Renewable Energy Investing Run of River Projects Forward Looking - - PowerPoint PPT Presentation

Renewable Energy Investing Run of River Projects

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Forward Looking Statement

This presentation may contain "forward-looking statements" within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date of this presentation and the Company does not intend, and does not assume any obligation, to update these forward-looking statements. Forward-looking statements relate to future events or the anticipated performance of the Company and reflect management’s expectations or beliefs regarding such future events and anticipated performance. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved", or the negative of these words or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual performance of the Company to be materially different from any anticipated performance expressed or implied by the forward-looking statements. Such factors include various risks related to the Company’s

• perations, which are detailed from time to time in the Company’s interim and annual financial statements and

management’s discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www. sedar.com. Although the Company has attempted to identify important factors that could cause actual performance to differ materially from that described in forward-looking statements, there may be other factors that cause its performance not to be as anticipated. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

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The Green Power Industry in BC

• The ‘B.C. Energy Plan’

– 50% of all new capacity to be clean – B.C. Government’s goal is to return to self sufficiency

• B.C. imports electricity

– 7,400 GWh out of total electricity consumption of 55,000 GWh – 1 in 8 homes powered by imported electricity

• Environmental concerns of the public
• BC Hydro the only acquirer of power in the Province
• Currently 45 operating IPPs in BC

– 31 Run of River Hydro facilities in operation

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Demand Growth and Supply Gap

Source: BC Hydro 2006

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No major capacity built in over 20 years

500 1000 1500 2000 2500 3000 3500 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Mega-Watts

Hydropower Thermal IPPs Operating IPPs Contracted

4 1 2 11 2 1 5 2 2 1 2 12 21 14 38

NO MAJOR ADDITIONS SINCE 1984 F2006 CFT # of projects

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Electricity Procurement

• 1989 RFP:

– 12 RoR Hydro EPAs awarded (140 MW)

• 2001/2002 Green Power Call:

– 15 RoR Hydro EPAs awarded (200 MW) – 2 Co-gen (6.6 MW)

• 2002/2003 Green Power Call: - only 2 projects built

– 14 RoR Hydro EPAs awarded (450 MW) – 1 Co-gen and 1 Wind EPA awarded (60 MW)

• 2006 Call for Power:

– 37 EPAs awarded: RoR, Wind, Biomass, Coal

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What is Run of River

Photos of Miller Creek HEP

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Intake Example

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Penstock (Pipeline) Example

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Powerhouse Example

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Run of River Benefits

• Non-depleting resource
• Small environmental footprint
• No dams or reservoirs
• No change to rivers downstream
• Considered ‘green energy’
• Long life facilities – 50 years +
• Low operating costs – under 20% of revenue
• No fuel price risk
• No technology risk

– 31 established run of river projects in B.C.

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What makes a good site

• Large ‘utility grade’ locations
• Remote sites (avoiding NIMBY problems)
• Existing infrastructure
• Non-salmon bearing streams

– Ease of environmental permitting

• High head projects (vertical drop)
• High rainfall areas (fuel source)
• Glacial run-off (steady flows)
• Strong Historical hydrology data

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Topography

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Precipitation

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Run-off patterns: Coastal vs. Interior

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Run-off patters: Glaciers

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Key Fundamentals to development

• 1. Environmental Permitting
• 2. First Nations
• 3. Financing
• 4. Construction

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Environmental Permitting

• Two environmental permitting regimes:

– ILMB and MoE (LWBC): under 50 MW projects

• Less rigorous
• Proponent driven process
• No timelines

– BCEAO process: over 50 MW projects

• More rigorous process
• Terms of Reference
• Formal Application to the EAO
• 180 day legislated timeline for review

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Environmental Permitting process

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First Nations

• Over 200 First Nations Bands in British Columbia
• Unresolved treaty process
• Indian Reserve vs. Traditional Territory
• Duty to ‘consult and accommodate’
• First contact, consultation and negotiation
• Employment and economic consideration
• Capacity challenges
• Working partnership and participation

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Financing

• Development funding
• Project Finance

– Debt borrowed against EPA contract – BC Hydro AAA rated crown corporation – Debt amortization term matches EPA term – Target 75% to 85% Debt ratio – Bank debt vs. industry partner – Corporate debt vs. project debt – Target 5.50% to 6.50% interest rate – Target of 1.5x Debt Service Coverage ratio – Equity rate of return target 15% to 25%

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Project Economics

East Toba and Montrose project example

• Capital Costs:

– $450 million fixed EPC price – $60 million in interest and closing costs

• Debt Term: 35 years (matches BC Hydro EPA term)
• Annual revenue: ~ $65 million

– Escalated at 50% CPI for term of contract

• Annual expenses (O&M and taxes): ~ $10 million
• EBITDA: ~ $55 million
• Equity Cash Flow: ~ $25 million

Assumes 80% debt at 6% interest rate in 2010-2011

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Financing Example

• GE to invest $100 million in equity in Toba project
• GE granted right to debt finance project
• Assumed 80% debt ratio
• Plutonic retains 40% carried economic interest
• Plutonic will be 51% legal project owner
• Economic interest will revert to 51% Plutonic and

49% GE after 35 years

• Confirmatory Due diligence underway

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Construction

• Escalating construction costs in Western Canada

– Steel, concrete, labour costs, etc.

• Fixed Price EPC vs. Design Build

– Requirements of financers – Ablility to control cost over-runs

• Availability of contractors

– Equipment lead times – Labour shortages – Experience in hydro construction – Performance guarantees

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Operation

• Low operating costs
• Remote operation possible
• “Lighthouse” maintenance personnel
• Long asset life (over 50 years)
• Major turbine refit required after 35 years
• Continued environmental monitoring required
• Revenue after EPA expiration

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Plutonic Power: What Do We Have

• 211 MWs of recently awarded (Aug 2006) PPAs

from B.C. Hydro

– 196 MW East Toba / Montrose Project – 15 MW Rainy River Project – 35 year term contract – Largest project awarded in B.C. call for power

• 19 additional development locations in B.C.

– 868 MW of capacity and 2,709 GWh

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Management and Board of Directors

Management Team Management Team Board of Directors Board of Directors

• Walter Segsworth, Chairman
• R. Stuart (Tookie) Angus
• Dr. Peter Flynn
• Michael Volker
• Dr. William Lindqvist
• Donald McInnes
• Grig Cook
• Donald McInnes, President
• Paul Sweeney, Executive Vice

President

• Grig Cook, Chief Operating

Officer

• Peter Wong, Chief Financial

Officer

• Marc Stachiw, Director, Corp.

Development

• Robert Poore, Director, Corp.

Affairs

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22 Development Locations

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East Toba / Montrose Project

• 196 MW: ~ 745 GWh (75,000 homes)
• Permitting to be completed in Q1 2007
• Construction to begin in 2007
• Construction period: 3.5 years
• General Contractor: Peter Kiewit Sons Co.

– Large experienced contractor in hydropower – Negotiating full EPC Contract – Limited Notice to Proceed

• Proposed COD mid 2009 Toba / 2010 Montrose

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Inflatable Weir Intake Site Head pond Buried Penstock

Flow

East Toba River

East Toba River Intake Site

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East Toba Project –Conceptual Rendition of Powerhouse 4.8 km Buried Penstock Corridor (3m dia.) Powerhouse 565 metres vertical head

Confluence with Toba River

East Toba River Powerhouse Site

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Rainy River Project

• 15 MW: ~ 55 GWh (5,500 homes)
• Permitting to be completed in Q2 2007
• Construction to begin in 2007
• Construction period: 2 years
• Located near Howe Sound pulp & paper mill

– Existing infrastructure, easy access

• Proposed COD early 2009

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Plutonic Growth Pipeline

MW Location 115 MW Green Corridor Kitimat Green Corridor Green Corridor Green Corridor Rest of Pipeline 452 MW TOTAL 868 MW 81 MW 77 MW 74 MW 69 MW Southgate 1 Europa Creek Upper Lillooet River Icewall Creek Whitemantle Creek

NPV at current prices equates to $400 - $600 thousand / MW once PPA in place

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Corporate Valuation

• Discounted Cash Flow Model

– NPV of project cash flow (discounted to today) – Sum of the parts valuation – Assumptions of the model important

• Comparables Valuation

– Mature vs. growth companies – Operating vs. Non-operating companies – Lack of comparables – Using proper metrics

• EV/EBITDA
• P/CF

– Implications from taxation legislation of income trusts

• Yield based valuations

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Sprott Securities Target Valuation

Using DCF Model

Source Data: Sprott Securities Report December 12, 2006

$- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 Current Share Price Target Valuation

East Toba/Montrose Rainy River Uncontracted

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Toll Cross Securities Target Valuation

Using Combination of DCF Model and Comparables Model

Source Data: Toll Cross Securities, January 11, 2007

$- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 Current Share Price Valuation

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Comparable Peer

Canadian Hydro Developers Plutonic Power Corporation Ticker: KHD PCC CURRENT Shares Outstanding: 120.1 MM 30 MM Share Price: $5.80 $3.00 Market Cap: $696 MM $90 MM 2010 Projection Capacity: 615 MW 93.4 MW* Generation: 1,570 GWh 354 GWh “Contracted” Cash Flow (2010): $59.5 MM $11.6 MM Price / “Contracted” 2010 CF: 11.5x 5.6x

* Attributable to Plutonic

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Next Steps

• Finalize EPC contract with Peter Kiewit (Q1 2007)
• Complete environmental permitting (Q1 2007)
• Reach agreement with First Nations (Q1 2007)

– Klahoose agreement announced

• Finalize construction financing with GE (Q1 2007)
• Commence construction (Q2 2007)
• F2007 B.C. Hydro CFT (proposed Fall 2007)

– Preparing to submit 200 to 400 MW – Call for power of 5,000 GWh (approximately 1,500 MW)

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Capital Structure

• Stock Symbol: PCC:TSXV
• Capital Structure

– 29.2 million shares issued – 38 million fully diluted

• Insider Ownership: ~ 20%
• Current Price: ~ $3.00
• Cash: ~ $5 million / no debt
• Market Cap: ~ $90 million
• 52 week high / low: $3.75 – $0.65

Currency in Canadian Dollars ($) January 10, 2007

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Contact: Marc Stachiw or Nancy Goertzen +1-877-669-4999 marc.stachiw@plutonic.ca nancy.goertzen@plutonic.ca www.plutonic.ca