ecostrat - overview - 28mar11

8/6/2019 Ecostrat - Overview - 28Mar11

1/6

Good Afternoon, Rob:

Further to our telephone discussion last week, I am pleased to providean overview of Ecostrats vast experience and proprietary BiofuelSupply Network (www.ecostrat.com), together with an outline the

unique opportunities available.

COMPANY OVERVIEW

Ecostrat and our biofuel affiliate, General Biofuel, purchase,manufacture and distribute wood by-products, renewable fuels andbiomass. With proprietary access to over 200,000 point sources ofwood supply, we have the largest reach of any wood fuel supplier inthe country today.

We have been supplying hundreds of thousands of tons of wood fuel

throughout the US and Canada for over 17 years. We specialize invirgin, post-industrial, and construction & demolition derived woodfuels. Our staff has extensive experience in the wood biomassbusiness. We are reliable, straight-forward, and deliver high qualitywood fuel on time, all the time.

Our Businesses:

BIOMASS SUPPLY WITHIN NORTH AMERICA

We have over 17 years and hundreds of thousands of tons of

wood fuel supply experience. We know how to contract anddeliver woodfuel.

We offer long-term fuel supply contracts of up to 10 years. Our integrated logistics and supply network (truck, rail and ocean

vessel) is capable of delivering biomass anywhere in NorthAmerica and the world.

We install grinding, screening and loading equipment, and set-upfuel consolidation yards to ensure secure supply and quality offuel mix.

All our fuels are rigorously tested according to ASTM standards toensure the highest quality.

We supply top quality biofuel to a wide range of customers:paper and board manufacturers, power plants, greenhouses,schools, buildings, cement kilns, and pellet manufacturers.

General Biofuel is able to supply woody biomass for industrial co-firing, regional combined heat and power projects (CHP), andEnergy Service Company (ESCO) clean heat and power projects.

BIOMASS SUPPLY INTERNATIONALLY


2/6

We supply paper and board quality chips and biofuel in shiploadquantities to Europe and Asia.

Our integrated wood biomass supply chain extends fromharvesting to stockpiling, loading, fumigation, ocean freight anddischarge.

We supply top quality biofuel and woodchips to leading MDF andcomposite board manufacturers and power companies. We opened the east coast Wood Pellet market to bulk export by

making the first bulk shipment of fuel pellets to the Netherlandsin 2003.

We opened the Composite Board market in Turkey to import ofbulk wood chips and sent the first successful bulk vessel to Turkey (2005). The Turkish Composite Board Market currentlyimports over 1 million tons of wood chips per year.

CONSULTING SERVICES

Our consulting division performs three kinds of studies:1. Biofuel Supply Assessments to determine availability and

cost of wood fuel in any woodshed across North America.2. Biomass Power and Co-Generation Evaluations to

determine CapEx,3. Operating cost, cash flow and ROI for clean power projects

and conversions.4. Carbon Credit Evaluations to determine whether a project

qualifies for ghg offsets or other carbon credits and mosteffective direction to monetize credits.

Leading clean power companies like Honeywell, Rentech and Johnson Control have used our team to get the answers theyneed.

BIOFUEL SUPPLY NETWORK

Ecostrat's Biofuel Supply Network supply is the largest and mostcomprehensive in North America with over 200,000 proprietary,qualified sources of woody biomass. The Network is the result of over10 years and 30,000 man-hours of collecting, consolidating, andparsing of raw source data. It contains over 96% of all point sources of

virgin and post-industrial wood in the country.

The Network is powered by FuelFind, our proprietary technology thatautomatically filters, parses and coordinates thousands of potentialsuppliers of wood by-products. Our procurement managers useFuelFind to determine the most reliable and cost effective supplies ofbiofuel. Our team consolidates the biofuel supply, co-ordinates supplyand logistics, and delivers the fuel to the buyer.


3/6

Our team of fuel supply experts, supported by the largest network ofwood fuel sources in the country, make us uniquely positioned to fillour customers' needs guaranteeing supply of wood fuel, to providingleading-edge information on supply, pricing, sustainability andcompetition in the local woodshed.

LONG-TERM SUPPLY AGREEMENT OPPORTUNITIES

The current push for energy independence and the environmentalneed for sustainable and renewable energy sources, coupled with anincreasing level of governmental assistance initiatives at all levelsworldwide, has resulted in an increasing number of major biomassclean energy projects being developed. Ecostrat has in its pipelineover 1M tons per year of potential supply agreements and estimatesthat there are millions more tons of supply agreements available for

properly secured arrangements.

Ecostrat, due to its recognized expertise in the field, has been calledupon, not only as a supply source, but as consultants and experts tothose developing clean energy projects.

Integral to the efficient budgeting and financing of these clean energyprojects is a guaranteed long term supply of feedstock. Ecostrat isuniquely qualified to provide long term supply agreements that wouldguarantee the feedstock price, quality and quantity.

Additionally, through extensive consultation, Ecostrat has determinedthat a guaranteed supply agreement could, in fact, make the projectfinancing easier and up to 100 basis point less expensive.

Ecostrat proposes to provide such clean energy projects with aguaranteed long-term supply agreement through the issuance of asupply performance surety bond type of instrument.

SAMPLE CLEAN ENERGY PROJECT

Project #1: XYZ, CT

1. Basic Details

Project XYZ Renewable Energy Project, XYZ, CT

Size 37.5 MW

Fuel


4/6

Minimum 64% processed (i.e.chipped) Construction andDemolition (C&D) Wood,including painted and varnishedwood (but excluding pressure

treated or railroad ties) Land clearing debris

Recycled or clean wood

Regulated wood fuel

Fuel Quantity: 350,000 tons/yr

Term Requested: 10 years

Start date: 2013 expected

Upstream Suppliers: Major waste managementcompanies/landfill owners

2. Supply Agreement Structure

Ecostrat to guaranteed supply fibre to project at fixed price of$11 per ton

Actual final cost of fibre will be $6/ton.Termsheets with suppliershave been negotiated, drafted and are ready to sign.

3. Relevant Wood Market Characteristics

C&D wood is handled by commercial waste haulers (i.e.

construction dumpster suppliers), such as Waste ManagementInc. and similar large companies.

Disposal of C&D wood is very expensive in New England.Massachusetts has no licensed disposal sites. Rhode Island hasone landfill licensed to take it and CT has two, but one hasrecently closed to taking it and the other is near capacity.Tipping fees are high. Maine and New Hampshire each have onelicensed facility that can burn C&D wood.

Currently, most C&D wood is sent to landfills in Ohio viatruck and rail, leading to disposal costs between $50-85/ton

XYZ facility is the ONLY conversion facility licensed to burn

C&D wood in CT and was grandfathered in the relevantlegislation to be the only facility able to generate ConnecticutRECS from burning C&D wood.

Highly unlikely that significant additional disposal optionswill appear during 10 year term of credit wrap (typically takesmany years to permit such a facility even where political willexists to do so and it does not today).


5/6

Project sponsors anticipate supply of wood to the facility tofar outstrip the facilitys demand.

4. Key Risk Elements- Mitigants

Shortage of C&D Wood. This is unlikely because 1) the US is justnow emerging from a large economic contraction. Decreasedeconomic activity results in lower quantities of C&D. As a result,right now we are seeing the bottom of the curve in terms ofquantities of C&D available. As the economy recovers, more C&Dis expected in New England, not less; 2) there is not likely to beover the term more attractive disposal alternatives than XYZ.Even if there were, there is over 2M tons of C&D wood that isgenerated in New England. New disposal alternative (if they canbe permitted, which is unlikely) are not likely to soak up all theadditional feedstock; 3) the fact that New England is one of the

highest and most consistent construction / demolition activityregions in the US acts as a natural hedge against shortages ofC&D.

Market price for C&D wood will increase is unlikely to occurbecause this facility is likely to remain the least-cost option fordisposal. If new landfills are permitted, they will likely havetipping fees, resulting in a cost to the suppliers, as opposed toreceiving $6-8 from XYZ. Significant export of materials (e.g. toUK where high incentives in place for using biomass) unlikelybecause of poor stowage factor of this material, leading to veryexpensive ocean freight.

The price is capped at $12 and has no provision for inflation orhigher diesel prices.

Because of its location, inflation (both generally and in dieselfuel) works in favor of the project, helping to retain its position asthe least-cost disposal option. Because of this suppliers haveagreed to a long term supply contract.

Individual supplier risk/credit risk. Resolve through diversity ofsuppliers.

I trust that the material provides an understanding of our business andhow the EDC could be of assistance.

I will take the liberty of contacting you next week to answer anyquestions and discuss with you the next steps. In the interim, pleasefeel free to contact me with any questions.


6/6

Regards,

Ira Lyons416-303-9499

ecostrat - overview - 28mar11

Documents