OLMOS IRRIGATION PROJECT

Opportunity to acquire farm lands in Peru

The Olmos Project involves the diversion of Atlantic-basin Huancabamba river waters to the Pacific basin through a 20-km tunnel across the Andean mountain range, which is being built by Trasvase Olmos Concessionaire (an Odebrecht subsidiary) under a concession agreement signed in 2004. The tunnel construction would be completed by the first quarter of 2012.

The Olmos Irrigation Project concession involves the irrigation of 38,000 hectares of New Land owned by the Lambayeque Regional Government (GRL, Spanish acronym) and 5,500 hectares of lands in the Valle Viejo and 'Santo Domingo de Olmos' Rural Community by means of the development of hydraulic infrastructure.

On June 11, 2010 the concession agreement for the mentioned project was signed, under which the Lambayeque Regional Government awarded the concession to H2Olmos S.A., an Odebrecht subsidiary, for the design, financing, construction, operation and maintenance of the irrigation project.

The Olmos Irrigation Project is self-sustaining concession without requiring of financial resources or guarantees of the Peruvian State, being funded 100% by the private.

Through a trustee, the GRL will sell through a public auction all 38,000 hectares of land to be irrigated with water diverted and uptaken, conducted and distributed by H2Olmos S.A. (the concessionaire) which will be in charge of major hydraulic infrastructure for irrigation, access roads and power transmission line.

The proceeds from the public auction will be used mainly to finance hydraulic infrastructure work construction.

Main characteristics of the auction:

• Lot sizes: 250 Ha, 500 Ha and 1,000 Ha (1)
• Base Price: US$4,250 per hectare. Property title and irrigation capacity included.
• Surface water availability per lot: An average of 9,032 m3 /gross hectare/ year to be supplied through the irrigation infrastructure to be built.
• Service fee: Flat service fee of US$0.07/m3 of pressurized water for 9,032m3 annual water supply per hectare, equivalent to a Total Fix fee of US$ 632 per hectare year, to be paid by the owners of the land under a take or pay contract.
• Additional infrastructure: Each lot to be auctioned shall be improved with access roads and power connection to the national power transmission network.
• Work construction term: 24 months to be started no later than 6 months after land auction.

(1) The final dimension of the lots to be auctioned will be available in the Rules of the Bidding Procedure.