BioChip Energy Systems LP

1
BioChip Energy Systems LP

• Opportunity Presentation
• November, 2007

2
Fibre Supply

• 300 million cubic meters of beetle infested
  standing Lodgepole pine
• Located in Central British Columbia
• Life expectancy 3 to 25 years, depending on
  climateand soil conditions

3
Fibre Supplier
British Columbia Ministry of Forests

• District and Regional Forest Offices
• Forest Harvesting Tenure Licenses
• Special rates for infested timber not suited for
  sawlogs or timber production
• Special legislation expected next year for
  bioenergy tenure licensing.

4
Power Buyer
BC Hydro and Power Authority

• Under Its Standing Offer Program
• Will purchase all power from Independent Power
  Producers for plants of 10 megawatts or less
• Price of 7.2 per kilowatt hour in Central BC
• Addition 1 Federal subsidy for green energy

5
Market Size

• Estimated fibre required to produce one
  megawatt-year of electricity 5,500 cubic meters
• Gross revenue from 1 megawatt-year 8.2 /
  kilowatt hour 24 hours/day 365 days/year
  1,000 kilowatts/megawatt 718,320.
• Estimated inventory of fibre in megawatt-years
  300 million / 5,500 54,545 megawatt-years
• Estimated gross production value of dead fibre
  inventory 718,320 54,545 39,180,764,400.
  40 Billion

6
Next Generation BioChip Power Plants

• Based on wood gasification prior to combustion
• Produces less emissions than direct fuel
  combustion
• Gas combustion produces steam to drive cost
  efficient turbines for power generation
• Also produces auxiliary heat for secondary
  revenue source in CHP (Combined Heat and Power)
  installations
• Estimated cost 2,000 - 2,600 / kilowatt hour

7
Summary Of Business Opportunity

• The core business
• Massive fibre inventory
• Established buyer
• Advanced but tested generation technology
• Environmental Factors
• Additional revenue from surplus heat
• Bioenergy is carbon neutral facilitates
  approvals
• Potentially additional revenue from carbon
  trading

8
BioChip Energy Power Plants

• Estimated Revenue10 Megawatt Plant

9
Assumptions

• 10 Megawatt Power Plant
• Cost of construction _at_ 2,300 / kilowatt - 23
  million
• Biomass per megawatt year - 5,500
• Price of power - 8.2 / kilowatt hour
• Operating costs - 125,000 / megawatt / year
• 10 year depreciation (20 / year)
• Debt financing - 35 Equity Financing - 65
• Fibre Supply
• Stumpage, Roads, Silviculture - 7.25 / cubic
  meter
• Stump-Gate fibre supply cost - 35 / cubic
  meter
• Cost Inflation - 8
• 15 year tenure license

10
Estimated Revenue
11
Estimated Business Valuation
12
Accelerating Revenue Growth

• Build more plants one per year.
• Increase efficiencies through growing scale of
  operations
• Increase plant efficiencies through new
  technologies
• Increase revenues from heat through Joint
  Ventures
• Reduce plant costs through design and
  construction refinements
• Increase debt financing

13
BioChip Energy Systems

• Estimated Returns From the Second10 Megawatt
  Plant

14
Assumptions

• 10 Megawatt Power Plant
• Cost of construction _at_ 2,300 / kilowatt - 23
  million
• Biomass per megawatt year - 5,500
• Price of power - 8.2 / kilowatt hour
• Operating costs - 125,000 / megawatt / year
• 10 year depreciation (20 / year)
• Debt financing - 45 Equity Financing - 55
• Fibre Supply
• Stumpage, Roads, Silviculture - 7.25 / cubic
  meter
• Stump-Gate fibre supply cost - 35 / cubic
  meter
• Cost Inflation - 8
• 15 year tenure license

15
Estimated Revenue - 2 Plants
16
Estimated 2-Plant Business Valuation
17
Investment Opportunity
Current offering

• BioChip Limited Partnership Units 1,000,000
• 1,000 Units _at_ 1,000 / Unit
• No Minimum
• 10 Bonus In Units For 25,000 or More
• Full Write-off Against Taxable Income
• Optioned For Conversion

18
Use Of Proceeds

• Power Plant Design Engineering
• Forest Tenure Licensing
• Plant Site Location In Consultation With BC Hydro
• Construction Contract Preparation
• Legal, General and Administrative

19
Tax Reduction Benefits
20
Conclusion
For more information

• Contact
• Edgar Froese, General PartnerBioChip Energy
  Systems LP426 - 470 Granville St.Vancouver, BC
• Phone [phone]
• Toll-free 1-877-246-3624
• Email edgarfroese_at_netequity.biz