SOMITA IRON ORE EXPLOITATION AND INFRASTRUCTURAL DEVELOPMENT PLAN FOR THE SOUS VALLEY AND THE SOUTHERN

Eng. Marco Gonella, Ph.D. GMB Financial S.p.A. Technical Sales Manager

March 2018

Summary

FOREWORD ...... 4 THE SOUS VALLEY ...... 5 THE INFRASTRUCTURAL PLAN ...... 6 ENGINEERING ACTIVITIES...... 8 Feasibility studies ...... 8 Mine Due Diligence and Certification ...... 8 Design work started ...... 9 Design elements of the intervention ...... 9 INFRASTRUCTURAL PLAN ELEMENTS...... 9 IMD – Installation for the Mine Development ...... 9 Equipment for the production of mineral ...... 9 Earth moving equipment (dump trucks, excavators and trucks large servings) ...... 10 Total cost ...... 10 Initial Tooling ...... 10 HW – Highway ...... 10 RW – Railway ...... 11 Railroad construction ...... 11 Supply of Train wagons ...... 12 ISIC – Iron Steel Industrial Center ...... 12 EPP – Energy Power Plant ...... 14 NC – New Cities ...... 14 Number of inhabitants ...... 14 Construction costs of the New Cities ...... 15 HS – Hydraulic Structures ...... 17 NW – NEW HARBOUR ...... 17 Traffic and maritime structures considerations ...... 18 Estimates of maritime works costs for the new port ...... 19 Cost of a dedicated dock in the existing port of ...... 20 New Harbour cost ...... 20

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Marco Gonella, P.E., Ph.D.

COST AND REVENUES ...... 20 FIRST PHASE INVESTMENT ...... 21 WHOLE PROJECT ...... 22 SUPPORT TO THE SOUTH MOROCCO INFRASTRUCTURAL DEVELOPMENT ...... 23 THE GMB LOGISTIC YARD IN THE PORT OF LIVORNO ...... 26

List of figures

Figure 1 – Iron ore value fluctuation from 2012 to 2017 (from “focus-economics.com”) ...... 4 Figure 2 – A sketch of the Sous Valley Map with the main roads...... 5 Figure 3 – The two dams of Aoulouz and Mokhtar Soussi, and the irrigated areas close to the Somita site. .. 6 Figure 4 – Infrastructural plan for the development of the Sous Valley...... 7 Figure 5 – Assumption of the New Harbour location, North of the existing Agadir Port...... 18 Figure 6 – First Phase Business Plan...... 21 Figure 7 – Whole Project Business Plan...... 22 Figure 8 – The cover and one of the first maps of the 2011 publication on the Morocco Port Strategy...... 24 Figure 9 – The expected development of the two South Port poles of the Morocco Country...... 24 Figure 10 – Expected investments in the South Ports of Morocco...... 25 Figure 11 – Sketch of the preliminary project for the Dakhla Atlantique port...... 25 Figure 12 – Aerial view of the yard area in the Port of Livorno (North of Italy, Tuscany, Tyrrhenian Sea). ....27 Figure 13 – The actual state of the art of the yard area...... 28 Figure 14 – Demolition (in yellow) and restoration / reconstruction works (in orange)...... 28 Figure 15 – The final lay-out of the restored logistic yard...... 29

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Marco Gonella, P.E., Ph.D.

EXECUTIVE SUMMARY

This document describes the investment opportunity, in Morocco, for the acquisition of the SOMITA iron ore mine, placed in the edge of the Sous Valley, near Agadir, close to the city of Aouluz.

The proven amount of iron ore in place is 8 billion tons, but more optimistic estimations, based on the iron ore thickness in the area, indicates reserves for more than 20 billion tons.

The cost for the acquisition of the mine is 2 Euro per proven ton of iron ore, on the basis of a dedicated due diligence on the mine deposit.

For the exploitation of the mine an infrastructural plan has been prepared. The Somita mine exploitation could change the actual economic status of the entire Agadir region and, more in general, of the southern Morocco area, giving also the opportunity to start with a stable development of the Western Sahara.

Sous Valley Infrastructural Plan.

The development plan of the Sous Valley is based on the construction of the following infrastructure elements:

 IMD, Installation for the Mine Development, to exploit the iron ore mineral from the mine (60 million tons per year when fully operational);  HW, Highway, to link the Aoulouz area with Agadir and the coast, creating, with the close Railway, a Transport Corridor along the axes of the valley, on the Ouadi Sous riverside;  RW, Railway for the transport of the iron ore (in a first step) and steel products to the coast and the harbour, for export; the rolling stock is included in the estimate;  ISIC, Iron Steel Industrial Center, to transform the iron ore in steel and iron cast;

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 1

 EPP, Energy Power Plant, to give energy to the mine, the Iron Steel Industrial Center and the cities that will be built for the workers and their families;  NC, three New Cities, built as “smart cities”, to host 140.000 inhabitants, the workers in the mine, in the Iron Steel Industrial Center and in the related services and their families;  HS, Hydraulic Structures, a new dam on the Atlante mountain and the related distribution network to feed the new irrigated agricultural land, the cities and the industrial complex;  NW, New Harbor in Agadir fully dedicated to the mining operation, import and export of iron ore and steel and iron cast products.

The whole cost of the investment will be of 13,5 billion Euro: with a very conservative business plan the return of the investment will be reached in 9 years from the beginning of the activities, and in 4 years from the completion of all the infrastructural plan.

A first phase plan could be activated immediately to start with the iron ore exploitation: it requires an investment of 400 million Euro (plus 8% of technical service) and will come back to the whole return in 4 years from the start of the operations.

The infrastructural plan gives the opportunity to the China Government to expatriate 140.000 Chinese citizens. GMB will manage all the expatriation logistics and the administrative issues.

The Morocco Kingdom will receive from the exploitation of the Somita iron ore mine and the construction of the infrastructures a very good economic impulse for the development of the Agadir region, with benefit for the entire Moroccan and local Berber population.

Morocco Southern Ports Infrastructural Plan.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 2

To create and maintain good relationships with the Morocco Kingdom and in order to penetrate more and more in a very huge and profitable area, part of the income of the mine exploitation could be reinvested in the development of the Strategic Port Plan prepared by the Morocco Ministry of Transports for the Agadir Port pole and the Southern Ports Pole.

With an investment of 4 billion Euro it will be possible to create a port network along the South Morocco coast in order to improve the economic and infrastructural development of the formerly Western Sahara region, that is part of the Morocco Kingdom.

Another big quota of Chinese citizens expatriation could be achieved in the next future in this very big area of around 266,000 square kilometers, where only half million of inhabitants are present at the moment.

Finally, to support the logistic efforts for the development of the Sous Valley and the southern Morocco region, GMB Financial could provide its yard area in the Port of Livorno, to facilitate the export and movements of goods from China and Italy to Morocco. The yard area of 28.000 m2 with a berth of 180 m could be used to store and export machineries and materials to be used for the Somita exploitation and the infrastructural plan realization.

A global investment of 24 million Euro is required for the rehabilitation of the yard, where the 48% could be the co-investment of the GMB partners.

The GMB yard area to be renovated in the Port of Livorno (North of Italy).

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 3

FOREWORD

The opportunity for an Infrastructural Development Plan of the Sous Valley (Morocco) is given by the large mine iron ore resource placed in the edge of the valley, close to the City of Aoulouz.

The Somita iron ore extends on a surface of 32 square kilometers and has a pre-defined total mass of iron mineral at least of 8 billion tons, as reported in a geological study based on local surveys and chemical samples analysis performed by the National Council Research of Morocco. More optimistic estimations, based on local surveys on the iron layer thickness, indicate reserves for more than 20 billion tons.

To rate the value of the mine is necessary to refer to an average price of the iron ore. It is a tricky exercise because of the big fluctuations of this value in the last 5 years, from a maximum of about 180 Euro/ton in 2012 to a minimum of less than 50 Euro/ton in the beginning of 2016 (see the next figure, from “focus- economics.com”). But that value is also indicated from the main players (as Rio Tinto) as a minimum threshold of the fluctuations: in the next future the economic reprise in U.S.A., and the iron ore demand for the African general infrastructural development could maintain the price around, at least, 80 Euro/ton.

Figure 1 – Iron ore value fluctuation from 2012 to 2017 (from “focus-economics.com”)

To estimate the iron ore economic value we consider, conservatively, a price of 80 Euro/ton of iron mineral and a reserve of 8 billion tons, so the value is more than 600 billion of Euro. Looking at an affordable mining project to extract and export 60 million tons per year (or to use the same amount of mineral in a local transformation industry), the development time for the complete use of the mineral resource is more than 130 years and the yearly income, at current-cost, is of about 5 billion Euro. More value can be created implementing, in the area of Aoulouz, an Iron and Steel Industrial Center and exporting cast iron and steel.

The availability of this very important economic mine resource has been the basis for the development of the Infrastructural Plan for the Sous Valley, with the goal of the exploitation of the iron ore and, in the same time, for a sustainable development of a large area of the Morocco State.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 4

THE SOUS VALLEY

The Sous Valley extends for about 4,500 square kilometers and separates the Atlas Mountains, in the right of the valley, from the Anti-Atlas Mountains. The valley has a triangular shape with a depth of 150 kilometers and a base of about 60 km along the ocean side.

Aoulouz

Figure 2 – A sketch of the Sous Valley Map with the main roads.

The main cities of the valley are Agadir (600,000 inhabitants, 2012) on the coast, the main city of the South of Morocco, (70,000 inhabitants, 2004), the ancient Berber capital, in the middle of the valley, and the two villages of Aoulouz (6,000 inhabitants, 2004) and (5,500 inhabitants, 2004) at the bottom of the Sous Valley.

The valley of the Sous Ouadi is fertile and especially devoted to agricultural production. Two large dams, on the right side of the valley, increase the water resources availability given by the groundwater fields around the main river: the Aoulouz barrage (at the top of the valley) and the Mokhtar Soussi barrage (in the middle of the river course).

A national road (N10) runs along the right side of the valley. A new road has been realized recently in the lower part of the valley, to link directly Taroudant with the Agadir Airport, but the traffic and the congestion of the ways is very huge. Other small unpaved roads links the other little villages and urban centers of the valley.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 5

c c

Figure 3 – The two dams of Aoulouz and Mokhtar Soussi, and the irrigated areas close to the Somita site.

The Sous Valley is a good and vast hinterland for a sustainable development of the Agadir area and his neighborhoods, limiting the infrastructural concentration along the coastal zone and improving the sea- land interface planning and management, as stated in the European Principles for the Integrated Coastal Zone Management, worldwide recognized as a valuable tool for the sustainability.

THE INFRASTRUCTURAL PLAN

For the exploitation of the iron ore will be necessary the following infrastructural interventions in the Sous Valley that, at the same time, represent the necessary infrastructures for the economic development of this important Moroccan Regional Area:

 IMD – Installation for the Mine Development: it includes all the machinery devoted to the extraction of the iron ore and all the related services (roads, buildings, water and energy distribution systems, water treatment plant, etc.);

 HW – Highway: a new main road on the left side of the Sous Ouadi that connects the Somita Mine with Aoulouz and with the highway system of Agadir, till the Agadir harbor, is necessary to allow the increased traffic of trucks (in the first period) to transport the iron ore to the Agadir harbor for exporting, and of general vehicles (in the future) due to the economic development of the Valley;

 RW – Railway: a new railway line will be necessary to export the iron ore and the iron and steel products and to import the coke for the industrial center. The cost of the railway is considered, in the next analyses, complete of the freight trains. The Railway will follow a course parallel to the Highway in order to create a service corridor that will be used also for the main important distribution services for the Valley (ICT, pipelines, etc.);

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 6

Dam Power Plant

New irrigated areas New Cities

Somita Mine Iron Steel Center Harbor

Transport Corridor

Figure 4 – Infrastructural plan for the development of the Sous Valley.

 ISIC – Iron Steel Industrial Center: it will be realized close to the Somita Mine in order to produce cast iron and steel for the export;

 EPP – Energy Power Plant; it has to be realized in the area of Aoulouz to provide energy for the mine exploitation, the steel industry, the new cities and the transport lines. A traditional Thermal Power Plant and Energy Renewable Power Plants (photovoltaic, concentrated solar power, wind, geothermal) will be realized in order to follow the principles of the environmental sustainability. The availability of shale gas resources will be investigated;

 NC – New Cities: it has been estimated that approximately 35.000 new working places will be created in the mine, the industrial center and for the general services. It implies a number of 140.000 new inhabitants that has to be hosted in the Aoulouz area. In order to limit the bad effects of a big urbanization, at least three new towns will be created in the surrounding of the Somita Mine. Each town will have all the social services (schools, hospitals, mosques, cultural centers, sport facilities, etc.) and the environmental features (parks, sewer systems, garbage facilities, water treatment plants, etc.) developed according with the principles of the sustainable development;

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 7

 HS – Hydraulic Structures: a new dam on the Atlante valleys (in the area of the two existing ones) and new water distribution structures for irrigation, industrial and drinking water will be realized in the Sous Valley. The existing agricultural use of the soil will be increased tanks to the new available water resources;

 NW – New Harbor: a huge development of the Agadir Harbor will be necessary to hold up the increase of the freight traffic, particularly for exporting the iron ore and steel products and importing the coke.

ENGINEERING ACTIVITIES

Feasibility studies

It comprises the feasibility studies, to be made in the next 12 months in order to define from the technical and economic point of view the following items of the plan:

 Determination of the mineral volume (geologic and electromagnetic surveys) and certification of the mine ore;  Realization of one first dock in the port of Agadir and realization of the industrial port to serve the Mine and the Iron Steel Industrial Center;  Railroad construction and trains supply;  Tooling supply of the mine (roads, large squares, systems and blots for the earth movement, buildings);  Availability of the areas, permissions, certifications;  Iron and steel system;  Cities of the workers (completes of schools, hospitals, mosques and related services);  Dam and utilities for water supplying for the cities and the mine;  Center for power supply and energy supply transfer.

The cost for the feasibility studies, comprehensive of the burdens for the inspections, the collection and the measurement of new data (including topographical, geologic and mineral surveys) is estimated in 5 million Euro.

Mine Due Diligence and Certification

The mining certification (asseveration of the volume and the quality of the mineral) valid also according to a LME fixing (in order to bring the mine into Stock Exchange value), carried out from a qualified international company and duly insured responsibility, is estimated in 25 million Euro.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 8

Design work started

It has been supposed, in the earlier stage, to start with the exploitation of a portion of mine with the mineral export of iron ore, via the port of Agadir, with truck transportation on the existing roads, where docks of new construction can be loaded on the ships (or with the adaptation with one existing dock). The technical cost for design and work survey is estimated in the measure of 8% of the cost for the realization of the work.

Design elements of the intervention

It is previewed, on the base of the feasibility studies, to entrust parts of the planning of the single elements of plan to a company of advising of declared reputation, to be searched within European Engineering companies already operating in the area. It will be proceeded in such a way to the production of the preliminary plans and defined on the base of which the Business Plan will be updated in terms of costs and time.

The plans defined will be used for the realization of contests to invite of the type to “contract integrated”, for the executive planning and the realization of the structural elements, on the base of time and costs defined during the phase of definitive planning. To every successive step of planning, based on the sharpening of the costs, it will be see again and the Business Plan updated.

The total burden of planning (civil and industrial) and of the technical services can be estimated that (Project management and direction works, security) is of the order of 8% of the value of the planned works.

INFRASTRUCTURAL PLAN ELEMENTS

IMD – Installation for the Mine Development

Equipment for the production of mineral The final scope of the production, that it will be of 60 million tons of mineral per year (5 million tons to the month), is that one of the feeding of the iron and steel system for the production and the export of cast iron in billets.

For the production of this mineral volume, to regimen, at least 20 yards of mobile working are necessary whose cost based on the appraisals of the company Baioni Crusching Plants S.P.A. everyone is of approximately 4 million Euro mounted in native place (former 3,5 million Euro “factory”, more 500,000 Euro for transport and putting in function).

They turn out 80 million Euro of investment in this way.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 9

Earth moving equipment (dump trucks, excavators and trucks large servings) It is necessary to enliven material for 5M/30=170.000ton/day.

Dumper carries 300 t.

Assuming that every dumper makes in a day 10 travels little less (than a travel to the gone hour of, equally of cargo return, comprehensive and drainage, if works 24 hours on 24), is 3000 ton.

They are necessary therefore 170.000/3000=60 dumper, from which 60x600.000= 36 million Euro, rounded off to 40 million Euro.

For the voices of the excavators and the trucks of great capacities the same cost of the dumper can be assumed, that is 40 million Euro for each voice.

Total cost To the cost of the specific equipment of quarry therefore determined (200 million Euro), we need to add those for the yard roads (approximately 2 million Euro), for the system detailed list (compressed air, perforation, winnowing, accumulating), for the Administration buildings, for the service takeovers, for the software managerial, for the medical garrison etc.

We can say that the total preliminary cost for the general tooling and start-up of the mine, can be estimated in 500 million Euro, for the production of 5 million tons per month.

Initial Tooling In the earlier stage, as already exposed, it can be thought to equip the mine for the production and the export of 500.000 tons of mineral per month.

The cost of this first investment, to be made in a period of 12 months as a result of the planning, can be estimated in 100 million Euro, inclusive of the great part of definitive infrastructures of services to the mine.

HW – Highway

A new highway along the Sous Valley will be necessary to increase the capacity of the existing road system and to connect the new cities, that will be constructed for the mine workers, with the coast and the network of the other existing cities (Agadir, Taroudant, Aoulouz an Taliouine).

The Highway, with the related interchange infrastructure (road junction, bridges, etc.) will be constructed in the vicinity of the Railroad, to create a Transport Corridor along the “thalweg” (the valley axes) of the Sous Valley.

This choice will minimize the environmental impact on the valley and also the costs of the infrastructures to over or underpass the Transport Corridor. Many new and modern European infrastructures adopt this solution putting beside an highway and a railroad.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 10

On a basis of preliminary feasibility assessments and local surveys, the left river side of the Sous Ouadi should be used to place the new transport infrastructure, connecting the highway with the main existing road system (National Road 203) on the right side of the river.

The total development of the highway, including the road junctions, will be of about 200 km. Taking into account the needs of bridges and other local interferences, a unitary cost could be assigned as 7,5 million Euro looking at the Morocco market.

The total gross cost of the Highway could be assessed as 1,5 billion Euro.

RW – Railway

Railroad construction The cost of the railroad can be estimated in approximately 1 billion Euro.

The estimation has been made assuming a unitary value per km all inclusive, by considering the tracing, characterized based on the study of the cartography, and estimating a unit cost for the features in found and the incidence given from the works of art main (bridges and galleries) and secondary ( small bridges passages and river crossings).

The railway tracing turns out in approximately 200 km.

It is considered of bordering with the railroad the Sous Ouadi from the Lake of Aoulouz until the sea, the flat country decreases in enough regular way: less of the short mount feature in proximity of the mine, in which they will be probable galleries, for the rest the bridges will be to overcoming of the hydrographical network and the practicability of the surroundings.

If we assume:

 a bridge every 5 km, of total 100 m length, we get 40 bridges of approximately 100 m of length are had everyone that, to a cost of 30.000 Euro/m, gives a value of 120 million Euro;  Rail track base reinforcements (1 every 200 m) , that it involves the realization of 1000 base reinforcements, that to a cost of 50.000 Euro each gives a total cost of 50 million Euro; the cost of the works turns out of 170 Million Euro.

Rounding off to the double quantity, in order to hold account also of the galleries and the several works of reconstruction, the cost total turns out of 3 million Euro per km, for the 200 km of line, gives to 600 million Euro. It is the infrastructural cost, that represents the 60% of the infrastructural cost.

The other 40% of the cost is due to the ballasting tracking, the electrical infrastructure and the signaling.

The total estimation cost for the Railway infrastructure is of about 1 billion Euro.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 11

Supply of Train wagons The requirement of railway convoys has been determined according to the first hypothesis of export and sale the entire production of the iron ore, 5 million tons per month.

The obtained dimensioning, therefore, turns out valid also for the export of the cast iron produced in the Iron Steel Industrial Center towards the coast, and the transport of the huge amounts of coal and limestone that will serve for the feeding of the blasts furnaces.

In fact, for the production of a ton of cast iron 1,8 tons of mineral are necessary, 0,9 tons of coal and 0,45 tons of limestone.

The transport of 5 million tons per month is equivalent to 160.000 tons/day. Considering a weight of the mineral of 2 tons/m3, we have to manage a volume of transport of 80.000 m3/day.

A wagon carries 135 m3, therefore we need 600 wagons. Every train can carry 20 wagon averagely. Therefore 30 trains per day are needed, that means 1,2 train per hour, so a train every 50 minutes (considering the transport 24h/24, day and night).

Estimating that the speed of the convoys can be of 80 km/h, comprised the times of departure and maneuver, we can estimate that the single travel takes 4 hours, which other 4 hours to unload the iron ore mineral and others 4 hours for the return travel, which they follow others 4 hours in order to recharge. They are, in total, 16 hours to travel.

They will be necessary, finally, at least 20 trains with 400 wagons.

As basic assumption the cost of the trains could be estimated as for 5 million Euro for the locomotors and 1 million Euro for each wagon. In these costs could be intended as comprised also the investments for a first repair and maintenance workshops.

The total cost for the supply of the trains is 500 million Euro.

The total cost for the Railway is 1,5 billion Euro.

ISIC – Iron Steel Industrial Center

An Iron Steel Industrial Center will be created in the vicinity of the Somita mine, equipped with blast furnaces for the transformation of iron ore into cast iron and mills, suitable for the production of cast iron billets to be exported by rail transport to the new port of Agadir.

As mentioned above, the production of 1 ton of cast iron requires on average the use of 1.8 tons of mineral (actually depends on the iron content, which in our case is high, but we can assume the data as average), 0,45 tons of limestone and 0.9 tons of coke.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 12

We can assume, in the first hypothesis, that the limestone is present in the waste production of the mine, as normally happens with iron minerals. If not, we should look for a limestone quarry near the iron mine, or finally we will have to assume the transportation the imported limestone from the port of Agadir.

Thinking of turning all the ore production of the mine into cast-iron, 60 million tons per year, 30 million tons per year of coal will be needed. Unless there are coal mines near the mine, it will be necessary to import the coal from the sea, unload it in the port of Agadir and then transport it by train to the Iron and Steel Industrial Center. The number of trains estimated in the previous paragraph will be sufficient to support this transport of material.

The management of coal (as the case of Taranto, in Italy, teaches), involves a series of environmental problems that must be carefully studied in the feasibility analysis. For this problem, it has been thought to consider pneumatic systems for transporting coal dust, as is already the case in modern power plants. The related costs have already been considered among those for the fitting out of the new port of Agadir.

As regards of the sizing of the blast furnaces, the most modern systems ensure a production between 6,000 and 10,000 tons per day. Having, in our case, a large volume of ore, we attest to the maximum production.

The production of annual cast iron can be obtained simply by multiplying the tons per day by 365, as the ovens operate in a continuous cycle and turn off, on average, every 7 years for the change of refractories.

With a blast furnace of 10,000 tons per day, about 3,5 million tons per year of cast iron will be produced, using (in the ratio 1 cast iron / 1,8 mineral) about 6,5 million tons per year of ore. Having thought about a production of 60 million tons per year of ore, to transform it all into cast iron, at least 9 blast furnaces are needed, thus creating one of the largest steel plants in the world.

In order to evaluate the extension of such a system in rough terms, reference was made to that of Ilva in Taranto (Italy), which is one of the largest in Europe.

Besides the blast furnaces (5) it contains many other factories and industrial plants for the production of steel (which at the moment we have not considered in our steel plant), but it is believed that it can still be a good reference point, even if the simple production cast iron could be optimized in spaces. The Ilva steel plant has an area of about 5 km2, of which about 1 km2 is occupied by the bunkers.

For an assessment of the order of magnitude of the cost of the steel pole, taken as a whole, reference was made to the investments in progress in important steel plants in the world (in Turkey, in particular, there is one in constant evolution) and to an estimate of the value of the Taranto ironworks at current costs (which Riva company paid 1 billion euros net of payables). The only cost of supply of a blast furnace is not in fact sufficient for the evaluation as it also serves the cost of all the equipment supplied for the casting of the cast iron and the transport of materials.

Based on these assessments, it can be estimated that the cost of the Iron and Steel Industrial Center is 3 billion Euro.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 13

EPP – Energy Power Plant

In an initial phase of rigging of the mine, the connection of the mining area to the local electricity grid can be envisaged: based on some estimates made on site in recent years, this cost can be estimated at 5 million Euro, including the construction of the appropriate transformation cabins.

As part of the overall territorial development plan of the area, it will be opportune to envisage the construction of a Energy Power Plant that will have to feed the Mining Area for full production, the Iron and Steel Industrial Center, the Railway, the New Cities and support the electricity consumption of the New Harbour.

In principle, one can think of a power plant, made up of several generators, which ensures an output of 500 MW of electricity. The estimate of the cost of the power plant can be done considering the usual 2,500 Euro per kW of installed power, for a total value of 1,5 billion Euro, including the transformer cabins and the distribution networks.

NC – New Cities

Number of inhabitants The assessment of the cost of the cities leaves, obviously, from the estimation of the number of persons who will have to accommodate, and be, therefore, carried out on the basis of the estimation of the number of workers that will be engaged in the Mine and in the Iron and Steel Industrial Center.

Workers in the Iron and Steel Industrial Center In Taranto there are 13,000 workers, to produce 20 million tons of raw materials treated per year.

If we assume we are dealing with almost the entire production of the mine of 60 million tons per year, we would need three times more employees.

However, in the hypothesis of latest generation plants that certainly have a higher level of automation, and considering that the Iron and Steel Industrial Center that we are going to build is aimed at the production of cast iron (and not only steel) it is believed that a correct estimate of the number of workers is 20,000 units.

This figure is also supported by the number of direct employees for each blast furnace, which can be estimated at 500, for a total of 4-5,000 workers. All the others will be used in the service activities and in the related industries.

Workers in the Mine In the Sishen mine in South Africa, one of the largest in the world, about 40 million tons per year of ore are extracted, with a number of workers in the mine to about 8,500.

Assuming a high level of automation for the plants that will be realized in the Somita Mine, it is estimated that the number of workers can be 10,000.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 14

The total number of workers employed in the mine and in the metallurgical center is therefore about 30,000 units, to which prudently 5,000 are added for the related activities in the cities (administration and services).

Assuming, on average, families of 4 people, of which the head of the family is employed, a total of 140,000 people is reached.

In order to not create a single settlement center, with all the problems of the big cities, but wanting to refer to urban schemes that consider a sustainable development approach (Smart Cities approach), endowed with services "on a human scale", in the subsequent evaluations we referred to the construction of 3 cities with 45,000 inhabitants each.

Construction costs of the New Cities In the attempt to apply the principles of Sustainable Development to the cities (the overall very well-known “Smart Cities approach”), for the assessment of the main characteristics of the new cities and the related costs, reference was made to the application of the urban criteria imposed by the Italian laws and regulation, that are the more advanced in Europe and in the World in term of ensuring social and health quality for the inhabitants.

Housing The Italian Law (D.M. 1444 of the 2 April 1968 and D.M. 5 July 1975 and succeeded) previews a minimal surface of 14 m2 per inhabitant until a maximum of 4 inhabitants. Increasing with a coefficient of 1,6 this threshold in the view of residences of an average level, turns out that a medium family of 4 persons will occupy a lodging of approximately 90 m2.

Assuming the construction of three cities, each of 45.000 inhabitants, with houses inhabited averagely from 4 persons, and a cost of construction of 300 Euro per m2 (in order to make reference to popular building, but of ensuring quality and equipment for all the technological innovations, as for example self-production energy and low pollution) for every city the cost for the construction of the houses it will be as follows:

45.000 / 4 = 11,750 house x 90 m2/ house x 300 Euro/m2 = about 305 million Euro.

The cost total of the 3 cities, in terms of houses, will be of about 900 million Euro.

Schools (nurseries, kindergartens and primary schools) The Italian Law demands for a minimum of 4,5 m2 to inhabitant for the school buildings; if a value of 6 m2 is assumed for every citizen, they turn out therefore 270,000 m2 to assign to the scholastic building.

In Italy the cost to m2 of a school is approximately 1,5 times that one of the residential house; an average cost of 450 Euro/m2 is therefore assumed for the schools, from which:

270.000 x 450 = approximately 125 million Euro for a city, for a total of approximately 375 million Euro fro the three cities.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 15

Hospital and religious buildings The Italian Law demands as minimum 2 m2 per inhabitant; if a value of 3 m2 is assumed, for every citizen they turn out therefore 135,000 m2 per city.

In Italy the cost of 1 m2 of a hospital is approximately 2 times that one of the residential; an average cost of 600 Euro/m2 is therefore assumed for hospitals, mosques and religions buildings, that is:

135,000 x 600 = approximately 80 million Euro each city, for a total of about 240 million Euro for hospitals and mosques.

Recreation centers and green areas The Italian Law demands for a minimum of 9 m2 per inhabitant; considering a value of 12 m2, for every city they turn out therefore 540,000 m2.

An equal cost to 1/5 of the residential cost, therefore 60 Euro/m2 is assume, obtaining an average cost for the recreation centers and the green areas of:

540.000 x 60 = approximately 32 million Euro per each city, for a total of about 95 million Euro for the green and recreational areas.

Works of primary urbanization (roads, power lines, water distribution, waste water network) Assessment in the Italian structures indicates a cost of about 650 Euro per each inhabitant; assuming a reduction factor of 50% 0,5 taking into account the Morocco costs, a value of:

650 x 50% x 45,000 = about 15 million Euro per city, for a total of about 45 million Euro.

Public buildings and shopping centers We estimate the same value assessed for the schools, as 375 million Euro.

Airport for medium-small airplanes and helicopters The specific cost can be reallocated in the all-in costs estimates for the construction of the cities.

Total costs Related to the add-up of the previous unitary costs:

 Housing: 900 million Euro;  Schools: 375 million Euro;  Hospitals and religions buildings: 240 million Euro;  Green areas: 95 million Euro;  Urbanistics: 45 million Euro;  Publics buildings and shopping centers: 375 million Euro, for a total of 2 billions Euro.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 16

HS – Hydraulic Structures

The cost for the Hydraulic Structures has been evaluated as a whole estimation referred to experiences of water supply and distribution in similar environmental and climatic situations.

We have considered:

 the water supply system for the Mine, for the housing settlements (the cities) and for the agricultural and zoo technical activities that will have to be implemented in the cities surroundings;  the primary distribution system (the internal networks inside the cities and the industrial and mining plants are already included in the costs of installation and construction);  the Water Treatment Plants;  the construction of irrigation fields to support the agricultural activities.

Given the huge needs of water, it has been considered necessary the construction of a new dam with the creation of a reservoir and all the related plants.

The total assessed cost for the Hydraulic Structures is of about 1,5 billion Euro.

NW – NEW HARBOUR

The estimation has been executed considering unitary costs for the docks, the large squares and the offshore works that comes from the hypothesis to manage a traffic of 5 million tons of iron mineral per month. This is the more conservative estimate considering the condition of transports in terms of dimensions of the number of berthing facilities and the spaces for the docks.

The port thus hypothesised, therefore, is also suitable for the absorption of traffic composed partly of iron ore, partly by cast iron billets to be exported, and partly by coal imported for the power supply of the Iron and Steel Industrial Center.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 17

Figure 5 – Assumption of the New Harbour location, North of the existing Agadir Port.

Traffic and maritime structures considerations

Port traffic and berths If we consider ships that make a transport of 150,000 tons of bulk (bulk carriers) we must consider 33 moorings per month in order to export 5 million tons of iron ore.

Considering gantry cranes with a capacity of 1,000 tons per hour, in order to unload 150,000 tons 150 hours are needed, so the ship mooring time will be approximately 6-7 days.

Every ship place receives approximately 4 ships per month and, therefore, 8 berths are necessary.

Other estimates previews that if every ship berth produces approximately 600,000 tons per month, then in order to allow the export of 5 million tons at least 9 ship places have to be realized.

Holding account of other traffic estimations in the industrial ports we assume, after all, 10 ship places.

Ships, berths and depth Ships of 150,000 DWT are of approximately 300 m of length and 18 m of draft. The depth of the port must be therefore of 20 m (18 of draught plus 2 m frank for tides).

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 18

The ships also need about 25-30 m on each side for cables and mooring ropes, so for 10 berths of 350 m each, 3500 m of quays are needed with a nominal depth of 20 m, to which at least 500 m of docks must be added m as technical docks (pilots, armed forces, tugs, etc.) with at least 7/8 m depth.

Docking circle For an easy manoeuvring and mooring a docking circle of at least 600 meters of diameter is required (keeping into account more than 1,5 times the length, with ships of 300 m).

Docks available areas Being coal and mineral goods, the aprons must be of considerable size and with high geotechnical load parameters (bearing capacity) even up to 6/7 tons per m2. A square space with side 350 m for each ship place is the square suitable for each landing.

In other words, having 3,500 m of quays and 350 m of loading / unloading area, ground space for 1,200,000 m2 at a cost of at least 100 Euro per m2 has to be taken into account.

Defense works It is an ocean port that requires breakwaters at least 6 m high over depths of at least 20 m, to be completed with a parabolic wall.

Navigation channel If the works were adequately placed on a high seabed, the excavation of the access channel would not be necessary, but a certain amount of dredging costs is prudentially taken into account.

Dredging As above, the cost of dredging depends on how much is needed to dig at sea and on land. In any case it is prudential to take into account a couple of millions of cubic meters of dredging.

Estimates of maritime works costs for the new port From the previous estimates:

 about 3500 m of equipped docks, placed on -20 m depths, at the unitary cost of about 100,000 Euro per meter, give a total cost of 350 million Euro;  about 500 m of piers at -7 m depths, at the unitary cost of about 20,000 Euro per meter, give a total cost of 10 million Euro;  the maritime works can be estimated at around 80 million Euro;  the access channel has been assessed as 20 million Euro;  for the dredging works (2 million m3 approximately) 40 million Euro are needed;  for the yards (including drainage works) 100 million Euro;  for ordinary roads, accesses and port buildings, 100 million Euro;  for cranes and port handling equipment for iron ore and coal loading and unloading systems (without air pollution and dust dispersion) 300 million Euro are needed,

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 19

so the total cost for the new port will be around 900 million Euro.

Cost of a dedicated dock in the existing port of Agadir Beyond to these costs it must be considered, in the earlier stage of operations of the mine, the tooling of one specific dock in the existing Port of Agadir in order to begin to export the material transported with the trucks.

A cost of 100 million Euro, comprehensive of large squares and ways of access can be assumed for such dock.

New Harbour cost The cost of the New Harbour is approximately in the order of 1 billion Euro.

COST AND REVENUES

In an accurate pre-feasibility analysis the estimates of infrastructures cost has been defined as follows:

 IMD – Installation for the Mine Development: 500 million Euro,  HW – Highway (including the Transport Corridor): 1.500 million Euro,  RW – Railway (including the trains): 1.500 million Euro,  ISIC – Iron Steel Industrial Center: 3.000 million Euro,  EPP – Energy Power Plant: 1.500 million Euro,  NC – New Cities: 2.000 million Euro,  HS – Hydraulic Structures: 1.500 million Euro,  NW – New Harbor: 1.000 million Euro.

The total cost of the infrastructures is 12,5 billion Euro; the cost for the engineering and the related technical services (data acquisition, sampling, security, etc.) can be estimated around the 8% of the total value of the structures, so it is about 1,0 billion Euro.

The general cost for the plan implementation is, finally, of about 13,5 billion Euro. This general budget has been compared with the infrastructural cost of some other mines and Oil&Gas activities in Africa, and substantially appear of a valuable order of magnitude.

The income evaluation has been referred to an annual production of 60 million tons of iron ore (5 million tons per month), and referring only, conservatively, to the commercial opportunity to sell the iron ore at the New Harbor of Agadir, “free at port”. The future production of iron and steel products will offer, surely, more incomes.

Looking at the actual average prices, the “free at port” value of 1 iron ore ton is about 80 Euro. Considering, conservatively, the 40% of cost of production (for extraction and transport to the harbor), the net income is about 50 Euro per ton, that is 3,0 billion Euro per year.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 20

With a simple current-costs accounting approach, the payback period of the investments is less than 5 years.

FIRST PHASE INVESTMENT

A first phase of intervention, that can start in few time, considers the export of the iron ore transported through trucks from the mine to a new restored berth in the existing Port of Agadir.

The production of the mine is strictly related to the transport capacity via trucks from the mine to the new berth. To allow this transport without interfering with the local traffic, a dedicated track will be realized between the mine and Agadir, following the tracing of the future transport corridor. This track will be instrumental for the construction of the Sous Valley corridor and will cost 250 million Euro.

With this new route the transport capacity with trucks will be of about 4 million tons per year, that will generate a net income of about 200 million Euro per year.

The cost of the first phase investment takes into account the feasibility study, the Due Diligence of the mine, the design and the technical services related to the first phase interventions that will cover: the mine initial tooling, the construction of the dedicated track, the construction of the new iron ore berth in the Agadir Harbor.

Years 1 2 3 4 5 (values in million Euro) Months 6 12 18 24 30 36 42 48 54 60 COSTS ENGINEERING Feasibility study 5 -3 -2 Mine Due Diligence and Certification 25 -25 Design and services (8% of the structures value) 32 -16 -8 -8 MINE Initial tooling 100 -50 -50 ROAD Track for transport via trucks 200 -100 -100 PORT iron ore berth 100 -50 -50 6 months base total costs -3 -27 -16 -208 -208 REVENUES Sales of Minerals transported via trucks 100 100 100 100 100 REVENUES - COSTS -3 -27 -16 -208 -208 100 100 100 100 100 CASHFLOW -3 -30 -46 -254 -462 -362 -262 -162 -62 38

Figure 6 – First Phase Business Plan.

As presented in the business plan, calculated with the current-cost principle on a basis of time of 6 months, the payback period is 4,5 years from the beginning of the project and 2 years after the completion of the first phase structures. The maximum value of the disbursement, before the beginning of the revenues, is about 460 million Euro.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 21

The first phase investment will produce by itself, after the payback period, a net income of 200 million Euro per year and will generate an initial project time period to assess and design the completion of the infrastructural plan.

WHOLE PROJECT

In the following business plan at the First Phase has been added the completion of the Whole Project.

Years 1 2 3 4 5 (values in million Euro) Months 6 12 18 24 30 36 42 48 54 60 COSTS ENGINEERING Feasibility study 5 -3 -2 Mine certification 25 -25 First Phase Design (8% of First Phase works) 32 -16 -8 -8 Whole Design (8% of the works) 968 -125 -125 -125 -125 -125 -125 -125 -93 IMD – Installation for the Mine Development 500 Initial tooling 100 -50 -50 Completion of the tooling 400 -80 -80 -80 -80 -80 HW – Highway (including the Transport Corridor 1500 Track for transport via trucks 200 -100 -100 Completion of the Transport Corridor 1300 -260 -260 -260 -260 -260 RW – Railway (including the trains) 1500 -300 -300 -300 -300 -300 ISIC – Iron Steel Industrial Center 3000 -750 -750 -750 -750 EPP – Energy Power Plant 1500 -400 -400 -400 -300 NC – New Cities 2000 -400 -400 -400 -400 -400 HS – Hydraulic Structures 1500 -300 -300 -300 -300 -300 NW – New Harbor 1000 Iron ore berth in the existing Agadir Port 100 -50 -50 New Harbor 900 -180 -180 -180 -180 -180 TOTAL WORKS COST 12500 6 months base total costs -3 -27 -141 -333 -1033 -1645 -2795 -2795 -2795 -1963 REVENUES Sales of Minerals transported via trucks 100 100 100 100 100 Sales of Iron ore and steel transported via railway 6 months base total revenues 100 100 100 100 100 REVENUES - COSTS -3 -27 -141 -333 -1033 -1545 -2695 -2695 -2695 -1863 CASHFLOW -3 -30 -171 -504 -1537 -3082 -5777 -8472 -11167 -13030

Years 6 7 8 9 10 (values in million Euro) Months 66 72 78 84 90 96 102 108 114 120 REVENUES Sales of Minerals transported via trucks Sales of Iron ore and steel transported via railway 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 6 months base total revenues 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 REVENUES - COSTS 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 CASHFLOW -11530 -10030 -8530 -7030 -5530 -4030 -2530 -1030 470 1970

Figure 7 – Whole Project Business Plan.

The design will be accomplished in 2 or 3 years from the beginning of the project for the different project elements, and the complete construction of all the elements of the infrastructural plan will be finished after 5 years from the beginning of the project.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 22

The maximum disbursement in the cash flow will happen at the end of the fifth year, with a value of approximately 13 billion Euro.

The return of the investment has been evaluated in a very conservative way, considering only the sale of the iron ore mineral, without considering the more profitable sale of steel produced in the Iron and Steel Industrial Center. It will happen in 9 years from the beginning of the investment.

The cost for the Somita mine acquisition has not been considered in this business plan estimation because it depends closely from the amount of iron ore existing in the Somita mine. In any case, the value of 2 Euro per ton is around the 1/40 of the value of the mine, so very convenient in respect to the 10% assigned to the permission proprietary in the international mining market.

SUPPORT TO THE SOUTH MOROCCO INFRASTRUCTURAL DEVELOPMENT

The 12,5 billion Euro infrastructural investment in the Sous Valley, made by the China Government tanks to the opportunity to exploit the Somita mine, gives good opportunities to the Morocco in improving one of the least developed areas.

The Agadir area is one of the more profitable developing areas of the Country for two reasons: the coast of Agadir and its internal land (the Sous Valley) gives optimal possibilities of exploiting natural and agricultural resources; this area will be pivotal for the next developing action in the Southern Provinces of the Morocco nation (the formerly Western Sahara land) in order to affirm and maintain the control of the central state against the Polisario front.

In particular the intervention on the Agadir Port and the construction of a New Harbour dedicated to the mining initiative will be in perfect agreement with the “National Port Strategy with the 2030 Horizon” published in 2011 by the Road and Transport Ministry of the Morocco Kingdom (“La stratégie portuaire nationale à l’horizon 2030“, Publication du Ministère de l’ Equipement et des Transports – 2011).

In the next figure the cover of the publication is represented, together with one of the first maps that depicts how all the main port activities in the country are placed in the northern areas while, starting from Agadir and extending to the South, the maritime infrastructure are only dedicated, actually, to the fisheries and to small transport activities.

The development of the port network in the South of the country gives good opportunities to use an improve all the natural and land resources of this vast territory, that covers more than 266,000 square kilometers with less than 550,000 inhabitants.

The ministerial strategic plan considers the improvement of two port pole in the South of the country:

 the Souss-Tensift Pole, that includes the Port of Agadir for which an expansion is expected till the 2030 to be able to exchange more than 16 million tons of commercial goods (excluding the iron ore

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 23

exchange expected with the use of the Somita mine and the related New Harbour dedicate to the mining activities);  the pole of the Southern Ports including the maritime structures of Tan Tan, Laayoune, Boujdour, Dakhla, Lamhinz and Lagouira, at the border with Mauritania.

Figure 8 – The cover and one of the first maps of the 2011 publication on the Morocco Port Strategy.

Figure 9 – The expected development of the two South Port poles of the Morocco Country.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 24

The Transport Ministry, with its strategy publication, has already prepared an investment plan for the two South poles based on pre-feasibility studies and preliminary projects of the maritime infrastructures.

The following tables represent the expected investments.

Figure 10 – Expected investments in the South Ports of Morocco.

The conversion between the Morocco Dirham and the Euro is 0,109 Dh/Euro, so the total investment defined in 2011 was of about 15,22 billion Dh, equal to 1,7 billion Euro.

The Dakhla Atlantique will be the main oceanic port of the southern region, devoted to the development of the entire country. It will be a high depths multipurpose port, with docks for cereals, mining and Ro-Ro, a Container Terminal, berthing for fisheries area and general services.

Figure 11 – Sketch of the preliminary project for the Dakhla Atlantique port.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 25

Considering an actualization to 2018 the investment could be defined in 2 billion Euro, and it can be doubled to at least 4 billion Euro considering the construction of roads, motorways and other infrastructure to penetrate in the Western Sahara lands starting from the coastal sites.

The port network of the southern pole could be linked with a Ro-Ro Terminal berths in order to create a so- called “Sea Motorway” increasing the goods exchange via the maritime transport in a first fast way, before the construction of new land motorway and railways in the southern country.

The investment in the Morocco southern port network finds a logical synergy with the GMB Financial availability of a huge yard in the Port of Livorno (North of Italy, Tuscany, Tyrrhenian Sea) that will became the logistic pole for the exchanges within China, Italy and Morocco.

THE GMB LOGISTIC YARD IN THE PORT OF LIVORNO

GMB Financial is in the process of acquiring a yard in the Port of Livorno and the connected yard, actually occupied by warehouses, squares and offices. It is an area of almost 30,000 m2 that has belonged to a fish processing and refrigeration company.

The yard, thanks to some interventions, described below, can become a logistical base useful for the storage of stocks and materials to be transported in Africa, specifically in Morocco, to support the various infrastructural development operations described above. Livorno is in a optimal position for that goal: it is in the center of the North and Center Italian productive area, very well connected to the Italian network of motorways an railways.

In the yard there are currently 4 recent sheds (built in the last 10 years) occupied by cold rooms, with structures made of sheet and polyurethane sandwich panels, for a total extension of about 4,200 m2 and a volume of 43,000 m3, fully equipped with storage machineries. These cold rooms, following an appropriate revision of the refrigeration engines, will be reused for storage of stocks and provisions.

Instead, the demolition of all the oldest warehouses is foreseen (some of those dating back to before the II World War, others to the 60s) preserving only the valuable office building dating back to 1928 and with a considerable potential for architectural recovery.

In this way, a free area of about 22,800 m2 will be obtained, very useful for the loading / unloading operations of the ships. Some of this area, in the South Western corner of the yard, may be occupied again with open sheds for the covered storage of materials.

The dock, which actually presents geometric deformities and which was used only for the temporary docking of fishing vessels that unloaded the fish to be frozen, must be regularized with an intervention that will be partly supported by the Port Authority, in order to make the quay in geometric continuity with the quay of the adjacent lot.

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 26

The new quay will therefore have a length of 170 m, with a useful depth of 9 m for mooring, allowing the berthing of bulk carriers or general cargo of the "Mini Bulk Carrier" and "Handysize" category, up to approximately a maximum of 20,000 / 30,000 DWT. The width of these ships, less than 30 m, allows the berth without disturbing the navigation in the harbour canal.

The quay will be equipped with a fixed crane or with more mobile cranes on rubber, to allow the handling of goods in the loading / unloading of the ship and for the handling on the yards.

The total investment that GMB Financial is facing for the reconversion of the building complex is about 24 million Euros and includes the following items:

 acquisition of the ownership of the area;  demolition of obsolete factory buildings and sheds;  maintenance of cold rooms and refrigeration systems;  pavement of the new free yard area;  construction of the new open covered docks;  restoration and modernization of the office building;  remake of the quay (expenditure incurred at least for 50% to the Port Authority);  rigging the goods handling area (stationary and / or rubber cranes, forklifts, etc.)  arrangement of green and parking areas.

The intervention master plan is depicted in the following figures.

Figure 12 – Aerial view of the yard area in the Port of Livorno (North of Italy, Tuscany, Tyrrhenian Sea).

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 27

Figure 13 – The actual state of the art of the yard area.

Figure 14 – Demolition (in yellow) and restoration / reconstruction works (in orange).

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 28

NQ

NY

CR CR ND

OB

Figure 15 – The final lay-out of the restored logistic yard.

In the last figure:

- CR: Cold Rooms, that will be maintained and that become fully operative; - OB: Office Building, that will be restored preserving the original architecture; - NY: New Yard, a new open square, useful for loading / unloading, of about 20.000 m2; - NQ: New Quay, 170 m long with 9 m depth; - ND: New Docks, the new open and covered docks.

GMB Financial is looking for partners in the operation, being available to sell up to 48% of the property against an equivalent commitment to the overall investment.

Eng. Marco Gonella, Ph.D. GMB Financial S.p.A. Technical Sales Manager

GMB Financial SpA • P. IVA 02218480560 Sous Valley (Morocco) Infrastructural Development Plan Eng. Marco Gonella, Ph.D. 29