equity research report on colombia clean power and fuels

8/7/2019 Equity Research Report on Colombia Clean Power and Fuels

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Developing metallurgical coal reserves and planning coal upgrading

acilities in Colombia.

Colombia Clean Power and

Fuels Inc.

OTCBB: CCPF.OB

181 3rd StreetSuite 150

San Raael, CA94901

PHONE: (415) 460-1165

http://www.colombiacleanpower.com

INDUSTRY:Coal Mining &Coke Production

RESEARCH REPOR

INITIAL REPORT April,18, 20

www.researchworks360.coRIGOROUS EQUITY ANALYSIS SINCE 1992

THE RESEARCH WORKS

Company Description

Colombia Clean Power & Fuels, Inc. (CCPF or the Company) aims to be a vertically-

integrated coal, coke and clean power producer in Colombia. Initial operations will include

mining high-grade metallurgical coal and producing coke.

Investment Highlights

Properties

CCPF is acquiring extensive metallurgical coal acreage in the Andean oothills. Through the

use o deerred payouts and revenue-sharing agreements, the Company has been able to build

a large land position with only modest shareholder dilution. To date, CCPF has acquired

three mining concessions or 7,000 hectares, has agreements or three more totaling 3,000 ha

pending due diligence, and has applications pending or 11 more totaling 60,000 ha.

Exploration & Improvement Potential

A $5.5 million, 20,000 meter drilling program is ongoing, with the goals o ormally quantiying

a resource by Q4 2011 and preparing a bankable mine easibility study. Current exploration

eorts are ocused on the new Otanche block which could be brought into production quickly

because it has existing environmental licenses.

Plans or Coke Production & Other Facilities

Further plans call or breaking ground in 2012 on a $25M, 200,000 tonne-per-annum, heat-

recovery coke plant using modular technology that could be replicated in a series o plants. The

management team has longer-term intentions to pursue additional coal-upgrading acilities and

to construct a clean energy complex using local coal eedstock.

Politics

Colombia has become business-riendly in recent years and opened up to oreign investmen

(ranked #5 by the World Bank or investor protections, sovereign debt considered investment

grade). The government recently began oering rights to mine in previously inaccessible

regions.

Recent Developments

The Company announced the completion o

an $8M round o external nancing in the

ourth quarter o 2010. Core drilling began

on existing concessions in November 2010,

and a resource report may be completed by

the 4th quarter.

Forward-looking Valuation

Based on a peer valuation model and the

Companys preliminary estimates o coal

resources, the benchmark equivalent share

price or CCPF would be over $4.00 once a

ormal resource report is in hand.

Speculating urther, based on managements

goal o 300kt o annual production by 2012,

the benchmark price could be near $6.00 per

share.

We will eagerly await the resource report and

easibility study later this year to conrm these

early resource and production estimates.

Research 360, GmbH www.researchworks360.com/colombia-clean-power-and-uels-(ccp)

MARKET DATA

52-week price range:

Average volume (3m):

Common shares (approx.):

Fully diluted shares (4.2011)

Market capitalization:

$1.20 - 2.35

117

22.3m

29.0m

$ 53.9m

SELECTED BALANCE

SHEET DATA

(approx. as o Dec 31, 2010

Cash & equivalents

Mining concessions

Total Assets

Accounts payable & accrued liab.

Convertible notes

Total Liabilities

$5.0m

$2.0m

$8.2m

$1.2m

$2.9m

$ 7m

Apr 18 2011 CLOSE: $2.45

Sep$0.00

$3.00

$2.40

$0.80

$1.20

$0.60

AprDec Feb

CCPF -1 year average

MINING REPORT IN CONJUNCTION WITH www.miningalmanac.com

MINING REPORT WITHwww.miningalmanac.com


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www.researchworks360.com/colombia-clean-power-and-uels-(ccp) Page2o 25

Colombia Clean Power and Fuels - OTCBB: CCPF.OB Initial Report:April 18, 2011


TABLE OF CONTENTS 1

I. Metallurgical Coal and Clean Coal Technologies 3

Coal Market Overview 3

Metallurgical Coal & Coke 4

Clean Coal Technologies

Urea Sector 4

II. The Colombian Coal Industry 5

Emerging rom a long spell o under-investment 5

Colombian Coke Production 5

Urea Market in Latin America 6

Geography 6

III. Properties & Exploration 9

Current Land Position & Preliminary Work 9

Dening Resource Estimates 9

IV. Production, Transportation and Processing 10

Mine Plans and Costs 10 Transportation 10

V. Coking Plant and Other Facilities 12

Heat-Recovery Coke Plant 12

VI. Future Plans for a Clean Energy Park 13

Gasication Plant 13

Full-recovery Coke Plant 13

Power Plant 13

VII: Financials

Balance sheet 14Statement o operations and loss 15

Condensed consolidated statements o cash fows (Unaudited) 16

Recently Completed Financing 17

Ongoing Financing 17

Property Acquisition Costs 17

VIII: Equity Valuation Considerations 18

Valuation by Resource Estimates 18

Valuation by Annual Production 19

Coking Plant 20

Longer-term possibilities 20

Selected Risk Considerations 20

IX. Company Ownership & Subsidiaries 21

LIFE Power & Fuels 21

Subsidiaries 21

X. Executive Management and Advisers 22

Management 22

Advisors 23

XI. Disclosures


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I. Metallurgical Coal and Clean Coal Technologies

Metallurgical coal is trading or over USD 200 per tonne (FOB Colombian ports), driven by reviving steel

prices and a shortage due to China`s high export taris.

Coal Market Overview

Coal is the worlds most abundant and cheapest primary ossil uel source, accounting or 41% o global

electricity production and 27% o total energy needs. Export prices have soared in the last ew years with

the rest o the commodity market. Much o the developing world derives the vast majority o its electricity

rom coal, and coal is a key ingredient in the steel and cement production needed or the inrastructure

boom in those nations. The developed world also relies heavily on coal-red power plants, though

environmental concerns there have led to demand or improved processing and burning technologies.

There are several types and grades o coal, rom cheaper thermal coals used or power generation to more-

expensive metallurgical coals used or coke production.

Exhibit 1: Coal Prices (thermal) since 1981

Global coal supplies are tight, and

new sources are being sought.

Description: Coal, Australian thermal coal, 12000 - btu/pound, less than 1% sular, 14% ash,

FOB Newcastle/Port Kembla, US$ per metric tonne.

USDollarsperMetricTon

Feb 1981 - Feb 2011: 89880 (188.63%)

202.5184.53

166.56

148.59

22.6

40.77

58.74

76.71

94.68

112.65

130.62


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Coke is a value-added produc

made rom high grade coal used

in iron smelting and steel pro

duction. The coking process also

produces byproducts valuable o

use as ertilizer.

Clean coal reers to technologie

that reduce the environmentaimpact o the industry by captur

ing pollutants or reducing land

impact. Gasication allows o

cleaner combustion or production

o petrochemicals.

Metallurgical Coal & Coke

Coke is a solid, carbonaceous uel source derived rom metallurgical coal, a high-quality low-ash, low-

sulur bituminous coal. Coking involves baking at high temperature in an airless blast urnace to remove

volatile constituents and realign and use the xed carbon and residual ash. A value-added product, coke

today is most commonly used as a heat and carbon source and chemical reducing agent in iron smelting

and steel production.

Cokes market value is linked with global steel demand and is higher than that o raw metallurgical coal,

especially when optimal levels o volatile constituents are present. In the coking process these constituents

become various marketable byproducts including tars, oils, and urea and ammonia, the latter two being

key ertilizer eedstocks. The coke supply remains tight due in part to the imposition a 40% export tari on

Chinese coke and metallurgical coal exports since late 2008, which reduced Chinas share o the world

coke trade rom over 40% to near 3% and turned them into a net importer. The foods in Queensland

Australia have also reduced this years coking coal output by 50 million metric tonnes (mmt), since that

region supplies about 50% o the worlds coking coal exports.

Clean Coal Technologies

Various new coal processing technologies termed clean coal reer to improved removal o pollutants prior

to or at the point o use. The ability to capture and sequester carbon is also included, although the latteris an expensive practice not likely to be utilized without legislative mandates or carbon taxes and trading

systems.

Gasication, the conversion by use o heat and pressure o coal into syngas or clean combustion or

chemical reormation, is another technique that can reduce the environmental impact o the coal industry.

Syngas is a high caloric value mix o hydrocarbons that can be burned cleanly, rened into methane or

liquid uels, and used to produce urea and ammonia. The costs and technical challenges o sequestering

carbon are also reduced when coal is gasied prior to combustion.

Urea Sector

Urea, a valuable byproduct o the coking process, is a key ingredient in nitrogen ertilizer. Global urea

consumption is over 150 million tonnes and growing by a ew percent per annum. Most o the increase

in urea production comes rom Asia.


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II. The Colombian Coal Industry

Columbia exports almost all o its coking coal and coke, and has a 6% share o global exports. New

properties are explored by global companies in order to satisy demand.

Emerging rom a long spell o under-investment

Colombia is the worlds tenth largest producer and ourth largest exporter o coal, with an estimated 7

billion tonnes o recoverable reserves and 17 billion tonnes o potential reserves. Coal accounts or hal o

the countrys mining activity, and is the second largest export ater oil.

Colombia is a signicant exporter o thermal coal, accounting or 5-7% o global exports over the last

decade, mostly rom mines near the northern coast. Colombian coal tends to have high heat-value and low

ash and sulur content. The metallurgical coal and coking industries, located in the Andean oothill region,

have been underdeveloped due to past political instability and logistics associated with transportation.

Vast improvements in stability and the enactment o market-riendly legislation have spurred a boom in

Colombias resource industry. Benets include ree-trade zones with key coal consumers, special exchange

rates or resource companies, new trade agreements, and better contract law.

Ater the coal industry was privatized in 2004, concessions were available or purchase with relative ease,

spurring a staking boom, but now many early speculators are deaulting on ees as their 3-year exploration

periods expire. This situation presents an opportunity to obtain properties at avorable prices.

The government is now changing the bidding process to evaluate companies ability to bring resources into

production, a development that avors larger, better organized concerns. Major international companies

such as London Mining have been snapping up Colombian metallurgical coal operations. Future production

o metallurgical coal is expected to rise as inrastructure improvements continue and importing nations orm

more relationships with local suppliers.

Colombian Coke Production

Colombia produced approximately one million tonnes o metallurgical coke in 2009, down rom a higho two million in 2007 due to the global recession, but up rom 400,000 tonnes in 1999. Production was

expected to exceed two million tonnes in 2010 and to continue growing.

Colombia exported nearly 100% o its metallurgical coke in 2009, making it one o the top coke exporters in

the world at 6% o world exports. Colombias primary export markets are North and South America, Europe

and India. Three leading companies, C.I. Milpa, Coquecol and C.I. Carbocoque, produce approximately

50% o Colombian coke.

Over 90% o Colombian coke is made in beehive ovens, an inecient and environmentally damaging 19th

century technique that results in low quality, inconsistent coke. This has to some degree discouraged the

large and well-developed Brazilian steel industry rom sourcing its coke in Colombia.

Colombia has large, underexploit

ed resources o quality therma

and metallurgical coal.

Colombia is a major exporter o

metallurgical coke.The industr

is dominated by ew companies

that use antiquated technolog

and produce a lesser quality prod

uct.


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Exhibit 2: Traditional Beehive Coke Ovens

Urea Market in Latin America

Colombia, like many other South American countries, imports all o its urea, estimated by Gobi International

to be approximately 700,000 tonnes per annum, or 14% o the South American urea market. Brazil imports

roughly 3 times this amount.

Geography

The low-lying, politically-stable Guajira peninsula on Colombias Caribbean coast contains good thermalcoal in thick seams, and this region accounts or the vast majority o the countrys production and exports.

Here a consortium owned by Anglo American, BHP Billiton and Xstrata operates the Cerrejon Zona Norte,

one o the largest open-cast coal mines in the world and the largest coal mine in South America, boasting

an annual output o 30 million tonnes, with plans to double output by 2020.


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Exhibit 3: Cerrejon Zona Norte (Let), The Guajira Peninsula (Right)

Further south in the Andean oothills, high-pressure geological activity has produced high-BTU thermal

coal and high-quality metallurgical coal. These reserves have been relatively under-exploited due to violent

political instability and a lack o inrastructure. Now that violence has ebbed and governance is better,

there is an opportunity or smaller companies to build substantial portolios o solid properties. This region

is where the Company plans to ocus its operations.


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Exhibit 4: The Santander Region

The Andean oothills are underdeveloped and lack large-scale inrastructure, but have the highest quality

coal and have recently become politically stable.

Exhibit 5: The Andean Foothills; Pin marks Santander

Panama

Colombia

Ven

ArubaNetherlands Antilles

Ecuador

A


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III. Properties & Exploration

$5.5million will be invested in drilling in 2011 with a short-term goal o dening 50-60 mmt o metal-

lurgical coal resources, possibly 15-20mmt o which as initial reserves. Management believes that the

resource could ultimately be 300 mmt.

Current Land Position & Preliminary Work

The Company currently holds three concessions covering approximately 7,000 hectares on agricultural land

in the Santander district (the North Block). In March 2011 it announced agreements to acquire three more

continguous concessions in the Boyac region near Otanche, totaling 3,000 ha. Applications are pending

or an additional 11 concessions in the Santander and Magdalena districts covering approximately 60,000

ha. The budget or urther acquisitions this year will depend on the results o ongoing drilling operations.

The Company has established a team o engineers and geologists who are amiliar with the region in order

to perorm preliminary work on the concessions. They have determined that the North Block is part o the

Umir ormation, a local sedimentary structure associated with coal. The ormation is adjacent to the Lisama

oil elds, and there are extensive records o oil drillings, borings, electrographic data and stratigraphy

perormed by Ecopetrol S.A., the countrys largest petroleum concern.

In the North Block, 44 coal seams have so ar been identied, some o which are in excess o 1.5m thick. Inplaces a total o over 27 meters o coal is present in 15 seams over 50cm thick. The dip is generally shallow

enough or surace mining. The continuity o outcrop has been measured so ar as 10km N-S and 1km E-W,

though the team believes that the width may be as much as 6km.

Due diligence is ongoing on the Otanche block, and the Companys production is likely to start here

because two o the Otache concessions have existing environmental licenses. Mining could commence

as early as October 2011, whereas environmental licenses or the North Block are expected within 6-12

months.

Defning Resource Estimates

CCPF commenced core drilling in November 2010, with the goal o completing this phase by Q3 2011. The

drilling program calls or an aggregate o 60 bore holes, both cored and non-cored, or a total o 20,000m.The cored holes are expected to cost $150 per meter, the non-cored $75, and water is to be sourced rom

local supply and boreholes. The stage o drilling will ocus on those concessions that appear to be easiest

to get into production, including some with existing mine workings.

The entire program is being conducted in accordance with US and international standards or the denition

o a ormal resource and reserve estimate. Ater drilling is complete, the Company will retain a recognized

rm to analyze the data and prepare the estimates. Coal samples will be tested, and the underlying rock

ormations will be analyzed to assist with mine planning.

Management hopes that the initial resource estimate will come in at 50-60mmt, with a measured resource

o upwards o 20mmt and the balance in the indicated and inerred resource categories. O course, these

numbers should be considered a guess until drilling is complete and the resource report is released in late

2011.

Ater the resource is dened and a mine plan is ready, mining applications will be submitted to the

government. A planned easibility study will then delineate the mineable reserve portion o the resource,

15mmt o which should be sucient to or production o one million tonnes per year, though the reserve

would be expected to expand as mining progresses, as is typical in the industry.

The Company expects to inves

$5.5M to dene its resources and

release a report by late 2011. Man

agement beleives that a 50-60M

tonne resource may be dened

this year.


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IV. Production, Transportation and Processing

Management expects total production, transportation and washing costs to be $120 per tonne FOB,

while exporting prices are now $200-240 per tonne FOB in Colombia. The company plans to export

1-2mmt o metallurgical coal per year.

Mine Plans and CostsBy the ourth quarter o 2011, CCPF aims to have ormal mine plans or an eventual production target o

1-2 million tonnes per annum, mostly o metallurgical coal. The Companys business plan requires just over

300,000 tonnes o production to meet the requirements o the rst coking acility, and management does

not anticipate diculty in meeting this goal given the estimated size o the resource and history o local

production. Nonetheless the Company is identiying other sources o coal to supplement its own production

i needed or the plant.

Most mines in the area use single-entry shat systems utilizing jackhammer mining and manual loading into

trucks, with costs running $35-40 per ton delivered to the truck. Management intends to stick with these

methods because they are amiliar to the local workers.

TransportationThe Companys initial production will be trucked to coastal ports or export.

Prior to completion o the coking plant and other coal upgrading acilities, CCPF plans to export all coal

produced. Preliminary discussions or supply agreements and sales & marketing partnerships are ongoing

with parties in China, Hong Kong, India, Korea, Brazil and the U.S, including an international trader and

distributor o steel and raw materials.

Proposed exports o coal and coke would utilize three primary ports on the Atlantic coast, Santa Marta,

Barranquilla and Cartagena, and possibly the Buenaventura port on the Pacic coast. These ports will

provide access to Panamax and Handy vessels. Due to capacity constraints, current delays at the ports may

impact the Companys operations, as the Company is only in preliminary discussions over port agreements.

However six new ports are being built on Colombias Atlantic coast as alternative export options, as well

as two more on the Pacic coast.

The Companys concessions are approximately 800 km rom coastal ports, and less than 200 km rom the

expected location o the upgrading acilities along the Magdalena River. The Company has determined that

the most cost-eective means o transporting the coal or the rst ew years is by 20-ton truck. The majority

o the roads between the concessions and loading acilities are paved highways, although some road

building and repair will be required on the rst ew kilometers o some routes.

Initial plans call or 1-2M tonne

o production, and nal costs ma

be near $120/tonne FOB.

Some tertiary roads may need to

be improved or trucking. Rail us

is not likely in the near term, bu

inrastructure development is un

derway by the Colombian govern

ment or river transit.


11/25


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V. Heat-recovery Coking Plant

The Company plans to pursue an additional prot per tonne by installing a modern 200,000 tonne-per-

annum coking plant or $25 mln in CapEx.

CCPF plans to build coking and other coal processing acilities using clean and ecient technology. The

Company is negotiating a contract to lease with the option to purchase a 220+ acre industrial developmentthat is already permitted or oil and gas rening and power generation, with the intention o converting

these permits or coking operations. The Company has agreed in principal to the terms o the deal, pending

due diligence, and hopes to close in the rst hal o 2011, with licenses nalized by the end o the year.

Heat-Recovery Coke Plant

For their rst upgrading acility, a 200,000 tonne/year coking plant, the Company plans to use a modular

technology developed in Europe and manuactured in China. These systems are built and transported as kits,

with a capital cost o $25M. The technology is modern, yet still 1-2 generations behind ull-recovery coking

plants, so although it captures waste heat and produces high quality coke and urea, it doesnt capture CO2

or other emissions. A easibility study or the plant is underway and is expected to be completed this year.

Pending nancing, the Company plans to break ground on the acility in 2012. Proceeds rom an equityraise will likely be used, and debt nancing may be sought or the balance. There are discussions with

parties that may supply additional coal or the plant beore the Companys own mines can produce at a rate

sucient to meet the plants capacity. CCPF has stated that it may also seek to acquire other nearby mines

to provide eedstock.

The Brazilian steel industry could be an important market or Colombian coke i the supply is o good

quality. The urea and ammonia could be also be marketed in Colombia, Brazil or the US.

The Company plans to use clean

& ecient modular technology o

its coking acility.

The Company plans to break

ground on a 200kt/year acilit

in 2011. CAPEX will be roughly

$25M or the acility itsel.


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VI. Future Plans for a Clean Energy Park

I mining and the rst coke plant are successul, the Company plans to pursue a ull value chain ater

2013 by constructing a gasication plant, a 1 million tonne ull-recovery coke plant and a 120 MW power

plant.

In addition to the heat-recovery coke plant, the Company has longer-term plans to develop a large industrialpark in Santander, including a ull-recovery coke plant, coal gasication plant, a methanol plant and a

120MW power plant. CCPF is working with a Chinese engineering rm and a Chinese manuacturer on

these plans, on which construction would tentatively begin in 2013 with these rms as partners. These are

very capital-intensive projects costing roughly $100-300 million each, and the Company has entered into

a MOU with the partners or 80-85% o the nancing. CCPF would supply the coal eedstock, assuming its

mines are producing millions o tonnes per year by such time.

Gasifcation Plant

The proposed gasication plant would convert coal into liquid and gaseous uel, ammonia and urea, and

allow or the capture and sequestration o carbon i economical. The output mix o gasication plants

can be adjusted to meet demand or various products. Tentative production goals are 180,000 tonnes o

ammonia or 300,000 tonnes o urea. Capital costs are projected to be $235 million, and pre-easibilitywork is ongoing.

Full-recovery Coke Plant

A proposed state-o-the-art, ull-recovery coke plant and associated methanol plant could produce one

million tonnes o coke and 100,000 tonnes o methanol annually. This plant could capture nearly all

emissions plus carbon dioxide and produce top-quality coke or steel production. The acility is also in

the pre-easibility stage, with a goal o breaking ground in 2014 at a capital cost o roughly $300 million.

Power Plant

A 120MW power plant would supply all o the energy parks electric needs and be able to sell the other

hal o its output into the local grid. Pre-easibility work is ongoing or a 2013 construction start, and thecapital cost is estimated at $100 million.


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VII: Financials

As of: Dec 31, 2010

Assets

Current Assets

Cash and Cash Equivalents 5,027,656

Other Current Assets 747,588

Total Current Assets 5,775,244

Long Term Assets

Mining Concession 2,026,617

Construction in Progress 30,000

Equipment 2,075

Total Assets 8,175,587

Liabilities & Stockholders defcit

Current Liabilities

Accounts Payable And Accrued Liabilities 1,181,295

Total Current Liabilities 1,181,295

Long-term Liabilities

Convertible Notes - Related Party 19,122

Convertible Notes Payable (Net of Iss. Discount) 2,885,022

Accrued Interest on Convertible Notes Payable 110,846

Other non-current liabilities 400,000

Derivative liability - conversion feature 2,816,000

Total Long Term Liabilities 6,230,990

Total Liabilities 7,412,285

Stockholders defcit

Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares

issued and outstanding-

Common Stock, $.001 par value, 100,000,000 shares authorized,

20,280,001 shares and 20,549,637 shares issued and outstanding,respectively

20.550

Additional Paid in Capital 3,263,345

Decit Accumulated during the Exploration Stage -2,438,927

Other Comprehensive Loss -81,666

Total Stockholders Decit 763,302

Total Liabilities & Stockholders defcit 8,175,587

Balance Sheet


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Statement o Operations and Loss

For the year ended: Dec 31, 2010

Revenue -

Expenses

General and Administrative 1,935,450

Total Expenses 1,935,450

Loss Before Other Income (Expense) -1,935,450

Other Income (Expense)

Interest Expense, net -533,870

Total Other Income (Expense) -277,870

Loss Before Income Taxes -2,213,320

Net Loss -2,213,320

Other Comprehensive Loss

Loss on Foreign Currency Translation -81,666

Total Comprehensive Loss -2,294,986

Basic and Diluted Loss per Common Share -0.12

Weighted Average Common Shares 18,887,765


16/25


17/25




Recent Financing

On December 23, 2010, the Company announced completion o its rst round o nancing rom outside

investors, totaling $8 million at a price o $1.25 per share ully diluted. The initial oer was or $2.5

million, which was met by retail demand; the total was increased to meet urther demand rom larger

institutions. 6 million new shares were issued, representing approximately 20% o the new total o 29

million ully diluted shares outstanding. The deal was structured as 10% Secured Convertible Notes due

June 30, 2012, convertible at $2.50 per share, and ve-year warrants to purchase up to 3,200,000 commonshares in aggregate, at $0.01 per share The largest investor was the Bellevue, Washington private equity

und Steelhead Navigator Master, LP, ollowed by Plano, Texas-based Pinnacle Family Oce Investments LP.

O the net proceeds, approximately $2.5 million is intended to go towards payments to secure mining

concessions and $5.5 million is earmarked or the exploration o these properties and denition o a ormal

coal resource. Working capital, operating costs and easibility studies will likely require the balance o these

unds. The capital cost o bringing the rst mine(s) into operation is still being determined, and should be

made clear by the easibility study later in the year.

Property Acquisition Costs

CCPF completed acquisitions o three mining concessions in Santander in July and October 2010, andsigned agreements or another three concessions in Boyac in March 2011, with closing o the later pending

due diligence. The rst acquisition consisted o two concessions on an aggregate o 2,674 hectares, or which

the Company paid 400 million COP (214,593 USD) to the owner o the concessions and 125,266,709 COP

(67,348 USD) in annual ees to the Colombian Ministry o Mines. In addition to the purchase price, the

seller is entitled to a royalty o $2.00 or each ton o coal extracted under the concessions during the term

o each contract.

The October 2010 acquisition was or a single 4,400 hectare concession at an aggregate purchase price

o $1,515,000. The Company has paid $95,000 and the balance is due as ollows: $220,000 payable on

the date concession rights are registered with the Colombian National Mining Register, and $1,200,000

payable in six quarterly installments o $200,000 beginning three months ater the date the rights are

registered, less 50% o the value o any extraction royalties paid to the assignor, where royalties amount to

$2.00 per ton o coal extracted during the term o the concession. The Company also paid 215,377,844COP (115,299 USD) in annual ees to the Colombian Ministry o Mines.

The terms o the 2011 Boyac acquistions require a total o $2.55 million, $300,000 o which has been

paid, with the balance payable upon meeting certain milestones: a) $500,000 upon the assignment o the

concessions rom the Colombian Institute o Geology and Mining and; b) $250,000 upon the recording and

publication o the assignment in the National Mining Registry. Thereater, three installments o $500,000

each are due on six month intervals.

The Company closed an $8M

private placement in Decembe

at $1.25/share ully diluted. Man

agement believes that this should

be sucient to prove up reserve

estimates and bring mines to production.

Payment or coal concessions in

cludes cash plus royalties to sell

ers or the duration o the conces

sion contracts.


18/25




VIII: Equity Valuation Considerations

Based on assets alone, CCPF could be valued at over $4.00 per share once the Company denes an

ocial coal resource, a goal or 2011. Cash fow rom mining and coking operations oers even greater

potential or gain, given satisactory nancing arrangements or capital expenditures.

CCPF is still at a very early stage o operations, but there are two readily-available ways to illustrate howthe might be valued should certain milestones be met. An investor could compare the companys valuation

to ormal resource estimates or to initial production goals. We will demonstrate both methods here, and

briefy discuss the Companys longer-term, more speculative plans.

Valuation by Resource Estimates

The ollowing table compares the enterprise values (EV, a comprehensive metric o company valuation,

dened as market capitalization + debt cash) o metallurgical coal companies to the adjusted dollar values

o their compliant resource and reserve estimates.

For this calculation, in order o decreasing certainty, proven and probable reserves (P&P) are credited at

100%; measured and indicated resources (M&I) are credited at 50%, and inerred resources are credited

at 5%. A coal price o $285 per tonne is employed, and where present, other minerals (such as thermal coal,iron or copper) are credited using the same methodology and their respective market prices.

Exibit 7:Metallurgical Coal Stock Valuations by Resource Estimates

Company Ticker EV($M)

Met. CoalP&P (MT)

Met. Coal

M&I (MT)

Met. CoalInferred(MT)

Value MetCoal ($M)

OtherMinerals($M)

Value of To-tal Resources($M)

EV / ValueTotal

Coal of Africa CZA:ASX 800 0 0 254 3,619 6780 10,399 0.07

Aquila Resources AQA:ASX 3,255 188 894 703 164,202 32760 196,962 0.01

Cline Mining CMK:TSX 599 14 186 55 29,283 19687 48,970 0.01

Teck Resources TCK:NYSE 44,596 592 3,617 2082 629,451 50400 67,9851 0.06

Caledon Resources CDN:AIM 513 0 176 233 28,400 0 28,400 0.01

Atlantic Coal ATC:AIM 49 4 4 0 1,140 0 1,140 0.04

Petmin PTMN:AIM 260 25 30 1 7,851 1200 9,051 0.02

Aspire Mining AKM:ASX 372 0 276 56 40,128 0 40,128 0.00

Lysander Minerals LYM:TSX.V 107 27 76 0 14,677 0 14,677 0.00

NuCoal Resources NCR:ASX 219 0 13 492 8,863 0 8,863 0.02

Mean 0.03

Colombia C.P.F. CCPF:OTCBB 54 0 50 0 7,125 0 7,125 0.00

Source: miningalmanac.com

Key: EV: Enterprise Value (market cap + debt cash); MT: million tones; Other Minerals ($M): Gross value

o all non-coal minerals; Value o Total Resources: Gross value o coal + other minerals.


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CCPF does not yet o course have any ormal estimates, but based on sampling, geology, and the teams

experienced judgment, a measured and indicated resource o 50-60 mmt is expected by management. I

the Company is successul at proving a resource o 50mmt, the present stock valuation relative to resource

value would be approximately 70% lower than the group mean.

O course, this is still a highly speculative calculation, but it oers some perspective on how the market

might react to a ormal resource report. A easibility study and mine plan would oer urther assurance that

reserves were economically recoverable and that the company was on the way to becoming a producer. It

is important to actor in the share dilution that will be required in order to raise capital or mine contruction

and the coking acility, but the current valuation is low enough to eectively discounts or another 50%

increase in the share count.

In summary, a 50mmt resource might result in a valuation o roughly $210 million, which ater dilution

would amount to over $4.00 per share. A urther discount may need to be applied due to the somewhat

lower than average met coal pricing in Colombia ($200-240 vs $250+). Positive variables would include

acheiving this resource and meeting capital needs with less than the assumed 50% dilution, or coming in

with the targeted 50-60mmt resource.

Valuation by Annual Production

Until a mine plan has been published it is too early to make assumptions about uture production rates,but or illustrative purposes we can look at how the market might value the shares should CCPF reach

managements rst target o 300,000 tonnes per annum o coal production.

Exibit 8:Coal Stock Valuations by Revenue

Company Ticker Enterprise Value ($M) Revenue ($M) EV/Revenue

Massey Energy MEE:NYSE 8,927 3,039 2.94

Alpha Natural Resources ANR:NYSE 8,474 3,917 2.16

Arch Coal ACI:NYSE 8,073 3,186 2.53

Walter Energy WLT:NYSE 7,305 1,588 4.6

Patriot Coal PCZ:NYSE 4,965 2,035 2.44

Western Coal WTN:TSX 4,574 449 10.19

Alliance Natural Resources ARLP:NASD 3,534 1,610 2.2

International Coal Group ICO:NYSE 2,528 1,188 2.13

UK Coal UKC:AIM 1,291 514 2.51

Westmoreland Coal WLB:AMEX 1,037 443 2.34

James River Coal JRCC:NASD 878 681 1.29

Coal of Africa CZA:ASX 800 115 6.96

Caledon Resources CDN:ASX 508 68 7.47

Ath Resources ATH:AIM 152 128 1.19Homeland Energy Group HEG:TSX 85 7 12.14

America West Resources AWSR:OTCBB 84 11 7.64

Atlantic Coal ATC:AIM 49 9 5.44

The average coal company above trades at 4.5 times annual revenues. More mature companies like Massey

and Alpha trade at lower multiples, while companies with on a rapid growth trajectory like Western Coal

and Homeland Energy sport much higher relative values. At the current (low-ball) price o $200/t, 300kt o

production would equate to roughly $60 million in revenues. The market today would seem to value $60

million in revenues at $270 million in enterprise value, a huge markup to CCPFs current $54m valuation.


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Heat-Recovery Coking Plant

The initial heat-recovery coking plant calls or production by 2013 o 200ktpa o high-quality coke rom

a eedstock o 300kt o metallurgical coal. Quality Colombian coke is selling or $400 per tonne. At these

prices, management estimates that margins could be $200 per tonne i their own mines supply the eedstock

and $120 per tonne i purchased on the local market. Even allowing or a all in the coke price and lower

margins, the cash fow rom such a plant could be over $20 million, a remarkable rate o return. O course,

equity dilution and/or partner nancing will absorb much o that prot, but even net cash fow o $10

million per unit would be highly avorable. Furthermore, once a plant is operational, additional modular

plants may be eligible or lower-cost nancing, so the returns on subsequent units could be higher.

Longer-term possibilities

Looking urther into the uture, Company management believes that based the regional geology and the

availability o concessions, that CCPF could achieve several million tonnes o production by 2016. Based

on current prices and managements margin estimates, the EBITDA on such quantities could top $200M.

This is in no way meant to be considered a valuation actor, but to illustrate managements vision o longer-

term possibilities. These also include the large industrial park with ull-scale coal upgrading operations.

Selected Risk Considerations

The Company remains in the exploration stage, and total reserves on its concessions are unproven. Surace

geology may also prove to be unreliable on uture concessions and the Company could overpay or uture

concessions using imperect inormation.

The Company is depending on avorable rulings rom regulators to receive the required permissions to

construct mines and processing acilities, and there can be no guarantee that these will be orthcoming in

a timely basis.

The global market price o coal and coke have increased dramatically in recent years, but continued

strength depends on a number o actors including economic growth and environmental regulations. A

drop in prices to pre-2005 levels would have a severe eect on the protability o the Companys mining

operations.

The Company has high capital requirements or its planned coke plant and clean energy park, and there

is no guarantee that sucient nancing will be available on shareholder-riendly terms. Capital raises will

dilute existing shareholders.

Colombia has been undergoing an economic boom in recent years and hostilities have subsided, but theCompanys coal resources are in an historically volatile region. Renewed political instability could make it

very dicult to saely and reliably operate.

Additionally, CCPF is currently a penny stock, making it subject to additional market risks and trading

regulations.

For CCPF to achieve its production goal, well over $10 million in capex will be required, in addition to the

$20 million or the coking plant. Working capital will add signicantly to these cash needs, so management

has indicated that it may need to raise another $50 million by 2012. With bankable easibility studies or

the mines and coking plant, it is possible that debt could be used or a large portion o capex, but again,

signicant equity dilution should be expected. Again allowing or 50% additional stock issuance, 300kt

o production might equate to a value o roughly $6.00 per share based on the above peer valuations. O

course, it is still way too early to put much credence into these production orecasts, but this model willcome into play once a bankable easibility study is in hand, a goal or 2011.


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IX. Company Ownership & Subsidiaries

LIFE Power & Fuels

CCPF was ounded and is majority owned by LIFE Power & Fuels LLC (LIFE), a company ocused on

managing projects that combine coal resources with technologies to upgrade those resources. LIFE owns

the majority o the outstanding shares o CCPF, though its share is expected to be signicantly diluted ater

a new nancing. Edward P. Mooney, CCPFs CEO and a Director, is the sole Managing Member o LIFE.

Daniel F. Carlson is CFO or both CCPF and LIFE.

LIFE provides CCPF with corporate, nancial, and merger and acquisition advisory services as well as

assistance with securing equipment leases and equipment nancing, or a ee equal to the lesser o 1% o

gross coal sales or $2 per ton o coal sold with a minimum monthly ee o $25,000 plus expenses. Total

management ee expenses and ees payable to LIFE or the three months ended September 30, 2010 were

$155,299.

Subsidiaries

CCPF has established a wholly-owned Dutch subsidiary, Energia Andina Santander Resources CooperatieveU.A., which owns 99% o the Colombian company Energia Andina Santander Resources SAS (Energia),

headquartered in Bogota. The nal 1% o Energia is owned by an other non-operating wholly-owned

subsidiary to CCPF, Colombia CPF LLC, a Delaware LLC. CCPF holds all o its mining concessions and

perorms all Colombian operations through Energia. Energia is presently recruiting a team o operations,

technical, nancial, logistics, mining and marketing employees as well as consultants.

CCPF is majority-owned by LIFE

Power & Fuels, which will pro

vide management services in

exchange or monthly ees and

royalty payments.

All Colombian operations will bemanaged by a wholly-owned Co

lombian subsidiary.


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X. Executive Management and Advisers

Management

Ted Swindells, Chairman o LIFE Power and Fuels, LLC

LIFE, an investor in and developer o clean energy products worldwide, is the Companys largest stockholder.

Mr. Swindells has more than 25 years o experience as a Principal in acquiring, building, nancing and

advising public and private companies in industries including natural resources, energy technology,

clean-tech, telecommunications and technology. He has been a partner or principal in venture capital,

investment banking and merchant banking rms in New York, San Francisco and London. He has built and

advised companies that have listed on the NASDAQ, London AIM, and American Stock Exchanges, and

has raised hundreds o millions o dollars in equity and debt nancings. Mr. Swindells previous experience

includes corporate nance and venture capital positions with Drexel Burnham Lambert, RubiconVentures,

Hambrecht & Quist, Woodman Kirkpatrick & Gilbreath and Bank o America. He holds a BA in economics

rom Claremont Mens College and an MBA in Finance rom the Kellogg School o Business. He is a major

supporter o non-prot organizations involved in community service, education, and the arts.

Edward P. Mooney, Chie Executive Ofcer and Director

Mr. Mooney is also the President and sole managing member o LIFE. Mr. Mooney has over 20 years

o experience in all aspects o corporate development or publicly held and privately-held enterprises,

including mergers and acquisitions, corporate nance, strategic planning, business development, investor

relations, corporate communications and corporate governance. Over the past ten years, he has been an

ocer, director or advisor on ve reverse mergers rom start-up through initial acquisitions and recruitment

o proessional industry management teams, and has been an advisor, consultant, board member and ocer

o early-stage companies in numerous industry segments. He is also co-ounder and chairman o the Global

University or Lielong Learning, a Caliornia not-or-prot organization ocused on educational initiatives

or developing nations. Mr. Mooney holds a Masters Degree in Education and a Bachelors Degree in

Geography rom the Caliornia State University system.

Graham Chapman, FGS, Chie Operating Ofcer

Mr. Chapman spent 16 years in South Arica with Rand Mines and Ingwe Coal Corporation on operating

mines as a geologist and later in an executive role in the Head Oce. In 1996, he set up Ingwes (later

Billiton) operations in Indonesia. He successully negotiated and managed two major JVs with Indonesian

companies, controlling exploration activities and the Billiton operations throughout the country. In 2001,

Mr. Chapman transerred to the Melbourne Head Oce o the newly-created BHP Billiton Ltd as Vice

President Strategy and was instrumental in producing the new companys rst public strategy. He ormed

Energy Edge Ltd., an innovative coal-ocused consultancy in 2003, with our skilled proessionals in the

elds o energy and strategy development. The company established a large blue-chip client base o major

energy organizations. Mr. Chapman holds MBA and Bachelor o Science degrees with honors, and is a

Fellow o the Geological Society o London (FGS).

Daniel Carlson, CFO, Treasurer and Director

Mr. Carlson is also the CFO o LIFE. Previously, he was a Managing Director o EAE, a registered broker-

dealer, and worked with Primary Capital or two years as Head o Institutional Sales, where he ocused

on reverse merger and PIPE transactions or Chinese companies in the U.S. Previously he was a Managing

Director at BayStar Capital, a leading hedge und in the PIPE space, where he was Head o Trading rom

2004 through 2006; he was the Head o Trading/Analyst at Azure Capital Partners, a Venture Capital/

Crossover und investing in the technology industry rom 2000 through 2002; rom 1995-2000 he was a

Senior Trader or RCM Capital Management, a $50+ billion asset management rm, where he specialized in

small cap. Mr. Carlson currently serves on the board o directors o China Precision Steel, Inc., a NASDAQ-

listed Chinese steel processor. He holds a BA degree in Economics rom Tuts University, received in 1989.

The Companys managemen

team has extensive experience in

coal mining and clean coal tech

nology.


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James Wol, Director

Mr. Wol is the CFO o U.S. Coal Corporation, a coal mining company with operations in the Central

Appalachian region o the U.S. Previously, rom 2006 to 2008, he was Executive Vice President and CFO

o Energy Coal Resources, Inc., a $400 million natural resources company producing approximately 10

million tonnes o coal annually in Central Appalachia and Colorado. From 2003 to 2006, he provided

independent nancial advisory services to transportation and energy businesses. Previously, rom 1992

to 2003, he held several positions with American Commercial Lines, LLC (ACL), including Senior VicePresident o Finance and Administration, CFO and CFO, Danielson Holding Corporation. ACL was owned

by CSX Corporation prior to 1998, publicly listed and backed by Citicorp Venture Capital rom 1998-2002

and owned by Danielson Holding Company (AMEX: DHC) since 2002. Prior to ACL, rom 1986 to 1992,

Mr. Wol was the Director o Financial Planning and a Financial Analyst with CSX Corporation and was a

Manager o Planning and Evaluation with Texas Gas Exploration Corporation rom 1979 to 1986. Mr. Wol

holds a B.A. degree in Economics rom the University o Texas.

Rene S. Grossman, Senior Vice President Corporate Finance

Ms. Grossman has more than 20 years o experience in investment banking, principal investing, strategic

consulting and corporate nance. She has acquired, invested in, raised capital or and provided advisory

services to companies across a broad range o industries, including energy, nancial services, business

services, communications, consumer and technology. Ms. Grossman is also a Director o BusinessDevelopment o LIFE, the Companys majority stockholder. Previously, she was a Managing Director o

EAE, a registered broker-dealer and an executive with Ladenburg Thalmann, RSG Capital LLC, a rm she

ormed, Counsel Corporation and The Shattan Group. At Counsel, she acquired several telecommunications

companies, which were consolidated into iLink, a company in which she was made Director o Strategic

Planning. Previously, Ms. Grossman was a consultant or The Boston Consulting Group and a nancial

analyst in mergers & acquisitions and leveraged buyouts with Wasserstein Perella & Co., Inc. Ms. Grossman

holds a MBA degree and a Bachelor o Science in Economics degree, summa cum laude, both rom The

Wharton School, University o Pennsylvania.

Barry Markowitz, Chairman o the Board o Directors

Mr. Markowitz has had a 40-year career in the energy industry. In addition to serving as Chairman, Mr.

Markowitz will lead a special board committee ocused on rening and implementing the Companys

strategy or developing advanced coal processing acilities to be developed and operated in Colombia. Mr.

Markowitz retired in December 2004 ater serving as President o DTE Energy Services, a sister company

to Detroit Edison and a subsidiary o DTE Energy. While at DTE Energy Services, Mr. Markowitz helped

to successully acquire and integrate several businesses and executed major transactions with rms

such as General Motors, DaimlerChrysler, Ford, Duke Energy, Kimberly Clark and US Steel. Previously,

Mr. Markowitz was a Vice President or the Bechtel Group o Companies, ocusing on power industry

engineering and construction. Mr. Markowitz served as a director o Earthrst Technologies rom September

2005 until March 2007 and presently serves as a Director o Raser Technologies, Inc., a publicly-traded

environmental energy technology company ocused on geothermal power development and technology

licensing, where he serves on the Audit, Nominating and Governance, and Compensation Committees.

William Gibbs, Director

Mr. Gibbs is the President and Chairman o GreenRiver Resources Corp, which applies technology tothe extraction o oil rom tar sands. He has over two decades experience in corporate management,including M&A and nance. He has served on the boards o public and private companies andstructured and negotiated over $2 billion in nancings and acquisitions. He has worked with severalechnology businesses, was a partner at the Snell & Wilmer law rm specializing in corporate nance,and has worked or the SEC. He holds a JD rom Magdalene College at Oxord University, an LLM romGeorgetown, and a BA in economics rom the University o Utah.


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Carlos Soto, President, Energia Andina Santander Resources S.A.S., CCPFs wholly-ownedColombian subsidiary

Mr. Soto holds a degree in Mining and Metallurgy Engineering rom the Universidad Nacional de Colombia

and in Management and Finance rom the Universidad de Cartagena. He has worked in the coal mining

industry or over 33 years, 29 o them or Carbones del Cerrejn Limited where he held various positions

in both the technical areas and in the management and administration o special projects. As part o hisextensive experience he occupied various positions in Colombia and abroad in the eld o Engineering,

Mine Planning, Finance, Business Planning, Operations Research, and Coal Marketing, and nally, as

manager o special projects or the development o Cerrejn new businesses in electricity, natural gas

and coal. He is currently the Managing Director o CoalSupport SAS, a leading company which provides

consulting and advisory services in energy and mining, serving as a Senior Advisory Consulting Partner or

Carbones del Cerrejn Limited and the Investment Bank Nogal Asesoras Financieras.

Advisors

Robin Borley, Advisor Mine Engineering

Mr. Borley is a mining engineer with over 20 years o practical experience. He has undertaken all aspects

o project planning and management and has managed major mining operation in South Arica, Botswana,

Jamaica and Madagascar, as well as consulting activities in other countries such as Russia. Mr. Borley has

an in-depth knowledge o mining practices, world industry production norms and the methodology o

creating value in such opportunities and latest mine design and planning methods.

Peter Hand, Advisor Metallurgical Coal

Mr. Hand is a metallurgical engineer with 30 years experience in coal processing, handling and logistics.

He has operated some o the largest coal beneciation plants in the world and has developed specialized

computer sotware to enable new plants to be designed, costed and optimized in a raction o the time

normally taken. He has consulted to major coal organizations in South Arica, Russia, India and Australia

and has in depth experience o processing o all coal types.

Jody J. Sitkoski, Advisor or Technology

Mr. Sitkoski brings 30 years o hands on business experience in mining and mineral exploration, due

diligence, mine acility construction, power plant construction and maintenance, and pipeline construction

with companies such as Bechtel, GE Power Systems, Flour Daniels, Cleveland Clis and Wisconsin Gas &

Electric and the DOE. He is also Vice President o Business Development o LIFE, the Companys majority

stockholder. Mr. Sitkoski has experience with environmental technology processes that include

Waste-to-Energy, mine waste recovery, pollution control systems, precious metal extraction and ren-

ing. Mr. Sitkoskis commercial real estate company recently developed two waste handling projects, a

municipal waste transer station and a metal scrap collection and recycling acility or Best Way Dis-

posal and American Iron & Metal.


25/25


XI. Disclosures

This report was prepared by Research 360, GmbH (RW), which is a web-based publisher o inormation about stocks

and is not an investment adviser. In consideration or RWs equity research services relating to this Company, including

this report, to be perormed through March 2012, the Company agreed to pay RW a ee o $15,000 (reundable under

certain conditions). This report is based on RWs independent analysis and judgment. The materials upon which thisreport is based are believed to be reliable, but RW does not guarantee the inormations accuracy or completeness.

Unless otherwise noted, any interpretations, earnings estimates, and conclusions contained in this report are those o RW.

This report is not intended to constitute a recommendation or any particular investor to purchase or sell any particular

security or that any particular security is suitable or any particular investor. This report should not be construed as a

recommendation or request to engage in any transaction, or an oer or solicitation o an oer to buy or sell any security

or investment, and investors are advised to consult their personal broker or investment advisor beore making any

investment decision concerning any o the companies mentioned herein. Use o this report may be subject to applicable

rules o any sel-regulatory organization o which you may be a member. The inormation contained in this report is

subject to change without notice, and RW assumes no responsibility to update the inormation contained in this report.

Subject to certain restrictions posted in the Legal section o RWs web site (www.researchworks360.com), RW and its

aliated entities and persons may purchase and hold positions in the securities o its clients, but they are prohibited rom

selling any securities o a RW client during the RW service period to such client. Research 360, GmbH, 2011. All rights

reserved. Additional and supporting inormation is available upon request.

Michael J. Ritger, who authored this report, has been an equity research analyst since 2003. He passed the Uniorm

Investment Adviser Law Examination, Series 65, in August 2003, and he holds a BA (English) rom Bates College and a

Masters degree rom the Yale School o Forestry and Environmental Studies. Mr. Ritger certies that the views expressed

in this report are an accurate representation o his personal views about the Company and its publicly traded securities.

The Private Securities Litigation Reorm Act o 1995 provides a sae harbor or orward-looking statements. In order to

comply with the terms o the sae harbor, RW notes that except or the description o historical acts contained herein, this

report may contain certain orward-looking statements that involve risks and uncertainties as detailed herein and rom

time to time in the Companys press releases and elsewhere. Such statements are based on RWs current expectations

and are subject to a number o actors and uncertainties, which could cause actual results to dier materially rom those

described in the orward-looking statements. These actors include those described in the Companys press releases and

SEC lings, all o which are hereby incorporated by reerence. No orward-looking statements are a guarantee o uture

results or events, and one should avoid placing undue reliance on such statements. Jerey Ritger co-authored this report.

He also makes the above certications

equity research report on colombia clean power and fuels

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