Biomass to Renewable Fuels & Chemicals:

Canada eh! Prepared for:ABLC Next 2014San Francisco, CANovember 10 – 12, 2014

Prepared by:Jeff Passmore, CEO, Passmore Group Inc.

For early commercial plant rollout Assuming the project sponsors have:

demonstrated technology equity $$$ in the game

Canada can offer:Feedstock

Ag residue; Forest residue; MSW

Sites Greenfield; Brownfield

Partners Strategics; “Service providers”

Capital Non-dilutive, subordinated debt (grants and loans) “Conventional” debt (market rates)

Markets Fuels and Chemicals

Canada Wheat (straw) growing areas

NOTE: SW Ontario (lower left portion of large area in blue) also grows two million acres of corn (stover)

Map – Courtesy, Agriculture Division, Statistics Canada / Foreign Agricultural Service, USDA

Canada Wheat area harvested (red) versus yield in tons/hectare

Canadian Agriculture Total crop & pasture land:

Canada - 160 million acres Saskatchewan ~62 million acres (39% of total farm area in Canada) Alberta ~50 million acres (31% of total farm area in

Canada) Ontario ~12 million acres

Gross farm receipts in 2010: Alberta - $11.4 billion Saskatchewan - $9.4 billion Ontario - $11.9 billion

From a feedstock perspective, the best locations for a cellulosic sugars bio-refinery in Canada are:

- the black soil zones of Alberta and Saskatchewan- SW Ontario

Canada Forest cover (10% of global)

Co-develop, co-locate, co-produceNumerous sites have serviced land suitable for

chemicaland/or fuels production facilities Site locations in good feedstock basins that could be appropriate for a

brownfield or co-located bio-refinery project: operating corn ethanol facilities (Alberta, Saskatchewan, Ontario) operating forest companies with “waste” wood and/or sawdust (Alberta, British

Columbia) existing boilers, buildings, rail, and other infrastructure (Saskatchewan, Ontario) industrial zoned land so permitting will be straightforward supportive communities potential need to meet regulatory requirements

Are not necessarily looking for Government funds if project returns are attractive

For strategics, projects typically need to demonstrate: a 5-6 year simple payback a cost advantage over current practices a competitive edge over capital opportunities in other potential areas of investment

Example Sarnia, ONBrownfield lands with shared resources in industrial parks

Electricity

Steam

• The TransAlta Sarnia Regional Cogeneration Plant supplies Bluewater Energy Park and BPS tenants with “behind the fence” electricity, avoiding certain transmission and overhead costs charged when supplied from the grid

• Long term steam energy contracts also available through TransAlta’s cogeneration facility in Sarnia, with infrastructure in place to supply a choice of 450, 165, 15 psi steam pressures

8

Support services

• Strong network of firms providing crucial chemical industry support services, including: specialized engineering, machining shops, environmental services, metal fabricating, industrial pipefitting and boiler making firms

Wastewater• BioIndustrial Park Sarnia (BPS) is equipped with a privately-owned world class biological

waste water treatment plant which has a capacity of 24,000 m3/day (7 million U.S. gallons)

Brownfield lands

• Selection of available, privately-owned brownfield properties suited for chemical processing activities, many of which are situated within industrial parks

Transport Infrastructure

• Highly accessible by road, rail, air and water, and located close to the U.S.-Canada border with direct access to the commercial, industrial and agricultural heartland of North America

• Industrial Heartland

of North America –

52% USA GDP

within 10 hours

trucking

•Secure Raw Materials

•High Quality Labour

•Tax Advantages

Sarnia area showing proximity to US markets

10

Combined federal and state/provincial manufacturing income tax rate (2014)

Note: Ohio rate includes the state’s Commercial Activity Tax rate which is levied on gross receipts in Ohio; a CIT equivalent is not available. Texas rate includes the state’s 1.0 per cent franchise tax, which is based on gross revenue; a CIT equivalent is not available. Source: Ontario Ministry of Finance, based on legislation as of May 31, 2014.

36.4%

36.0%

25.0%

Great Lakes StatesAvg.

US Weighted Avg.

Ontario

38.5%

38.2%

38.0%

38.0%

37.7%

35.9%

35.9%

35.9%

35.3%

32.5%

32.0%

25.0%

Minnesota

Iowa

Pennsylvania

New Jersey

Illinois

Georgia

Michigan

North Carolina

Louisiana

Texas

Ohio

Ontario

Ontario’s corporate tax rate is 11% lower than

in the U.S. for manufacturers

Canadian Govts’ project support is unique and generous

Scientific Research and Experimental Development (SR&ED) Tax Credits- large Corporation can claim a 20% tax credit on eligible research expenses

- in combination with Ontario tax credits, cut cost of $100 R&D expenditure to ~$40.11

Sustainable Development Technology Canada (SDTC)**Next Gen Fund* - up to 40% of capex (max $200mm), plus 20 % stacking - “repayable contribution” from free cash flow (last in line) * all funds must be spent by March 31/’17Tech Fund - development and demonstration grant funding (typically ~$2 –

12m)

Agriculture Canada - Growing Forward Two - up to $10m interest free loan (other financing / term sheets must be in place)

Ministry of State for Science & Tech- SW Ontario projects - up to $20 million interest free 10 year loan

(includes R&D, engineering, labour and capital costs)- Western Economic Development - $2 – 4 million interest free loan

(British Columbia, Alberta, Saskatchewan, Manitoba)- ACOA – up to ~$1 million

** Most other federal and provincial funding Programs will rely on SDTC tech due diligence

Canadian Govts’ project support is unique and generous Export Development Canada

- financial support (loan) for inbound foreign direct investment- partners with other financial institutions- minimum 50% of the facility’s production must be exported

Ontario Ministry of Economic Development and Trade- Jobs and Prosperity Fund: 10-Year, $2.5B program: Support to large, strategic

investments that provide unique benefit to Ontario (Discretionary grants and loans)- Southwestern Ontario Development Fund: Grant up to 15% of eligible expenses to a max of $1.5m + interest-free loans up to $3.5m- OPA Industrial Accelerator Program: up to $10 million per project for energy-efficiency

Alberta - Climate Change and Emissions Management Corporation – Grants up to $10 million

(Role is to reduce Alberta GHGs, and assist with deployment of clean technology Funds raised from a $15/tonne carbon tax on the Province’s major large GHG emitters)- Alberta Treasury Branch – “patient” loans up to $50m, can invest outside the Province (market based interest rates, could lead a syndicate including US Investment banks)

- Agriculture Financial Services Corp. - max $5 million, 20 year loans at 3% - 5% interest

Hypothetical Bare Bones Capital StackPrivate Equity $30mPrivate Debt 50

--- $80

SDTC $15mFedDev 18Growing Forward 9Jobs and Prosperity 8

---$50

EDC $20m

TOTAL PROJECT $150mm

Renewable fuels / renewable chemicals markets• National etoh mandate - 5% ethanol “on average” (Biodiesel

mandate - 2%)

• Canada consumes about 40 billion litres (10 billion gallons) of gasoline/year

= Obligated parties required to blend ~2 billion litres of ethanol annually

• This blending obligation is currently met with conventional grain based ethanol from Canada (~1.8 billion litres) or the US, or from small amounts of sugar cane ethanol from Brazil

• There is no “set aside” or “carve out” for 2nd generation cellulosic ethanol

• Build in Canada (take advantage of government capital assistance), export finished product:

• Fuels to the US (take advantage of the higher value proposition) • Chemicals to the world – FTAs with US, Mexico and Europe• Makes the project eligible for EDC financing

North American CN Rail connections

Contacts:

Email jeff@passmoregroup.ca

Web www.passmoregroup.ca

Mobile +1 613 614 8568

Land+1 613 821 0495