Quarterly Meeting 2012Feb13-14

Zilkha Black® Pellets
The Clean, Renewable Alternative to Coal
Renewable Power from Coal Plants
Biomass Pellets Trade Asia
Seoul, Korea
September 23-24
Zilkha Black® Pellets Fuel Renewable Baseload Power
Thermally treated pellet
NOT a torrefied pellet
An advanced wood pellet is:
• Grindable
• Low-dust
• Water-resistant
• Can be burned in existing
steam turbine power plants
• Co-fired up to 100%
• Minimal capital expenditure
Certified sustainably harvested
Carbon neutral compared to
traditional fossil fuels
2
Zilkha Accomplishments
 Construction nearly complete on 275,000 metric
tonne/yr Black pellet plant in Selma, Alabama (U.S.)
 Selma plant output sold under long term contract to
European utility
 First license agreement executed with third party
covering multiple sites in Northeast U.S.
 Zilkha announced a second, larger plant located in
Monticello, Arkansas (U.S.)
 Additional offtake being negotiated to be supplied by
Zilkha and additional licensee plants
3
Zilkha Black® Pellet Advantages for Korea and SE Asia
 Reduced shipping cost means delivered energy cost in line with
white pellets, but with better performance than white pellets
 Greatly improved safety and reduced storage costs compared to
white pellets or chips
 Korean companies can benefit from Black pellets:
o Genco’s who begin with co-firing can move up to a 100% conversion in
the REC market
o Trading houses who source fuel for those Genco’s can also supply fuel
to commercial and industrial customers
o Engineering companies and boiler/burner manufacturers can provided
guidance and services to Genco’s and commercial/industrial market
4
Zilkha Business Model: Emission Driven Market
 Europe and Asia are focused on SOx, NOx, and CO2 reduction
and have mandates and incentives in place today
 North America is focused on SOx, NOx, and Hg with tighter
emissions standards that require significant capital investment
 Our current customers are European utilities who have experience
burning biomass in pulverized coal-fired units
 We serve this market with a better product—Zilkha Black® pellets
o
o
o
o
Patented Zilkha technology
NOT torrefaction
Durable, water resistant pellet with reduced dust and better safety
Drop-in replacement for coal with minimal capital investment
5
Zilkha Black® Pellet Advantages
Key Criteria
Zilkha Black® Pellets
Conventional White Pellets
HANDLING
Water-resistant
Disintegrate upon water contact
1) COST: Zilkha Black® pellets contain
and retain more energy than white
LOGISTICS
19.5 GJ per bdmt
750 kg/m3
17.0 GJ per bdmt
640 kg/m3
2) SAFETY: Zilkha Black® pellets are
safer than white
DUST
98% durability index
99% is >74 microns (low-risk)
96.5% durability index
Dust particles prone to explosion
3) DROP-IN: Zilkha Black® pellets grind
and burn more like coal than white
SAFETY
No self-heating
Minimal off-gassing
Self-heating common
Off-gassing significant
GRINDING
25-35 grindability index
15 hp-hr/mt mill energy demand
15-20 grindability index
26 hp-hr/mt mill energy demand
COMBUSTION
Higher ignition potential at
16.28 [kJ/kg fuel/°C]
Lower ignition potential at
12-14 [kJ/kg fuel/°C]
Significant capex
and opex avoided
by customer
6
Zilkha Black® Pellets Perform Like Common Coals
Parameter
Zilkha Black®
Pellets(1)
Russian Coal #1,
G Grade(2)
Central Appalachian
(Long Fork)(3)
Powder River Basin
Coal-Eagle Butte(4)
Moisture %
1.44
7.37
7.16
23.92
Ash, Dry %
0.72
14.1
11.52
4.65
Volatile, Dry %
78.53
35.92
31.23
33.95
Sulfur, S, Dry %
0.03
0.229
1.07
0.29
8,447
11,218
12,114
8,966
19,647
26,093
28,117
20,854
54.42
69.38
66.93
53.46
Hydrogen, H, Dry %
6.03
4.69
4.43
2.71
Nitrogen, N, Dry %
0.15
2.25
1.34
0.58
Mercury, ug/g
0.01
0.52(5)
0.15(7)
0.08(7)
Calorific Value, BTU/lb
Calorific Value, kJ/kg
Carbon, C, Dry %
Source:
1)
Analysis Report 0089_C1_SWPELLET_10-3-11. SGS North America Minerals Services Division. South Holland, IL. October 18, 2011.
2) LQSi Data Statistical Results By Program. SGS Minerals Services Division. 2010.
3) Tillman, David A., Duong, Dao N. B. Fuel Selection for Cofiring Biomass in Pulverized Coal and Cyclone Fired Boilers. Foster Wheeler North American Corp. Clinton, NJ. 2009.
4) Testing of Biomass/Coal Blends in WRI’s Combustion Test Facility. Western Research Institute. May 9, 2011.
5) Yudovich, Ya E., and M. P. Ketris. "Mercury in Coal: a Review." International Journal of Coal Geology 107-134 62 (2005): 117.
6) Leaner, J., James Dabrowski, R. Mason, P. Ashton, K. Murray, T. Resane, M. Richardson, M. Ginster, R. Euripides, E. Masekoameng, and G. Gericke. Mercury Emissions from
Point Sources in South Africa. Council for Scientific and Industrial Research, 2008. PPT.
7) United States. Department of the Interior. U.S. Geological Survey. Mercury in Coal--Abundance, Distribution, and Modes of Occurance. By Susan J. Tewalt, Linda J. Bragg, and
Robert B. Finkelman. 2001. USGS Fact Sheet FS-095-01.
7
HANDLING: Black pellets are water-resistant
Zilkha Black®
Pellets compared
to conventional
white pellets after
soaking in water
8
LOGISTICS: Black pellets will always be cheaper to ship
TWO DISTINCT ADVANTAGES:
1) Each tonne of Black
pellets holds 15% more
energy than white, 140%
more than chips
2) Each ship will hold 15%
more tonnes of Black
pellets than white, and
115% more than chips
ZILKHA BLACK® STD WHITE
CHIPS
Net Calorific Value (CV) 19.5 GJ/mt
17.0 GJ/mt
8.0 GJ/mt
Pellet Bulk Density
750 kg/m3
640 kg/m3
350 kg/m3
Cubic space onboard
58,500 m3
58,500 m3
58,500 m3
Tonnes onboard
43,875 mt
37,440 mt
20,475 mt
CV onboard
851,175 GJ
636,480 GJ
163,800 GJ
Relative freight
1.00
1.34
5.20
~30% savings with
Zilkha Black® pellets
vs. white pellets and
~80% vs. chips
9
LOGISTICS: Loads Like Coal and No Problem with Rain
10
SAFETY: White pellets require extra safety measures
 Fines = dust = very real explosion risk
 Explosion mitigation takes capital
beyond that required to handle coal
 Venting during transportation
 Off-gassing of CO, CO2, and CH4
 Pellet pile self-heating
Source: Staffan Melin.
Safety in Handling Wood
Pellets. 2008.
11
SAFETY: Black pellets limit dangerous gas emissions
Less carbon monoxide:
 Zilkha Black® pellets tested as far
less reactive than white
WHITE
 Zilkha Black® pellets showed
reduced oxygen depletion
BLACK
 Oxygen depletion is a significant
operational issue. Extra workers
and other special safety restrictions
are required for workers entering
white pellet storage areas
More oxygen:
Less methane:
WHITE
BLACK
 These results @ 25 C. but
similar results @ 45 C.
BLACK
WHITE
12
Zilkha Technology at a Glance
Manufacturing of Zilkha Black® Pellets is
similar to the production of standard
white pellets, with the addition of our
patented thermal treatment step.
Intake
Drying
Sawdust, wood chips,
pulpwood, and other
fibrous waste
Reduce moisture content
from ambient (~50%)
to 10-12%
Proprietary
Patented Zilkha
Thermal Treatment
Milling & Pelletizing
Feedstock is resized then
passed through dies to
create Zilkha Black® pellets
* - Source: Poyry Wood Pellet Multiclient, 2012
13
First Commercial Zilkha Plant: Selma, AL (275,000 mtpy)
 First full-scale Black pellet plant
 275,000 metric tpy
 Construction complete October
2014
 Commissioning 4Q 2014
 First Black pellets ship Q2 2015
to Europe, long term contract
 Export from Port of Mobile
 Plant staffing: 55 jobs
 Project financing
Wood Yard
Zilkha Black
Pellet
Technology
Dryers
Pelleting
14
Successful Full-Scale Testing by Utility Customers
2,700 tonne test burn in the Netherlands, Mar-2012

Over ten (10) full-scale tests completed in European coal units and
additional tests planned

Black pellets recently delivered for a power boiler test in Oct-Nov 2014
in Japan

Unit co-firing levels from 20-70% in large units to 100% in smaller units

Units ranged in size from 80-500 MW

Success grinding in existing coal
pulverizers (ball and roller) as well as
hammer mills

Coal mills have successfully run on
100% Black pellets
Black pellets stored outdoors in Sweden since Mar-2012
15
Many Paths for Korean Companies to Supply Market
Black Pellet Plants
North &
South
America
Southeast
Asia
Customer
Customer
Genco
Customer
and IPP
Customers
Korean
Trading
Houses
Korean
Engineering
and Boiler
Companies
16