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Unmanned Aerial Systems for Mineral ExplorationMARCH 2015
• Low Probability of Making a Discovery – (1 in 10,000 prospects becomes a mine)
• Large Discoveries are Declining
• Discoveries are increasingly in remote areas with high costs
• Technology has not lowered costs or increased success rates
• Exploration Drilling is Expensive ($50/foot)
• Junior Mining Companies are Dependent on Capital Markets which Finances Projects at the Wrong Time and at the Wrong Price
• $40 Billion in Exploration in Last 15 Years – 90% Wasted
• Mineral Exploration as an Industry is Unprofitable for Companies and Investors
MINERAL EXPLORATION: AN INDUSTRY WITH BIG PROBLEMS
• Recon, sampling and mapping is labor intensive
• Requires geologists and trained sampling techs
• Results can vary depending on training and experience
• Remote areas require helicopter support
• Humans need shelter, food, water, rest, and medical care.
• 1 person can collect about 30 samples per day.
• Human cost = $30/sample
THE REAL PROBLEM: TOO MANY BOOTS ON THE GROUND
Sampling a Remote Mountain Top in Alaska Required Helicopter Support
COST COMPARISON:UAV VS. TRADITIONAL PROSPECTING
UAV Prospecting:
• $500 per day (our cost)• 6 flights per day (1.5 hr)• 10.8 square miles per day• Recon and mapping done
at same time• Consistent data• Complete Coverage• Cost per square mile =
$50
Boots on the Ground:
• $1,000 per day (single geologist)
• 2 square miles per day• Recon and mapping done
on separate visits• Inconsistent Data• Low Coverage• Cost per square mile =
$500
• Barite is an industrial mineral used in oil and gas drilling
• Price are currently high and miners want to find good deposits quickly
• High grade ore near the surface can be profitably mined with little capital outlay
• Problem: how to find high grade deposits near surface without massive “boots-on-the-ground” prospecting effort
• Solution: custom sensor package on UAV that can locate barite’s unique spectral signature
• Cost of finding deposits decreases by up to 80% and quality of prospects increases
CASE STUDY: BARITE MINING
Barite (BaSO4) is used as a weighing agent in oil and gas drilling due to its high density, non-toxicity, and softness.
• Hyperspectral refers to imaging
that includes wide swath of
electromagnetic spectrum well
beyond visual range (.3 microns
– 10 microns)
• Satellite Platforms: LandSat,
Terra (Aster), Geoeye
• Airborne Platforms: SpecTir,
HySpec
• Current Costs for fixed wing,
manned survey approximately
$10,000 – one week lead time
• Large Survey Areas
HYPERSPECTRAL IMAGING
Overlay map of Cuprite, Nevada which is used as a testing ground for Hyperspectral Imaging.
• Different minerals absorb and reflect
different frequencies of light (or other
radiation) at different intensities
• Every mineral has characteristic
absorption bands (dips) which along
with shape of curve can be unique
identifiers
• Near Infrared Spectrum (.8 microns to
2.5 microns) good for identifying
minerals due to information-rich
reflectance curves and sensor
technology
• Well established techniques for
separating mixed spectral signatures,
ignoring atmospheric gases, adjusting
for lighting and topography variations
SPECTROSCOPY 101
• Cost of a hyperspectral survey can
be $10,000 to $25,000
• Satellite images are cheaper, but
have low resolution
• Primarily used for regional surveys
(>100 sq miles)
• Old images, cloud cover, dated
technology, limited perspective
• Biggest factor in resolution is
altitude - even 100 feet makes a
difference
• Satellites won’t be competitive for
high resolution applications (1 cm or
below)
SATELLITES: COMPETITION?
Terra Satellite with Aster Imaging Sensor
FIRST PRODUCT: AERIAL REMOTE MINERAL DETECTION SYSTEM (ARMDS)
UAV Prospector with Hyperspectral Imaging Sensors
Cover 1-3 square miles per flight, up to eight flights per day
1 centimeter resolution vs. current 50 centimeter resolution
ARMDS SYSTEM DESCRIPTION
Wing Span 7.5 ft
Air Vehicle Weight 25lbs
Range 25+ miles (Grid Pattern)
Airspeed Hover to 40+ mph
Altitude <400ft AGL
Endurance 1+hrs min, Fuel
Payload
- Visible Light Camera –, 1080p30, 3fps, 5MP, Ultra wide FOV, Wifi Enabled, National Television Standard Compliant (NTSC)
- External Interfaces
-TBD Spectrometer- .8-1.6 microns
Payload/ARMDS - Combined Weight 29 – 32 lbs
Insert System Picture Here
Description
VLSPayload
Multispectral Payload
Tough Pad Ground Station
Aircraft
Field Repair Kit
Custom Shipping Cases
UAV MARKET POTENTIAL
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20250
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
AgriculturePublic SafetyOther
# o
f U
nit
s
Mining (15%) of Other~1,500 units per year
Annual UAS Sales for Agriculture, Publics Safety, and Other Markets
Reference: The Aerospace and Defense Industry in the U.S., A financial and economic impact study, March, 2012
• Predictions of 1,500 units per year are based on making existing applications cheaper and easier
• The real promise is to develop new capabilities and applications that were impossible on previous platforms
• Combination of UAV’s and High Resolution Hyperspectral Imaging will revolutionize mineral exploration.
MINING UAS MARKET
Pixel Size:
1m2 : major outcrops
1cm2 : individual rocks
1mm2 : features on rocks
100µ2 : individualmineral particles --------
mm2 resolution and below will radically improve utility and give hyperspectral imaging a central role in discovery.
RESOLUTION REVOLUTION
We will do this, but from our UAV platform at 300 feet and for entire square miles. It would allow direct discovery of low grade anomalies
• Mapping and geoprocessing software such as ArcGIS, MapInfo, AutoCAD
• Annual License Fees = $7,000 to $25,000• 0% Market Penetration in 1975• 99% Market Penetration in 2000• Peak Adoption: 1985-1995• Network effects are driven by need to package
exploration data for potential buyers / financiers• Similar network effects for high resolution
hyperspectral imaging
MINING TECH COMPARABLE:GIS (GEOGRAPHICAL INFORMATION SYSTEM)
• Prior to diamond drilling exploration was done by sinking shafts (expensive, slow)
• 5% Market Penetration in 1920• 90% Market Penetration in 1950• Slower adoption: initial rigs were
steam powered, cumbersome• Reduces exploration costs 90%• Network effects drive universal
adoption. • Without drill data – properties are
much less valuable• Market leader in 1920 is market
leader today (Boart Longyear)
MINING TECH COMPARABLE:DIAMOND DRILLING
20162018
20202022
20242026
20282030
20322034
2036 -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
New UsersTotal Users
Begin 10 Year Replacement Cycle
MINERAL EXPLORATION UASGLOBAL UNIT GROWTH / ADOPTION
Based on Bass Diffusion Model
Market Matures
U.S. Market Leader
30%
U.S. #215%
Asian Co.15%
European Co.10%
All Others30%
% of Global Market in 10 Years
COMPETITION AT MATURITY
We are positioningto be one of these guys
Market is initially fragmented and leaders start out with Single digit percentages.
• Ground-truthing is the process of verifying remote sensor data with an actual on-the-ground geological observations
• GroundTruth software will put spectral data in geological context and make predictions
• Use mineral mapping along with Artificial Intelligence to identify geological formations, estimate grades and quantities of target minerals, and make inferences about the location of target minerals based on indirect evidence.
• GroundTruth is our version of IBM’s Watson - but for field geology
• Computers can be taught to do geology
GROUNDTRUTH SOFTWARER&D EFFORT FOR AUTOMATED GEOLOGY
• Installed base of ARMDS is >5,000 units in 2025• Reaches 15,000 units after replacement cycle if we are a market
leader• At $2,500 annual license fee – the software generates recurring,
high margin revenue• If we can replace some human geologists – the price could be
$25,000 per year• Add-ons can double median annual license fee• Minimal revenues for first five years. Two person development
team (1 geologist, 1 programmer).• GroundTruth will be the most valuable part of the business in 10
years
GROUNDTRUTH SOFTWARE
• Contract hyperspectral surveys
• Competing with SpectIR (Reno) and other Airborne Geophysics Companies
• Affordable, flexible alternative
• Capabilities fit average property size (5 sq. miles)
• $10,000 vs. $2,000 per day
SERVICES
• March 2015: First Prototype Delivered
• April 2015: Sensor test flight by scientific testing company
• March to June 2015: Training, Testing and Calibration
• June 2015: File 333 Exemption
• June 2015: Meet with Potential Cornerstone Client for Demo
• July 2015: Begin Barite Discovery Beta Testing
• August 2015: Begin work for cornerstone client
• September 2015: Field testing feedback and design of production version
• November 2015: Begin building / programming production version
• January 2016: Delivery of production version, arrange contract manufacturing
• March 2016: PDAC Booth and Meet Potential Clients
• April 2016: Begin work with next batch of large clients
SCHEDULE: DEVELOPMENT TO SALES
Jeff Janda, President, co-founded Tonogold Resources, Prospect Uranium. Junior mining, capital raising and public company management experience.
Brian Zamudio, Vice President, co-founded Tonogold Resources, Prospect Uranium. Junior mining, capital raising and public company management experience.
Chris Taddei, Robotics and UAV engineer. Built prototype. Experience developing new robotics technology and integrating complex hardware and software.
Wright Parks, Geologist, Permitting, Permitted Apex Mine. Sr. Geologist and Project Manager for U.S. Borax, Phillips Petroleum, and Horizon Gold.
Alan Day, Geologist, Mineral Exploration Services, based in Reno. Clients include Newmont, Barrick, Anglo, and Midway.
Penny Nagel, Business Development, former HSBC executive with experience in risk management, sales, and capital raising.
New Hires: Aviation consultant, drone developer, FAA regulatory expert, and flight trainer (one guy). Sensor Physicist with experience developing drone-based hyperspectral imaging sensors and software for military contractors.
MANAGEMENT
Company Revenues Valuation Revenue Multiple
Aerovironment (Def) $230 million $765 million 3.3X
Aeronautics (Def) $97 million $200 million 2X
3D Robotics (Cm) $5 million $150 million 30X
Airware (Cm) $4 million $30 million 7.5X
CyPhy (Def) $2.5 million $20 million 8X
Average Multiple = 10.16X
UAV VALUATION COMPS