Transcript AAFFG Silica Portfolio

American Alliance Financial & Funding
Group
Corporate Summary
Legal
THIS CORPORATE SUMMARY DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY FROM ANY PERSON IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO A PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. THERE IS NO PUBLIC MARKET FOR THE
SECURITIES, AND NONE IS EXPECTED TO DEVELOP IN THE FUTURE. THEREFORE, INVESTORS
SHOULD BE AWARE THAT THEY MIGHT BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS. This Executive
Summary contains “forward-looking statements” within the meaning of the federal securities laws.
Forward-looking statements are those that predict or describe future events or trends and that do
not relate solely to historical matters. For example, forward-looking statements may predict future
economic performance, describe plans and objectives of management for future operations and
make projections of revenue and other financial items. Prospective investors should not rely on
such forward-looking statements because the matters they describe are subject to known (and
unknown) risks, uncertainties and other unpredictable factors, many of which are beyond our
control.
2
AAFFG Company Profile
A financial services institution with its vast assets
under management, unique approach, dynamic
relationships, and core expertise. Leading global
conduit focused on the following sectors:
• Banking
• Energy
• Mining and Minerals
• Government
• Technology
3
AAFFG Mission
AAFFG is dedicated to creating value for
its stakeholders and operating under the
premise to:
Reinvest a significant portion of its
net proceeds into the betterment of
communities of the world it engages.
4
Corporate Structure
5
AAFFG Key Management
Steven V. Cross – Chairman & Chief Executive Officer
Phillip Long – Chief Financial Officer
CD Rowsell – Senior Executive Vice President, Investments
Gary Wiess – Senior Vice President, Commodities
Alexander Chang – Executive Vice President, Legal Counsel – Asia
Thomas L. Woodall – Senior Vice President, Chief Legal – Americas
William C. Brannan – Senior Vice President, Economics & International Planning
Richard Scales – Senior Vice President, Financial Management
Jim Lewis – Chief Geologist
Paul Pomp – Chief Silica Engineer
Gordon Pomp – Silica Production Manager
Steven Hopkins – Project Lifeguard Supervisor (EDCU – Utah Governors Office)
Stacy Hopkins – Chief EDCU Coordinator
6
Balance Sheet
ASSETS
LIABILITIES
Cash
$50,000
Accounts payable
$2,444,577
Accounts receivable
$0
Short-term notes
$0
Short Term Investments
$0
Taxes payable
$0
Prepaid expenses
$0
Accrued payroll
$ 4,477,083
$50,000
Total Current Liabilities
$ 6,921,660
1,969,730
Long Term Notes Payable
$ 7,578,000
Total Long Term Liabilities
$7,578,000
Total Current Assets
Investments – LP (Non
Minerals and Mining)
Investments - LP Mining and
Minerals
(Valuation * Rev Share)
Total Long Term Assets
$
$3,214,355,000,000
$3,214,357,019,730
STOCKHOLDERS EQUITY
Paid in Capital
Retained earnings
TOTAL ASSETS
$3,214,357,019,730
7
$0
$3,214,342,520,070
Total Shareholders' Equity
$3,214,342,520,070
TOTAL LIABILITIES &
EQUITY
$3,214,357,019,730
Summary of Silica Leases
• The 3 distinct mineral leases on 40,000+ acres contain an estimated
50 billion tons of quartz silica rock of very high purity, as well as an
abundance of quartz crystals of gemstone and fiber optic quality.
• The British Columbia sites are located near rail facilities connected to
port facilities at Vancouver, BC or Prince Rupert, BC. The Idaho site is
also close proximity to rail facilities.
• Geologic sampling has revealed exceedingly pure samples of silica
comprised of 97.7% to 99.3% silica, with iron oxide contents ranging
from 0.02% to 0.05%. Majority of prospect is covered with only 2-4
inches of overburden consisting of moss and light soils.
• Underlying the main silica deposit, there is an inferred gold deposit
varying from 600-800 feet in depth from the surface.
• AAFFG is General Partner owning 51% of the limited partnership and
40% of net revenues.
8
Location of British Columbia
and Idaho Silica Sites
9
Silica Diverse Uses
•
Glass (a colorless, high-purity form is called fused silica)
•
Silica gel (used as desiccants in new clothes, leather goods,
electronics)
•
Raw material for ceramics such as earthenware, stoneware and
porcelain.
•
Raw material for the production of Portland cement.
•
Food additive in powdered foods or to absorb water
•
Electronic insulator as the natural oxide coating grows on
silicon is a electric insulator, possessing high chemical stability.
•
Raw material for aerogel for spacecraft, defense.
•
Extraction of DNA due to its ability to bind to the nucleic acids.
•
Added to medicinal anti-foaming agent
•
As hydrated silica in toothpaste (abrasive to fight away plaque.)
•
As fumed silica as pharmaceutical excipients. Improving flow
properties of materials required for modern tablet and capsule
10
Pure Silica Hi-Tech Uses
• Solar Panels created from Silicon Wafers
• Optical Components - lenses, prisms, reflectors, mirrors, filters,
optical flats.
• Analytical Instruments - UV spectrophotometer cells, fire control
devices, reticle substrates,interferometer plates
• Semiconductor Electronic - Microcircuit substrates, microwave
devices, photomasks, sputter plates, excimer lasers
• Lasers - beam splitters, brewster windows, medical/industrial
systems, Q-switches, UV excimers
• Energy - Laser fusion research, isotope separation, solar cell
covers.
• Spacecraft/Aircraft - Docking light covers, windows, re-entry heat
shields, ring laser gyros.
• Fiber optics
11
Potential Silica Buyers/Partners
• Chemical Manufactures (DuPont,
Dow, BASF, Pharmaceuticals)
• Petro-chemical Processors
• Solar Industry
• Electronics Industry
• Glass Industry
• Construction Industry
12
Initial Silica - Production and Pricing
• 10,000 metric tons per month mined in Year 1
from each of the 3 North American mines.
Overview of pricing of silica production:
• Raw decorative silica stone = $120 per ton.
• OR crush and grind silica stone into granular silica =
$6,000 a ton.
• OR grind granular into powder = $7,500 a ton.
• OR by heat in a refinery furnace into a gel = $6,500 an
ounce ($208,000,000 a ton)
13
Risk Factors – Silica Production
• No customers to purchase the commodities,
inadequate demand.
• Change in Technology
• Environmental, Local Permits
• Production Health Risks – Silicosis
• Delays due to weather, equipment failure,
staffing
14
Risk Mitigations – Silica Production
• Company actively pursuing silica buyers from
diverse industries
• Company plan to ramp up production and
refineries as demand and technology evolves
• Company working closely with local and
national governments to secure permits and
partnerships
• Company outsourcing production to
experienced mining producers to reduce
injury, equipment misuse, and staff training
15
Silica Financial Projections
2008
2009
2010
2011
2012
5 Year
Total Silica Revenue
$
53,100,000
$ 699,840,000
$ 1,465,920,000
$ 2,669,760,000
$ 5,508,000,000
$10,396,620,000
Total Operating Expenses
$
39,825,000
$ 454,896,000
$
879,552,000
$ 1,468,368,000
$ 2,754,000,000
$ 5,596,641,000
Total Profit
$
$ 244,944,000
$
586,368,000
$ 1,201,392,000
$ 2,754,000,000
$ 4,799,979,000
Cumulative Total Profit
$
$ 258,219,000
$
844,587,000
$ 2,045,979,000
$ 4,799,979,000
$ 4,799,979,000
AAFFG Profit
$
$ 93,895,200
$
224,774,400
$
460,533,600
$ 1,055,700,000
$ 1,839,991,950
AAFFG Cumulative Profit
$
5,088,750
$ 98,983,950
$
323,758,350
$
784,291,950
$ 1,839,991,950
$ 1,839,991,950
AAFFG Total Investment
$
27,000,000
$ 42,000,000
$
$
$
69,000,000
AAFFG Cumulative
Investment
$
27,000,000
$ 69,000,000
$
69,000,000
$
69,000,000
$
69,000,000
$
69,000,000
AAFFG Net Cash Flows
$
(21,911,250)
$ 51,895,200
$
224,774,400
$
460,533,600
$
1,055,700,000
$
1,770,991,950
Cumulative Net Cash Flows
$
(21,911,250)
$ 29,983,950
$
254,758,350
$
715,291,950
$ 1,770,991,950
13,275,000
13,275,000
5,088,750
-
$
-
-
$ 1,770,991,950
• 5 Year Net Present Value = $1.3 billion (8% discount rate)
• Based on Investment of $69 million over 14 months
• Investment Recovery (Cumulative Break-even) in Q3 2009
• Cash Flow Positive Q2 2009 (Peak Cumulative Loss ~ $22 million)
16
Metals and Mining Overview
• AAFFG receives 40% of gross profit from Appleman
LP, Card LP, and Composite Corp JV
• Total Reserve Value > $300 billion
• Appleman LP owns mineral deposits of 50 million
tons on 1,280 acres in Colorado
−
Value of reserves in 2005 ~ $851 billion, today’s
value > $2 trillion
 54,300,000 oz. gold
 704,700,000 oz. silver
 61,100,000 oz. platinum
 86,900,000 oz. palladium
− Economic life of mine = 20 years
− 5 Year estimate gross revenue = $13.6 billion
17
Card LP Gold Overview
• Card LP includes inferred 7 million ounces of Gold
at 600-800 feet (below the Silica)
• Market value of gold reserves ~ $7 billion
• Economic life is 20 years
• 5 Year estimated gross revenue = $803 million
• Initial investment capital = $69 million (included in
silica investment)
18
Precious Metals Projections
2008
2009
2010
2011
2012
5 Year Total
Total Metals Revenue
$
45,695,658
$ 1,200,724,583
$ 3,587,259,879
$
7,099,533,516
$
8,186,454,796
$
20,119,668,432
Total Operating
Expenses
$
36,556,520
$
952,675,017
$ 2,421,964,126
$
3,233,779,880
$
4,077,465,248
$
10,722,440,791
Total Profit
$
9,139,138
$
248,049,566
$ 1,165,295,753
$
3,787,003,636
$
4,003,989,548
$
9,213,477,641
Cumulative Total Profit
$
9,139,138
$
257,188,704
$ 1,422,484,458
$
5,209,488,093
$
9,213,477,641
$
9,213,477,641
AAFFG Profit
$
3,655,655
$
99,219,827
$
466,118,301
$
1,546,301,454
$
1,643,595,819
$
3,758,891,056
AAFFG Cumulative
Profit
$
3,655,655
$
102,875,482
$
568,993,783
$
2,115,295,237
$
3,758,891,056
$
3,758,891,056
Total Investment
$
54,000,000
$
56,000,000
$
15,000,000
$
$
125,000,000
Cumulative
Investment
$
54,000,000
$
110,000,000
$
125,000,000
$
125,000,000
$
125,000,000
$
125,000,000
AAFFG Cash Flows
$
(50,344,345)
$
43,219,827
$
451,118,301
$
1,546,301,454
$
1,643,595,819
$
3,633,891,056
AAFFG Cumulative
Cash Flows
$
(50,344,345)
$
$
443,993,783
$
1,990,295,237
$
3,633,891,056
$
3,633,891,056
(7,124,518)
-
$
-
• 5 Year Net Present Value = $2.6 billion (8% discount rate)
• Investment Recovery (Cumulative Break-even) in Q1 2010
• Based on Investment of $125 million over next 27 months
• Cash Flow Positive Q1 2009 (Peak Cumulative Loss ~ $50 million)
19
Investment Opportunities
• Strategic, Equity, Diversified Position in
AAFFG Corporation (Parent/Holding Co.)
• Investment in AAFFG LLC Limited
Partnerships & Joint Ventures:
− Pure Silica (USA, Canada, China)
− Metals Mining and Tailings (USA)
− Oil Exploration and Drilling (USA)
20