Overview

Mantra Venture Group (MVTG) operates in the U.S. and Canada with offices in Seattle, Washington and Vancouver, British Columbia. Through its group of sustainable energy, carbon reduction and consumer product subsidiaries, it is active in the green technology marketplace with an innovative, multi-faceted approach focused on profitability through sustainability. By aggressively seeking out new technologies and innovating solutions for a cleaner earth for everyone.

Mantra's recent developments have resulted in many governments and leading industrial companies taking an interest in ERC. Mantra is currently in discussions regarding various grants and other support initiatives offered by international governments, as well as possible pilot projects with large industrial companies.

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Investment Highlights

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Projects

Electroreduction of Carbon Dioxide

U.S. industry produces an estimated 147 terragrams of CO2 equivalent per year and carbon credits currently trade at values of up to $40 USD.

In using renewable energy, Mantras Electroreduction of Carbon Dioxide technology combines captured CO2 with water to produce high value materials, including: formic acid, formate salts, oxalic acid, and methanol. In addition, companies adopting ERC stand to make significant profit from its by-products. Formic acid, for example, currently sells for approx. $1,200/ton.

Mantra successfully completed a prototype capable of processing 1 Kg of CO2 per day in Oct. 2008, and its first commercial scale reactor is schedule for launch in early 2010.

The Need

Carbon dioxide is increasingly notorious as a cause of global warming. In fact, the EPA estimates that US industry produces approximately 147 terragrams of CO2 equivalent, approximately 30% of which comes from the production of iron and steel. CO2 accounts for 84.8% of all emissions, with Electricity Generation having the greatest impact of all economic sub-sectors. (Environmental Protection Agency, 2006.

Subsequently, public and regulatory scrutiny has become a major burden to large stationary industrial producers. However, other than energy conservation, Carbon Capture and Storage (CCS), the process of separating CO2 from emission sources and transporting it to a storage location for long-term (indefinite) isolation, is the only potentially viable option for CO2 reduction today. Carbon Sequestration, the process of permanently storing CO2 underground, has garnered the most significant attention to date, with corporations and governments committing Billions of dollars in large sequestration pilot projects and research. Nonetheless, this technology still faces significant challenges, as it is far from being cost effective. In addition, sequestration has raised serious environmental concern, legal and regulatory issues due to the unknown ramifications of permanently storing CO2 underground.

The amount of CO2 emitted annually from industry, fossil fuel combustion and utilities, coupled with the aforementioned lack of viable mitigation technology, presents a giant window of opportunity for entrants into the CCS market.

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Technology

In November 2007, Mantra acquired the 100% outright ownership of a chemical processing technology developed by the University of British Columbia's Clean Energy Research Center, entitled the Electroreduction of Carbon Dioxide (ERC). Powered by electricity, ERC combines captured carbon dioxide with water to produce high value materials that are conventionally obtained from the thermochemical processing of fossil fuels, including: formic acid, formate salts, oxalic acid, and methanol.

Advantages of ERC Technology

MVTG management asserts the following potential advantages relative to alternative methods of CO2 capture and conversion:

• Process is driven by electric energy that can be taken from an electric power grid supplied by hydro, wind, solar, tidal or nuclear energy (all renewable).
• Medium reaction rate allows for commercial viable CO2 processing times
• Medium CO2 space velocity gives the ability to treat comparatively large volumes of CO2.
• High product selectivity for formate and formic acid (up to 90%)
• Low operating temperature (20° to 80° Celsius) and pressure (below 1 MPa or magnitude of pressure)
• Hydrogen is not required as a feed reactant, but is already present in water used in the process
• ERC by-products represent useful, and financially profitable sources of income
• ERC pilot projects can be executed on any scale, whereas sequestration can only be performed on a very large scale, leading to exorbitant research and development expenditures

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Markets

Mantra's objective is to make electrochemical reduction of carbon dioxide not only cost effective but profitable for emitters for whom CO2 management is either mandated or desirable. Therefore, the primary market for ERC technology will be the major sources of stationary CO2 production: industry, fossil fuel combustion, and utilities. The International market for carbon dioxide management is currently in the Billions of dollars and carbon emission credits are traded at values up to $40 USD per ton of CO2. Iron and Steel Production in the US alone accounted for 45.2 Terragrams of CO2 equivalent in 2005, representing approximately 30% of overall CO2 emissions from industry. (Environmental Protection Agency, 2006)

Upon successful entry into the CO2 market, a powerful and perhaps even more profitable market will develop for its useful by-products. Sodium Formate and Formic Acid, two of the main by-products of ERC, currently have an average market value of $1,200/ton, with more than 600,000 tons of formic acid produced annually (Li, 2006). Their applications are diverse, including feedstock preservatives, de-icing solutions, cleaning solutions and baking soda to name a few. The market for formic acid has experienced continual growth and demand over the past several years, mainly attributed to the following: European and developing country demand for formic acid in silage, rising raw materials, energy and logistics costs; and animal feed preservative and Asian demand for formic acid in the leather, rubber, food and pharmaceutical industries. The average market price of formic acid is expected to increase by as much as 20% in 2009. (Dunia Frontier Consultants, 2008).

However, if the ERC process reaches market acceptance as a way for industry to deal with exhaust gas from power production, it will likely lead to supply of formic acid in excess of market demand. Fortunately, Mantra has identified several future applications for formic acid, leading to a prolific expansion in current market demand, including steel pickling, fuel cell development and as a fuel additive.

Possible uses include fuel cells, fuel additive, formic acid production in steel plant, steel pickling.

Partnerships

Given the magnitude of the ERC project, both government and corporate partnerships will play a pivotal role in further development of the ERC technology.

Government Programs and Grant Relations

A Grant Research Report, completed in February 2009, identified 43 funding programs that fit strategically with the company's current R&D efforts. Mantra has already began applying for those grants as recommended in the report, and if successful, Mantra could recover anywhere from 70% to 100% of future development costs.

The objective of this first Grant Program is to establish the technical basis for electro-reduction of carbon dioxide to formate via continuous electrochemical reactor. The main milestones to be achieved are: i) to develop longevity of catalyst materials for anode and cathode used in the electrochemical reactor, ii) to develop an in-situ catalyst regeneration method for the cathode catalyst material, and iii) to resolve formate crossover and prolong the lifetime of the employed membrane.

Corporate Partnerships

Mantra has been in contact with several key players within its identified target markets, including: environmental risk management, steel production and pickling, chemical production (formic acid), utilities and fossil fuel production. Mantra is now in the process of finalizing Partnership Agreements with a host of international corporations, and while yet to be finalized, the aforementioned agreements should lead to increased capital resources to expedite development and optimization of the commercial scale ERC reactor. Mantra will also benefit from international exposure in areas including Asia, Western Europe and Australia, and ultimate entry into applicable markets. The Company is looking to finalizing these first set of agreements by May 2009.

Capitalizing on Electroreduction of Carbon Dioxide

The estimated electrical cost of producing formate from CO2 is 8MWhr per ton. This is approximately $480 of electricity per ton of product at $0.06 per KWhr. The formate market price is approximately $1,200 per ton. Factors such as carbon credits, savings in shipping for on-site production and use, and savings with respect to using formic acid (for improved process performance) over other inorganic acids improves economics even further.

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Biometals Recovery System (BRS)

Mantra signed an exclusive Option Agreement to acquire the license of the Biometals Recovery System (BRS)- a revolutionary mine wastewater technology, on February 27th, 2009. Biometals Recovery System is a biological-based water treatment system that selectively recovers and upgrades valuable metals with maximum energy recovery.

Acid mine drainage (AMD), the outflow of acidic water from abandoned metal mines or coal mines, is responsible for the contamination of 40% of western waterways. While the U.S. Bureau of Mines estimates current AMD remediation expenditures to be $1 Million per day, these efforts have been largely inadequate due to the ineffectiveness of current AMD mitigation technologies. In 2004, the EPA listed 63 hardrock mining Superfund sites with a combined estimated cleanup costs of $7.8 Billion- representing only a fraction of global market demand.

In addition to the treatment of acid mine drainage, a secondary market for Mantras BRS technology is Heap Leaching Metal Recovery. Heap leaching is currently responsible for 20% of worldwide copper production, representing an approximate market value of $12 Billion USD.

Bioteq Environmental, one of the pioneers in the AMD remediation sector, represents a fairly accurate representation of Mantras intended entry into this industry. Bioteqs technology, as developed by the same inventor of Mantras BRS technology, has led to annual revenues of $4.6 Million USD since going public in 2000. In 2007, Bioteq processed a total of 4.46 billion liters of water, recovered 1.4 million pounds of copper and increased its operations and engineering staff by 40%.

Mantras BRS technology relies on a much more efficient biological reaction, which is combined with product upgrading and energy recovery to provide a major economic advantage over competing technologies in the AMD mitigation market. Therefore, upon completion of the BRS technology, Mantra anticipates rapidly overcoming market penetration rates achieved by its competitors.

The implementation of BRS technology will focus on the development of selected large-scale projects in collaboration with key industry partners, resulting in on-going profitability for all parties involved. In addition, Mantra anticipates licensing the BRS technology to resource companies for their own applications for projects that do not fit within Mantras discretionary project criteria.

Mine Wastewater Technology

The US Environmental Protection Agency ranks mining as the United States' top toxic polluter, reporting more toxic releases annually than any other sector. Acid generation occurs naturally in the mining process as waste rock and metal tailings are exposed to water and oxygen. The result is contaminated, toxic water that has serious ramifications on the local environment if left untreated. Consequently, The EPA estimates that over 40% of US western waterways are contaminated by mining activities.

Fortunately, Mantra has just signed an exclusive Option Agreement with Synergy BioMetals Recovery Inc to license a technology that effectively converts acid mine drainage into clean water with a neutral pH- suitable for release into the environment. This technology represents a significant and new opportunity for Mantra and its shareholders.

"Mantra has experienced accelerated development and unprecedented interest in our technologies during the last quarter. This has led to a very exciting time for our team, and we look forward to sharing this opportunity with the investing community as we continue to grow." -Larry Kristof, President and CEO.

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Recent News and Press Releases

Mantra To Feature CO2 Recycling Technology at Environment and Energy Tech Trade Show (ENTECH 2009) in Busan, Korea.
PR Newswire (Mon, Aug 17)

Mantra Discovers a New Cathode Catalyst Structure that Increases Current Efficiency for CO2 Recycling Technology.
PR Newswire (Tue, Jul 28)

Mantra Retains BTL Media Corp. to implement Global Public Relations Program
PR Newswire (Tue, Jul 21)

Mantra Seeks Commercial Partner for Participation in $100 Million U.S. DOE Research Program
PR Newswire (Wed, Jul 8)

Mantra Revokes Sponsorship Agreement with M Partners Inc., Selects Canadian National Stock Exchange for Public Listing in Canada
PR Newswire (Fri, Jun 26)

Mantra Announces Shawn Kim as Executive Vice President of International Business Development
PR Newswire (Wed, Jun 3)

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Management

Larry Kristof
President & Chief Executive Officer

Prior to founding Mantra Venture Group, Mr. Kristof served as President and Chief Executive Officer of Lexington Energy Services Inc., a Calgary, Alberta company he co-founded. Under his direction, Lexington designed and commercialized innovative mobile drilling rigs and nitrogen generation technologies. He successfully raised capital for the company on public markets.

Before establishing Lexington, he founded Westec Venture Group Inc., a company which provided business development and venture capital services.

Dennis Petke
Chief Financial Officer

Mr. Petke is qualified as a Chartered Accountant in Canada, and is a member of the Institute of Chartered Accountants of British Columbia (1995). Currently serving as a director and/or chief financial officer for a number of private and public companies, his responsibilities include strategic and overall financial management for these companies. Mr. Petke has accumulated extensive experience in the area of corporate finance, including negotiating and implementing private and public company mergers, as well as facilitating private placement, preference share, convertible debenture, special warrant and debt financings.

John Russell
VP of Technology Evaluation,
Mantra Venture Group

A founding member of Mantras management team, Mr. Russell has over 30 years experience in the identification, evaluation and marketing of technological resources. From 1995 to 2007, Mr. Russell was as Vice President of Technology with ARC Sonics Inc., a specialty engineering firm. He has authored several scientific publications and has presented technological innovations at conferences internationally. Mr. Russell holds a Bachelor of Arts from the University of British Columbia.

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Contact

Mantra Venture Group

Canada Corporate Headquarters

Dominion Building
Suite 1205, 207 West Hastings Street
Vancouver, BC
Canada
V6B 1H7

1-(877) 609-2898 (Toll Free)
1-(604) 609-2878

USA Corporate Headquarters

3503 S. 58th Street
Tacoma, WA
USA
98409

1-(877) 609-2898 (Toll Free)
1-(206) 652-3403

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FORWARD LOOKING STATEMENTS

This report includes forward-looking statements that reflect Mantra Venture Group Ltd. current expectations about its future results, performance, prospects and opportunities. Mantra Venture Group Ltd. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Mantra Venture Group Ltd.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.

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