Financing Algae Projects Martin A. Sabarsky, CEO October 2, 2014 Page 1 Cellana 2014 Cellana Inc. 2014
Summary of Cellana Financing Strategy 1. Establish Robust, Multi-Product Business Model A. Capable of being successful based on current yields, costs, & prices 2. De-Risk Commercial Development in Staged Approach A. Establish breadth and depth of platform through industrial-scale production of diverse strains meeting business model criteria B. Conduct large-scale product trials across all product areas C. Sign binding, contingent off-take agreements for product streams from future commercial facilities (e.g., 2013 Off-Take with Neste Oil) D. Scaling based on modular components (PBRs, Ponds) designed to be on the same order of magnitude as those demonstration facility ( <10x ) 3. Maximize Non-Dilutive Funding A. Joint Venture with Shell Oil one of the largest in the industry B. Multiple multi-million-dollar grant programs / consortia Page 2 Cellana 2014
Cellana Partners Since Inception -- Corporate and Gov t Over $100 million invested in R&D, facilities, production, product trials 1997 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Pilot Facility Production (10+MT) ($25MM+) Ongoing Demonstration Facility Production (13+MT) CEROS Funding ($700K) Shell JV Funding ($70MM+) Ongoing DOE / USDA Funding ($15MM+) ABY Page 3 Cellana 2014
Cellana Partners Since Inception -- Academic & Nat l Labs Over $100 million invested in R&D, facilities, production, product trials Page 4 Cellana 2014
Cellana s Biorefinery Business Model Builds on a Foundation of Biofuel Research to Address Additional Valuable Products Omega-3 nutritional oils and high-value aquaculture / animal feed products are an extension of Cellana's core competency - screening, developing, and producing algae biofuel feedstock. = oil separation $4B Omega-3 nutritional oils market 1 2 $1T+ fuels and energy markets $9B aquaculture feed / fishmeal market $300B livestock feed market Page 5 Cellana 2014
ALDUO Enables Economic Algae Production Unencumbered by Contamination by Balancing Higher-Cost PBRs with Lower-Cost Open Ponds High 100% PBRs Cost <50% PBRs / >50% Open Ponds Low 100% Open Ponds Low Risk of Contamination High Covered by US Patents 7,770,322 & 5,541,056, Similar Patents/Patents pending in Europe, Australia, South Africa, Brazil, Japan, Mexico Page 6 Cellana 2014
Three-Product Biorefinery: 3 Products From Each Strain Via ALDUO + Conventional Upstream/Downstream Processes Off-the-shelf ag inputs + sunlight + CO 2 + ALDUO = Off-the-shelf harvesting, de-watering, & oil/biomass separation techniques Page 7 Cellana 2014
What We Like About Marine Algae The Right Kinds of Proteins Amino acid distribution is comparable to high-value food & feed proteins Source: Williams and Laurens, 2010 Page 8 Cellana 2014
... And They Make the Right Kinds of Oils for BOTH Biofuels AND Omega-3 Nutritional Oils... Group % Glycerides and Fatty Acids 79 Phospholipids 1 Sterols 2 Carotenes 1.5 Chlorophyll 0.30 Others 16.2 Chain Length % By Weight C12:0 0.00 C14:0 3.56 C14:1 0.04 C16:0 44.32 C16:1n7 34.67 C18:0 0.72 C18:1 1.14 C18:2 2.44 C18:3 0.54 C20:0 0.06 C20:1 0.00 C20:2n6 0.06 C20:4n3 4.31 C20:5n3 6.52 C22:0 0.04 C22:1 0.16 C24:0 0.03 C12:0 C14:0 C14:1 C16:0 C16:1n7 C18:0 C18:1 C18:2 C18:3 C20:0 C20:1 C20:2n6 C20:4n3 C20:5n3 C22:0 C22:1 C24:0 C26:0 C26:1 % by weight 0 10 20 30 40 50 PUFAs- Eicosapentaenoic Acid (EPA) C26:0 1.11 C Algae oil (%) Palm oil (%) C26:1 0.28 Page 9 Cellana 2014
Flexible Biorefinery Production / Revenue Model Bioproducts Generated from the Use of the Entire Algae Biomass 2 1 891kg Total per MT* (11% yield loss) 121kg Biocrude Oil 62kg Omega-3 Oil (35% conc.) @ $100/bbl, $0.68/kg (fossil petroleum px benchmark) @ $100/kg (discount to Martek DHA wholesale px benchmark) $6,928 per MT (dry weight) $82 $6,138 = oil separation 708kg Algae Meal (Residual Proteins, Sugars, Minerals, Lipids, & Micronutrients) @ $1.00/kg (premium to soymeal px benchmark; discount to fishmeal px benchmark) $708 * Reflects recovery based on initial whole algae fraction of 6% Omega-3 oils, 25% Biocrude oil, 69% Algae Meal (Protein/Sugars/Minerals/Lipids/Micronutrients), and 11% total yield loss after two separations Page 10 Cellana 2014
Highly Profitable Production of Algae Bioproducts Projected Revenue & Costs per MT for 88-ha. Commercial-Scale Facility in USA, 2016 Estimated 46% Gross Margin and 62% Cash Margin at current yields / costs (Higher margins / lower unit costs at larger scale and over time) $7,000 $6,928 per MT $6,000 $5,000 $6,138 Estimated: Gross Margin 46% Cash Margin 62% Omega-3 Oil $100 per kg (35% conc. DHA/EPA) US$/MT $4,000 $3,000 $2,000 $3,712 per MT $1,046 depreciation Algae Meal $1.00 per kg Biocrude Oil $100 per bbl, $0.68 per kg $1,000 $0 $708 $82 Revenue $2,666 cash cost Production cost Page 11 Cellana 2014
Commercial-Scale Off-Take Agreement with Neste Oil Off-Take Agreement for algae oil announced June 2013 Neste Oil is the largest refiner of renewable diesel in the world Multi-year off-take agreement Commercial-scale quantities of algae oil Contingencies for Cellana production capacity, EU/US sustainability criteria, and other factors Non-Exclusive for both parties Samples have shown that Cellana is able to produce algae oil suitable for renewable fuel production by Neste Oil. The off-take agreement with Cellana allows us access to commercial-scale volumes of cost-competitive algae oil in the future. Neste Oil's renewable fuel plant in Rotterdam in the Netherlands was commissioned in 2011. Neste Oil started up the world's largest renewable diesel refinery in Singapore in November 2010. Page 12 Cellana 2014
Over 6 MT of Cellana s ReNew Feed Used in Diverse & Successful Feed Trials Finfish, shellfish, chicken, pigs, cattle most major sources of meat Successful large-scale feed trial for Salmon, Carp, & Shrimp Marine microalgae from biorefinery as a potential feed protein source for Atlantic salmon, common carp and whiteleg shrimp, V. Kiron (Bodo University) et al., published online: Aquaculture Nutrition, 3 APR 2012 Cellana s ReNew Feed was acceptable for the three animals at the maximum levels tested (Salmon 10%, Carp 40%, Shrimp 40%) There were negligible differences in growth and hardly any in the biochemical composition during the study period Successful large-scale feed trial for Broiler Chicks Potential and Limitation of a New Defatted Diatom Microalgal Biomass in Replacing Soybean Meal and Corn in Diets for Broiler Chickens, Xin Gen Lei (Cornell) et al., published online: J. Agric. Food Chem., 4 JULY 2013 Cellana s ReNew Feed could substitute for 7.5% of soybean meal alone, or in combination with corn, in diets for broiler chicks when appropriate amino acids are added Page 13 Cellana 2014
Modular Growth Enables Scale-Up of Technology to Commercial Facilities Other target sites around the globe identified generally lower cost than in USA 2004+ Laboratory Research 2004+ Pilot Facility 2008+ Kona Demonstration Facility (2.5 hectares) 2015-2016 N. America, Phase 1 (88 hectares; $83MM capex; 2016 Production: ~4,600 MT) 2018-2019 N. America, Phase 2 (additional 88 hectares for 176 hectares total; $84MM additional capex; 2019 Production: ~11,000 MT) Page 14 Cellana 2014
Cellana Financing Strategy / Process In process of raising <$5MM Series A financing Support corporate development and pre-commercial facility development activities Finance / Build First Commercial Facility (FCF) FCF will be <$100MM to minimize total capital/financing required Project Equity Assume 100% equity for first (small-scale) owned & operated commercial facility Minimize equity % in project financing packages for expansions / subsequent commercial facilities Maximize project debt for all commercial facilities Potentially available for 1 st and 2 nd commercial facilities DOE/USDA loan guarantees for renewables projects Local/State government cleantech support programs Higher debt levels possible for 3 rd, 4 th, etc. commercial facilities Page 15 Cellana 2014
Revenue / Kg Production Cost / Kg Scaling of Algae Biomass Industry Easy as A, B, C A. Biorefineries with High-Value Anchor Product(s) $ B. Bolt-On Expansions for Fuel + Feed C. Standalone Biorefineries for Fuel + Feed $4 $3 $2 $1 $ $ $ $ $ 70 60 50 40 Biomass Yield MT / ha / yr Crude Oil Production Production cost Algae biomass yield Food, feed, & fuel prices 1 billion gpy 1-2 billion gpy 10+ billions gpy > $2/kg $2/kg $1/kg < 70MT/yr > 50MT/yr > 60MT/yr Low Medium High Page 16 Cellana 2014
Summary of Cellana Financing Strategy 1. Establish Robust, Multi-Product Business Model A. Capable of being successful based on current yields, costs, & prices 2. De-Risk Commercial Development in Staged Approach A. Establish breadth and depth of platform through industrial-scale production of diverse strains meeting business model criteria B. Conduct large-scale product trials across all product areas C. Sign binding, contingent off-take agreements for product streams from future commercial facilities (e.g., 2013 Off-Take with Neste Oil) D. Scaling based on modular components (PBRs, Ponds) designed to be on the same order of magnitude as those demonstration facility ( <10x ) 3. Maximize Non-Dilutive Funding A. Joint Venture with Shell Oil one of the largest in the industry B. Multiple multi-million-dollar grant programs / consortia Page 17 Cellana 2014
Thank You For further information please visit www.cellana.com or contact: Martin Sabarsky Chief Executive Officer martin.sabarsky@cellana.com (858) 774-7915 Page 18 Cellana 2014