Prepared for:
ABLC Next 2014
San Francisco, CA
November 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
 Alberta
 Ontario
~62 million acres (39% of total farm area in Canada)
~50 million acres (31% of total farm area in Canada)
~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-produce
Numerous sites have serviced land suitable for chemical
and/or fuels production facilities
 Site locations in good feedstock basins that could be appropriate for a brownfield or colocated 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, ON
Brownfield lands with shared resources in industrial parks
Brownfield
lands
•
Selection of available, privately-owned brownfield properties suited for chemical
processing activities, many of which are situated within industrial parks
•
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)
•
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
•
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
•
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
Wastewater
Electricity
Steam
Support
services
Transport
Infrastructure
8
Sarnia area showing proximity to US markets
• Industrial Heartland
of North America –
52% USA GDP
within 10 hours
trucking
• Secure Raw
Materials
• High Quality Labour
• Tax Advantages
Combined federal and state/provincial manufacturing income tax rate (2014)
Ontario
US Weighted Avg.
Great Lakes States
Avg.
25.0%
Ontario’s
corporate tax rate
is 11% lower than
in the U.S. for
manufacturers
36.0%
36.4%
Ontario
25.0%
Ohio
32.0%
Texas
32.5%
Louisiana
35.3%
North Carolina
35.9%
Michigan
35.9%
Georgia
35.9%
Illinois
37.7%
New Jersey
38.0%
Pennsylvania
38.0%
Iowa
38.2%
Minnesota
38.5%
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.
10
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/’17
Tech 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 Stack
Private Equity
Private Debt
SDTC
FedDev
Growing Forward
Jobs and Prosperity
EDC
TOTAL PROJECT
$30m
50
--$80
$15m
18
9
8
--$50
$20m
$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