Low cost production INVESTOR PRESENTATION. June 4, LD Micro Invitational Conference

Transcription

1 INVESTOR PRESENTATION June 4, 2014 LD Micro Invitational Conference

2 Safe Harbor Certain statements in this presentation are forward-looking statements, which reflect the current expectations of management regarding the Company s future operations. Forwardlooking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management s current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a continued downturn in general economic conditions in North America and internationally, (2) the inherent uncertainties associated with the demand for biofuels, (3) the risk that the Company does not execute its business plan, (4) an inability to finance operations and growth (5) an inability to retain key management and employees, (6) ; an increase in the number of competitors with larger resources, and (7) other factors beyond the Company s control. Additional information about these and other assumptions, risks and uncertainties are set out in the Risks and Uncertainties section in the Company s MD&A filed with Canadian security regulators. Viridis Energy Inc. (TSX-V: VRD) Suite West Pender Vancouver, B.C. V6C 1G8

3 Corporate Profile iridis Energy Inc. is a Canadian Renewable Energy company in the waste biomass sector. Specializing in wood pellets, Viridis is the most diversified pellet company in North America. Sales in North America and Europe Distributed between the Heat & Power Sector Serving markets from its facilities in BC and Nova Scotia Over 225,000 tons of produced and aggregated production Viridis management has completed two acquisitions below industry rates, has a track record or turnarounds and is structured to lead a consolidation in the industry.

4 Snapshot History: Headquarters: Low Inside Ownership: cost production 77% Company Incorporated Listing on the TSX-V Acquired Okanagan Pellet Company Inc. Acquired Scotia Biomass Company Secures Ekman&Co Sales Agreement Formed Viridis Merchants Appointed Robert Aaron Chairman Vancouver, Canada Operations: Kelowna, BC (Western Canada) Middle Musquodoboit, Nova Scotia (Eastern Canada) Business Development: New Jersey/Arizona/Rotterdam Employees: 60 Market Cap: Shares Outstanding: Warrants + Options: Estimated Value of PPE: Long Term Debt: Shareholders Equity: NOLs: $21 million (@ $0.15/share) million 11.1 million ($0.25 to $0.27 strike price) $15 million $6.2 million $3.5 million $17.5 million Recent Key Developments 5/28/14 Viridis Reports 143% Year- Over-Year First Quarter 2014 Revenue Increase. 4/3/14 Viridis Receives $3.75 Million in Warrant Exercise. 3/20/14 Viridis Merchants Secures Second Deal 12,000 Ton Annual Pellet Supply. 12/30/13 Viridis Merchants Secures First Transaction 30,000 Ton Annual Pellet Supply. (in millions) E Revenue $9.5 $13.9 $30-35 EPS $(0.08) $(0.02) B/E+

5 Global Pellet outlook Market expected to more than double in next 7 years from $4 billion to $9 billion North America million million million Europe million million million Asia million million million Drax Power Limited (U.K.) is in the process of converting from coal to biomass, and by 2016 is expecting to generate half its power from wood pellets. - BBC, April 17, 2014 June 2, 2014 EPA proposed legislation mandating US power plants to cut greenhouse-gas emissions an average of 30% by 2030 from 2005 levels.

6 Market Segments Power Generation Home Heating Replacing coal to reduce GHG emissions Home & District heating with pellets

7 Power Generation Power Generation U.K. 3.75m Power Imports in 2013 Canada EU 0.3 million 1.5 million USA 1.9 million Replacing coal to reduce GHG emissions Source: Ekman & Co.

8 Home Heating European Heat Market Italy 2013 Consumption 3.2 million MT 6 million tons of pellets consumed in 2012 Italy consumption grew by 50% in one year

9 Wood Pellets 101 Made from compressed wood fiber Lignin binds the fibre. No adhesives needed. Used as a coal substitute for Power Generation Used for residential, commercial Heating instead of oil or propane One of fastest growing Renewable Energy sources

10 Fuel Costs 25 GJ/MT

11 Carbon Debt Factors

12 Critical Success Factors Fiber Canada s forests are among the most sustainable in the world. Logistics Rail or port access are critical to any acquisition of any pellet plant. Fiber feedstock is plentiful Provincial differences in fiber Over 8b m3 of unutilized biomass BC-18m hectares pine beetle crown land Nova Scotia, majority is private wood lots Whole log chipping at Scotia Atlantic Primary licensee sawdust & sawmills Fiber Distribution is diversified Own our own trucks and leased railcars Ship locally, US northeast, Europe, Asia Rail bagged and bulk Container loading to Asia and Europe Dry bulk shipment to Europe Offer logistics, sales to Merchants deals

13 Product Standards Pellet Grades Market Segment Viridis Divisions EN Plus A1 Premium quality Low ash Home Heating Okanagan Pellets Viridis Merchants EN Plus A2 Industrial I1 Industrial I2 Secondary quality Low to moderate ash District heating Lower quality Moderate ash Power Generation Lower quality High ash Power Generation Scotia Atlantic Viridis Merchants

14 Okanagan Pellet Company Viridis Energy s flagship facility located in West Kelowna B.C., was acquired in April of British Columbia Produce 60,000 tons per year Premium Quality Pellet Produced Designed for Heat Market Ideal for Premium (Heat) market in Italy Product is packaged in bags: 15 kg bags for Europe 40 lbs bags for Domestic market 1 ton tote bags for Domestic industrial market 12 cubic foot bags for Animal bedding Rail and Truck to Port or local markets Average sell price per ton - $175 per ton Average gross margin 25%

15 Scotia Atlantic Biomass Company Viridis Energy s second Facility located on 157 acres in eastern Canada was acquired in February Nova Scotia Produce 120,000 tons per year Industrial Quality Pellet Produced Designed for Power Market Ideal for European Export Product is shipped in Bulk Truck to Port for Storage & shipment Average sell price per ton - $160 per ton Average gross margin 15% *Ekman distribution agreement covers Scotia s total production over 24-month period * Ekman, founded in 1802 and based in Sweden, specializes in all facets of the supply chain of forest related products. Revenue $2.3 billion+; Assets $300 million+; 40 offices in 24 countries

16 Viridis Merchants Inc. Increasing its capacity and contribution beyond the company s manufacturing capacity, Viridis Merchants is a wholly owned subsidiary which arranges transactions between buyer and sellers of alternative energy. Viridis Merchants will broker transactions with sellers. Viridis hired a 25-year commodities trading specialist as Managing Director. Transactions will be minimal risk and require minimal working capital. Over 150 pellet producers in North America with avg. capacity of 60,000 MTs. Will use access to establish itself as go to source of wood pellets, globally.

17 Competitive Advantage Only pellet producer in North America with facilities on both east and west coasts Highly diversified Heat & Power / Domestic & Export / Production & Aggregation Aggregation /Consolidation opportunity through brokerage and trading business Successful track record with acquisitions and turnaround

18 Viridis in the News

19 Viridis Growth Strategy Continue to improve margins in both manufacturing facilities Expand both operations Seek additional low cost acquisitions Low cost Obtain production 1 million tons per year through expansion, aggregation and acquisition by end of 2015 Continue diversification strategy with export to South Korea /Asia

20 Viridis Executive Leadership Chris Robertson - Chief Executive Officer & Director Founder of Cypress Pacific, wood pellet distribution business- grew business to $6 million revenue, self funded the business; Entrepreneur with experience in Import/Export/logistics; Extensive background in Forestry, Remanufacturing, Lumber trading; 15 years with Olympic Industries, a division of Forest City, the largest forest products company in US. Michele Rebiere - Chief Financial Officer & COO Part of Cypress Pacific team since 2004; Formerly part of M&A team at $1 billion market cap Financial services firm in CT; Completed over 20 acquisitions in 5 years; Over 20 years experience in financial services, high tech, rapid growth businesses; Former member of advisory board of Merchant Bank fund; Former member of Financial Services Roundtable (Banking Industry Technology Secretariat); Current director of board of Wood Pellet Association of Canada. Robert Aaron Chairman of the Board Chief executive officer of Gilwern Associates, an adviser to Viridis Energy's largest shareholder (75%), Cornwall Investments LLC.; also serves as vice-chairman of HedgeServ Corp., a hedge fund and private equity administrator; vice chairman of Investor Analytics LLC; previously, CEO of DPM Mellon LLC), President of Tricon Holdings, an international energy & forest products trading firm; vice-president of Commodities Corp. acquired by Goldman Sachs. BS (accounting) - Fordham University. Noah Schankler Director Experience in corporate development and M&A. Principal with Felix Partners, a New York based financial advisory Firm. Prior, M&A at JP Morgan Securities. BS (Economics) - Princeton University. Joseph Zappulla - Director 25 years experience in investment banking, M&A and executive management. CEO of Grannus Financial Advisors Inc. in New York. Previously, held management positions with Donaldson, Lufkin and Jenrette, S.G. Warburg & Co. and American Express. MBA, BS - Suffolk University Sawyer Business School.

21 Summary Income Statements (C$ in millions) E Revenue $ 2.3 $ 6.1 $ 6.9 $ 12.4 $ 9.5 $ 13.9 $ 30.0 EBITDA $ 0.30 $ 0.65 $ (4.2) $ (3.5) $ (2.9) $ (1.9) Net Income/(Loss) $ 0.04 $ 0.25 $ (1.2) $ (4.2) $ (4.0) $ (3.2)* EPS - - $(0.05) $(0.12) $(0.08) $(0.02) B/E+ Shares Outstanding (mil) $16 $14 $12 $10 $8 $6 $4 $2 $0 Revenue Growth * Includes one time charges of severance and litigation accruals of $200,000

22 Summary Balance Sheet

23 Capitalization Directors and Executive Officers Common Shares Warrants Average Exercise Price Options Average Exercise Price Fully Diluted Shares % Ownership Management $ % Cornwall Investments As of April 2014 In millions $ % Employees $ % Total Insiders $ $ % Public 25.8 $ % Shares Outstanding $ $ %

24 Viridis Investment Highlights Viridis Energy Inc., an investment with all the elements of success: Highly diversified business model Industry well positioned for consolidation Plan to aggressively expand capacity Access to plentiful feedstock Seasoned management; Seasoned distribution (Internal + Ekman); Seasoned commodities trading capability (Viridis Merchants)

25 Viridis Energy Inc. Contacts: Michele Rebiere, CFO Yvonne Zappulla, IR