1.1 Executive Summary

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INVESTMENT OPPORTUNITY

Business Opportunity

Cement Plant 1Cementos Interocenicos SAC (Cementos Interocenicosor the Company) is a Peru-based consortium which seeksto become the preeminent cement manufacturer in thealtiplano region of Southeastern Peru. The Company ownsland and mineral extraction rights for eleven mineralconcessions estimated to contain 716 million tons oflimestone and 400 million tons of pozzolans. CementosInterocenicos seeks approximately US$260 million infinancing to construct a greenfield cement plant with acapacity of 3,000 metric tons per day (1.3 million metric tonsper year) to initially produce Type 1 Portland Cement andPozzolanic Portland Cement. The Company will consider

opportunities to diversify into the production of other typesof cement, lime and gypsum products in the future.

The primary target markets for the Companys products are:

the surrounding altiplano region of Southeastern Peru, for which it expects to be the low-cost producer by asignificant margin within the areas of Cuzco, Puno and Madre de Dios;

the Southwestern region of Brazil, specifically the states of Acre, Rondnia and the Southwestern part ofAmazonas, which has limited local cement production; and

the Northern states in Bolivia of Beni, La Paz and Pando served by only one plant in the Bolivian capital.Economic Climate

Since 2002, Perus GDP has grown at an average of 6.7% per year, and in 2008 outpaced China, growing at 9.8%. 2Perus real GDP has grown by a cumulative 44% between 2000 and 2007. 3 The economic boom has been fueled byglobal commodities demand, and saw free-trade deals consummated with the US, Brazil, Bolivia, Mexico, Chile andArgentina among others. Peru is also part of the Asian Pacific Economic Council (APEC) and it is currently finalizingtrade negotiations with China. While Perus GDP growth is expected by many analysts to slow in 2009, the boom yearshave allowed Peru to pay down its financial obligations and earn an investment-grade rating on its sovereign debt.Similarly, neighboring Brazils real GDP grew a cumulative 25% between 2000 and 2007 and combined with responsiblefiscal planning has permitted it to earn an investment-grade sovereign debt rating as well.4 The Brazilian and Peruviangovernments have engaged in unprecedented economic cooperation in recent years. Among the more notable productsof this engagement is the US$1.3 billion Transoceanic Highway, currently under construction, which will pave orimprove 2,586 km of highway between Perus coast and the town of Iapari on the border with Brazil. Ultimately, theproject will link Brazilian Atlantic ports of Rio de Janeiro and Santos to the Peruvian Pacific ports of Ilo, Matanari, andSan Juan-Marcona.

Bolivia is also an interesting market with the current political regime focused on infrastructure development; publicinvestment has increased from 6.3% of GDP in 2005 to 10.5% in 2009. When the government increased its controlover natural resources it increased revenues and expanded investment across the country. Bolivias economic growth inthe last four years has been higher than at any time in the last 30 years, averaging 5.2% annually since the currentadministration took office in 2006. One of the sectors that has highly benefited from this growth is construction atalmost 8% during the first half of 2009. Due to the expected investment in infrastructure and general GDP growth

1 Representative image, does not necessarily indicate proposed design of the Cementos Interocenicos SAC plant.2Businessweek, May 28, 2009.

1Boston Chicago Los Angeles Miami New York Pepper Pike Philadelphia San Antonio

1001 Brickell Bay Drive, Suite 2306, Miami, FL 33131 phone (305) 459-4150 toll free (800) 291-2388 fax (305) 347-3733

3 World Trade Organization, April 2009.4 World Trade Organization, April 2009.


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there are strong expectations of growth in cement consumption. Cementos Interoceanicos plant site will located atapproximately 300 km from the Bolivian border.

Cement Industry Overview and Market Opportunity

Unlike commodities such as foodstuffs or precious metals, cement has a very low value per unit of mass which translatesto high transport cost. Accordingly, producers of cement often enjoy effective local monopolies substantiated by theirtransport cost advantage as compared to distant competitors. Expensive modes of transport such as inland truckfreight, long transport distances and large elevation changes accentuate transport cost differences among producers.

Used as an important ingredient in concrete, cement iscritical to residential, commercial and infrastructureconstruction worldwide and is an archetypal pro-cyclicalcommodity. Despite the recession affecting more developedeconomies, for full-year 2009, Peruvian cement consumptionreached 7,234 thousand metric tons, an increase of 4.3% ascompared to the same period of 2008. 6 Although asignificant growth, it is only a third of 2008s cementconsumption growth of 12.2%.7

The Peruvian cement market is served by an oligopoly ofthree main ownership groups. Hothschild Mining plcsCementos Pacasmayo is dominant in the northern coastaland mountain regions and serves the sparsely populatednorthern jungle region through its subsidiary, CementosSelva. The Rizo-Patrn familys Cementos Lima andCemento Andino are dominant throughout the central, mostpopulous region of the country. The Rodrguez-BandaGroups Cementos Yura and Cementos Sur are the main providers of cement to the southern part of Peru. Peru is a netcement exporter.

2009 Peru Cement Capacity: 10.2 MM MT 5

Andino,

15%

Yura, 18%

Sur, 3%

Selva, 1%

Lima, 44%

Pacasmayo,

19%

While each of the three main ownership groups in Peru enjoy substantial market power within their regional spheres ofinfluence, particularly in the local vicinity of their manufacturing plants, they do compete with one another in pockets of

the country that have little or no local cement productionand which therefore must be served by distant plants. TheCompany believes that the region surrounding its proposedPuno facility is locally undersupplied by approximately 700thousand metric tons per year, or equivalent to approximately54% of the capacity of Cementos Interocenicos proposedcement plant. The Company proposes to become theprimary local producer in this region, which nominally fallswithin the sphere of influence of the Rodrguez-BandaGroups Cementos Yura and Cementos Sur.

Plant estimated location in Puno (red square)

Even greater opportunities exist to capitalize on the largegrowth in trade between Peru and Brazil fostered byunprecedented cooperation between the governments of

both countries. Specifically, the Transoceanic Highway,projected to open by the end of 2010, will cut several weeksof transport time for Brazils exports of soybeans andminerals to the Pacific and will enable overland import ofPeruvian cement to the Southwest border area of Brazil,

much of which lacks the required geology and mineral reserves to support local cement production. The highway passes

5 Asocem (National Association of Cement Producers Peru).6 Ibid.7 Ibid.




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next to the site of the Companys planned cement plant in Perus Puno Region which will enable the Company to serveareas of the interior of Brazil with pozzolanic cement while minimizing transport cost. While the Highway will open theinterior of Brazil to competing Peruvian cement producers as well, the Companys proposed facility lies less than 160miles closer to the first major Brazilian city, Rio Branco (State of Acre) than does the nearest Cementos Yura plant,creating a substantial and durable transport cost advantage.

The Company has identified an opportunity to leverage existing truck freight dynamics to minimize transport costs whensupplying markets in Brazil. Currently, trucks carrying Brazilian oilseeds and other agricultural exports to Peruvian portsfor ocean shipment often return to Brazil under-filled or empty. There is a cost advantage using these empty trucks toprovide raw-materials (eg. coke8) from the coastal areas in Peru, in their way back to Brazil, to the plants location.Simultaneously, loading these trucks with cement products on their return trip to Brazil presents an attractiveopportunity to increase the shippers productivity in return for which the Company expects to be able to negotiatefavorable rates. The Companys high altitude location creates a further cost advantage for the Company as compared tocoastal sources of cement as trucks carrying Cementos Interocenicos cement to Brazil.

The construction of the Transoceanic Highway itself, which will include several bridges, is another potential source ofdemand that the Company may be well positioned to serve. As well there are several hydroelectric plants projects in theBrazilian targeted market close to the city of Porto Velho, state of Rondonia. Cementos Interocenicos proposedplant will be ideally situated to deliver a low cost value proposition given its location at high altitude right on theHighway itself.

Marketing

One of the main drivers of this project is the opportunity to serve the large demand for pozzolanic cement in theinterior of Brazil at a transport cost advantage over both Peruvian and Brazilian cement manufacturers. Managementhas conducted discussions with a number of business entities and senior members of the federal governments of bothBrazil and Peru in the interest of negotiating contracts. While no offtake contracts have yet been signed, managementbelieves there may be opportunities to contract a significant part of the Companys projected annual production.

Independent of efforts to negotiate offtake contracts, the Company has engaged PricewaterHouse Coopers (PwC)consultancy services to lead a marketing study within thetarget markets region in Peru, Brazil and Bolivia. The studypresents a market opportunity of approximately 2 billion tons

of cement consumption in the target markets. The Companyalso has engaged Cement Performance International (CPI) toevaluate the overall process design, initial capital equipmentcost and production cost model. In addition, it is not theleast to mention that Brazil will be hosting the Soccer WorldCup in 2014 and the World Olympics in 2016, wheresignificant existing and new infrastructure will be improvedand added throughout the country.



Engineering and Construction

The Company has engaged a leader in cement equipmentmanufacturer and clean technologies (Equipment Supplier)

to develop a complete greenfield cement manufacturingfacility from quarry to cement packing and loadout. TheEquipment Supplier has presented and overall proposal forthe required capital equipment at approximately $157 millionfor a daily 3,000 metric tons of cement capacity. Odebrecht a worldly recognized Brazilian construction company will build the plant at an estimated cost of $125 million.

Transoceanic Highway

8 Coke.- Petroleum coke (also referred as Pet Coke or petcoke) is a carbonaceous solid derived from oil refinery cokerunits. It is a high heat and low ash content making it a good fuel for power generation in coal fired boilers.


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Quarry plan, soil and environmental studies are being executed by a recognized Chilean contractor: R & Q. Explorationpermits will be ready during the first quarter of 2010, and all permits required for operations will be issued andcompleted by the end of 2010. Plant operations will start in the first quarter of 2012.

Operations and Management (O&M)A well recognized operator (Operator) has developed a comprehensive proposal to the Company for the Operate andMaintain phases of the project. Management anticipates that experienced cement professionals, under the direction ofthe Operator, will run the plant for a five-year period while training local managers and workers. The O&M contract hasa fee per ton of quarry produced and includes all direct and indirect labor cost and all maintenance required. A stagedhandoff of operational responsibility to local managers would proceed as specific operational milestones are met.

Financing

Current projections indicate an investment of approximately US$310MM to construct the cement plant and associatedworkers housing, mining facilities, links to water and energy supplies and to provide for startup working capital needs.The Company has engaged US-based Cabrera Capital Markets, LLC (CCM), a registered US broker-dealer, as itsexclusive financial advisor to conduct the financing process. CCM is collaborating with the Company and FL Smidth to

develop financial projections and is assisting the Company in refining its business plan. CCM serves as the primarypoint of contact for potential lenders, equity investors and governmental agencies with the exception of Peruvianregulatory authorities which deal directly with the company. The initial estimate on the uses of funds is the following:

Equipment: $ 157 million Construction: $ 125 million Operations $ 12 million Working Capital: $ 5 million Other: $ 11 million

Total: $ 310 million

Initial Capitalization

As a possible option to capitalize this enterprise, the Company has approximately US$50 million of Peruvian bondsinternationally tradable securities which could apply towards the capitalization of the enterprise. CCM is assistingCementos Interoceanicos to evaluate the application of this marketable security. Also, the Company will contribute itsmineral reserves estimated at over 1.2 billion tons of high-quality raw materials for cement production.

There are also local and international investors that have expressed interest to participate with an equity investment. TheCompany, with its financial advisor, is evaluating these options.

Financials

Cementos Interoceanicos first year of operations is expected to be 2012 as a ramp up year. Initial capacity during theramp up first three years is expected below 50%. Sales are expected at approximately $200 million by the end of theprojections. Sales mix is calculated at 90% in bags of 42.5 Kg and 50.0 Kg bag, and 10% wholesale; their respective

average prices are US$8.0 per bag and about US$160 per ton. The Company plans to implement an aggressive marketdiscount during the first years of operations to gain market share.

Operational break-even, including depreciation and depletion costs, is expected by year 2 of operations and theCompany expects to be Net Income positive by the fourth year of operations at approximately 40%. For projectionpurposes the Company is implementing a corporate tax incentive (Law N 29482) which is being reviewed by Congress.The proposal exempts any industrial manufacturing processes located higher than 3,200 meters above sea level. TheCompanys cement plant will be located at approximately 4,000 meters above sea level.


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Cementos Interoceanicos Income StatementScenario: Base CAGR

(US $millions) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 9 Yrs.

Total Sales Value 40.0$ $52.8 $66.5 $80.7 $94.8 $109.6 $125.5 $142.6 $160.8 $180.2 18.2%

Sales Volume (MM Tons) 0.30 0.38 0.46 0.54 0.62 0.71 0.81 0.90 1.01 1.12 15.8%

Unit Sales (US$ / Ton) 134 139 145 150 152 154 156 158 159 161 2.0%

(%) sales growth 32% 26% 21% 17% 16% 15% 14% 13% 12%(%) plant capacity 28% 31% 36% 42% 49% 56% 63% 71% 79% 87%

Variable Cost 15.8 19.7 23.7 27.4 31.4 35.9 40.6 45.7 51.2 57.0 15.4%

Fixed Cost 7.0 7.6 9.3 9.3 9.3 9.4 9.4 9.4 9.4 9.5 3.4%

Total Cost 22.8 27.4 33.0 36.7 40.8 45.2 50.0 55.1 60.6 66.5 12.6%

Total Cost per Unit (US$ / Ton) 76.5 72.3 71.7 68.1 65.3 63.5 62.1 61.0 60.1 59.5 -2.8%

Int'l Logistics 3.0 4.2 5.5 6.9 8.4 10.0 11.6 13.3 15.1 17.1 21.2%

EBITDA 14$ 21$ 28$ 37$ 46$ 54$ 64$ 74$ 85$ 97$ 23.8%

(%) ebitda 35% 40% 42% 46% 48% 50% 51% 52% 53% 54%

EBITDA (per unit ton) 48$ 56$ 61$ 69$ 73$ 76$ 79$ 82$ 84$ 86$ 6.8%

Net Interest Expense (20)$ (19)$ (18)$ (17)$ (16)$ (15)$ (14)$ (13)$ (12)$ (11)$

Net Income (21)$ (13)$ (5)$ 3$ 13$ 22$ 31$ 41$ 52$ 63$ n.a.

(%) net income -52% -24% -8% 4% 14% 20% 25% 29% 32% 35%

Customers

The Company is currently negotiating with potential strategic partners in Peru, Brazil and Bolivia to sell approximately50% of the production during its first five years of operations. There are also foreign groups that will be investing indeveloping projects across Peru that would require the need of cement. These requirements will be negotiated as Lettersof Intent (LOI) and for projection purposes have not been included in the forecast.

Key Investment Highlights

Rapid regional growth of cement demand

Market opportunity in Southern Peru, Northwestern Brazil and Northern Bolivia High logistics cost for cement in Northern region of Brazil and limited access to construction

materials throughout Bolivia

Strong governmental support in Peru on the industry and tax incentive are being analyzed forcompanies located over 3200 meters above sea level

Unique production cost advantage Transport cost advantage: Brazilian export trucks and Transoceanic Highway Sizeable mining reserves Independent cement production Scalable Investment Current negotiation of long term offtake contracts Leading equipment supplier with more than 100 years of experience Strong management team




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Legal Structure and Executive Management

Cementos Interocenicos owned assets are principally the mineral concessions described herein and the tradablesecurities. The Company anticipates utilizing a common project finance structure whereby title to mineral assets isplaced in a holding company which then assigns custody to a trust. The trust will serve as the primary entity to facilitate

a possible additional capitalization of the cement plant development project, if required.Members of the Cementos Interocenicos Board of Directors:

Fernando Lazo, President of the Board of Directors Armando Belfiore, Director Franco de Ferrari, Director Ricardo Palomino, Director Juan Carlos Salazar, Director

Members of the Cementos Interocenicos current Management Team:

Armando Belfiore, Chairman Alberto Pandolfi, General Manager Juan Carlos Salazar, Legal Manager Oswaldo Collazos, General Accountant Csar Castillo, Project Manager

Additional information on Financial Advisor

Cabrera Capital Markets, LLC (CCM) is a full service broker-dealer headquartered in the heart of the Chicagosfinancial district and with offices throughout the country. CCM is a member of the Financial Industry RegulatoryAuthority (FINRA), the Municipal Securities Rulemaking Board (MSRB), the Chicago Stock Exchange (CHX) and theSecurities Investor Protection Corporation (SIPC). CCM is also a certified Minority Business Enterprise (MBE). Forfurther information on this project please contact:

Camilo Salomon

Managing DirectorMerchant Banking Division

[email protected]

Julio Tupac

Vice PresidentMerchant Banking Division

[email protected]

Disclaimer

The information in the attached business plan is provided on a confidential basis to selected sophisticated institutionalinvestors. It must not be copied or disclosed to anyone except to personnel and professional advisors of the recipienton a need-to-know basis. It is for information purposes only and is not an offer or invitation to subscribe for orpurchase securities nor a solicitation of an offer to subscribe for or purchase securities. No advice or recommendation iscontained in it and it does not take into account the investment objectives, financial situation and particular needs of anypotential investor.

All investments entail an element of risk and may not be suitable for certain investors. The information contained in theattached business plan does not purport to be complete or current or to cover all the information or risk factors which arecipient may need to reach an investment decision. Each recipient should conduct its own independent investigationand assessment of the investment opportunity discussed herein and make such additional inquiries as it deems necessaryor appropriate rather than relying on the information in this document. All information and/or statements contained inthe attached term sheet are subject to and qualified in their entirety by reference to the offering document andsubscription documentation relative to the investments discussed therein.

Investment is subject to significant risks of loss of income and capital, and will be subject to restrictions on transfer.There will be no public market for investments in Cementos Interoceanicos and they will not be traded on the capitalmarkets. Investors should regard their investment as illiquid.
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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There can be no assurance that the targeted returns, results, diversification, capitalization or asset allocations will be metor that the Cementos Interoceanicos referenced herein will be able to implement its investment strategy and investmentapproach or achieve its investment objectives. Actual returns on investments will depend on, among other factors,future operating results, the value of the assets and market conditions at the time of disposition, legal and contractualrestrictions on transfer that may limit liquidity, any related transaction costs and the timing and manner of sale.

Past performance should not be considered as an indication of future performance.

Statements contained in the attached business plan that are not historical facts are based on current expectations,estimates, projections, opinions and beliefs. Such statements involve known and unknown risks, uncertainties and otherfactors, and past results are not necessarily indicative of future performance. Additionally, the attached term sheetcontains forward-looking statements. Actual events or results or actual performance may differ materially from thosereflected or contemplated in such forward-looking statements. Certain economic and market information containedherein has been obtained from published sources prepared by third parties and in certain cases has not been updatedthrough the date hereof. While such sources are believed to be reliable, Cabrera Capital Markets, LLC does not assumeany responsibility for the accuracy or completeness of such information.

By acceptance hereof, the recipient agrees that this Information Memorandum shall served as evaluation material withinthe meaning of the Confidentiality Agreement previously executed by the recipient for the benefit of CementosInterocenicos, SAC. The recipient also agrees that it will not divulge any such information to any other party and shall

return this Memorandum together with any other materials provided in connection with this matter without retainingcopies thereof upon request thereof, all in accordance with the Confidentiality Agreement. This InformationMemorandum may not be copied, reproduced or distributed to others at any time without the prior written consent ofCabrera Capital Markets, LLC or the Company.

Do not contact any clients, officers, employees, directors or other representatives of the Company. If you requireadditional information or have any questions, please call any of the Cabrera Capital Markets Cementos Interocenicosadvisory team members at the phone numbers above.

Documents

1.1 Executive Summary