EVERYTHING WE LEARNED ABOUT BUSINESS, WE LEARNED FROM THE HYDRO PROJECT.

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1 EVERYTHING WE LEARNED ABOUT BUSINESS, WE LEARNED FROM THE HYDRO PROJECT. NORMAN JAEHRLING, CEO PIC MOBERT FIRST NATION NADF ENERGY & FORESTRY FORUM, 2017

2 MOST EVERYTHING WE LEARNED ABOUT BUSINESS, WE LEARNED FROM THE HYDRO PROJECT. THIS IS THE STORY OF HOW OUR SMALL FIRST NATION COMMUNITY BUILT A HYDROELECTRIC PROJECT (2) AND IS LEVERAGING ITS EXPERIENCE TO BUILD OUR BUSINESS ASSETS & ECONOMY. WE WILL SHARE STORIES AND PERSPECTIVES ON: HOW WE GOT INTO THE HYDROELECTRIC BUSINESS AND WHAT WE BUILT WHAT WE ENCOUNTERED & LEARNED ALONG THE WAY THE FOUNDATIONS ON WHICH WE ARE NOW BUILDING OUR ECONOMY & NATION

3 WE ARE THE NETAMISAKOMIK PEOPLE OF THE PIC MOBERT FIRST NATION OJIBWAY NATION 1,000 MEMBERS GROWING COMMUNITY OF 400+ TRADITIONAL TERRITORY AND RESERVE LANDS AREAS CENTRED ON WHITE LAKE/RIVER IN NORTHWESTERN ONTARIO

4 WE ARE BUILDING THE FOUNDATION FOR A PROSPEROUS FUTURE ALTHOUGH WE WILL FOCUS ON BUSINESS, OUR LEADERS ARE ADVANCING ON NUMEROUS FOUNDATIONAL INITIATIVES: CHI-NAAKNIGEWAN (CONSTITUTION) RESTORATION OF JURISDICTION ON EDUCATION/ANISHINABEK EDUCATION SYSTEM 4 YEAR COUNCIL TERMS/FIRST NATIONS ELECTIONS ACT LAND CLAIM ADDITIONAL TO RESERVE/LAND & A LARGER LAND BASE PLANNING COMMUNITY STRATEGIC PLAN, ECONOMIC DEVELOPMENT STRATEGY, NOW COMPREHENSIVE COMMUNITY PLANNING SOVEREIGN WEALTH STRATEGY HOW TO ORGANIZE AND MANAGE OUR CURRENT AND ANTICIPATED ASSETS FOR LONG TERM ECONOMIC SELF-SUFFICIENCY

5 IN 1992, WE STARTED WORK ON BUILDING A HYDROELECTRIC PROJECT EXCLUSIVE DEVELOPMENT RIGHTS AWARDED BY MINISTER OF NATURAL RESOURCES AT THE TIME, THEY WERE LITTLE MORE THAN DOTS ON A MAP NO VIABLE MARKET FOR PRIVATE POWER UNTIL EARLY 2000 S (NOW CHIEF) WAYNE SABOURIN APPOINTED TO LEAD FILE IN 2000

6 24 YEARS LATER, WE COMMISSIONED THE GITCHI ANIMKI HYDROELECTRIC PROJECT OFFICIALLY OPENED ON JULY 27, 2016 LOCATED IN PMFN TRADITIONAL TERRITORY ON THE WHITE RIVER TWO GENERATING STATIONS COMBINED CAPACITY OF 18.9 MW INCORPORATED A UNIQUE MICROTURBINE TECHNOLOGY 50/50 JOINT VENTURE WITH REGIONAL POWER INC. REPLACES THE FUNCTION OF AN EXISTING MNR REGULATING DAM FIRST HYDROELECTRIC DEVELOPMENTS IN A PROVINCIAL PARK SINCE NIAGARA FALLS RECOGNIZED WITH ONTARIO WATER POWER ASSOCIATION AWARDS FOR SUSTAINABILITY & INNOVATION (2016)

7 AND WITH SOME UNIQUE VALUE-ADDED MAJOR POINT OF TENSION WITH REGULATORY AGENCIES IS COMPENSATION FLOWS MIGHT SAY INTERESTS OF REGULATORS VS. DEVELOPERS ARE OPPOSED ON THIS ONE MORE VS. LESS SOLUTION = GIVE A LITTLE ON FLOWS BUT IMBED COMPENSATION MICRO TURBINES INTO THE REGULATING DAMS COMPENSATION FLOWS ARE TURBINED BEFORE RETURNING TO THE BYPASS REACH MICRO-TURBINES PROVIDE ADDITIONAL KW (RUN 24/7) & REVENUE (ABOUT $750K/YEAR - $3+ MILLION OVER INITIAL 40 YEAR CONTRACT) RECIPIENT OF $1 MILLION IN FUNDING FROM MOE SHOWCASING INNOVATION IN WATER

8 AN ASSET FOR FUTURE GENERATIONS 40 YEAR POWER SALE CONTRACT WITH IESO (FIT) HYDRO ASSETS ARE CENTURY ASSETS WILL OPERATE FOR 100+ YEARS WILL PROVIDE LONG TERM: REVENUE MINIUMUM & VARIABLE DISTRIBUTIONS EMPLOYMENT 3 OPERATORS HIRED AND TRAINED BUSINESS OPPORTUNITIES SUPPLYING GOODS & SERVICES TO OPERATIONS

9 SO IT WAS A LITTLE MORE CHALLENGING THAN WE FIGURED ALONG THE 23 YEARS, WE ENCOUNTERED A FEW CHALLENGES WITH: FIGURING OUT WHAT WE HAD, AND WHAT IT WOULD DO DEFINING AND OPTIMIZING THE RESOURCE AND THE PROJECT SCOPE FINDING THE RIGHT PARTNER, PARTNERSHIP AGREEMENT WAITING FOR THE RIGHT ELECTRICITY PROCUREMENT PROGRAM, COMMERCIAL CONDITIONS GETTING THROUGH THE EA PROCESS GETTING A VIABLE BID GETTING IT FINANCED GETTING IT BUILT

10 IN THE BEGINNING ALL WE HAD WHERE A FEW DOTS ON A MAP OPPORTUNITIES AROSE OUT OF MNR ASSESSMENTS & PROMOTION OF HYDRO POTENTIAL ON THE WHITE RIVER DEVELOPMENT RIGHTS/ APPLICANT OF RECORD STATUS WERE AWARDED BY THE MNR MINISTER IN 1992 ALSO TO PIC RIVER FOR DOWNSTREAM SITE AT UMBATTA FALLS SO WE HAD THE EXCLUSIVE RIGHT TO DEVELOP 3 DOTS AND THAT S ABOUT ALL WE HAD, KNEW

11 THEN WE FIGURED OUT WE HAD THE WRONG DOTS IN THE EARLY DAYS, WE SPENT TIME LEARNING ABOUT HYDROELECTRIC DEVELOPMENTS AND THE BUSINESS OF HYDRO, ENERGY AND DECIDED WHETHER OR NOT WE WANTED TO INTERRUPT OUR TRADITIONAL VALUES FOR ECONOMIC DEVELOPMENT WE ASSESSED OUR DOTS (PRE-FEASIBILITY STUDY) & FIGURED OUT THAT THERE WEREN T REALLY VIABLE SO WE ASKED MNR TO CHANGE THEM SIMPLE REQUEST BUT IT TOOK ABOUT 2 YEARS AFTER THEY SAID YES SO WITH A BETTER FEEL FOR WHAT WE HAD/COULD HAVE, WE NEEDED TO FIND THE RIGHT PARTNER.

12 WE THEN LEARNED THAT DATING IS EASIER THAN MARRIAGE (IN BUSINESS PARTNERSHIPS) KEY CRITERIA FOR SELECTING A PARTNER: KNOW WHAT THEY ARE DOING HAVE (VERY) DEEP POCKETS IN THE RESOP, FIT DAYS, MANY NEW ENTRANTS INTO ONTARIO ENERGY SECTOR (AKA SHARKS ) DATING ( MOU ) REASONABLY EASY COMMITMENT (DEFINITIVE BUSINESS AGREEMENTS) A DIFFERENT STORY 2 ROUNDS OF NEGOTIATIONS & 4 YEARS WE SIGNED THE FINAL AGREEMENT WITH REGIONAL POWER

13 AND THEN WE LEARNED THAT TIMING IS EVERYTHING (WHEN IT COMES TO POWER PROCUREMENT) NOTHING CAN PROCEED WITHOUT A VIABLE POWER SALE CONTRACT: ONTARIO HYDRO-NUG PROGRAM (90 S) MARKET OPENING/MERCHANT CONTRACTS (EARLY 200 S) RESOP PROGRAM NORTHERN HYDROELECTRIC INITIATIVE FINALLY, FIT PROGRAM (ONE OF FIRST ABORIGINAL PROJECTS AWARDED A CONTRACT) ABORIGINAL ADDER & ABORIGINAL RENEWABLE ENERGY FUND SADLY WE ARE MOVING INTO THE POST-FIT ERA FOR LARGE HYDRO

14 WE THOUGHT WE WERE FRIENDS? (WITH ONTARIO & CANADA) YOU WOULD THINK THAT ONTARIO S POLICIES IN RENEWABLE ENERGY, FIRST NATION PARTICIPATION IN ENERGY WOULD BE ALIGNED? NOPE. ANY OPPOSITION WAS NOT FROM INSIDE GOVERNMENT, NOT FROM STAKEHOLDERS THROUGHOUT THE EA PROCESS, IT SEEMED THAT THE PEOPLE ACROSS THE TABLE FROM US WERE AGAINST US AS A CONSEQUENCE: EA TOOK 5+ YEARS INCLUDING SET-BACKS FROM THE ALLEGED CARIBOU & WHIPPOORWILL AFTER CONSTRUCTION COMMENCED, MOECC REVISITED APPROVAL & ASKED US TO PAUSE BUT WE GOT IT DONE.AND INSIDE A PROVINCIAL PARK, NO LESS

15 BUT, IT AIN T OVER TILL ITS OVER! WITH EA & DESIGN IN HAND, WE WERE READY TO ROLL, RIGHT? NEXT CHALLENGE GET A VIABLE TENDER BID (IT TOOK 2 ROUNDS) VIABLE TENDER = CONSTRUCTION CONTRACT & FINANCING BUT WAIT THE ORIGINAL CONTRACTOR DEFAULTED AND WE HAD TO TAKE ON THE ROLE OF G.C. AND IN THE MEANTIME, WE HAD TO FIND MORE MONEY!

16 BUT WE RE SELLING POWER NOW. ACHIEVED OUR COMMERCIAL OPERATIONS IN MAY, OPERATORS TRAINED & EMPLOYED FROM THE COMMUNITY JOBS FOR LIFE RECEIVED AWARDS FROM ONTARIO WATER POWER ASSOCIATION FOR INNOVATION & SUSTAINABILITY (2016) FIRST DISTRIBUTIONS WILL HAPPEN IN MAY, 2017

17 AND WE VE PUT THIS EXPERIENCE TO WORK IN THE ENERGY SECTOR GIIZIS SOLAR LP: 15% INTEREST IN 3 ROOF TOP SOLAR PROJECTS (750 KW) 50% INTEREST IN 3 GROUND MOUNT PROJECTS (1.5 MW) BAMKASHWADA LIMITED PARTNERSHIP/SUPERCOM INDUSTRIES LP 20% INTEREST IN EAST-WEST TIE TRANSMISSION LINE MAJOR ROLE IN CONSTRUCTION LEVERAGING KNOWLEDGE AND EXPERIENCE IN CONTRACTING & WORKFORCE ENGAGEMENT

18 THE RIBBON CUTTING WAS MORE THAN THE CELEBRATION OF A CONSTRUCTION MILESTONE THE CULMINATION OF OVER 2 DECADES OF EFFORT & EDUCATION IN HOW TO EXECUTE A MAJOR BUSINESS PROJECT COMMUNITY OFFICIALS & THE BROADER COMMUNITY WERE INVOLVED IN THE PLANNING, ANALYSIS, PROBLEM SOLVING AND EXECUTION OF ALL ASPECTS OF THE PROJECT FROM IDEA THROUGH TO OPERATIONS

19 AND A FUNNY THING HAPPENED ALONG OUR WAY TO OPENING OUR HYDRO PROJECT. WE BECAME BUSINESS PEOPLE. AS LITTLE AS 10 YEARS AGO, WE HAD NO BUSINESS ENTERPRISES CURRENTLY HAVE OVER 14 VENTURES, CO- VENTURES IN VARIOUS SECTORS - TOGETHER EMPLOY NEAR 200 PERSONS AND GENERATE OVER $50 MILLION OF GROSS ANNUAL BUSINESS INCOME EXPANDED OUR ASSET BASE FROM $5 MILLION TO OVER $100 MILLION OUR OWN SOURCE REVENUE HAS INCREASED SUBSTANTIALLY INCREASING OUR ECONOMIC INDEPENDENCE

20 AN EDUCATION THAT HAS YIELDED NUMEROUS LEGACY BENEFITS HOW TO EVALUATE AND NEGOTIATE FAIR AND BALANCED BUSINESS AGREEMENTS, PARTNERSHIPS HOW TO EVALUATE AND PLAN A BUSINESS HOW TO STRUCTURE AND EXECUTE BUSINESS FINANCING WHILE MITIGATING RISK, AND EFFECTIVELY COMBINING PUBLIC AND PRIVATE SECTOR FINANCING HOW TO MANAGE THROUGH COMPLEX REGULATORY PROCESSES HOW TO STRUCTURE & EXECUTE A MAJOR PROCUREMENT AND CONSTRUCTION PROCESS HOW DO SOLVE BUSINESS PROBLEMS AND DISPUTES

21 AND WILL CONTINUE TO DO SO WHEN OPPORTUNITIES DEVELOP TRANSMISSION &/OR GENERATION RELATED TO NEW MINE DEVELOPMENT IN OUR TRADITIONAL TERRITORY NEW GENERATION OPPORTUNITIES ARISING OUT OF THE EAST-WEST TIE TRANSMISSION DEVELOPMENT (LONG-TERM) REUSE OF MINE INFRASTRUCTURE - PUMPED STORAGE, LARGE SCALE SOLAR CONSERVATIVELY ADVANCE THESE IN ANTICIPATION OF FUTURE MARKET OPPORTUNITIES

22 PIC MOBERT INC. ENERGY PIC MOBERT HYDRO INC./GITCHI ANIMKI ENERGY LP GIIZIS POWER (SOLAR) LP BAMKASHWADA LP WHITE LAKE LIMITED PARTNERSHIP CONTRACT LABOUR COMMERCIAL CONSTRUCTION CIVIL CONSTRUCTION SECURITY SERVICES DIAMOND DRILLING TRUCKING HEAVY EQUIPMENT LEASING FORESTRY WHITE RIVER FOREST PRODUCTS LP MAGWAYYAWK FORESTRY SERVICES LP REGIONAL VENTURES BLP & SUPERCOM INDUSTRIES LP COMMERCIAL REAL ESTATE NEW OFFICE BUILDING FOR DILICO ANISHINABEK FAMILY CARE

23 THE HYDRO PLAN IS NICE AND ALL, BUT PERHAPS JUST AS IMPORTANT THE POWER OF VISION THE VITALNESS OF TENACITY THE POWER OF DECISION THE MOMENTUM OF SUCCESS

24 MIIGWETCH!