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

For more informationplease contact Jeff Janda at

Phone: 858-752-8503 oremail: jeff@persistencemining.com

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