Juan Carlos Bustamante

TRADING & LOGISTICS Ceva Logistics, Zambia Railways Authotity, & TAZARA Railways The Bonded Warehouse Project SCOPE OF THE PROJECT Sukses Trading Resources has decided to Create a new company called Sukses Trading & Logistics who has an agreement with Zambian Railways Authority to rent the warehouse at Ndola on the old Railway Station; This warehouse is in the process of becoming a Bonded Warehouse and will be operated by CEVA Logistics with whom we are having an agreement. The goods will be received from the suppliers at the warehouse and storage there for final analysis. After the documents are received and analysis is done, the buyers that are working with Sukses Trading Resources wil pay by TT Transfer. Once goods are transfer on the buyer´s name, Sukses Trading & Logistics will coordinate with TAZARA Railways, with whom will be an agreement with Sukses Trading & Logistics to move the cargo through the railway system from Ndola to Kapiri Mposhi (Zambian Railways Authority) and from there to Dar Es Salaam Port to be exported. Once the goods are at the port, are delivered to the Shipping line. Location Ndola, Zambia, at the Copper Belt Region It is a city located at the North of Zambia, close to the border with the Democratic Republic of Congo (DRC); is the second biggest city of Zambia; it is the capital of the Copper Belt Province. Is the most important Zambian City for the Copper production and one of the most important mining region of Africa, according to Wikipedia. It counts with roads and railways to the mines and the ports and also the industrial cities. The importante of this location is because no buyer will buy minerals at DRC but they will at Ndola. How the Warehouse Looks? The concrete floor area is the one that will be used as the Cover warehouse to load the cargo direct to the wagons on the railway system. PROPOSED AREA FOR NDOLA WAREHOUSE FACILITY AT ZAMBIA RAILWAYS YARD AT NDOLA Why Ndola? Why Ceva Logistics? Why Bonded Warehouse? To secure a place to bring the goods and give the confidence to the suppliers and also the buyers we needed an Operator well know World Wide and Ceva Logistics was the one; Ceva was not having operations in Ndola and they accepted to operate our warehouse. The buyers confirm that will only buy if a Company like Ceva was in charge of the operation; The suppliers gave the same condition as well to bring the goods to Zambia. The only way to buy real product from DRC was bringing it to Ndola. Why a Bonded Warehouse? Because is a building in which imported dutiable merchandise may be stored, manipulated, or undergo manufacturing operations without payment of duty for up to 5 years from the date of importation. Who IS: CEVA Logistics Around the world, They have leverage the sector-focused expertise, global and local resources and advanced technologies to deliver a complete spectrum of supply chain services. Within the business they employ some of the leading experts in sector know-how and logistics expertise who support their customers in delivering the best solution to meet their needs. They want to make CEVA Logistics an undisputed world leading reference in the logistics industry. By doing what they do best, enabling businesses to grow and communities to thrive. The customers’ needs and strategic ambition are at the centre of all they do. In an increasingly unpredictable, changeable, complex and paradoxical world, they create value for the customers by consistently delivering exceptional end-to-end supply chain solutions that answer even their most complex needs. Who IS: CEVA Logistics WHERE THEY ARE LOCATED? CEVA Logistics has a broad geographic coverage covering over 170 countries / regions with over 1,000 locations Europe Africa America Asia Letter of Intent From CEVA Logistics TAZARA RAILWAYS The Bilateral Agreement relating to the Tanzania-Zambia Railway, made between the two Governments on 29 th September 1993, forms the basis and foundation of the existence of TAZARA. This Agreement is given effect by the TAZARA Act, which provides for the governance of the Authority, the nature of business transactions and other matters related to the provision of services by the railway. The two Governments of the United Republic of Tanzania and the Republic of Zambia hold the shares of TAZARA on a joint and equal basis. TAZARA operates as a statutory body established by the National Legislatures of both Tanzania and Zambia, through the TAZARA Act of1975, amended by the TAZARA Act of 1995. The governance structure, as provided for by the TAZARA Act, comprises a Council of Ministers, Board of Directors and Management. Thanks to this agreement between the two countries, we have decided to have an agreement with the TAZARA Railways Authority to move the cargo from our Bonded warehouse to Dar Es Salaam. As the line of Tazara starts at Mposhi Kpiri we will use the Line of the Zambian Railway Authority from Ndola do Kpiri and trom there to the port, giving low trasnportation costs and fast delivery to our goods and our clients. TYPES OF FREIGHT AND VEHICLES The CK6 diesel locomotive is a diesel-hydraulic locomotive manufactured for TAZARA by CSR Chengdu Co, Ltd of China.The locomotive is a 977kW diesel-hydraulic locomotive with 80t adhesive weight, B-B wheel arrangement and 65Km/h top service speed. It is suitable for the shunting and transfer services only. The 3000 Horsepower GE U30C Diesel Electric Locomotive is manufactured by General Electric of the USA. It is a very reliable locomotive that is well suited to the mountainous terrain of the Southern part of Tanzania. SDD20 diesel locomotive is a 3000 Horsepower Locomotive manufactured and delivered to TAZARA in 2012 by CSR Qishuyan of China. Its axle load is 20t. It is equipped with 7FDL 12 cylinder diesel engine with electronic fuel injection, 5GTA43A main alternator, 5GE761A23 traction motor, narrow gauge radial bogie with three axles. TYPES OF FREIGHT AND VEHICLES Copper carrying wagons Low-sided wagons can carryall types of machinery as well as containers Container carrying wagons Covered wagons for all kinds of merchandise WHERE DOES THE LINE STARTS - ENDS Starts in the Port of Dar Es Salaam, Tanzania and ends at the Kapiri Mposhi Station (Zambia). From Kapiri Mposhi to Ndola, we will use the Zambian Railways line Ndola FOR THE FUTURE We will use the line from Congo to bring the goods to Ndola; such line already exists but is not being used for commercial purposes. CHRONOGRAM Activity Signature of Contracts (Suppliers, Allies) Cleaning and mantainence to the yard Hiring the engineer to start building the warehouse Construction of covered warehouse and others Enviromental Impact Study Purchase of equipment and offices Purchase of Insurance for Bonded Area Zambia Revenuew Authority (ZRA) Audit Approval as Bonded Warehouse by ZRA Process of start receving goods will comence Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 The total process to build the warehouse and presenting the documents to get the approval to become a Bonded Warehouse Facilities will take 12 weeks. INCOMES Product Copper Cathodes Copper Concentrate Cobalt Concentrate Product Copper Cathodes Copper Concentrate Cobalt Concentrate Profit Per Ton Product Copper Cathodes Copper Concentrate Cobalt Concentrate Total Profit Per Product / Ton Year 1 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 - - - - - - - - Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 - - - - - - - - Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 - - - - - - - - - - - - - Month 9 Month 10 Month 11 Month- - - - - - - Year 2 Product Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Copper Cathodes Copper Concentrate Cobalt Concentrate - Product Copper Cathodes Copper Concentrate Cobalt Concentrate - - - - - - - - - - Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Profit Per Ton Product Copper Cathodes Copper Concentrate Cobalt Concentrate - - - - - - - - - - - - - Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Total Profit Per Product / Ton - - - - - - - - - - - - INCOMES Product Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 Copper Cathodes Copper Concentrate Cobalt Concentrate - Product Copper Cathodes Copper Concentrate Cobalt Concentrate - - - - - - - - - - - Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 Profit Per Ton Product Copper Cathodes Copper Concentrate Cobalt Concentrate Year 3 - - - - - - - - - - - - Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 Total Profit Per Product / Ton - - - - - - - - - - - - Year 4 Product Month 37 Month 38 Month 39 Month 40 Month 41 Month 42 Month 43 Month 44 Month 45 Month 46 Month 47 Month 48 Copper Cathodes Copper Concentrate Cobalt Concentrate - Product Copper Cathodes Copper Concentrate Cobalt Concentrate - - - - - - - - - - Month 37 Month 38 Month 39 Month 40 Month 41 Month 42 Month 43 Month 44 Month 45 Month 46 Month 47 Month 48 Profit Per Ton Product Copper Cathodes Copper Concentrate Cobalt Concentrate - - - - - - - - - - - - - Month 37 Month 38 Month 39 Month 40 Month 41 Month 42 Month 43 Month 44 Month 45 Month 46 Month 47 Month 48 Total Profit Per Product / Ton - - - - - - - - - - - - INCOMES Product Month 49 Month 50 Month 51 Month 52 Month 53 Month 54 Month 55 Month 56 Month 57 Month 58 Month 59 Month 60 Copper Cathodes Copper Concentrate Cobalt Concentrate - Product Copper Cathodes Copper Concentrate Cobalt Concentrate - - - - - - - - - - - Month 49 Month 50 Month 51 Month 52 Month 53 Month 54 Month 55 Month 56 Month 57 Month 58 Month 59 Month 60 Profit Per Ton Product Copper Cathodes Copper Concentrate Cobalt Concentrate Year 5 - - - - - - - - - - - - Month 49 Month 50 Month 51 Month 52 Month 53 Month 54 Month 55 Month 56 Month 57 Month 58 Month 59 Month 60 Total Profit Per Product / Ton - - - - - - - - - - - - The income´s projection has been done considering a flat commission given by Sukses Trading & Resources, per ton moved and using the maximum capacity of the warehouse; this capacity is being used slowly since the first month of the project, increasing every month up to the month 8th were the capacity is used at the fullest. This is an Income´s projection only made by the trading of the goods; besides this there is a fee charged by the two other services; the freight forwarding by train and the freight forwarding by sea. What ever profit Ceva Logistics is making is for them and we will not charge them for it. OTHER SERVICES INCOMES PER ANNUM Service Logistcs to Port Railway System Service CIF Delivery - Fee per ton Profit / Ton 10 Profit / Ton 10 Year 1 Year 2 Year 3 Year 4 Year 5 - - - - - Year 1 Year 2 Year 3 Year 4 Year 5 - - - - - The other services income´s projection has been done considering two services; the freight using the railway system and a fee charged to the container sea freight service. CASH FLOW PER YEAR ITEM 1. INCOMES Inversión Adicional Total Ingresos 2. EXPENSES Administrative Expenses Production Costs Fix Costs Operative Expenses Finantial Expenses Total Expenses OPERATIVE CASH FLOW Taxes Net Profit Acumulated Profit YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 - - - - - - - - - - - - - - - -709.225 -% TIR 44% VPN $- Rate Disccount 25% Inflation Proposed per Annum 5% The Internal rate of the project is 44%. The projections has been made on a basis of 5 years. INVESTMENT REQUIRED Details Value Quantity Total Bonded Warehouse building (700 sqm) 600 700 420.000 Wire fence of 2000 sqm 139 70 9.722 10.000 1 10.000 7 70 486 2 Ton Portable scale 1.000 1 1.000 3 Ton Forklift 20.000 1 20.000 Bonded Guarantee for ZRA 2% - 100.000 Bonded Guarantee for ZRA 5% 100.000 5.000 Environmental Impact Assessment 2.000 1 2.000 Enviromental study required to get the enviromental permit. Will be prepared by a professional of the field. Project Structuring 20.000 1 20.000 Putting together the project has had some costs for professional services, expenses (traveling to Tanzania and around Lusaka) and hours of consultancy fees. Office block for Admin purposes - Office Containers Wire fence for main entrance (100 mts) The warehouse required a cover area to storage the goods. This area has to be built. This is the quotation made by the engineer in charge of the project. This is the wire fence required to install at the uncover area. For the offices a Office container will be bought direct in Lusaka for this purpose. A portable scale will be use to control the weight of each big bag. Basic equipment required to move the products around the warehouse. An insurance bonded has to be hired from an insurance company. This will be supplied by Phoenix of Zambia Assurance company. The insurance fee can be paid monthly but we are considering paying it by semester. Also it has a tax fee to be paid. 588.208 Details Administrative Expenses (3 months - Up to month 4th) Production Costs Fix Costs Value Quantity Total 10.239 3 30.717 - 3 3 - These 3 expenses are considered for the first 3 months of operation so there is cash flow to pay for them without considering the Incomes 121.017 Total Investment 709.225 Projections for each 10% shares As the Total Money requires is USD 709.225, we have decided to get 3 investors, of USD 236.408 each against 10% shares of the company for each one of them. In the month 10th, the investor will collect the money back. YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL Investor 1 10% 331.808 482.985 498.213 497.819 497.401 - Investor 1 10% 331.808 482.985 498.213 497.819 497.401 - Investor 1 10% 331.808 482.985 498.213 497.819 497.401 - At the end of the 5th year, each investor will collect USD- in incomes. We are considering in covering initially 700 sqm but in the second year we are able to increase the cover area up to two times that size, which will bring additional capacity to the warehouse to trade with higher volumes of minerals, increasing the incomes for the company. Exhibit 1 Bond Quotation Exhibit 2 LOI CATHODES Exhibit 3 LOI COBALT Exhibit 4 CERTIFICATE OF INCORPORATION Exhibit 5 CERTIFICATE OF SHARE CAPITAL Exhibit 6 Office Containers The administrative offices will work on an office container that will be bought at Lusaka.