Executive Summary

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• Overview & contents
• i. Important Notice and Basis of Preparation
• 1. Executive Summary
• 2. The Corridor
• 3. Operating Model
• 4. Commercial Model
• 5. Market and Competitive Position
• 6. SWOT and Strategic Response
• 7. Financial Projections
• 8. Capital Expenditure, Funding and the Balance Sheet
• 9. Sensitivity and Scenario Analysis
• 10. Risk Analysis
• 11. Regulatory and Compliance
• 12. Organisation
• 13. Implementation Roadmap
• 14. Key Performance Indicators
• 15. Investor Returns and Recommendation
• 16. Assumption Register
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Round Trip and Fleet Schedules
• C. Appendix C: Funding, Debt Service and Balance Sheet Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

1.1 What this business actually is

Copperfrontline Logistics Limited is a Zambian-registered cross-border haulier operating between the copper-producing districts of the southern Democratic Republic of the Congo and the Zambian Copperbelt on one side, and the port of Dar es Salaam on the other. It carries copper cathode and concentrate southbound and eastbound to the port, and sulphur, reagents, fuel and mining consumables on the return leg.

A haulage company is often described as though it sells kilometres or tonnes. It does not. It owns a small number of expensive assets and sells the number of times each one can complete a productive circuit in a month. Rate per tonne matters, but it is a market price the company does not set. What the company controls is how many round trips each truck completes, and how much of each trip is loaded.

A completed round trip generates US$8 888 of revenue and US$3 392 of contribution, a margin of 38.2 per cent. A truck completing 2.05 round trips a month at 94 per cent availability produces roughly US$181 000 of revenue a year. Multiply that by a fleet and subtract overheads and finance costs, and the whole business is described.

1.2 What the model shows that a reader should not skip

▪ The southbound copper leg does not pay for the business. Copper moving to port is the visible business and the reason customers exist. It is not what makes money. With an empty return leg a round trip clears its own diesel and very little else — US$349 of contribution against US$3 392 when the return leg is loaded. The backhaul is 90 per cent of what a loaded trip earns. Run the same fleet with no return freight at all and FY2031 EBITDA is negative US$0.74m rather than positive US$2.61m. Overheads and debt service are paid out of the return leg.

▪ Growth is capped by debt service cover, not by demand or capital. Each truck costs US$195 000, of which 75 per cent is asset-financed over six years. A truck takes roughly three years to repay the capital committed to it, so a fleet growing quickly is permanently full of immature assets. Cover reaches only 1.37 times by FY2031, against the 1.25 times asset financiers typically require, and it is below that level in every prior year. Growing faster than this plan does would put the company below covenant regardless of how much equity were raised.

▪ The cheaper truck is a false economy on this corridor. A budget tractor unit costs US$105 000 against US$195 000 for a premium European unit. Net of finance cost and residual value released on a consistent basis, the premium unit produces US$55 513 a year against US$48 922 — an advantage of US$6 591 a truck a year. The budget unit would need 106.7 per cent availability to match it, which is not attainable. Better fuel consumption and higher availability compound across 5 200 kilometres of round trip.

▪ Fuel is nearly half of the cost of moving a load, and some of it is stolen. Fuel and fuel shrinkage together account for US$2 428 per round trip, roughly 44 per cent of variable cost. The plan assumes shrinkage — siphoning, unrecorded drawdowns and reconciliation loss — begins at 5.5 per cent of fuel and falls to 2.8 per cent as telematics, tank sensors and fuel-card discipline take effect. That reduction is an assumption about management, not about the market.

▪ The return depends on horizon rather than on performance. On a year-five exit at a mid-case valuation the equity returns 1.62 times money. Held to year eight, with the fleet flat and the asset finance amortising away, the same equity returns 2.20 times with an internal rate of return of 10 per cent and US$1.66m of distributions received along the way. A truck financed over six years earns for eight. An investor selling at year five hands the buyer three years of debt-free operation of assets the seller paid for.

1.3 Financial summary

1.4 The ask

The company seeks US$4.4m of equity for 65 per cent of the share capital, alongside a US$0.9m term facility for the depot and workshop and asset finance covering 75 per cent of each vehicle. Equity funds vehicle deposits of US$2.63m, the depot and workshop, the working capital gap created by 55-day customer terms, and trading losses to EBITDA breakeven in month 10.