TSX : PIF NOVEMBER 2016 WWW.POLARISINFRASTRUCTURE.COM 2 IMPORTANT - - PowerPoint PPT Presentation

POLARIS INFRASTRUCTURE INC. TSX : PIF

NOVEMBER 2016

WWW.POLARISINFRASTRUCTURE.COM

IMPORTANT NOTICE

This Presentation includes general background information with respect Polaris Infrastructure Inc. (“Polaris”) and does not purport to be complete. It has been prepared solely for informational purposes and is not to be considered a solicitation or an offer to buy or sell any securities and should not be treated as investment advice. The information contained in this Presentation is confidential and the property of

• Polaris. It is made available strictly for the purposes referred to above. This

Presentation must not be disclosed, copied, published, reproduced or distributed in whole or in part at any time without the prior written consent of Polaris and, by accepting this Presentation, you agree not to do so. You also agree to return any written copy of this Presentation to Polaris at the request of Polaris.

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POLARIS INFRASTRUCTURE OVERVIEW

SNAPSHOT

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 Own and operate single operating asset – San Jacinto Geothermal power plant

 Located in Nicaragua  PPA with national grid – contractual price per MWh, with escalator, to 2029  Plant completed in January 2013 at a Total Cost (including drilling)

• f US$421 million

 Above ground turbine capacity of 72 MW; Producing approx. 50 MW (net) before recent drilling program  Recapitalized in May 2015 – “fixed” balance sheet  Drilling program commenced in October 2015 to increase power generation; substantially complete as of September 2016  Cash flow positive; initiated dividend in Q2 2016

CAPITAL MARKETS SNAPSHOT

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* as of November 11, 2016

S y m b o l :

P I F

Price (C$): C$16.15 Shares Outstanding (FD): 15.7 mm Market Cap. (C$): 254 mm Market Cap (US$): 188 mm Cash On Hand – Sep 30 (US$): 31.3 mm Debt Sep 30 30 (US$): 183.2 mm Enterprise Value (US$): 340 mm Run Rate EBITDA (US$): ~ 48 mm Quarterly Dividend (US$): $0.11

MAY 2015 RECAPITALIZATION

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 Recapitalization was led by current CEO, Director and significant shareholder, Marc Murnaghan  Raised C$74 million (approx. US$60 million) of common equity at C$8.00 issue price  Converted corporate debentures into equity at C$10.00 issue price

 C$54.13 million of secured 8% debentures converted into C$43.3 million of equity

 Equity market capitalization at time of recapitalization: C$1.8 million

 Pre-existing shareholders (Ram Power, Corp) subject to share consolidation

 Substantially new Board of Directors and new Management team as of May 2015

MAY 2015 RESTRUCTURING

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 Restructuring of project-level senior & subordinated debt  Syndicate of development banks led by IFC (World Bank)  Key terms of restructuring:

 Extended term to 2024/2028 (Phase I/II)  2016 debt service reduced from $37 million to $23 million  Significant reduction in sub debt “return enhancement” (from 6.88% of EBTIDA to 3%)  Ability to reduce coupon based on future production targets

 Effectively enables distributions out of the project, to PIF

2016 OPERATING RESULTS

8 US $000 Q2 Per Share Q3 Per Share

Revenue 12,145 14,260 EBITDA 9,838 11,961 Less: Interest Cost 3,327 3,378 “Sustaining Capex” 1,330 1,330 Discretionary CF 5,181 US$0.33/ C$0.42 7,253 US$0.46/ C$0.61 Less: Principal Repayment 2,124 2,124 Free Cash Flow* 3,057 US$0.20/ C$0.25 5,129 US$0.33/ C$0.43

*As defined by management, on a long term “average” basis.

SAN JACINTO GEOTHERMAL PLANT

PLANT OVERVIEW

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 2 x 36 MW fuji turbines “above ground” – BOTH ONLINE SINCE JAN 2013  10 production wells with productive capacity of approximately:

 500-550 tph of steam and  1,500-1,700 tph of hot brine.  Production wells 500m to 2,500m in depth

 Current steam can result in power capacity of approx. 65-70 MW gross or 60-65 MW net  PPA in US$ for up to 72MW net, to 2029

 US$118/MWh in 2016 with 3% per annum price escalator for 7 years; 1.5% per annum thereafter (to 2029)

 6 Injection wells re-inject the hot brine into the reservoir to create a “closed loop” -- RENEWABLE ENERGY IN LITERAL SENSE  Plant re-certified for CO2 credits - ~250,000 tons per year available

HISTORICAL KEY PARAMETERS

Year Gross Hourly Production (1) Net Hourly Production (1) Average Steam Mass Planned Downtime (%) Turbine Availability (%)

2012

35.7 33.2 276 2.60 99.3

2013

53.3 48.4 416 1.79 99.8

2014

54.1 49.1 434 5.90 99.8

2015

54.6 49.5 428 3.09 99.8

2016(2)

56.7 51.6 451 2.34 99.1

(1) Net of Planned / Unplanned Downtime (2) YTD Oct 31

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2015/2016 SAN JACINTO DRILLING PROGRAM

2015/2016 DRILLING PROGRAM

 Drilled 3 new wells – target 2 new production wells ($23.4MM)

 SJ 6-3  SJ 9-4  SJ 14-1

 Mechanical “workover” of 4 existing injection wells ($8.2MM)  Selected infrastructure investments ($6.4 million):

 Roads  Drilling pads  New separation station  Well connection piping etc

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Pre-Existing Productive Capacity (gross) ~55 MW Well SJ 6-3 ~2 – 3 MW Well SJ 9-4 ~10 MW Current Productive Capacity (gross) * ~67 – 68 MW Plus: Binary Unit ~8 – 10 MW Total (gross) ~75 – 78 MW

PRODUCTIVE CAPACITY GROWTH

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* Until infrastructure improvements in Q1 2017 are complete, power production will be constrained by ~3 – 8 MW

FUTURE GROWTH OPTIONS

FUTURE GROWTH OPTIONS

 San Jacinto geothermal project

 Binary Unit  Drilling further production and injection wells  Plant output optimization projects  Develop Western Sector

 Acquisitions / Project Development  Casita – San Cristobal Geothermal Field Feasibility and Development Project  Carbon Credits

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BINARY UNIT

 Polaris is currently assessing binary unit feasibility  Estimate additional 8 – 10 MW

 Equates to approx. $8 – 10 million additional cash flow

 Viewed as a low risk, though capital intensive, means of generating additional power – approaching 72MW (net) threshold under PPA

 No exploration risk  Precedent exists for successful implementation  Known issues with feedstock (brine); can be planned for in engineering phase  Appears that competitive nature of OEM market will result in attractive pricing

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FURTHER WELLS

 Capital is set aside every quarter for “make-up” wells  Drilling rig is on-site, available  Have 2-3 more “traditional” well sites identified  More likely to drill several shallow wells to target “steam cap”

 Steam cap is a key development in the lifecycle of the San Jacinto resource

 Expansion into Western Sector of San Jacinto concession 19

ACQUISITIONS/DEVELOPMENT

 Grid in Central America is small/fragmented and has a significant number of renewable projects  Numerous – 25-100 MW projects in the region  Large power companies and infrastructure funds not active  Owners are small companies and / or HNW individuals  Implication is that:

 Good targets for acquisitions without significant competition  Much higher IRR projects available to develop (i.e. 15-20% IRR vs. 10-12% in North America)

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NICARAGUA OVERVIEW

 Daniel Ortega President – elected in 2007

• Ortega won national election in November 2016 – 5 more years of stability

 Highest growth rate and safest country in central America  “Left Leaning” politically but open economically  Polaris project is a showcase project for the country

 One of the largest foreign investments in country to date  Renewable energy  World bank and other global development banks as lenders

SAN JACINTO PHOTOS

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