BN Hydro FARM

HYDROPONICS PROJECT
PROPOSAL 2023
Contents

Disclaimer & confidentiality 3

1 Executive summary 4

2 Introduction 5

2.1 Project overview 5

2.1.1 Locations and Facilities 5

2.2 Project Investors/Issuers/Contractors 6

2.2.1 Investor 6

2.2.2 Contractor/Advisor: Oracle Framing Technologies 6

2.3 Proposed ownership structure 6

2.4 Current project status 6

3 Project technical description 7

3.1 Design 7

3.2 Market and Offtake 7

4 Project Implementation Plan 8

4.1 Build and Farm Plan 8

5 Budget and Drawdown 9

5.1 CAPEX 9

5.2 OPEX 9

6 Financial Analysis 11

6.1 Financial model 11

6.2 Key model inputs and assumptions 11

6.3 Key financial model outputs 11

7 Social and economic impact 12

7.1 Job Creation 12

7.1.1 Direct Jobs 12

7.1.2 Indirect Jobs 12

7.1.3 Climate Friendly 12

8 Key risks and risk mitigation 12

Disclaimer & confidentiality

a) The purpose of this Project Information Memorandum (“PIM”) is to enable BN Hydro Farm to
provide the status of the “Project” for suitable partners (“prospective project partners”) with
whom ………may wish to negotiate an agreement (or agreements) regarding the subject matter of
this PIM.

b) The information contained in this PIM is selective and is subject to updating, expansion,
revision and amendment. The information contained herein has not necessarily been
independently verified.

c) Where this PIM includes certain statements, estimates and projections with respect to the
anticipated future performance of the Project, as well as to the market for its products and
services, such statements, estimates and projections reflect various assumptions made by the
management of Oracle farming Tech concerning anticipated results, which assumptions may
or may not prove to be correct. No representation or warranty is made as to the accuracy of
such statements, estimates and projections.

d) This PIM is confidential and is for use only by the recipients to whom it is issued and who have
signed the applicable non-disclosure and confidentiality agreement. This PIM may not be
copied or distributed by the recipients to third parties other than in confidence to their
employees (including directors) and professional advisers, on a need-to-know basis only.
1 Executive summary

This document sets out the Project Information Memorandum (PIM) for the Bhodla Nkomo
Hydroponics
Project to be implemented and operated by the programme directors. It sets out the technical details
and financial feasibility of the project. The project stakeholders are identified and introduced that will
make this project a success. The project is located in Kwa-Zulu Natal

The project will involve the construction of two greenhouses (30m x 10m) their upgrade to include
various hydroponic equipment to grow lettuce\spinach and other plantations selected. As it stands the
programme directors will be on a quest to receive multiple off take agreements with local parties.

The project will be implemented in 1 main phase over a period of 3 months. The initial build of the
infrastructure is expected to take between 8 and 10 weeks, with resulting crop cycles on a 30-day
rotation.
2 Introduction

2.1 Project overview

Climate controlled hydroponic systems grown in Agri Tunnels will provide consistent, high quality
food year round, while reducing transport costs, and using up to 80% less water than conventional
farming measures.

BN Hydro Farm will build, construct and advise on the project with Technologies that aims to use
this technology to guarantee production output by isolating and controlling environmental
conditions. This allows for successful cultivation in almost any climate. The advantages for this
include:

• Allows import substitution and internal food security.

• Produces food locally, reducing reliance on transportation and minimizing associated risks.
• Removes opportunities for contamination through its soil-less production in controlled
environment.
• Stable supply reduces opportunity for food price volatility.
• Year-round cultivation provides an opportunity to target out-of-season crops.

• The project will include 2 Agri Tunnel structures of 30m x 10m, utilizing NFT hydroponic
techniques, to grow lettuce.

2.1.1 Locations and Facilities

The farm will be located at the following address:

. S .........................

Reg no:2018/072090/07

Address: oshabeni loation

Cell No : 0603254849

Email: essa@bhodlankomo.co.za

The site itself provides a suitable climate and water provisions for the growth of produce.

The geographic location of the site is extremely favorable in terms of produce delivery as it is only a
relatively short drive to the local market.
– Therefore reduced transport costs and less strain on produce resulting in longer shelf life.

As the site is close to town this also provides opportunity to target high-value markets such as
restaurants and shop outlets. Maintenance costs are less on vehicles, and servicing farming
infrastructure.

2.2 Project Investors/Issuers/Contractors

2.2.1 Investor

Ray Nkonyeni Techno Hub

2.2.2 Contractor/Advisor: Oracle Framing Technologies

Oracle Farming Technologies is a hydroponic farming company utilizing modern farming methods to
grow high quality crops, without any herbicides, fungicides and insecticide throughout the year,
utilizing up to 95% less water.

More information is addressed in the Technical Proposal Document.

2.3 Proposed ownership structure

To be determined once investor has confirmed

2.4 Current project status

• Lease Agreement with Programme stakeholders

• Funds being raised \ Budget
• Lettuce offtake secured
• Prepared for project commencement, awaiting finance approval
3 Project technical description

3.1 Design

See attached Appendix 2: Technical and Cost proposal

3.2 Market and Offtake

The fresh produce will mainly be sold through local and wholesale markets. Shipments of vegetables
will be transported in per orders packed according to specification of the client.

We have based our revenue projections on discussions with local sellers, allowing for average costs
per kg of produce as well as baseline data from the Cape Town and Johannesburg Markets. It
should be noted that we intend to not only supply the current off takers but push further into the
market to secure more clients and grow the business organically.

We foresee these sales prices as conservative. It should also be noted that all excess produce that
is not supplied directly to these clients would be supplied to the Local Market, for which these
average sales prices are in line.

It is anticipated that an active sales role would lead to more high-end customers such as restaurants
and hotels, which would be willing to pay more for the products than retail outlets

The company will also add product to the website and market aggressively using paid search as well
as social media outlets. Once offtake is received for the entire farm marketing spend can reduce to
zero.
 4.1

4 Project Implementation Plan

Month 1 Month 2 Month 3 Month 4

Build and Farm Plan

Action Item W W W W W W W W W W W W W W W W
1 2 3 4 5 6 7 8 9 1 1 1 1 1 1 1
Funds Received 0 1 2 3 4 5 6

Tunnel Fabrications

NFT Prefabrication
(2 weeks)
Tunnel Construction on site

First planting of seedling into Green house

First harvest Greenhouse

5 Budget and Drawdown

5.1 CAPEX

Budgetand Drawdown Total

Lettuce NFT Hydroponic Tunnel x2 (30mx10m) R 120 000.00

Transport of Steel/NFT/Construction material R 16 000,00

Accommodation for labour,forman and construction R 60 000,00

A – Frame Hydro Technology R 768 444,00

Hydroponic Training R 25 000,00

Total Capex R 989 444,00

5.2 OPEX

Table 4: Monthly Opex costs

OPEX at full capacity Cost
Accounting R0
Rent R0
Electricity R 10 027.00
Water R1 973,00
Delivery Costs R5 000,00
Maintenance R0
Printing, Office and Petty Cash R500,00
Cellphones, Telephone and Internet R1 000,00
Bank Fees R1 000,00
Owner Drawings R0
Working staff (10 Staff) R35 000,00
Employee related expenses (UIF, Med Aid etc.) R3 500,00
Insurance R1 000,00
Total Monthly Opex R59 000

Table 4: Monthly Cost of sales

Cost of Sales Total
Nutrients - farm R2 000,00
Seeds/Seedlings R2 000,00
Packaging - farm R3 000,00
Pest Control R0
Growing media R0
Chemicals (Ph up, pH down ect) R600,00
Cleaning supplies R400,00
Total R8 000,00
6 Financial Analysis

6.1 Financial model

See attached Excel Document

6.2 Key model inputs and assumptions

The financial forecast has been based on a single phased approach for which we estimate to get the
farm running at full capacity over a period of 3 Months.

As summarized in the financial model, they Key assumptions are as follows:

1) Growth in Opex 6%
2) Lending Rate 12.5%
3) Cost of Sales annual increase by 10%: This is a deemed very conservative annual figure based
on phase 1 amounts and there are large savings in bulk purchases. In addition, year on year
increases for our COS have remained below 10%.
4) Growth in Sales 3%: This is deemed conservative, and we have based the model around no
increase in our pricing on our products. It is believed that as consumers become more aware
of the benefits of hydroponic produce this can lead to an increase in price point.
5) Annual Depreciation 10%
6) 60-day account for all sales: This is also a relatively conservative estimation as a percentage
of our clients will be on 30 day accounts and cash accounts.
7) Phase 1 Cost of sales have been set as 50% of a full capacity farm in order to be conservative

6.3 Key financial model outputs

See attached excel

7 Social and economic impact

7.1 Job Creation

7.1.1 Direct Jobs

The proposed Project will be creating a total of 10 jobs. The Oracle Farming Technologies team will
also be training the staff and up skilling them in hydroponic farming practices. A summary of the direct
jobs are listed below. It should be noted that 100% of all jobs created would be awarded to individuals
from previously disadvantaged backgrounds

Table 6: Staff Summary

Position Number of Staff

Farm Manager 1 \ Depends

Unskilled Farm Hand 10 \ Depends

7.1.2 Indirect Jobs

During the project implementation phase of 3 months, the project will be servicing a total of 15 indirect
jobs in order to build, manage and service the hydroponic farm before handover to the permanent
staff. 100% of these jobs will be issued to individuals from previously disadvantaged backgrounds.

7.1.3 Climate Friendly

Another social advantage of this project is the promotion of climate conscious farming practice. These
farming techniques will yield crops using up to 80% water than conventional farming. This is a major
step towards sustainable agriculture practices in an already water stressed environment.

8 Key risks and risk mitigation

The table below identifies the key risks to the project and the risk mitigation strategies identified.
 RISK RISK OVERVIEW
Water Quantity / Drought Drought and lack of water is
always going to be a threat in
Limpopo. This is the most
important resource for the
farm, and if there is no water
there will be no produce.
Water Quality Water quality will be assessed
and if deemed acceptable
according to a water quality
test report supplied by the
farm. There is a risk of water
quality fluctuations which can
affect the level of quantity in
the produce being grown.
Crop Contamination Crop Contamination has a
relatively small likelihood in
hydroponic farming as harmful
conditions such as ecoli stem
from poor quality water and
manure in soil farming. That
being said crop contamination
is always a possibility and steps
should be taken to mitigate this
risks.
RISK MITIGATION
The risk is mitigated by having
multiple water points:
Water Point 1 is Borehole
water.
Water Point 2 is Local dam
water.
Water Point 3 is municipal
water.
Using this three access points
will mitigate the risks of water
shortages.
Additionally utilizing
recirculating Hydroponic
system reduces water
consumption up to 80%
compared to traditional
farming.
In order to mitigate this risk
water purification equipment
should be used in the operation
to ensure a consistent water
quality for the produce.
Alternatively multiple water
sources should suffice.
SOP's to be implemented shall
conform to international
GLOBAL GAP standards, and
shall include a pest
management plan. This risk is
mitigated through water quality
control through the farm in
feeders. This will be conducted
in our water purification
equipment. Harmful pathogens
can be destroyed using
chlorine. In addition to this
basic sanitary practices during
packaging will be installed and
monitored to ensure
compliance. Consistent testing
of produce and water quality
will also ensure that any
breaches in quality or crop
contamination can be caught
early.
Disease
Expanding Market for Phase 2
Crop disease is always a threat
to farmers. Due to the fact that
the majority of the crops have a
quick turnaround of
approximately 30 days this isn’t
a major as it will affect one
month of cash flow as opposed
to several.
In order for the farm to be
successful over the long term it
will need to expand and
become larger, hence finding a
market for the second phase of
the project. If there is no
market for leafy greens during
the expansion then there is a
risk of project failure
SOP’S to be implemented shall
conform to international
GLOBAL GAP standards.
Additionally, Disease
management program shall
form a part of this SOP.
Consistent daily checks for crop
diseases will be conducted to
catch any indicators as early as
possible. The affected plants
will be removed and disposed
of accordingly. Should be
necessary an entire harvest can
be removed and the
infrastructure sterilized to
remove the disease. In addition
to this insurance has been
included for just this scenario.
Various contingencies have
been planned for this risk
including but not limited to:
● Phase 2 expansion with no
(or limited) capex focusing on
tunnel farming without
hydroponic infrastructure.
● Using tunnels to grow micro
vegetables. There has been a
lot of requests from clients for
this produce.
● Using the remaining tunnels
to grow blueberries,
raspberries or blackberries for
export.
 Break Down of Timeframe
Week 1

1. Funds Reflected

2. Tunnel Designing

3. NFT Designing

Week 2

1. Tunnel Fabrication

2. NFT Fabrication

Week 3

1. Tunnel Spraying\ Assembly

2. NFT Fabrication completion

Week 4

1. Tunnel Transported to Site

2. Ground inspected

3. Pipe molding production starts

Week 5

1. 1\4 160 ( 3m) Hydroponic Food Grade

2. Pipes will be molded in batches

3. Site work continues

Week 6

1. 2\4 320 (3m) Hydroponic Food Grade Pipe work

2. Open and Closed Endcaps molding will start

3. Site work continues

 Week 7

1. 3\4 480 (3m) Hydroponic Pipe work

2. 450 \ 1280 End Caps to be completed

3. Greenhouse work continues

4. Hydroponic Training \Introduction

Week 8

1. 4\4 640 (3m) Hydroponic Pipe work starts

2. 1280 \ 1260 End Caps to be completed

3. Greenhouse work complete\ Systems complete

4. First planting of seedling into Greenhouse

Week 9

1. Second week of Germination process

Week 10

1. Third week of Germination process

Week 11

1. Fourth week of Germination process

Week 12

1. Transplanting the seedlings into the Hydroponic System