Prepared for: BIO World Congress on Industrial Biotechnology 2017 Montreal, Canada July 23 – 26 2017 Prepared by: Jeff Passmore, CEO, Passmore Group Inc.

Context for the bioeconomy market According to the OECD, in the 2025 – 2030 period, the

bioeconomy will command an estimated world market of

between US$ 2.6 and 5.8 trillion. At that time, bio-chemicals will

reach 22% - 28% of the potential global chemical market of US$

2.2 trillion.

If developed sustainably, the bioeconomy can simultaneously

deliver jobs, industrial development, reduced GHGs emissions,

and national security.

But this won’t just happen on its own.

To take advantage of this opportunity, both the public and private

sectors need to get our collective and collaborative skates on.

If you want to scale-up to a commercial project in the bio-economy space…

…Capital

will be the beginning and the end

of every discussion

Technology evolution - From idea to market adoption

1] Fundamental Research $

2] Applied Research $$

3] Pilot Facility $$$$

4] Demonstration Facility $$$$$$$$$$$$$$

5] Commercial Demonstration $$$$$$$$$$$$$$$$$$$$$$$$

(first ~full scale plant)

6] Commercial Rollout $$$$$$$$$$$$$...$$$$$$$$$$$$$$

(multiple plants; material impact on markets)

You’ve all heard that…

Necessity is the mother of invention

Well…

Certainty is the mother of investment

In the absence of (policy) certainty…

The private sector has fear of

change of law = stranded assets

Roles of public and private sectors…

Must be complimentary and

clearly defined

The private sector should assume…

Market risk: Technology risk

Feedstock supply risk

Project completion risk

Performance risk

Off-take risk

Management team risk

x Stranded Asset risk

And allocate those risks…

To those best qualified to manage them

(Unmanaged risks = higher cost of debt)

The public sector should assume…

Regulatory risk: - Long term regulatory certainty

(think tax system)

- Protection against future change of law

(think grandfathering)

Scaling up to commercial…

…means assembling project capital:

Equity:

Is about the future – what are you promising to deliver?

Comes in first and can range from 20% - 50% of project cost

Needed to demonstrate project sponsor/proponent skin in the game

Remainder from committed Strategic investors/Corporate balance sheets

Debt:

Is about the past – do you have a track record?

Comes in after equity

Senior debt - Commercial banks – expect timely payment of principal and interest (think mortgage)

Subordinated, non-recourse debt - Governments grants, loans, loan guarantees

(Typically last in - follows the private sector investment)

Scale up commercial success also requires that…

…You know your customer

Ensure your brand is firmly set in your customers’’ and prospective customers’ minds…

Why?

…Because you will need customer preference for bio-products to drive demand quickly enough to generate cash fast enough for your business to survive

… But really, why are we all here? Because I imagine a future in which my three grandsons live in a world that protects the environment AND grows the carbo-hydrate economy!

And why Scale up in Canada?

You perhaps know Canada as offering:

Best country to do business in the G20 - Forbes and Bloomberg

Strongest growth record among G7 from 2006 - /’15 - OECD

Most highly educated workforce among OECD members – OECD

Lowest business taxes among G7, and 46% lower than in the US - KPMG

Lowest business R&D costs among G7 with 27% cost advantage over the US – KPMG

“Most sound” banking system in the world – World Economic Forum

Easy transportation access to US markets (NAFTA)

A fun place to live, work and play – Best quality of life in G7 – OECD

But let’s drill down…

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 Ag Biomass 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’s forest cover: 10% of world’s (348 million hectares)

Want to learn more? – Attend “Scaling Up” Canada’s 2nd annual Bioeconomy conference

Look who’s speaking:

World Bank, Washington, DC International Energy Agency (IEA), Paris EcoSynthetix Inc. Genome Canada Bio-based Industries Joint Undertaking (BBI JU), Bio-based Public-Private Partnership, Brussels Special Advisor for Climate Change, Ontario Ministry of Environment Former Acting Assistant Secretary, US Department of Energy and Acting Under Secretary, US Department of Agriculture Comet Biorefining Clariant Ensyn Natural Fibre Technologies Alberta Enterprise Corporation Iogen Conifex Timber. Future Fuel Strategies Bio-Innovation Canada Ontario Federation of Agriculture CelluForce Forest Products Association of Canada Advonex ECOSTRAT Industrial Biotechnology Innovation Centre, Glasgow, Scotland Citigroup, New York Ikea of Sweden Sustainable Development Technology Canada

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Contacts:

Email jeff@passmoregroup.ca

Web www.passmoregroup.ca

Mobile +1 613 614 8568

Land +1 613 821 0495