PROJECT OF EXPLORATION AND PRODUCTION OF TRONA AND

SODIUM CARBONATE IN PUERTO PEÑASCO, SONORA

January, 2010

PROJECTExploration with drilling and exploitation of the existing reserves of sodiumsesquicarbonate (trona) in the mining concessions located in theMunicipality of Puerto Peñasco, Sonora.

THE OPPORTUNITY• Great deposit of natural trona mineral

and great quality brines.• National and exportation natural trona

market.• National market that imports 1,000,000

tons per year of sodium carbonate, thatmainly come from Wyoming, USA.

• Opportunity of substituting imports.• Has great highway and railway

infrastructure.

LOCATION

Starting from the city ofHermosillo, Sonora, take thefederal highway No. 15 for165 kms until the town ofSantana.

Continue on the state highway No. 2 for102 kms until the town of Caborca. After,take the state highway No. 37 for 230 kmsuntil Puerto Peñasco.The studied area is located 30 kms to theNW, following the highway that leads toMexicali, BC until you arrive to “LaGaviota” ranch.

STUDIED AREA

LOCATION

LEGAL SITUATION• At the moment we have the legal control over the following mining

concessions:

Lot Title Sur./HasPinacate 3 220,729 115.5 Pinacate 10 198,335 493.2 Pinacate 11 198,334 479.0 Sueño Blanco 209,018 173.0 Unión 1 225,426 100.0 Unión 2 225,425 260.0 Unión Fracción A 220,811 36.2 Unión Fracción B 220,812 18.0 Total 1,674.9

• Plus the aquisition of new concessions and properties.

LEGAL SITUATION• We have on property

the ranch named “LaGaviota” that covers atotal surface of 5,569.4hectares.

• This gives the right ofthe superficial waterdefined as “alkalinebrines” (pH of 11) andthat are emanatedfrom the natural hotsprings.

BACKGROUNDMore than 100 years:

• Knowledge of the existence of Trona in the studied areas.

• The Nonrenewable Mineral Resources Council of the FederalGovernment made the first studies.

1970-1975:

• Industrias Peñoles realized exploration studies focusing mainly in theSanta Elena lagoon, where a perforation program was done and resultedin a quantification of about 1.5 million tons of Trona crystal.

• More detailed studies concluded with a reserve quantification of about20 million tons considering massive trona and brines.

Up to 1992:

• Tenneco Minerals realized a detailed study resulting in a reservequantification of 60 million tons considering massive trona and brines.

• Company was sold to Solvay and the mining concessions were released.

From 1994:

• Alkatec started the exploration with a first stage of drilling in an area ofjust 10 hectares in which the results show potential geologic reserves of1.3 million tons of massive trona.

• Also the brines were analyzed finding important salt concentrations inthem.

• Four drills were done in the lot Sueño Blanco achieving the same resultsand cutting the same trona crystal layers than in the lot Santa Elena.

• For the experience achieved in the drilling made by us, that reaffirms theones made by Peñoles and Tenneco, and because in the lot SueñoBlanco, as well as in the Pinacate 10 and 11, we can see the samegeological conditions and the same superficial layer of trona crystal, wethink that we have all the possibilities of successfully quantifying thedesired objectives of our Project.

BACKGROUND

MARKET1. TRONA

a) Background and Industry Description:

- It is used as a buffer in the meat and milk industry, as well as in thefeeding of chicken and pigs, since it enhances the performancecompared to sodium bicarbonate.

- Many tests were realized worldwide of the convenience of usingnatural trona in this industry, and it has been proved that itincreases economic benefits.

- It is the basic raw material for the production of Sodium Carbonate,Sodium Bicarbonate and Caustic Soda.

MARKET1. TRONA (cont.)

b) Demand:

- This demand dimension study was made in base of our naturalmarket which is Mexico and the States of the United States that arecloser to our Project and that have an interesting milk market forour commercial purposes. The following information was obtained:

Potential Market’s Estimated Consumption of Buffer (2007 Data)

Place Milk Population Milk Production (lts) Quantity Tons-Year

Mexico 2,303,710 10,345,982 52,144

California 1,826,000 15,487,528 78,057

New Mexico 337,000 2,820,862 14,217

Arizona 184,000 1,541,950 7,771

Texas 348,000 2,739,229 13,806

TOTAL 4,998,710 32,935,551 165,995

MARKET1. TRONA (cont.)

c) Competition:

- Mexico:

• Industria del Álcali, S.A. de C.V. produces sodium bicarbonate inSta. Catarina, Nuevo León.

- USA:

• Church & Dwight Co., Inc. commercializes natural sodiumsesquicarbonate with the brand SQ-810.

• Solvay produces and commercializes sodium sesquicarbonate foranimal consumption with the brands T-50 & SOLVAir Select 200.

• FMC Industrial Chemicals, produces and commercializes with thebrand S-Carb.

MARKET1. TRONA (cont.)

d) Advantages and Business Objectives:

- Trona equals or improves the performance of the industry.

- Its price is lower than sodium bicarbonate.

- Increases economic benefits for companies.

- Increasing prices of trona that at the moment fluctuate between210-230 US Dollars.

- Objectives:

• Substitute in Mexico the market of sodium bicarbonate as abuffer in this industry and compete in the United States with themarket of Trona and sodium bicarbonate.

• Achieve in the short run a minimum of 36.00 % of the analyzeddemand, that will give out sales of 60,000 tons per year.

MARKET1. TRONA (cont.)

e) Commercial Plan:

- Plan directed by companies specialized in supplying the agriculturalindustry, in Mexico and in the United States, and that also have asupply chain in the States of our interest.

- In Mexico we are going to realize technical sales in order todemonstrate the advantages of our product in comparison to thesodium bicarbonate.

- In the USA we will win the market offering an excellent qualityproduct with a lower price, being located at only 130.00 km fromthe border of Sonoyta, Sonora, and 210.00 km from San Luis RíoColorado, Sonora, giving us a great advantage in logistics and costs.

- In addition we will develop new national and internationalmarkets.

MARKET2. SODIUM CARBONATE

a) Background and Industry Description:

- The industry of sodium carbonate is one of the biggest worldwide.

- The estimated annual increase in demand ranges from 1.5% to2.0%, according to the “US Geological Survey”.

- There are 2 types of production processes in the world:

• Synthetic process produced with the Solvay method.

o Principal producer country: China.

o World production of 34,200,000 tons annually.

• Process done by refining natural trona.

o Principal producer country: USA.

o World production of 11,800,000 tons annually.

MARKET2. SODIUM CARBONATE (cont.)

b) Demand:

- USA:

• Consumed in 2008 for internal use 5,860,000 tons.

• Exported in the same year 5,370,000 tons to different countries.

• During 2008, exported to South America and the Caribbean1,631,849 tons, which increases our possibilities of growth, dueto our always lower logistics costs, making us more competitive.

- Mexico:

• Consumed in 2008 for internal use 1,660,000 tons.

• Imported in the same year 1,000,000 tons from the USA, andmainly from the State of Wyoming, which will make us verycompetitive because of our location.

MARKET2. SODIUM CARBONATE (cont.)

c) Competition:

- Mexico:

• Industria del Álcali, S.A. de C.V. produces 660,000 tons os sodiumcarbonate in Sta. Catarina, Nuevo León.

- USA:

• FMC Industrial Chemicals.

• General Chemical Soda Ash Partners.

• OCI Chemical Corporation.

• Searles Valley Minerals, Inc.

• Solvay Chemicals, Inc.

- Others:

• There are various producers but mainly from Asia.

MARKET2. SODIUM CARBONATE (cont.)

d) Advantages and Business Objectives:

- Comparing with foreign competitors, with us there are no importprocedures and transportation costs to the plants of the clients.

- Also, they don’t have to maintain great stocks of material todiminish the risk of a delay in the time of importation.

- Increasing prices of sodium carbonate that are currently beingquoted in the market between 260 and 325 US Dollars.

- Very high possibility of introducing our product in the national andinternational market due to the existence of a demanding marketwith just one supplying company that only satisfies 660,000 tons ofthe national demand.

- Our initial market is the substitution of imports of 1,000,000 tonsper year from th USA and mainly from Wyoming.

MARKET2. SODIUM CARBONATE (cont.)

e) Commercial Plan:

- Privileged location of our deposit for the commercialization of thisproduct for having a world demand, and by being a greatly usedcommodity, gives us a unique market situation.

- This will place us as the national producer with the best alternativefor the market.

- Uses:

OBJECTIVESFirst Stage:

a) Exploration with drilling to verify 480,000 tons of superficial commercialquality natural Trona reserves indicated with drilling, and obtain positivereserves of 1,920,000 tons.

b) Construction of the operative mine with a monthly capacity of 4,000 m3,construction of the triturating and washing plant of 100,000 tons peryear, and construction of the sodium sesquicarbonate milling andpackaging process plant with capacity of 60,000 tons per year for itscommercialization with agricultural quality.

c) Month 19-24: Growth of the Project to 120,000 tons per year.

d) Month 31-36: Growth of the Project to 180,000 tons per year.

e) Exploration with drilling and geophysical studies in order to obtain30,000,000 tons of certified reserves of trona and brines. Estimated timeof 24 months.

OBJECTIVESFirst Stage (cont.):

Objective: Certify trona mineral reserves of 480,000 tons.

Location: Lot Sueño Blanco. It has 173 hectares and in the explored lagoonwe have 45 hectares.

Program: Realize 25 drills in the assigned area, according to the map. In thedrilling process we will also obtain samples of the brines and we willanalyze them in order to have information of the behavior of the water-bearing mantle.

Execution Time: 120 days.

Probability of Results: With the exploration done by Alkatec in this lot in1996, in which there were performed four drills with a deepness of 6.3mts., there were found the same layers than in Santa Elena, giving us allthe probabilities of having success.

OBJECTIVESFirst Stage (cont.):

Exploration Area200 x 200 mts 40,000 M2

Reserves Objective480,000 tons

Execution Time120 days

Influence Area400 x 400 mts 160,000 M2

Potential Reserves1,920,000 tons

Influence AreaTo define To define

Potential Reserves30,000,000 tons

200 meters

200

met

ers

Second Stage:

a) With the quantified reserves a specialized company in engineering anddesign will be contracted for a detailed cost budget of the project. Wenow have the technical consultancy of HPD (VEOLIA), a company ofexcellent prestige in crystallization processes of sodium salts.

b) Development of the Project for the construction of the plant with aproduction capacity of 800,000 tons per year of sodium carbonate andbicarbonate.

c) A Business Plan will be done for this specific Project to quantify theamount of investment.

d) Construction of the plant and the necessary infrastructure for producing800,000 tons per year.

OBJECTIVES

1. Excellent infrastructure: highway, railway and airport.

2. The mining concessions cover the most important prospective areas.

3. “La Gaviota” ranch has a surface of 5,569.4 hectares and covers what hasbeen considered the most important area, since it covers 21 hot springswith alkaline brines and a great part of the area where it is expected tobe located the water-bearing that cause those hot springs, in addition togreat extensions of terrain where the trona layers arise.

4. Reserves from 20 to 60 million tons including brines, but withoutconsidering the total area under concession and without finishingstudying the total prospective area.

5. There had been approaches with commercializing companies specializedin supplying the agricultural industry in Mexico and in the United States.

6. The actual market in Mexico imports 1,000,000 tons per year from theUSA with a total amount of approximately 240 million US dollars.

CONCLUSION