Production and Expansion Strategy

Stratos aims to become the lowest cost and leading sugarcane ethanol producer in Peru. The Company plans to utilize low-cost, locally grown sugarcane feedstock and service international markets, with a focus on the U.S., which allows for tariff-free exports. Stratos intends to eventually produce more than 90% of the sugarcane it processes, and purchase the remaining 10% from local unaffiliated third party suppliers. Stratos is executing on a vertically integrated, disciplined, logistical strategy for production and expansion that eliminates commodity price volatility and leads to competitively high yields. Phase one is underway.

Phase I: Expand and operate ethanol production facilities and develop infrastructure:

• Modernize and expand mill and acquire distillery: Stratos acquired its first mill, Estrella del Norte, in September 2007. The company is in the process of relocating and expanding this mill to increase its milling capacity to 360,000 tons of sugarcane annually to produce 20 million liters of ethanol per year.
• Land acquisition and expansion: Stratos plans to acquire land holdings of at least 48,000 ha to fulfill the needs of Phase II operations.
• Phase I capital expenditure projection: $37 million.

Phase II: Expand development and operations in strategic locations:

Phase II consists of expansion into two strategic locations along the northern Peruvian coast and the cultivation of Stratos’ own sugarcane supplies.

• Develop staged sugarcane farms: Stratos plans to construct two greenfield sugar mills and distilleries, as well as cultivate its own sugarcane on 24,000 ha – land secured during Phase I.
• Develop and expand sugarcane plantations: On an additional 24,000 ha Stratos plans to construct two additional mills and distilleries.
• During this phase Stratos intends to grow and cultivate 90% of its own sugarcane needed for production.
• Stratos expects the operation of their mills and distilleries to produce 180 million gallons of ethanol annually by the fourth quarter of 2014.
• Phase II capital expenditure projection: $755 million.