uava bioenergy growth & investment strategy for ukraine
TRANSCRIPT
BIO-ENERGY SUPPLY CHAIN
MISCANTHUS ENERGY CROP
PELLETIZING PLANT
BIOMASS BOILERS
PROSPECTS FOR HEAT GENERATION
GUARANTEED CONTRACT TO BUY
ALL PRODUCED UAVA PELLETS
AT PREDETERMINED PRICE
Government owned buildings & commercial
enterprises
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UKRAINE AGRO VALLEY ASSOCIATION (UAVA)
MISSION STATEMENT The Ukraine Agro Valley Association’s mission is to establish a sustainable source of bio-energy fuel to Ukraine through a two-step approach of agro-crop (feedstock) production and end-use pelletizing. This source of “clean energy” produced in Ukraine, will provide a domestic alternative to assist in reducing Ukraine’s dependence on imported fossil fuels, most notably its current dependence on Russian natural gas. Our target is to grow with the biomass power generation market and eventually operate as many as twenty 100,000 ton pelletizing plants directly tied to end-users. Each plant will be supplied by approximately 4,000 hectares (10,000 acres) of crop land producing feedstock of the highly efficient bio-energy crop called Miscanthus. Converted to pellet form in our production facilities, these crops will be burned in biomass boilers to produce heat for municipal and private sector facilities replacing current coal and natural gas products. Most all of the important European financial institutions are committed to helping ensure Ukraine’s energy independence. We expect to partner with these agencies to help public and private entities in Ukraine to retrofit their existing gas boilers and make the switch to Bio-Mass heating.
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UKRAINE INDUSTRY OVERVIEW • The slow burn Russian border conflict and its related geo-political issues have led to the drive toward Ukrainian “home grown’ solutions for heating buildings and industrial enterprises. Ukrainian coal, once a staple in the domestic energy supply, has become increasingly more expensive because of calculated sabotage. Coal supply has become increasingly unreliable and international opposition to new coal projects has moved energy focus almost exclusively to domestic Bio-Mass projects. • The development of Bio-Mass based renewable energy (in-country) could reduce demand for imported gas by 15%. Under the National Renewable Energy Action Plan (NREAP) the potential of renewable energy usage in the Ukraine is projected to jump from a current 3% use to over 13% in fifteen years of which 80% should be in Bio-Mass. It is estimated the Ukraine’s increase in renewable energy will reach a ten fold increase from 87PJ’s to 870PJs by 2030.
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WHY MISCANTHUS? The rapid growth, low mineral content and high Bio Mass yield of Miscanthus make it the leader amongst biofuel alternatives. Miscanthus has little to no nutritional value, eliminating the competitive demand that exists with corn and sugarcane and can be grown on infertile land.
Miscanthus vs Straw • Energy Output: 15%+ higher energy output then
straw • Burn Efficiency: 2% ash content vs 8% for straw • Yield: Generates up to 30 tons of crop per hectar
vs. 3 tons for straw • Control: Supply of feedstock without
dependence on agro residue’s availability & price • Perennial Growth: Initial seeding produces crop
for 20+ years vs one year for straw • Harvest Efficiency: Requires 10 times less
machinery & fuel to collect then straw • Secondary Use Markets: Can be sold to many
other industries; poultry, paper production, ethanol and animal bedding are among other uses
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UAVA’s TWO STEP STRATEGY • Pilot: UAVA will initially purchase an existing pelletizing facility in Vinnytsya, Ukraine (pilot plant) that with limited additional investment has the capacity to produce 50,000 tons of pelletized Miscanthus bio-fuel per year supplied by 2,000 hectares of leased cropland. This factory has already been identified and is outfitted with new technology and excellent management that is on the forefront of bio energy in Ukraine. We will use this pilot factory as our “lab” and develop management teams and technology for deployment in our roll out strategy. This pilot plant can be acquired for approximately $5M (with improvements) pending due diligence and validation of its market value. • Rollout: As the demand for Bio-Mass energy grows, we plan to build up to twenty factories over the next five years. Each of these new plants will provide 100,000 tons of capacity and will be strategically placed relative to end user demand for Bio-Mass fuel. Our intention will be to have the production capacity of each factory “pre-sold” ensuring each factory will be operationally profitable in its first full year of production. This capacity will be through “tenders” or sales contracts pre-sold to national and local government end users as well as large private industry enterprises prior to the start of construction of each plant. Feedstock cropland will be aggregated and leased for approximately $125 per hectar per year from the government and farmers cooperatives.
The UAVA team mee.ng with "Heroes of Ukraine" Agro World
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UAVA STRATEGY (CONTINUED) • Our Program: Is a unique blend of international funding and technology, combined with best practices in agro-farming. With guaranteed purchases from the Ukraine government and large private enterprises for our biomass product, UAVA will rapidly achieve positive cash flow and working capital for expansion. Our strategic partnership with Ukraine and American providers of farm equipment, new and retrofitted boilers as well as other logistics suppliers make this a truly international affair. • Risk Factor: There is active political support for this project from the US, Ukraine and international community. Each plant will have it’s production pre-sold and each will be a stand alone operating unit and thus the risk is segmented with each independent plant. Capital is needed to build each factory and seed the supporting cropland in advance, but the fields need only be seeded once as Miscanthus is a perennial plant producing harvest and yields for up to twenty years. If any unforeseen interruption in the contracted demand for UAVA Bio-Mass arises, there are multiple secondary markets both within Ukraine and throughout the European Union for UAVA Miscanthus.
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UAVA’s THREE PHASE APPROACH OF GROWTH & FUNDING
PHASE I (Funding $21,875,000) IMMEDIATE Phase I funding will support the acquisition of the pilot plant, leasing and seeding of 2,000 hectares of cropland to supply feedstock, cropland agro equipment and retrofit investment to increase plant capacity to 50,000 tons. In addition, UAVA will expand greenhouse capacity at its seedling supply partner ITT, who has developed an accelerated growth strain of Miscanthus thru DNA technology that will allow for the growth of seedlings year round. UAVA will also purchase the land for its first new factory site and lease and seed the 4,000 hectares of feedstock cropland.
PHASE II (Funding $155,000,000) 2017-2018 Phase II funding will complete the buildout of the first 100,000 ton plant in 2017 and fund an additional 8 plants in 2017 and 2018. Total capital requirement for each additional plant is approximately $17.9M. It is anticipated that new plants will become operational by October of each year in time to harvest the fields and support the highest demand for winter heating needs.
PHASE III (Funding $179,000,000) OPTIONAL Phase III will continue the rollout of 5 additional plants in each of 2019 and 2020. Operating performance will offer several financing options as free cash flow would provide UAVA with the ability to; 1) continue institutional funding of expansion while paying down accumulated debt; or 2) continued carry of accumulated debt while implementing Phase III expansion through self-funding.
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TIME TABLE 2015 • (Q3) Pilot funding launched and completed by year’s end • (Q4) Finalization of strategic partner relationships • (Q4) Finalize terms for acquisition of Vinnytsya plant & supporting cropland 2016 • (Q1) Expansion of ITT greenhouses to support Miscanthus germination • (Q1) Acquisition and delivery of ITT Miscanthus Rhizomes to greenhouses • (Q1) Vinnizza plant retrofitted and brought up to 50,000 ton capacity • (Q1) Tenders finalized with government and private industry clients • (Q1) Secure first 100,000 ton plant site and supporting cropland • (Q1) Logistic, operational & sales procedures are established • (Q2) Pilot plant and 1st 100k ton 4,000 hectares of Miscanthus planted • (Q4) Phase II funding closed • (Q4) Secure 3 additional plant locations and land leases
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TIME TABLE (CONTINUED) 2017 • (Q1) Construction begins on 1st 100,000 ton plant • (Q1) Human Resource recruiting, development & training • (Q2) 12,000 hectares for next (3) 100,000 plants planted • (Q4) 1st 100k ton facilities brought on line • (Q4) Secure 5 additional plant locations and land leases 2018 • (Q1) Construction begins on next (3) 100,000 ton plants • (Q2) 20,000 hectares for next (5) 100,000 plants planted • (Q4) (3) 100,000 ton facilities brought on line • (Q4) Funding for Phase III closed • (Q4) Secure 5 additional plant locations and land leases
2018-2019-2020 For the purposes of this model, UAVA will continue its rollout with 5 new plants brought online in each of 2019-2020-2021 using the same assumptions as applicable to earlier openings.. We expect issues all along the way! SUMMARY By year end 2020, UAVA plans to operate 20 plants and manage 78,000 hectares of land which will supply the feedstock to produce approximately two million tons of energy rich Miscanthus pellets.
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WORKING CAPITAL: 100,000 TON PLANT
Total Funding Requirement Per Plant $17,878,975
Pelletizing Plant Capacity: # of Units $ per Unit Total
AgricultureLand acquisition -‐ hectors 4,000 500$ 2,000,000$
Rhizomes (seeding material) 40,000,000 0.10$ 4,000,000$ Equipment 2,360,000$
Labor & Supplies 810,000$ Misce 458,500$
Total Agriculture: 9,628,500$
Plant Land 976,500$
Plant Equipment and Machinery 4,808,475$
Permits 40,000$
Professional Services 627,000$
Plant Construction 1,798,500$
100,000 tons
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UAVA ROLLOUT SCHEDULE
Total Funding Requirements $176,500,000
2016 2017 2018 2019 2020 2021
# of new Pellet Plants
1 (Pilot)
1 3 5 5 5
Cumula6ve Pellet Plants 1 2 5 10 15 20
# of Hectares 2,000 4,000 12,000 20,000 20,000 20,000
Cumula6ve Hectares 2,000 6,000 18,000 38,000 58,000 78,000
Produc6on Capacity (Tons) 50,000 100,000 300,000 500,000 500,000 500,000
Cumula6ve Capacity 50,000 150,000 450,000 950,000 1,450,000 1,950,000
New Capital Requirement $21.9M $11.6M $53.6M $89.4M TBD TBD
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STRATEGIC PARTNERS
• Mischanthus seeding production • Manufacturing equipment for planting and harvesting Miscanthus • Factory construction and equipment acquisition • Technology to run manufacturing • Operational and reporting software • Boilers to replace or retrofit coal or straw burning furnaces
www.babcock.com www.iQ-‐ukraine.com
www.newenergyfarms.com www.naas.com