TSX : PIF JUNE 2017 WWW.POLARISINFRASTRUCTURE.COM 1 IMPORTANT - - PowerPoint PPT Presentation

POLARIS INFRASTRUCTURE INC. TSX : PIF

JUNE 2017

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

3  Own and operate San Jacinto Geothermal power plant in Nicaragua

 PPA with national grid – contractual price per MWh, with annual escalator, to 2029

 Recapitalized in May 2015

 “Fixed” balance sheet  New Management and Board

 Cash flow positive; initiated dividend in Q2 2016  Strong organic growth expected in cash flow in next 12-18 months

CAPITAL MARKETS SNAPSHOT

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* as of June 16, 2017

S y m b o l :

P I F

Price* (C$): C$16.82 Shares Outstanding (FD): 15.7 mm Market Cap. (C$): 264 mm Market Cap (US$): 201 mm Cash On Hand – Mar 31 (US$): 48.4 mm Debt – Mar 31 (US$): 178.6 mm Enterprise Value (US$): 331 mm Run Rate EBITDA (US$): ~ 50 mm EV/EBITDA: ~ 6.6x Quarterly Dividend (US$): $0.12

IMPROVEMENT IN FINANCIAL METRICS

5 Annualized “Run-rate” Results 2 new wells drilled

* 2016 reflects annualized results once 2 new wells brought online

RECENT OPERATING RESULT LTS

USD million Q4/16 Per Share Q1/17 Per Share

Revenue 15.7 13.4 EBITDA 13.3 10.9

Less:

Interest & Bank Fees 3.8 3.8 Sustaining Capex * 1.3 1.3 Discretionary CF 8.2 US$0.52/ C$0.71 5.8 US$0.37/ C$0.51

Less:

Principal Repayment 2.1 2.5 Free Cash Flow 6.1 US$0.39/ C$0.53 3.3 US$0.21/ C$0.29

*As estimated by management, on a long term, average basis.

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Ability to raise dividend based

• n both growth

in cash flow and/or payout ratio Note: Q2 2017 payout ratio was impacted by planned turbine maintenance

DIVIDEND GROWTH

* Calculated using management's estimated sustaining capital expenditure

SAN JACINTO GEOTHERMAL PLANT

PROJECT OVERVIEW

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 72 MW capacity turbines – both online since January 2013  PPA in US$ for up to 72MW net, to 2029

 US$123/MWh in 2017 with 3% per annum price escalator for 6 years; 1.5% per annum thereafter (to 2029)

 10 production wells with productive capacity of approximately:

 500-525 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. 60-65 MW (net of ~5 MW internal consumption)  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

STABLE/GROWING PLANT-LEVEL EBITDA

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* Plant-level EBITDA defined as Revenue less Direct Costs

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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DRILLING PROGRAM RESULTS

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FUTURE GROWTH OPTIONS

FUTURE GROWTH OPTIONS

 San Jacinto geothermal project

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

 Acquisitions / Project Development  Casita – San Cristobal Geothermal Field Feasibility and Development Project 16

FURTHER PRODUCTION WELLS

 Drilling rig is on-site, available  Have 2-3 well sites identified

 Will validate location(s) through planned geological studies in Q1 -Q2 2017

 Target commencement of drilling July 2017  Likely to drill shallow wells to target “steam cap”

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

 Estimate cost of approximately $7.5 million / well

 Capital cost is funded by internal cash

 Possible long-term expansion into Western Sector of San Jacinto concession

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BINARY UNIT

 Separate generating unit – generates power from hot geothermal fluids (brine) before reinjecting  Low risk means of generating additional power

 No exploration risk  Low technical risk  Competitive nature of OEM market will result in attractive pricing

 Design finalized – procurement finalized July/August timeframe  Total cost of approximately $30 million  Estimate additional 8 – 10 MW

 Equates to approx. $6 – 8 million additional cash flow  Approx. 4-5 year payback

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NEAR TERM CAPACITY GROWTH

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* Until infrastructure improvements in Q3-Q4 2017 are complete, power production will be constrained by ~2 MW

Pre-Existing Productive Capacity (net) ~50 MW 2015/2016 Drilling Program ~10 – 12 MW Current Productive Capacity (net) * ~60 – 62 MW 2017 Drilling Program ~0 – 10 MW Plus: Binary Unit ~8 – 10 MW Total (net) ~68 – 82 MW

NEAR TERM GROWTH IMPACT

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 Polaris has the capital to significantly grow free cash flow in next 12-18 months  2 options are “risk–free”  Drilling provides upside …with an outcome most likely at the “midpoint”…i.e. $7-8 million in free cash flow

In Increase ease in in Cash sh Flo low w (% In Incre rease) ase) De-bottleneck Line Capacity $2 - 4 mm (7% to 13%) Two Production Wells $0 - 15 mm (0% to 50%) Binary Unit $7 - 9 mm (23% to 30%) Total (net) $9 - 28 mm (30% to 80%)

SAN JACINTO TARGET PRODUCTION

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Assuming 1 new production well Assuming Binary Unit

* reflects annualized results once new production brought online

Annualized “Run-rate” Results

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

RESEARCH ANALYST COVERAGE

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* as of May 11, 2017

SAN JACINTO PHOTOS

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