applications. Geomembranes are made of various materials. Some common geomembrane materials are Bituminous Geomembrane (BGM), Ethylene Propylene Diene Monomer (EPDM), Low-density polyethylene (LDPE), High-density polyethylene (HDPE), Polyvinyl Chloride (PVC), Polyurea and Polypropylene (PP).
  12. 12. 12 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Manufacturing Manufacturing Process GCLs are prefabricated sheets of processed bentonite clay available in multiple sizes. They are manufactured by encapsulating the clay between two or more layers of geotextile or by bonding the clay to one side of a geomembrane. The geotextile-supported products hold the clay in place by soluble adhesive, I-ties, barbed-needle punching that interlocks the geotextile fibers or by periodic rows of heavy stitching through the clay and fabric. Typical Product Specifications Component Per square meter Bentonite Clay 2500g/m2 to 5500 g/m2 Cover Textile 100 g/m2 to 450 g/m2 Carrier Textile 80 g/m2 to 550 g/m2 HDPE Membrane Thickness 1m – 3mm GCL Width 5m – 6m GCL Length 40m – 200m Performance Criteria Permeability No greater than 7 x 10-10 m/s Peel strength Between 150N/m and 3500N/m Raw Materials Geosynthetic clay liner is made by sandwiching bentonite either between two nonwoven or one nonwoven and one woven geotextile. Further, since certain projects require pre membrane layer; the production can also account laminating LDPE/HDPE membrane layer saving costs, time and simplify installation and therefore sale and market positioning of our product. Projected manufacturing line takes into account such additional requirements in terms of equipment and its additional infrastructure requirements. All necessary raw and semi finished materials can be sourced from local market. Manufacturing Line Figure 3 - Geotextile needle punching production line Main machine for GCL production is needle punching machine unless other production methods such as thermal bonding are deployed. Additional production modules are feeder modules for geotextile, HDPE/LDPE membrane and bentonite in addition to packaging module for ready to ship/store GCL rolls. A fork lift capable to carry both rolls of raw materials and finished GCL rolls and a bridge crane are additional necessary equipments for GCL production.
  13. 13. 13 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Space Requirements A factory with a covered production space of 1,000 square meters is expected to be sufficient for hosting single production line as well as provide ample space for finished product storage. Production Line Single production line that includes PE membrane lamination and packaging modules require factory floor space of 300 m2 [L30m x W10m x H6m] including space required for loading and unloading raw and processed materials and servicing. The height at the installation location should be at least 6m in order for proper bridge crane operation. Material Storage Additional 500m2 space would provide ample space to store raw materials and finished goods. Outdoor storage space with proper weather protection can also be used for storing raw and finished products. Power Requirements Single GCL production line would require 65kWh, all machinery require three phase power circuits. Personnel Requirements Total of 6 personnel team is required for GCL production for a single shift. Single shift is defined as 6 days a week with 8 to 10hr working hours. Roles for the 6 man production team are:  production manager  machinery operator  fork lift operator  factory workers We have additionally included an office/factory assistant and administrator for taking care of daily back office duties. Although tasks such as invoicing and petty cash management are projected to be handled by production manager and office administrator, overall accounting is projected as an outsourced activity. Tasks such as product testing can be handled as either part time resources deployment or can be outsourced to local universities’ civil engineering departments; in either scenario, relative costs are included within the cash flow projection. Production Capability Estimation Production capability is projected as 4,000 (conservative output volume) square meters per day for a single shift (8 – 10hr working day). Therefore, estimated annual GCL production will be around 1 million square meters for single shift, which can be increased by either deploying a second shift and/or adding additional production lines.
  14. 14. 14 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Competition Currently there are 4 players within Turkish market; CETCO, Eurobent, Naue and local player Izomas. Other than the local manufacturer; rest of the competition does not have local manufacturing capability. Foreign players’ presence is via single sale representative. Eurobent has intentions to setup a local production facility; serving local and nearby markets however necessary initial steps has not been started as of today hence they import their products into Turkish market like rest. Eurobent ships GCLs from its Poland factory, CETCO ships from its Spain factory and Naue ships GCLs from its Germany or Hungary factories. Since CY2010 both CETCO and Naue’s market footprint has lessen due to lack of focus and weak field coverage. Current market activity of each company is very limited. CETCO CETCO [www.cetco.com] is a subsidiary of AMCOL and currently advertises itself as global market leader in GCL production and sales. Their principal GCL focus is in waste containment, water containment and mining sectors. CETCO has a worldwide footprint with 7 production locations and an additional one owned by a joint venture. CETCO’s 2010 sales is $232 million which constitutes 27% of mother company’s overall sales. CETCO also has a contracting services sub division and hence positioned in providing turnkey delivery. CETCO’s market activity within Turkish market has been diminished last couple of years following a change in management and sales personnel in its EMEA division. Naue Naue [www.naue.com] is one of the pioneering companies in establish GCL product and market. It is a privately held company, headquarters located in Germany. Its main manufacturing location is Germany and has recently opened one in Malaysia. Naue’s activity in Turkey is through a single sales representative and has been rather low so far. Eurobent Eurobent [www.eurobent.com] is a privately held company. Its factory is location in Poland and company’s primary focus is within European market. Currently Eurobent has the largest market share and activity within Turkish market; their last 2 year sales is above 1.5 million square meters in Turkish market focusing mainly in mining and waste containment markets. They have a single representative located in Turkey who is also responsible from sales in neighboring emerging markets; CIS, Iran and Africa. Izomas Izomas [www.izomas.com.tr] is local GCL manufacturer. The company introduced its GCL production line in 2009 [www.geomas.com.tr] and according to their web site their
  15. 15. 15 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Projects Examples GCL Deployment in Mining Projects Figure 4 - Containment liner installation at the Sukhaybarat Gold Mine in Saudi Arabia [Photo courtesy of Naue] The Saudi Company for Precious Metals (SCPM) made provisions for a new tailing facility at the Sukhaybarat Gold Mine in Qaseem province for the containment of the tailing from the gold ore mining process, in accordance with a technical specification drawn up by engineering consultants. SCPM is a limited-liability company of Saudi Arabia and is wholly owned by Saudi Arabian Mining Co., a state-owned company. To cope with the harsh chemical conditions of the containment and to ensure an environmentally safe solution, the designer specified a double-lined system that included a primary HDPE geomembrane and a needle-punched geosynthetic clay liner (GCL). The new tailing facility is approximately 580m x 380m surrounded by an embankment 7m high. The total area, including the slopes of the embankments, was lined with 222.100m2 of a double- lined HDPE above the geosynthetic clay liner. The primary liner system was protected on the base area with nonwoven geotextile before placement of a 30cm-thick protective layer of heap-leach gravel. The gravel did not contain stones greater than 15mm in diameter. A protective embankment and a layer of rockfill were created at one end of the tailing facility to slow the flow of tailing sand pouring into the tailing pond. The embankment and the protective layer were made of rockfill and a separation layer of geotextile was specified for this area prior to the positioning of the rockfill and also below the drain material and the drainage pipes. The project was completed in 13 weeks. GCL Deployment in Real Estate Projects One of the largest infrastructure projects in Europe in recent years has been in Toulouse, France, at the Toulouse-Blagnac Airport and the adjacent Airbus-France facility where the new Airbus A-380s are built. During the course of this construction project, hangars were built to house the wide-bodied A-380 planes. But in addition, the entire infrastructure of the complex was also realigned to accommodate the dimensions of the redesigned aircraft.
  16. 16. 16 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Figure 5 - Runway widening construction at the Toulouse-Blagnac Airport in France. [Photo courtesy of Naue] Runway No. 2, built originally as a test track for the supersonic Concorde, now serves the newest Airbus A-380s, currently in production. The necessary construction work included widening the 4-km runway by 2m to accommodate the 700-ton “silver bird” with its 80m wingspan. The conceptual design and advisory services for this construction project were completed in cooperation with the airport’s operating company, ADP Aeroport de Paris, and consulting engineers, including the decision to use geosynthetic clay liners (GCLs) to seal the runway. The entire system prevents any drainage water, contaminated by air and traffic, from polluting the groundwater. The project—from earthmoving activities; installation of sewer pipes, service lines and pipelines; and construction of roads and approach runways—had to be completed within two months … all without disruption to air traffic! The liner installation, and all of the associated construction work, proceeded smoothly. In fact, the installation portion of the project was completed ahead of schedule. All told, 40,000m2 of GCL and 24,000m2 of separation nonwoven geotextile were installed within two weeks. The capital expenditure for the total extension work was €13 million ($15.78 million U.S.) and was borne by the Toulouse Chamber of Commerce and Industry, and Airbus-France.
  17. 17. 17 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Market Outlook and Trends Market Structure Although the demand for GCLs has historically been driven by the lining requirements for landfills, there is now an emerging demand for GCLs in other applications, in particular, mining and building water proofing as well as water conservation and secondary containment. The Turkish market can be divided into the following market segments:  Mining – also characterised by large contracts of around 30,000 – 100,000 sqm;  Landfill – characterised by large contracts typically between 10,000 to 80,000 sqm;  Industrial/building & construction – typically consisting of small contracts ranging from 1,000 to 30,000 sqm; and  Consumer – characterised by very small contracts of between 200 to 1,500 sqm. The landfill and mining segments are project driven, often with long lead times between winning the contract and supply of the products. On the other hand, the industrial segment consists largely of basement waterproofing. Worldwide Market Worldwide demand for geosynthetics, including GCL is projected to increase 8.3 percent annually to 4.5 billion square meters in 2015. This growth rate is an acceleration from the gains of the 2005- 2010 period, reflecting in part the reduced 2010 bases of the developed countries. Advances are being driven by the increasing market penetration and large-scale construction plans in place in many developing countries. Asia/Pacific region to surpass North America as largest market In 2010, North America was the largest regional market, accounting for 31 percent of global sales. The US is the world’s largest individual country market, with one-quarter of total sales. Growth in North America benefits from the massive size of its construction sector, which is expected to rebound through 2015 from a low 2010 base, as well as the need to maintain its large transportation infrastructure. Gains are also aided by the region’s building codes and environmental protection regulations. The Asia/Pacific region was only slightly smaller, accounting for 30 percent of global geosynthetics sales in 2010. However, this region is projected to achieve the fastest growth rate through 2015, primarily driven by China, which is expected to account for nearly half of new global demand generated between 2010 and 2015. China’s gains are primarily due to amount of available land, its ongoing development of large-scale infrastructure projects, and the need for erosion control. India is also expected to post double-digit annual growth through the forecast period, with sales nearly doubling by 2015, albeit from a much smaller base. In many of the least developed countries, however, growth for geosynthetics will be more limited, due to lack of adequate funding, a lack of regulations that require their use, and the presence of lower-cost alternatives. Western Europe and Japan are fairly comparable to the US in terms of the level of maturity of their respective geosynthetics markets, as well as the type of regulatory environment. Both of these areas are expected to rebound from reduced 2010 bases, benefiting from improved construction activity and high level of concern for environmental protection. Gains in these areas are forecast to be the slowest among all regions through 2015, indicative of Western Europe and Japan’s relative maturity.
  18. 18. 18 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT However, the affluence of these countries allows them to use advanced geosynthetic technologies despite their larger upfront costs. In 2010, the construction market accounted for the largest share of geosynthetics sales with 34 percent. It will also register the fastest gains through 2015, albeit from a reduced 2010 base, as construction activity improves. This market benefits from factors such as the passage of environmental regulations, including those regarding sedimentary runoff from construction sites, as well as the increasing need for erosion control and other practices to protect against soil loss in a growing number of countries. Transportation infrastructure, the second largest market in 2010 (28 percent), is expected to post above-average gains through 2015 aided by the increasing use of geosynthetics in these projects, and the ongoing extension of paved roads and railways. The landfill market is another key area for geosynthetics as a growing number of countries adopt modern landfill designs and operations. Turkish GCL Market Size Local addressable GCL market size is estimated to be around 7 million square meters with 10% YoY growth. Market is rather virgin with large volume users are mines and landfill projects and small end users are real estates and private waste and water containment ponds. Mining In the heap leach extraction process used in the mining industry, GCL systems prevent the leakage of the valuable leachate into which the metal is dissolved, protect the ground and soil from contamination and provide drainage solutions. In all other processes, GCL are used as containment solutions for the tailing ponds in which water borne tailings are stored in order to allow the separation of solid particles from water. The size of the GCL opportunity in mining end markets is directly related to the amount of global mining activity, which is driven by demand for metals and minerals and the need for new mining infrastructure to satisfy this demand. Our products are especially relevant to mining applications focused on copper, gold, silver, uranium and phosphate. According to The Datamonitor Group, the global copper industry alone is expected to produce 19.4 million metric tons in 2015, representing an increase of 22.5% over 2010 production levels. The global mining industry is expected to increase annual capital expenditures by 113% to $168 billion in 2018 from $79 billion in 2009, according to the McKinsey Basic Materials Institute. Waste Management Geosynthetics are used in the management of solid waste (MSW) as liners to prevent landfill runoff from entering the surrounding environment and as caps to prevent the escape of greenhouse gases, control odors and limit rainwater infiltration. Key Note Publications estimates that 2.0 billion tons of MSW were generated worldwide in 2006 and nearly 3.0 billion tons are expected to be generated in 2011, representing annual growth of approximately 8%. While growth in North American and European waste management markets has historically trended with growth in gross domestic product, or GDP, we believe the construction and expansion of landfills for the containment of this waste will drive global GCL demand in emerging markets. According to Key Note, developing nations, such as China and India, represent more than half of global MSW generation and also require the most investment in their waste management infrastructure. We believe that increased wealth, the positive correlation between MSW generation and per capita GDP and heightened environmental regulation will move disposal practices in Turkey and surrounding emerging markets away from
  19. 19. 19 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT current open dumping and open burning practices towards landfilling and other more environmentally friendly methods of disposal. China has addressed the need for increased sound waste disposal resources in its twelfth five-year plan, the most recent in a series of economic development initiatives, which mandates the investment of 180 billion Yuan, or approximately $28 billion, in the urban waste disposal sector between 2011 and 2015. Liquid Containment GCL products are used in a wide variety of liquid containment applications in civil engineering and infrastructure end markets such as water infrastructure, agriculture and aquaculture. Water Infrastructure Our product will be used to prevent water leakage in water transportation and storage applications, such as reservoirs and canals. Frost & Sullivan estimates that approximately $6 trillion of global investment in the water industry will be required through the next twenty years, and that investment in water infrastructure alone will exceed $525 billion by 2016. This will be magnified in emerging economies in South America, Asia Pacific, Middle East and Africa, where population expansion and urbanization coupled with water scarcity and pollution will cause investment to outpace global rates. Agriculture and Aquaculture Irrigation waterways for agriculture end markets and fish farming ponds for aquaculture end markets employ geosynthetic products to prevent the leakage of water. According to the World Fish Center, aquaculture is among the fastest growing food production sectors in the world, with fish production expected to increase by as much as 67% between 2008 and 2030 to 110 million tons. In 2008, Asia represented over 90% of global aquaculture production, driven by increasing urbanization and affluence, higher per capita consumption and more protein-rich diets. Coal Ash Containment Coal-burning power plants produce coal ash, a pollutant that can contaminate soil and groundwater, as a byproduct of the combustion process. The Parthenon Group, or Parthenon, estimates that 135 million tons of coal ash were produced in 2009 in the United States. Approximately 55% of this was disposed of in surface impoundments, landfills and minefills, which are often unlined or insufficiently lined. In December 2008, a coal ash containment failure at The Tennessee Valley Authority's fossil fuel plant in Kingston, Tennessee resulted in the release of approximately 5.4 million cubic yards of coal ash into the Emory River. The clean-up costs and timeline associated with the failure are estimated to be in excess of $1 billion and four years, respectively. Following this incident, between May and November 2010, the United States Environmental Protection Agency, or EPA, announced plans to regulate the disposal of coal ash generated by coal-fired electric utilities under RCRA, published proposed rules for the regulation and held a public comment period. According to Parthenon, demand for GCL is expected to accelerate to between 235 million and 410 million square feet annually between 2011 and 2014 assuming EPA regulates coal ash disposal under Sole C or Subtitle D in 2011 and mandates that new and replacement coal ash impoundments and landfills are lined. Utilities have already begun constructing disposal facilities that meet the requirements of the regulation in advance of it coming into effect. Shale Oil and Gas GCL solutions are used in a number of applications in the drilling and production of shale oil and gas, including to effectively line storage and disposal ponds for both the freshwater required for
  20. 20. 20 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT hydraulic fracturing, or fracking, and for flowback water, a by-product containing high levels of the salt, down-well chemicals and metals used in the fracking process. According to Spears & Associates, Inc., $1.0 trillion of capital is expected to be spent in onshore oil and gas drilling and completion in the United States between 2011 and 2016. A portion of this capital will be used to develop over 103,000 horizontal wells in this period, the significant majority of which we believe will be in shale plays. We believe that the majority of producing shale wells will ultimately require appropriately lined ponds for the containment of freshwater, fracking chemicals and flowback water. These expenditures will support anticipated growth in domestic shale oil and gas production. While total domestic natural gas production is projected by the Energy Information Administration, or EIA, to grow by 25% to 26.3 trillion cubic feet, or tcf, in 2035 from 21.0 tcf in 2009, shale gas production is expected to grow by over 250% to account for 47% of total natural gas production by 2035 compared to 16% in 2009. Sales, Growth and Expansion Strategy Sales Strategy and Focus Our sales and delivery approach, other than where our channel has already established strong relationship, drive a direct sales approach for high volume sales segments; mining, waste management and liquid containment end markets and leverage subcontractors and reseller channel for low volume segment consumer markets. We will be also exploring and developing new end markets such as coal ash containment and shale oil and gas and expand our business in neighboring countries. Additionally, we have already established strong relationship and currently discussing joint venture details with a well established US based contractor services company for Turkey and surrounding region; this will also . We believe that there are highly attractive near- to medium-term trends in each of these sectors. Collaboration and Turnkey Project Delivery Although it may look like contradicting our initial engagement strategy with existing local market channel; we are currently in discussions with InterGEO Service [http://intergeoservices.com], a US based company formally CETCO’s contracting services division, focusing on geo environmental contracting capable of providing solutions to market’s diverse construction needs. We believe this will provide us an additional leverage within Turkish and expansion markets where InterGEO Service’s can be positioned as part of our extension or as a consulting controller defining product specifications. Develop New End Markets and Applications for Our Products As environmental regulations continue to be adopted in our domestic and neighboring international end markets, we will continue to respond to these regulations by cultivating new applications for our products. We believe we are well-positioned to develop new addressable markets as a result of our product development capabilities, our deep relationships with customers and end-users and our experience working with relevant governmental agencies. As a result of these efforts, we anticipate having the critical first-mover advantage in such important high-growth, high-margin markets. Additionally, we will establish local and international channel for small real estate developers that will allow us capture high margin but low volume segment of our market without incurring high field selling costs.
  21. 21. 21 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Focus on Sales and Operational Excellence We believe we have a clear strategy for ongoing improvement in our profitability by focusing on both higher-margin products and end markets, as well as continued operational improvement. We expect that our core product strategy of matching product specifications with the application will have a positive impact on our sales and profitability. We believe that as our volumes increase, the operating leverage we will create through facility and business line rationalizations will have a positive impact on our profitability. Selectively Pursue Investment and Acquisition Opportunities We plan to pursue strategic investment opportunities, both organic and acquisitive in nature. In an effort to ensure we have manufacturing capacity located where it would be most advantageous, we intend to make capital investments in our facilities that serve the Asian, Middle Eastern and African markets, as well as in our facilities which we expect will serve the domestic markets. In addition, given the fragmented nature of the GCL industry, we believe that there may be opportunities to pursue value-added acquisitions at attractive valuations in the future, which may augment our geographic footprint, broaden our product offerings, expand our technological capabilities and capitalize on potential operating synergies. Business Risks  Our business depends on the levels of capital investment expenditures by our customers, which are affected by factors such as the state of domestic and global economics, the cyclical nature of our customers' markets, our customers' liquidity and the condition of global credit and capital markets.  Our sales depend, in part, on our ability to bid and win orders. Our failure to effectively obtain future orders could adversely affect our profitability.  Increases in prices or disruptions in supply of our raw materials could adversely impact our financial condition.  Although organic market growth currently exists within our domestic and nearby markets, our future growth depends, in part, on developing new applications and end markets for our products.  Unexpected equipment failures or significant damage to our manufacturing facility would increase our costs and reduce our sales due to production curtailments or shutdowns.  Although global market is rather highly competitive even if our domestic market currently is not; we should assume operating in a highly competitive industry.
  22. 22. 22 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Cost, Revenue, Profit and Financial Outlook Scenario 1 Assumptions  Quick local and near neighbor market penetration and becoming single largest supplier is the main goal  Two independent production lines are projected with full fledge testing laboratory  Initial annual production volume is expected to be around 2 million square meters which is 40% of maximum capacity Equipment Investment GCL Production Line €573,946.15 Fork Lift €15,384.62 Office Equipment €5,000 Lab & Testing €27,138.46 Misc. €15,384.62 TOTAL €636,853.85 Power Requirement and Cost GCL Production Line 130kWh Lighting 3 Heating/Cooling 4 Misc. 3 TOTAL 140kWh €2,897.13 / month Space Requirement and Rent Cost GCL Production Line 600m2 Packaging Line 60m2 Lamination Line 156m2 Indoor Storage 500 m2 TOTAL 1316 m2 €7,692.31 / month Raw Material Cost Nonwoven Geotextile €0.45 / m2 Woven Geotextile €0.25 / m2 Bentonite €0.42 / m2 Geomembrane Liner €1.35 / m2 TOTAL €1.12 / m2 €2.47 / m2 , incl. HDPE Personnel and Field Selling Cost Production Manager 1 €1,500 Machinery Operator 1 €1,100 Fork Lift Operator 1 €850 Worker 3 €650 Office Administrator 1 €850 Field Selling Cost 1 €1,000 TOTAL 7 €7,250 / month
  23. 23. 23 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Scenario 2 Assumptions  Local market penetration with lowest possible initial investment is projected  Single production line with inline lamination and packaging modules  Activities such as production testing not forecasted  Initial annual production volume is expected to be around 1.7 million square meters which is 70% of maximum possible output capacity, obtain via double shift working schedule Equipment Investment GCL Production Line €164,280.77 Fork Lift €15,384.62 Office Equipment €5,000 Misc. €15,384.62 TOTAL €200,050.00 Power Requirement and Cost GCL Production Line 65kWh Lighting 3 Heating/Cooling 4 Misc. 3 TOTAL 75kWh €2,897.13 / month Space Requirement and Rent Cost GCL Production Line 300m2 Packaging Line 60m2 Lamination Line 156m2 Indoor Storage 500 m2 TOTAL 1016 m2 €3,004.29 / month Raw Material Cost Nonwoven Geotextile €0.45 / m2 Woven Geotextile €0.25 / m2 Bentonite €0.42 / m2 Geomembrane Liner €1.35 / m2 TOTAL €1.12 / m2 €2.47 / m2 , incl. HDPE Personnel and Field Selling Cost Production Manager 1 €1,500 Machinery Operator 2 €2,200 Fork Lift Operator 2 €1,700 Worker 6 €3,900 Office Administrator 1 €850 Field Selling Cost 1 €1,000 TOTAL 12 €11,150 / month
  24. 24. 24 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Cash Flow Projection Assumptions  Annual sales is equal to annual output  Average selling price per square meter GCL is €1.70 and €3.56 GCL with geomembrane  Revenue projection does not take into account GCL sold with geomembrane, which would have overall positive impact and yield further profits  Production volume for initial year is 704,000 square meters and 2,100,000 square meters for following years  Both average sale price and OPEX includes 5% annual increase  Net cash flow includes payback of initial investment in 3 installments starting in year two Scenario 1 Cash Flow Summary 1 2 3 4 5 Revenue € 1,196,800 € 3,748,500 € 3,935,925 € 4,132,721 € 4,339,357 OPEX € 1,322,769 € 2,738,312 € 2,875,228 € 3,018,989 € 3,169,939 Cash Flow € (380,711) € 755,445 € 805,955 € 858,990 € 914,676 Firm Summary Values IRR MIRR NPV Investment 5 Year Gross Cash Flow Company Value in 5th Year Simple ROI in 5 Years 202% 85% € 1,177,451 € 1,017,564 € 2,317,502 €4,573,383 115% Scenario 2 Cash Flow Summary 1 2 3 4 5 Revenue € 1,196,800 € 3,141,600 € 3,298,680 € 3,463,614 € 3,636,794 OPEX € 1,257,595 € 2,740,251 € 2,877,263 € 3,021,126 € 3,172,183 Cash Flow € (140,815) € 321,328 € 341,396 € 362,467 € 384,591 Firm Summary Values IRR MIRR NPV Investment 5 Year Gross Cash Flow Company Value in 5th Year Simple ROI in 5 Years 232% 88% € 550,620 € 340,865 € 1,068,918 € 1,922,957 156%
  25. 25. 25 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT References i. http://geosyntheticsmagazine.com ii. http://www.fredoniagroup.com, World Geosynthetics, Industry Study with Forecasts for 2015 & 2020, Study #2825 | December 2011 iii. http://www.amcol.com, 2010 annual corporate report iv.
  26. 26. 26 Geosynthetic Clay Liner Production, Confidential 2012 | IZOBENT Abbreviations GCL Geosynthetic Clay Liner HDPE High Density Polyethylene LDPE Low Density Polyethylene CETCO Colloid Environmental Technologies Company Naue Naue Gmbh & Co. KG MSW Management of Solid Waste

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