ALGETECH INDUSTRIER AS

Attractive investment opportunity within biotechMicroalgae are key to meet future raw materials

Powered by CO2 and sunlight

March 2007

Business and investment Business and investment opportunitiesopportunities

Business opportunityBusiness opportunity• Production of algae biomass is an environmentally friendly alternative Production of algae biomass is an environmentally friendly alternative

to the exploitation of ”krill”to the exploitation of ”krill”

• Algae biomass is an unlimited and renewable resourceAlgae biomass is an unlimited and renewable resource

• Algae biomass can secure demand for omega 3, proteins, vitamins and Algae biomass can secure demand for omega 3, proteins, vitamins and anti-oxidantsanti-oxidants

• Algetech Industrier AS possess the technology and experience for Algetech Industrier AS possess the technology and experience for greenhouse production of algae-biomassgreenhouse production of algae-biomass

Investment opportunityInvestment opportunity• Investing in a first plant for large-scale production and sales of micro Investing in a first plant for large-scale production and sales of micro

algae in Norwayalgae in Norway

2

Algetech Industrier ASBusiness idea • Production and sales of micro algae in Scandinavia • Sales and deliveries to three separate overall market segments The Markets• The Aquaculture industry • The Nutraceutical industry • The Agricultural industry

• An already existing and expanding market for algae-based products • Current marked needs exceeds greatly supply capabilities – high prices

Algetech Industrier ASAlgetech Industrier ASVisionTo establish a sustainable industry in Scandinavia, based on cultivation of micro algae in photo bioreactor installed in greenhouses using sunlight and artificial light

GoalBecome a leading company in Scandinavia, producing free of toxins and environmentally friendly substances for the feed, functional- and health food industries

Novelty• First in Scandinavia providing access to technology that works• Introduce environmentally friendly raw materials into different industrial products• Will contribute to the development of new production methods • Reduce the use of antibiotics and other synthetic products

Market opportunitiesExisting markets:• Feed additives for use in agricultural and aquaculture industries, particularly production of fatty acids and proteins• Micro algae are used to a significant extent in the health food products• Pharmaceutical/medical products

• Existing algae biomass market USD 5 bill• Expected significantly strong growth

Future markets:• Energy source – hydrogen gas and biodiesel

brow n algae56,0%

red algae24,9%

green algae0,3%

others18,8%

A l g a etotal production5.4 mio t p.a.

total sales4.9 mrd US $ p.a.

Algetech Produkter AS – Project Management

NIVA - extensive research and competence base within micro algae characterisation and cultivation. Large collection of micro algae species available

IGV GmbH – 20 years experience in algae research and industrial production. Proven technology for large scale micro algae biomass production in photo bioreactors

Gavita AS – Manufacturer of lighting systems for greenhouses. Extensive experience in combined use of artificial light and sunlight

Billerud AB – Large scale process industry expertise and technology

Technology is based on extensive research and trial production

Algetech project partners

Mixotrophic production of micro algae in photo bioreactor

Minerals

N, P, K, Mg, Na, S

Trace elements

H2O

CO2

Biomass

Light

Organicsubstrate

The cultivation in the PBR 4000 with artificial light, 24 h / day

The mixotrophic cultivation in the PBR 4000 with artificial light

Growth of micro algae by combining sunlight and artificial light

-5

0

5

10

15

20

25

30

35

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

week nr.

Yie

ld (

g/m

2/d

)

Sunlight only

Combinedsunlight andartificial light

Products from Micro algaeProtein-rich biomass -e.g. as ingredient in aquaculture and animal feed products

Astaxanthin -red-orange, carotenoid, e.g. for use in salmon feed

Nutraceuticals -e.g. dietary supplements, natural remedies, food, skin care

Pharmaceutical and drug compounds-potential for use in prevention and treatment of various diseases

Bio-compounds- e.g. fatty acids (DHA)

The aquaculture market– Fish feed - total consumption 700.000 t/year– Fatty acid and protein ingredients in fish-farming - yearly

consumption 7.000 t/yr– Annual growth in consumption: 10-15%, 700-1.000 tons– Few participants

Animal feed– Large market, protein supplement for pig and poultry– Poultry - yearly consumption 2.000 t/year– Lack of new resources to satisfy increasing demand– Few players

Nutraceuticals – dietary supplements– World retail nutraceutical market estimated to USD 106 billion– Functional food USD 77 billion – Growth rate annually 6,2 %– Fatty acids, fastest growing market, annually 16%

The Norwegian marketThe Norwegian market

Customer benefits and price levelCustomer benefits and price level• In aquaculture, cod larvaeIn aquaculture, cod larvae

– Faster growth, Less mortality, Free of toxins

– Expected market price: NOK 160 - NOK 175 pr. ltr.

– Price level: Competitiveness with synthetic feed products

• In agriculture, poultryIn agriculture, poultry

– Faster growth, Less mortality, Free of toxins, less cholesterol

– Expected market price NOK 160 - 175 pr. kg

• NutraceuticalsNutraceuticals

– Demand surpasses supply

– Expected market price: NOK 400 - NOK 450 pr. kg.

– Price generate profit high profit

Business modelBusiness model

• Core business: Innovation, production, product development, marketing and salesCore business: Innovation, production, product development, marketing and sales

• Production, sales and distribution in co-operation with othersProduction, sales and distribution in co-operation with others

• In special areas Algetech Industrier AS do it aloneIn special areas Algetech Industrier AS do it alone

.

Proven technology

Idendification and application of new technology

- Continuous new product development with partners

Core area

- Contract manufacturing

- Sales and distribution network

- Licesing,royalties, direct sales andcombinations

Cooperation withIndustrial players

Production Value addedMarketing Distribution Retailer End-customer

CompetitorsCompetitors

The aquaculture marketThe aquaculture market- Start feeding of cod larvae:- Start feeding of cod larvae:- Import of algae biomass from U.S and Japan, Read Mariculture dominantImport of algae biomass from U.S and Japan, Read Mariculture dominant- IDUN - Norwegian producer of yeastIDUN - Norwegian producer of yeast- Feeding of farmed fishes:Feeding of farmed fishes:- Krill producer Aker BioMarine and Igene/ProBioKrill producer Aker BioMarine and Igene/ProBio

The agricultural market (animal feed)The agricultural market (animal feed) - Many small players, no dominant - Many small players, no dominant

The nutraceutical market (dietary supplement)The nutraceutical market (dietary supplement) - Many large int. industrial players in the market - Abbott, BASF, DuPont - Many large int. industrial players in the market - Abbott, BASF, DuPont

- Small Norwegian producers - Aker Biomarine, Alpharma, ProBio- Small Norwegian producers - Aker Biomarine, Alpharma, ProBio

• The aquaculture market Start feeding of cod larvae:

- Distribution carried out by Algetech Feeding of farmed fishes:

- Distribution through EWOS and Skretting AS

• The agricultural market Feeding of animals:

- Distribution through public and farmed controlled channels: Cermaq ASA and Felleskjøpet. In Sweden: Lantmânnen AB

• The nutraceutical market - Distribution through integration with a partner which has its own

trademarks and a need for raw materials.- Distribution and sales to drug chains as Alpharma AS- Sales and distribution to producers of dietary supplementary products as Pharmatech AS and Nutri Pharma ASA.

Distribution ChannelsDistribution Channels

Based on production from the first plant, one photo bioreactor

2008 2009 2010 SUMSales volume: Wet algae biomass 17000 l 25000 l 32500 l 72500 l Dried algae biomass 850 kg 5000 kg 7500 kg 12350 kgRevenue (NOK) 3320000 6000000 8000000 17372000Costs (NOK) 2960000 5025000 6862500 14847500Profit (NOK) 400000 975000 1137500 2512500

Capital need, including start up costs: NOK 12,5 Mill.Financed through: risk loan, public support, private equity and equity offering

The company has, up till now, spent NOK 5 mill in research and development.

Plant 1 may be extended by a second photo bioreactor. Investment approx. NOK 9 mill. Decision to be taken after commercialisation.

Budget – phase 1Budget – phase 1

Investors are invited to participate in AlgetechInvestors are invited to participate in Algetech

• Private placementPrivate placement

• Active involvement and part of the boardActive involvement and part of the board

• Equity offering 35% of sharesEquity offering 35% of shares

Phase 1

• May 2007: Search for financial/industrial partner

• Aug 2007: Planning first plant

• Jan 2008: End of construction

• Feb 2008: Commercial production and sales

Phase 2 (2009)Phase 2 (2009)

• Public offering: NOK 100 MillionPublic offering: NOK 100 Million

• Investing in existing greenhouses – large scale productionInvesting in existing greenhouses – large scale production

• Annually revenue of appr. NOK 100 mill.Annually revenue of appr. NOK 100 mill.

2000: Proven photo bioreactor technology- mixotrophic technology, combining sunlight and artificial

light

2006: Trial production completed confirms- large scale production in Scandinavia feasible and

flexible production, applicable for a variety of algae species

Project statusProject status

Risk factors

• Establish a competent organisation

• Market finds other and cheaper product alternatives

• Energy price development

Exit strategy

• Listing the shares on the OTC-list of OSE

• Project or trade sell

• Great share value potential on project success

Risk and ExitRisk and Exit

Why invest in Algetech Industrier ASWhy invest in Algetech Industrier AS

• Important and experienced partnersImportant and experienced partners

• Environmentally friendly biotech company for the future Environmentally friendly biotech company for the future

• Low start-up costs and fast expanding opportunitiesLow start-up costs and fast expanding opportunities

• End-customers are already establishedEnd-customers are already established

• Huge opportunities for high revenueHuge opportunities for high revenue

• Micro algae based products are key to meet future demands

• Revenue making in early stageRevenue making in early stage