TSX : PIF JANUARY 2016 IMPORTANT NOTICE This Presentation includes - - PowerPoint PPT Presentation

POLARIS INFRASTRUCTURE INC. TSX : PIF

JANUARY 2016

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

• f 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.

SNAPSHOT

• PLANT COMPLETED IN JANUARY 2013 AT A TOTAL COST (INCLUDING DRILLING)

OF US $421MM.

• OPERATING GEOTHERMAL POWER PLANT – PRODUCING APPROX. NET 50 MW TODAY
• ABOVE GROUND TURBINE CAPACITY OF 72 MW
• PPA IN US$ FOR UP TO 72MW TO 2029
• US$115/MWH IN 2015 WITH 3% PER ANNUM PRICE ESCALATOR FOR 8 YEARS;

1.5% PER ANNUM THEREAFTER (TO 2029)

• CURRENT ANNUAL EBITDA AT PLANT LEVEL APPROXIMATELY US$41MM
• DRILLING PROGRAM COMMENCED IN OCTOBER 2015 TO INCREASE CAPACITY OF PLANT

SYMBOL PIF SHARES OUTSTANDING (FD) 15.6 mm PRICE (C$) C$8.14 MARKET CAP. (C$) C$127 mm MARKET CAP. (US$) $90 mm CASH ON HAND – SEP 30 (US$) $64 mm DEBT – SEP 30 (US$) $195 mm ENTERPRISE VALUE (US$) $221 mm RUN RATE EBITDA (US$) ~$39 mm EV TO RUN RATE EBITDA ~5.7x

CAPITAL MARKETS SNAPSHOT

as of January 4, 2016

RECAPITALIZATION TRANSACTION

• TOTAL SENIOR AND SUBORDINATED SECURED LOANS: US$195 MM (AT SEP 30/15)
• Restructured on several issues
• Principally increased term to 2024/2028
• Debt service in 2016 decreases from $37 million to $23 million
• Dividends allowed once drilling program complete
• RAISED US$60MM OF COMMON EQUITY AT $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 CAP AT TIME OF RESTRUCTURING: C$1.8 MM
• FUNDS RELEASED FROM ESCROW MAY 2015

MANAGEMENT/BOARD CHANGES

• CEO – MARC MURNAGHAN
• 20+ years Investment banking/renewable experience
• CFO – SHANE DOWNEY, CPA, CA
• 12+ years Accounting, M&A Advisory and Corporate Banking experience
• NEW BOARD MEMBERS:
• Jaime Guillen: Faros Partners: 25+ years in development/financing of infrastructure

projects in Latin American; fluent in Spanish

• Jorge Bernhard: ex-CEO Sherritt Metals Marketing, fluent in Spanish
• Retained Jim Lawless (Geothermal expertise) and Tony Mitchell (Chairman)
• APPROX. 115 EMPLOYEES IN NICARAGUA INCLUDING PLANT MANAGER, RESERVOIR

MANAGER, FINANCE MANAGER, ETC.

PLANT OVERVIEW

• 2 X 36 MW FUJI TURBINES “ABOVE GROUND” – BOTH ONLINE SINCE JAN 2013
• 8 PRODUCTION WELLS PRODUCING APPROXIMATELY:
• 425-450 TPH OF STEAM AND
• 1000-1200 TPH OF HOT BRINE.
• PRODUCTION WELLS 500M-2,500M IN DEPTH
• CURRENT STEAM RESULTS IN POWER PRODUCTION OF ~55 MW “GROSS” OR

~50 MW “NET”

• 5 INJECTION WELLS RE-INJECT THE HOT BRINE INTO THE RESERVOIR TO

CREATE A “CLOSED LOOP”

• RENEWABLE ENERGY IN LITERAL SENSE
• PLANT BEING RE-CERTIFIED FOR CO2 CREDITS - ~250,000 TONS PER YEAR

AVAILABLE

• 5,000

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

PLANT PRODUCTION (MWhrs)

AFTER BACKING OUT PLANNED MAINTENANCE , PRODUCTION HAS BEEN QUITE STABLE SINCE JAN/14 AND IS NOT EXHIBITING LARGE DECLINES

APPROXIMATE WELL BY WELL PRODUCTION (Gross)

WELL GROSS POWER OUTPUT (MWs) 12-2 14 4-1 8 12-3 8-10 6-2 8 9-1 7 9-3 2-4 5-1 3 6-1 2 TOTAL 52-56 AVERAGE PRODUCTION ~7MW / WELL

2015/16 DRILLING PROJECT

DRILLING LOCATION #1

SJ6-3

• SPUD DATE WAS OCT 12, 2015; DRILLING COMPLETED

IN LATE DEC 2015 AND TECHNICAL RESULTS ARE EXPECTED IN LATE JAN / EARLY FEB 2016

• USING EXISTING SJ6 PAD, EXPANDED SOUTH;

AVAILABLE FOR IMMEDIATE TIE-IN TO THE PLANT

• OBJECTIVES:
• ACHIEVE PRODUCTION FROM UPPER RESERVOIR AND

MODEST STEP OUT WEST

• EXPAND PROVEN RESOURCE AND TEST WESTERN

EXTENSION

• ACHIEVE HIGH PRODUCTIVITY FROM UPPER RESERVOIR; LIKE

SJ4-1

• TARGET STRATIGRAPHIC PERMEABLE ZONE (-500 TO -1000M

RL)

• TEMPERATURES ~240 TO 260˚C
• OPTION OF SJ6-4 WELL TO SW IF SUCCESSFUL

DRILLING LOCATION #2

SJ14-1

• PLANNED SPUD DATE EARLY JAN 2016; EXPECT

DRILLING COMPLETION MARCH 2016 AND TECHNICAL RESULTS IN APRIL 2016

• NEW PAD USING CC CONCEPT AGREED AT SANTA

ROSA (2014)

• OBJECTIVES:
• STEP OUT WELL TO TEST SE EXTENSION OF PRODUCTIVE

RESOURCE

• OPPORTUNITY TO TAP SAME HIGHLY PRODUCTIVE SHALLOW

RESERVOIR AS SJ4-1

• BT FAULT TARGET, EXPECTED TEMPERATURES ~250 TO 290˚C
• OPTION OF SJ14-2 WELL TO SE IF SJ14-1 SUCCESSFUL

DRILLING CAMPAIGN FINANCIAL IMPACT

• EACH NEW MW WILL PROVIDE ~$1 MM PER YEAR IN ADDITIONAL EBITDA /

FREE CASH FLOW

• CURRENT PIF RUN RATE EBITDA OF $39 MM
• GIVEN DEBT SERVICE IS “FIXED” THE IMPACT ON FREE CASH FLOW TO EQUITY

HOLDERS IS SIGNIFICANT

• 10 YEAR TAX HOLIDAY ENABLES TAX FREE “DISTRIBUTIONS” TO CANADA
• BOARD IS COMMITTED TO DIVIDEND POLICY ONCE DRILLING PROGRAM IS

COMPLETE

CASITA PROJECT

• ~$10 MILLION INVESTED TO DATE
• GEOPHYSICS
• ACCESS ROAD
• “SLIM” HOLE DRILLED TO 850 M IN 2011
• CONFIRMED GEOPHYSICS AND POTENTIAL “DRY STEAM” RESOURCE

OF 100 MW+

• IN GOVERNMENT’S PLAN TO COME ONLINE IN 2019
• WORKING WITH WORLD BANK TO ACCESS “DRILLING” CAPITAL TO DE-RISK
• SYNERGIES AVAILABLE:
• USE SAME RIG FROM SAN JACINTO DRILLING CAMPAIGN
• IN-PLACE ADMINISTRATIVE AND OPERATIONS PERSONNEL

ACQUISITIONS

• PRODUCTION WITH GROWTH

POTENTIAL

• LOOK TO FIND VENDORS THAT WOULD

WELCOME LIQUIDITY OF A TSX LISTED ENTITY

• DEFINITELY PART OF THE

MEDIUM/LONG TERM PLAN

• EARLY DAYS
• LOOK TO ACQUIRE RENEWABLE

PROJECTS IN LATIN AMERICA

NICARAGUA OVERVIEW

• DEMOCRATIC ELECTIONS – DANIEL ORTEGA PRESIDENT – RE-ELECTED IN 2007
• ELECTION IN 2016 – ORTEGA EXPECTED TO WIN
• 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

SUMMARY

• CURRENT EBITDA OF US$39 MM
• COMPLETE DRILLING PROGRAM IN

Q2 2016

• 3 New production wells
• Injection workovers
• COMMENCE DIVIDENDS Q2 2016 ONCE

DRILLING IS COMPLETE AND TIED IN

• PURSUE OTHER GROWTH OPTIONS:
• Binary cycle unit - +6/7 MW
• Casita partnership
• Acquisitions
• CO2 Credits

SAN JACINTO-TIZATE PLANT PHOTOS

THANK YOU