Central America Nickel Inc. Executive summary We are observing a revolution in the manufacturing of metal objects with the use of three-dimensional printing that is completely changing the face and function of manufacturing. The essential ingredient for the new age of manufacturing will be Nickel powder. CVMR (http://cvmr.ca) owns over a hundred patents and has been selling metal powder to large worldwide organizations such as: GM, General Dynamics and NASA, at more than three times the price of Nickel metal. CAN holds a license for the CVMR carbonyl refining processes in Cuba and Bolivia. CAN has recently signed an agreement with VARONA Inc. (company 100% held by the Cuban government) for the development of various mines located in Cuba and Bolivia utilizing the CVMR processes. VARONA Inc. is the engineering construction arm of the Cuban government in Cuba and in South America and will be responsible for building the plants utilizing the CVMR processes in Cuba as well as in Bolivia, where Cuba has a long standing relationship, both politically and commercially. (For reference, please see the intention letter between CAN and VARONA Inc. http://bit.ly/290jpoh) CUBA In the mid 90 s, Canadian mining companies were very active in Cuba making several important discoveries. I was the CEO KWG Resources Inc. at the time and developed excellent relations with the Cuban government. An US plane was shot down by the Cubans in 1997 and all the Canadian mining companies left. Last week Central America Nickel was invited to develop on a joint venture basis gold projects in Cuba that contain 3 million ounces of gold with an upside of at least the same amount. Gold projects The Cuban Government has confirmed that will enter into a joint venture with CAN on a gold belt extending for 500 km, with an excess of 50 historical mines of which 5 major projects with identified resources of 4 million ounces of gold. The Camaguey to Holguin gold belt extends over a distance of 300 km, contains a minimum of 1 million ounces, 50 past producing mines (small scale) of which 11 have been allocated to CAN as well as all other satellite mines within the Camaguey Holguin province. If the potential were 10% of the Abitibi gold belt, we would be looking at 17 million ounces with a gross metal value of 20 billion dollars. The Abitibi gold belt from Timmins to Val-d Or extends over a distance of 317 km and has produced 171 million ounces of gold over the last 100 years, predominantly along the Destor Porcupine Fault Zone (DPFZ), which is a major rift system. The Camaguey-Holguin Gold Belt, recognized as having the largest untapped nickel
laterite deposit in the world, is located in an island arc environment in which the rocks have undergone intense heat and pressure. Located on major fault zones, it allowed the gold and nickel-bearing fluids to migrate in many cases right to the surface, amenable to open pit mining methods. Epithermal gold deposits and Kurokostyle VMS deposits can be found within these regions and can be of considerable size. A 5-million-dollar plant with a capacity of 300 tons per day would generate a cash flow of 70 million dollars over a 5-year period. If we reinvest the cash flow to out an additional plant into production over a 5-year period, the total cumulative cash flow would be 213 million dollars. The Camaguey concession also includes the San Felipe nickel deposit, estimated by BHP to contain 300 million tones at 1 1 4% nickel (USD 37 billion in gross metal value). All of the above deposits have been reserved for CAN on the following terms: 80% of the profits to Central America Nickel until recovery of capital in the project and 49% of the profits thereafter. The company is finalizing a financing that will allow it to commission five (300,000 tones per day capacity) plants in Year1. Reference attached financial forecast. Presentation Cuba- Projects at http://bit.ly/2gctz7b
FINANCIAL FORECAST: $300 Million Capital Expenditure CAN Concentration forecast for mining in Cuba Y1 Y2 Y3 Y4 Y5 Ounces produced per year 75,000 150,000 150,000 150,000 150,000 Ounces produced per year (80% recovery 2 ) 60,000 120,000 120,000 120,000 120,000 Price per ounce $1,300 $1,300 $1,300 $1,300 $1,300 Revenue gold $59 m $117 m $117 m $117 m $117 m Revenue concentrate sales (at 75%) 45 k 90 k 90 k 90 k 90 k Tons of concentrate per year $100 $100 $100 $100 $100 Operating cost per tone $5 m $9 m $9 m $9 m $9 m Operating cost $54 m $108 m $108 m $108 m $108 m Gross profit $27 m $54 m $54 m $54 m $54 m 50% payable to the Cuban Government $27 m $54 m $54 m $54 m $54 m 50% payable to CAN 75,000 150,000 150,000 150,000 150,000 CAPEX CAN $300 m Assumptions: 1. Five concentration plants (grinding, gravity concentration and chemical flotation), $10 million per plant, with a capacity of 300 tons per day; 2. Assuming an average grade of 5 grams of Au per tone, 300 tons of concentrate per day, concentration ratio of 10:1, 80% recovery of gold; 3. Joint venture and profit split 50:50 with the Cuban Government; 4. Cost of operation per tone $100; 5. Year 1 is 6 months considering the time needed for the construction of the plant; 6. We will be selling concentrates at 75% of the metal value 7. Refinery to be build in Year 1: cost $250 million
Nickel Carbonate Project Cuba Cuba produces 20,000 tons per year of nickel carbonate at a grade of 48% of Nickel and 10% Cobalt. Samples are currently being sent to CVMR for production of high purity nickel and cobalt powders. We have been invited to build a powder refinery in Cuba to convert this high-grade source of concentrate into refined powders, under a joint venture agreement that is currently being negotiated. Please refer to the table below for the financial forecast. FINANCIAL FORECAST: $368 Million Capital Expenditure Revenue Forecast For First Five Years Product Plant Construction Y1 Y2 Plant Commissioning/Ramp up Qty - TPA Y3 Y4 Y5 Revenue Qty - TPA Revenue Qty - TPA Revenue FNP - 300 398 $13 m 398 $13 m 796 $22 m SNP - 80S 398 $11 m 398 $11 m 796 $22 m FNP - 900 398 $11 m 398 $11 m 1,193 $33 m SNP - 800 6,763 $159 m 6,763 $159 m 5,172 $121 m Cobalt Concentrate 2,000 $57 m 2,000 $57 m 2,000 $57 m Gross Revenue $251 m $251 m $256 m Operating Cost* -$99 m -$99 m -$99 m Capital Investment -$184 m -$184 m EBITDA -$184 m -$184 m $152 m $152 m $157 m Accumulated EBITDA -$184 m -$368 m -$216 m -$64 m $93 m *Operating cost includes feed material cost purchased at 70% of LME nickel price for the content nickel and credit for the cobalt content In Year 1 the company will invest 183 million in plant construction and the plant will be commissioned in Year 2 with cash flow commencing in Year 3.
San Felipe nickel mine: $1 Billion Capital Expenditure The key focus will be on the San Felipe nickel mine located in Cuba, which has an estimated reserve of 300 million tons containing 1.25% nickel: - BHP conducted an extensive joint program (7000 drill holes) in order to fully delineate the ore body. In addition, substantial metallurgical work was conducted by BHP. - The San Felipe mine is strategically located within 30 km of a deep-sea port, railway and airport with full power lines in close proximity. - The property was discovered after the revolution of 1955 and therefore is not subject to Helms-Burton legislation that deals with previous ownership of properties by foreigners pre-cuban revolution. - San Felipe is considered the largest proven nickel mine in the world that is not currently in production. Previous metallurgical issues relate to the fact that the nickel is contained in fine clays that are difficult to process with existing extraction technologies. The CVMR process is most amenable to this fine clay particles as it is based on vapor metallurgy. The advantage of producing nickel powder is that it will sell for several times the price of nickel metal, in addition to creating substantial credits from iron powder that will be extracted along with the nickel powder. - CAN intends to build metal powder refining plants on a modular basis with the first plant to be built in 2017. In addition, during 2017, the company will conduct extensive drilling programs in order to transfer indicated reserves into proven reserves categories on which additional modular nickel powder plants will be built. (For reference, please see the San Felipe Executive Summary by BHP http://bit.ly/29bbxjp and the San Felipe Report in Spanish Abstract in English http://bit.ly/295q8ic) Detailed forecast for San Felipe to be done - CAPEX and EBITDA numbers for five years bellow. Y1 Y2 Y3 Y4 Y5 CAPEX $500m $500 m EBITDA $300 m $600 m $600 m $600 m Note: These forecast are subject to final feasibility study in collaboration with Cuban Government.
BOLIVIA In Bolivia, lithium is present in pools of brine located under the salt flats, located primarily in the Salar de Uyuni (4,086 sq mi) and Coipasa, both of which are located in the regions of Potosi and Oruro, where according to some calculations, Bolivia has 100 million tons of the metal. Even by conservative estimates, Bolivia has more lithium than the rest of the world combined. (For reference please see the CVMR presentation on Lithium http://bit.ly/2gak7yj and the article The White Gold Lithium http://bit.ly/28xfrxo) CAN has the rights to the CVMR lithium extraction technology for Bolivia and as a result of signing the VARONA agreement with the Cuban government, presentations with respect to the CVMR lithium technology are currently being made to various levels of the Bolivian government, including President Morales. (For reference please see the Scoping Study Proposal http://bit.ly/29fo8ns) A very important use of lithium is in the construction of lithium ion batteries. All the necessary elements for manufacture of such batteries is currently available at CAN (nickel, cobalt, aluminum and lithium). Moreover, as the brine containing lithium elements is drained it will be desalinated by reverse osmosis, a small portion of which will be used in the process of refining lithium and the rest will be marketed as drinking water. The company intends to build a battery manufacturing plant in Bolivia in cooperation with a Chinese manufacturer of batteries, having a long relationship with CVMR. The company intends to build a lithium carbonate plant, a battery plant for lithium ion batteries and a drinking water bottling plant under a Bolivian brand. The current forecast now includes the 3 plants. The water bottling plant and the lithium carbonate plant have an estimated capital cost of $660 million. The company estimates the cost of the capital expenditure of the battery plant to be in the order of $1,3 Billion. After numerous discussions with the president of COMIBOL (state owned lithium company) and the Minister of Mines and Energy, the company has been invited to submit a full proposal for the production of lithium carbonate, potassium, and drinkable water from the brines that contain the lithium. Please reference to the letter on the following link: http://bit.ly/2ft9srn.
Financial forecast: $ 1,96 Billion Capital Expenditure Revenue forecast for first five years Y1 Y2 Y3 Y4 Y5 Product Qty - IPA Qty - IPA Qty - IPA Lithium Carbonate 20,000 20,000 20,000 Plant Plant Bottled water Construction Construction Gross Revenue $320,000,000 $320,000,000 $320,000,000 Operating cost -$70,400,000 -$70,400,000 -$70,400,000 Capital Investment -$330,000,000 -$330,000,000 EBITDA -$330,000,000 -$330,000,000 $249,600,000 $249,600,000 $249,600,000 Accumulated EBITDA -$330,000,000 -$660,000,000 -$410,400,000 -$160,800,000 $88,800,000 Note: 1. Capital expenditure and operating cost include both Lithium Carbonate plant and water bottling plant construction and their operations 2. Credits from by products are not included in the operating cost 3. Though the current market price for Lithium Carbonate is $20,000 per tone, $16,000 per tone was used as long-term price. 4. Revenue from selling bottled water is not included in this economic evaluation
MEXICO CAN and Auxico Resources Canada Inc. hold a 100% interest in the Zamora Property, which includes 12 historic mines including the Los Olotes Mine, which is held by a wholly-owned subsidiary of Auxico Resources Mexico. CAN and Auxico will enter into agreement with the company Nexxtrade for a term of ten (10) years for 100% of Auxico s production, according to terms that will be agreeable to both parties. CAN and Auxico will purchase a 300 ton per day gravity and floatation plant from China. The plant will be located in the historic townsite of Campanillas and will be able to process ore from all deposits on the property. From this plant the company will be able to deliver to Nexxtrade the following products: 1. High-grade direct shipping ore ground to Nexxtrade specifications. 2. High-grade gravity concentrates. 3. Floatation concentrates. All products will delivered to the Nexxtrade warehouse located less than 100 kms from property. Reference www.nexxtrade.com MK Metal Trading México, S.A. de C.V. The balance of funds will be used to put into production the high-grade resource of the Zamora Mine. For reference please see Technical Report on the Zamora Silver-Gold Property, Sinaloa, Mexico NI 43-101 Report (http://bit.ly/2epkrz8). CONCENTRATION FORECAST: 5 Million CAPEX for one plant Timeframe Y1 Y2 Y3 Y4 Y5 TOTAL 5 Years CAPEX $5 m / / / / $5 m Tonnes 22,500 45,000 45,000 45,000 45,000 202,500 Value $28 m $55 m $55 m $55 m $55 m $248 m 75% of Value $21 m $41 m $41 m $41 m $41 m $186 m Mining/Transport Costs $9 m $18 m $18 m $18 m $18 m $81 m Concentrate Profit $12 m $23 m $23 m $23 m $23 m $105 m REFINING FORECAST: 20 Million CAPEX for refinery Timeframe Y1 Y2 Y3 Y4 Y5 TOTAL 5 Years CAPEX $20 m / / / / $20 m Metal Powder Profit / $69 m $69 m $69 m $69 m $276 m Assumptions: 1. The forecast is for one plant capacity - 300 tons per day (grinding, gravity concentration and chemical flotation) - CAPEX for one plant $5 million; 2. The company has 16 historical mines on the property and therefore could operate a total of 10 plants on the property for a CAPEX of $50 million; 3. Metal powder refining: $50 million investment in a silver powder refining plant to upgrade the value of the concentrate threefold.
DOMINICAN REPUBLIC CAN is finalizing an agreement with Falcondo Dominicana (general terms having been agreed between the parties) to process 11 million tons of proven nickel at a grade of 1.25% nickel, as Falcondo Dominicana has already conducted an extensive drill program on this ore. CAN will have the right to process this reserve by paying Falcone Domenicana $10 per ton of ore processed. Please refer to the attached financial forecast. The gross proven nickel content is currently worth $1,2 billion (137,500 tons of nickel at a price of $9,000). The ore body is located within the boundaries of the existing Falcondo mining concession, which has all the necessary environmental permits to start production immediately. The mine has immediate access to electricity that will be supplied by the Falcondo power grid located on the property. CAN is finalizing an agreement with McNally Bharat, a leading manufacturer of material handling, crushing and screening equipment, equipment for steel, mining, cement and ports and process plant equipment, to supply all the necessary concentration equipment for the Dominican Project against a joint venture interest in the project. By signing this agreement CAN will not need to raise any capital to launch this project.
FORECAST FOR DOMINICAN REPUBLIC PROJECT: $100 Million Capital Expenditure CAN Concentration Forecast Y1 Y2 Y3 Y4 Y5 Tons 100,000 500,000 1,000,000 1,000,000 1,000,000 Tons of concentrate 10,000 50,000 100,000 100,000 100,000 Price per ton of nickel $9 k $9 k $9 k $9 k $9 k Price per ton of concentrate @10% nickel $900 $900 $900 $900 $900 Gross revenue $9 m $45 m $90 m $90 m $90 m Concentration cost per ton $135 $135 $135 $135 $135 Acquisition cost ($10 per ton) $1 m $5 m $10 m $10 m $10 m Operating cost $1 m $7 m $14 m $14 m $14 m EBITDA $7 m $33 m $67 m $67 m $67 m CVMR Refining Forecast Y1 Y2 Y3 Y4 Y5 Tons of concentrate 10,000 50,000 100,000 100,000 100,000 Tons of refined nickel 1,000 5,000 10,000 10,000 10,000 Price per ton of refined nickel $9 k $9 k $9 k $9 k $9 k Price per ton of nickel powder $36 k $36 k $36 k $36 k $36 k Gross revenue $36 m $180 m $360 m $360 m $360 m Refining cost per ton $2 k $2 k $2 k $2 k $2 k Operating cost $2 m $12 m $24 m $24 m $24 m EBITDA $34 m $168 m $336 m $336 m $336 m Assumptions: 1. The forecast assumes that CAN will pay $10 per ton of laterite nickel to 3 rd parties. 2. The project has 11 million tons proven at a grade of 1.25% nickel and for forecast purposes we have assumed 1% nickel grade. 3. The concentration process will be based on the reduction of the ore and magnetic separation. 4. The nickel concentrates will be refined into nickel powder with a selling price of powders that will average 3 times the LME price of nickel. 5. CAPEX is $100,000,000: $20,000,000 for the concentration equipment and $80,000,000 for nickel powder refinery.
SUMMARY AND FINANCIAL FORECAST CAN has acquired or is in the process of finalizing the acquisition of a diversified portfolio of gold, silver, lithium, nickel, cobalt and copper properties located in Mexico, Cuba, Haiti, Bolivia and Dominican Republic, which represents a geo-political diversification of risk. The company owns major nickel reserves in Guatemala, Cuba and Dominican Republic and has acquired an exclusive license to produce nickel and cobalt metal powders, and is negotiating the acquisition of the world largest lithium reserves in Bolivia to produce lithium carbonate using the CVMR lithium carbonate technology. In addition, the company has rights to exploit reserves of gold and silver in Cuba and Mexico. Note: For a details description for the use of funds on monthly basis for the first 2 years, please consult the attached document: http://bit.ly/2flsnml Summary Forecast 3.8 BILLION CAPEX EBITDA Project CAPEX Y1 Y2 Y3 Y4 Y5 CUBA Gold $300 m $35 m $71 m $70 m $69 m $68 m Nickel Carbonate $368 m / / $152 m $152 m $157 m San Filipe $1,000 m / / $200 m $200 m $200 m MEXICO $25 m $12 m $92 m $92 m $92 m $92 m BOLIVIA Lithium Carbonate $660 m / Lithium Battery plant $1,300 m $250 m $250 m $250 m US Tennessee $100 m / / $50 m $50 m $50 m DOMINICAN REPUBLIC $100 m $17 m $84 m $168 m $168 m $168 m TOTAL $3,853 m $64 m $247 m $981 m $980 m $984 m Assumptions: 1. Metal prices: Nickel $4 a pound, Cobalt $20 a pound, Gold $1,300 per ounce, Lithium Carbonate $8,000 per tone; 2. Metal powder prices: Nickel powder $12, Cobalt powder $40, Gold powder $1700 per ounce.