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Investment

About Investment

Company’s investment style is the application of private equity terms in its portfolio investments. Once Company commences operations it will negotiate very favorable investment terms for itself. As Company is not involved in simple “project finance”, it will have the ability to “walk away” from a targeted acquisition if favorable terms for Company cannot be achieved.

Company’s private equity- type terms to be introduced into each of its portfolio investments and expects:

Being A Long-Term Investor

Being a long-term investor requiring from its potential investees covenant controls and conditions including: no debt, dividends, distributions, sale of assets, etc., without Company’s prior consent;

Participating As Management

Participating as management and/or on the board of directors of the portfolio company;

Liquidation

Obtaining liquidation preferences;

Voting Agreements

Obtaining voting agreements from existing major investors who are non-public;

lock Up Agreements

Depending on specific circumstances, Company may also seek lock up agreements;

Anti-Dilution Provisions;

Negotiating anti-dilution provisions;

Sufficient Funding

Ability to commit, on a tranche by tranche basis, sufficient funding to enhance the portfolio project to the point of making a construction decision (commercial feasibility);

Minority Equity Positions

Initially investing in minority equity positions with its ownership increasing as each tranche is funded; and

Construction Decision

Ability to commit, on a tranche by tranche basis, sufficient funding to enhance the portfolio project to the point of making a construction decision (commercial feasibility);

Set Pricing For Each Tranche

Company does not expect to negotiate against itself and intends to set pricing for each tranche on the front end.

Above methodology will be employed for all of Company’s acquisitions and is one benefit of holistic funding commitments. Company intends to structure its investment commitments in tranches that are based upon achieving performance milestones. Because of this, should a fatal flaw arise at any time during the development phase, Company can exit and limit its downside exposure.

Exit Strategy

Advancing a mining project from an advanced exploration stage to a decision on future construction (“Bankable Feasibility”) generally captures the highest risk-weighted return on investment. A commercial mining project at Bankable Feasibility stage is very marketable. Company Manager believes Company should retain some flexibility in determining optimal exit points but would expect to create a project liquidity event in any one or a combination of the following:

Third Party Mining Company

Sale to or merge a specific portfolio investment into a third party mining company that will construct and operate the mine;

Distribute To Shareholders

Distribute to Shareholders the traded shares Company holds in a portfolio company. This would likely be in conjunction with a secondary float or financing by the portfolio company to raise the necessary capital to construct the operating facilities to bring the mine into commercial production;

Sale Of Shares

Sale of shares held in the portfolio company either via IPO or secondary offering;

Combine Various Portfolio

Combine various portfolio companies or projects, creating larger scale, multi-project mining company that would either be offered in the public market or to larger mining concerns. Multi-mine companies carry a higher valuation premium due to diversification of risks

Raise The Development Capital

Continue to hold the portfolio asset; raise the development capital to construct and operate the mine.

Each of the alternative liquidity events noted above would be available to Company at appreciated valuations as a result of reduced risks and enhanced scale of operating /assets created by Company’s investment in underlying Portfolio Company.

Key Competitors:

Large and mid-size mining companies that either have or have access to capital often represent buyers of developing and developed mining properties. However, once the Company is invested in a mining project, these same enterprises represent a source of exit.

Investment Cycle

Management began the process of seeking investment opportunities of five (5) to ten (10) productive investments. Managing Principal’s history and experience in the industry, including an extensive network of industry related contacts, together with the availability of Company’s investment capital and making Company’s intentions broadly known will generate continuous deal flow.

Investment Factors Company will consider in making its investme

Growth and profitability trends in mining assets

Returns on invested capital

Target management’s credibility

Competitive advantages

Major shareholders of target

Technical, operational financial, environmental and legal risks

Corporate governance

Project feasibility and scalability