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Feasibility Study: Feedstock production in Mexico

Prepared by Todd Hill Promethean Biofuels for Simbiotec, LLC

The Raise and Use of Funds

Develop company owned/controlled farm for oil feedstock production

Develop U.S. and Mexican vehicles suitable for capital raise Foment relationships in Mexico Understand the production potential per $1,000,000 in capital raised. Understand the relevant transportation and shipping costs from different point of origin.

Develop relationships with other oil producers that allow for pooled distribution and commercialization

The Opportunity Defined

Create a production and distribution channel for biodiesel feedstock exports from Mexico to the USA.

Maximize certain advantages for import/export made possible by NAFTA. Retain benefits of U.S. biodiesel and/or renewable diesel subsidies to producers or blenders.

The Value Proposition


Reduced volatility = Reduced risk = Capitalization Opportunity

Reap higher margins Offer competitive ceilings for buyers and floors for producers

WHAT MEXICAN FARMERS WANT

1. 2. 3. 4.

Floor price Upside participation Lower farm costs directly related to fuel costs Stability

Widescreen Presentation
This template is formatted with a 16:9 widescreen aspect ratio. Its a great way to take advantage of laptops, televisions and projectors equipped with widescreen displays.

The model of Mexican agriculture has not changed significantly since the late 1970s.

Even if you do not production have a Level of farm technology has you widescreen display, increased can still create and Multinational present 16:9 slides. corporations like ADM PowerPoints Slide Show have used NAFTA to form corporate always resizes your slides and to fit any subsidiaries screen. cooperative groups.

What Crop?
Jatropha is a possibility. So are more traditional crops.

The more traditional crops have the benefit of finding farms and farmer with prior cultivation and processing experience.
The introduction of new farm types is also attractive.

The Current Landscape


Biodiesel in Mexico is produced from animal fat and used cooking oil. Other feedstock opportunities includes palm oil, sunflower, safflower, canola, and soybean. Mexican government is interested in jatropha, but does not have a current action plan.
Biodiesel US$/liter From jatropha From canola From sunflower From used cooking oil/tallow 0.53 0.61 0.63 0.73

SENER estimates that more than 2 million ha are available for palm oil production (currently 15,000 ha), and approximately 1 million ha are available for jatropha cultivation.

Source: SENER-BID-GTZ 2006

Suitable Areas for Pictures Biodiesel Feedstock Widescreen Production (SENER 2007)

What are the challenges?


Cementing the distribution channel Forming the relationships and entities necessary for commercialization and customs passage

A real problem in the Mexican agricultural segment is contract compliance and enforcement!

Supply and Demand


Mexico does not produce enough grains and oilseeds to meet internal demand, so the countrys food and livestock producers import sizable volumes of these commodities to make value-added products, primarily for the domestic market.

Truck capacity is approximately 4,000 gallons of feedstock.

The Legal Landscape

What Mexico Wants

April 26, 2007, the Mexican Congress voted overwhelmingly for the Biofuels Promotion and Development Law

Products that do not compete with cost of food. Increased generation of oil stocks Increased exportation by Mexican entities.

Mexican Government Agencies

SENER - the Secretariat of Energy (SENER)


Permits

biofuels related concerns agricultural concerns

SAGARPA - the Secretariat of Agriculture (SAGARP


Permits

The scope of the concern determines whether permits are required from both organiza Additional permits are required at the State and Local levels of government.

Location Selection

A variety of agricultural, political, and economic factors need to be considered before a suitable location is selected.

Location Selection

Prefer areas of lesser conflicting activity Prefer areas that want U.S. investment dollars and have supporting policies and infrastructure.

CONCLUSIONS

Prefer areas that currently have less U.S. direct investment, all things being equal

QUESTIONS

Todd Ryan Gregory Hill Managing Principal & Founder Promethean Biofuels todd.hill@prometheanbiofuels.com 011.626.232.7608

Contact Information

Todd Ryan Gregory Hill Managing Principal & Founder Promethean Biofuels todd.hill@prometheanbiofuels.com 011.626.232.7608