ANNUAL GENERAL MEETING
May 28th, 2019
1000 - 925 West Georgia Street Vancouver BC. Canada
ANNUAL GENERAL MEETING May 28 th , 2019 1000 - 925 West Georgia - - PowerPoint PPT Presentation
ANNUAL GENERAL MEETING May 28 th , 2019 1000 - 925 West Georgia Street Vancouver BC. Canada Forward Looking Information - Disclaimer This presentation contains certain forward-looking information that reflects the Companys current views and/or
1000 - 925 West Georgia Street Vancouver BC. Canada
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This presentation contains certain forward-looking information that reflects the Company’s current views and/or expectations with respect to, among other things, the markets the Company operates in; the impact of currency exchange rates and other market factors on the results of the Company’s mills; expectations relating to capital expenditure spending; and the Company’s production, biorefinery, and balance sheet initiatives. Persons reading this presentation are cautioned that statements comprising forward- looking information are only predictions, and that the Company's actual future results or performance are subject to certain risks and uncertainties including, without limitation: those relating to potential disruptions to production and delivery, including as a result
fluctuations in the market price for products sold; trade restrictions or import duties imposed by foreign governments; labour relations; failure to meet regulatory requirements; changes in the market; potential downturns in economic conditions; fluctuations in the price and supply of required materials; foreign exchange fluctuations; availability of financing (as necessary); ability to restructure the Company’s existing debt on satisfactory terms; and other risk factors detailed in our Annual Information Form dated March 29, 2019 available on SEDAR at www.sedar.com and other filings with the Canadian securities regulatory authorities. In particular, financial forecasts and expectations are not indicators of future financial performance and there is no assurance that the Company’s assumptions in support of such forecasts or expectations are correct, accurate, or complete. These risks, as well as
forward-looking information, except as required by applicable securities law. Unless otherwise noted, all references in this presentation to “$” are to Canadian dollars. The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, the Company’s unaudited condensed consolidated financial statements for the quarter ended March 31, 2019 and the related notes thereto and Management’s Discussion & Analysis, which are available on SEDAR. This presentation contains reference to “Operating EBITDA”, which is a non-GAAP financial measure. For disclosure of the manner in which these measures are calculated and a reconciliation to net loss, please refer to the MD&A for the quarter ended March 31, 2019, available on SEDAR.
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the acquisition of S2G Biochemicals Inc. (“S2G”)
demonstration plant
initiated negotiations for an additional $12.5 million
the world’s largest snacking companies, including commitments in principle relating to the purchase of xylitol from the demonstration plant and a future commercial plant
and extending maturity to December 31, 2022 from December 31, 2019
capital expenditure program
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200 600 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18
Liquor Cycle Volume (ADMT/day)
ADMT
Launched leadership Phase 1 - KBI/KPI Increase
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0.0 600.0 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18
ADMT
Production ADMT/day
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15 25 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18
Megawatts
MW
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a combination of factors the positive momentum from the prior three quarters was temporarily interrupted
wide electrical outages impacted operating results in the first quarter and April of 2019*
which will ensure the winter issues are mitigated and throughput increased under diverse conditions
*Operating EBITDA loss of $9.7 million, DP operating EBITDA loss of $8.8 million. The Company invested $0.8 million in the Bioproducts Segment which was
first quarter of 2019 by advancing engineering for
bioproducts demonstration plant, and
equipment required for tie-in to the FSC mill’s fifth digester
definitive contribution agreement with NRC for up to $10 million nonrefundable grant. This funding from NRC is in addition to previously announced Governments of Canada and Quebec commitments for up to $17.4 million
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Production Improvements Biorefinery Balance Sheet Improvements
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day as we were able to perform some maintenance during the power outages in the first quarter
the extraction of prehydrolysis liquor, an important step for the bioproducts demonstration plant project
advantage of historically stronger seasonal pricing in the second half of the year
result in increased run rate throughput and reduced costs
equipment monitoring system
Production Improvements
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Cellulose 43-45% Inorganics/Organics Waste water treatments Lignin 20-28% Water 100 t of Green Wood
17t of specialty cellulose grade 20t of rayon cellulose grade 25t of fluff pulp 27t of paper pulp grade
Black Liquor Organics - Energy Inorganics - Recovery Hemicelluloses (PHK) 12-15%
INPUT COOKING PROCESS BLEACHING PROCESS OUTPUT
Bio-products Opportunity Burned in recovery boiler for energy
Source: Hawkins Wright
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Immediate Opportunities
streams
wins
PHL Opportunities
bioproducts
Other Opportunities
High Value Bioproducts Products
Strategic plan to become one of the world leaders in demonstrating and commercializing leading technologies for conversion of hemicellulose to advanced bioproducts
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$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 50 100 150 200 250 300 350 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Tonnes USD Millions 000s Tonnes US$M
Volume & Revenue Forecast to 2024
Source: Global Market Insights -Xylitol Market Report 2024, ICTS, EPA, FDA, EFSA, ADA, CCM
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processes/bioproduct opportunities
and select
construction of demonstration plant in second half of 2019
Biorefinery
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multi year interest and principal payment deferrals and an extended term on the $105.2 million indebtedness, subject to definitive documentation
to become available June 2019
second half of the year
Balance Sheet Improvements
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capacity has contributed to inventory build up and softening of VSF pricing. Near term dissolving pulp pricing will most likely continue to be impacted by VSF market pricing and paper pulp markets
structurally sound – VSF demand should eventually catch up to rapid increase in supply
DP supply over the next few years
annum for the foreseeable future
Source: RISI, CCF, Hawkins Wright
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favorable macro trends, expanding middle classes and consumer spending in emerging markets
advantages over competing products thus dragging along dissolving pulp demand
5kg in 1960 to almost 14kg in 2016
increase by over 60% through 2030
fibre demand growth
Source: RISI, CCF, Hawkins Wright
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Natural Fibers, 31.6mt , 30.6% Cellulosic, 6.6mt, 6.4% Synthetics, 64.9mt, 62.9%
85.7% 68.8% 37.5%
10.% 30.% 50.% 70.% 90.% 110.% Cotton Natural Fibers Cellulosic Synthetics Total Fiber Production
2006-2016 % Growth in Volume
Natural Fibers 32.9 mt 44.1% Cellulosic 3.6 mt 4.8% Synthetic 38.3 mt 51.1%
Source: “The Fiber Year 2017 ” and “Hawkins Wright, 2010 World Survey on Textiles & Nonwovens”
World Fiber Production 103.1 Million tonnes (mt)
World Fiber Production 74.8 mt
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Quote from Canada’s Bioeconomy Strategy "Canada has a window now to become one of the world’s most successful modern bioeconomies. It is important that governments, financial institutions and large corporations hasten the pace of policies”