This is a game-changer

Transcription

1 This is a game-changer John Hines Former Deputy Secretary for Water PA Department of Environmental Protection Dec 4,

2 Forward Looking Statements/Risk Factors This presentation contains, in addition to historical information, forwardlooking statements regarding Bion Environmental Technologies, Inc. (the "Company"), which represent the Company's expectations or beliefs including, but not limited to, statements concerning the Company's operations, performance, financial condition, business strategies, and other information and that involve substantial risks and uncertainties. The Company's actual results of operations, most of which are beyond the Company's control, could differ materially. For this purpose, any statements contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," projected" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Risk Factors that could cause or contribute to such difference include, but are not limited to, limited operating history; uncertain nature of environmental regulation and operations; uncertain pace and form of development of nutrient (N&P) reduction market; risks of development of first of their kind Integrated Projects; need for substantial additional financing; competition; dependence on management; and other factors. Additional information regarding the Company s 3G technology platform should be reviewed in the Company Overview, available upon request and at Investors are urged to also consider closely the disclosures and risk factors in the Company s current Form 10-K, filed with the Securities and Exchange Commission, available at 2

3 New Market/ Investment Space A new untapped space at the intersection of the $110 billion clean water sector $180 billion livestock industry $ 40 billion organic food industry $185 billion biofuels industry 3

4 Untapped Opportunity 4 More than 70% U.S. livestock are produced on large farms scale + concentration = cost-effective treatment

5 Overview Dairy, meat and egg production is one of the largest sources of pollution in the United States and the world. Industry is under fire from consumers, advocacy groups, and investors for environmental and public health impacts. Bion s patented technology provides comprehensive treatment (similar to municipal wastewater treatment for human waste). Almost eliminates the air and water pollution. Recovers byproducts/ value from the waste that substantially improves production efficiencies and economics. Bion has excellent management and relationships with some of the largest livestock producers in the U.S. and the world. Bion s technology is proven and accepted by US EPA, USDA, and several U.S. states. Policies in the U.S. (and the world) are already changing to encourage livestock waste cleanup. 5

6 Nutrient Cycle Nitrogen and Phosphorus Sources: Human waste Transportation/ combustion Industrial/ manufacturing Urban runoff Agricultural runoff 70% in most major watersheds Agriculture: Direct runoff Atmospheric deposition 6

7 The Problem 2 billion poultry 80 million beef cattle 62 million swine 9 million dairy cows In the United States only 1.37 BILLION tons of animal waste (130X human waste) Spread on the ground... 7

8 Algae Blooms/ Dead Zones Gulf of Mexico Texas Coast Annual dead zone averages 5,500 square miles 2017 dead zone is the largest on record 8

9 Dead Zones Low- or no-oxygen DEAD ZONES kills fish, shrimp, crabs, and almost everything else 9

10 10 Toxic Algae Bloom Stuart, FL July 1, 2016

11 11 Toxic Algae Bloom Lake Erie in 2014 Toledo Water Crisis

12 Excess Nutrients Local, Regional, National, Global Problem One of America's most widespread, costly and challenging environmental problems US EPA Globally, the most prevalent water quality problem is eutrophication, a result of high-nutrient loads Veolia/ International Food Policy Research Institute Report dead zones worldwide 12

13 Environmental/ Public Health Impacts Excess nutrients contaminate Surface water (lakes, rivers, coastal waters) Drinking water (aquifers/ water wells) Soil Air Pollution Ammonia Contributes to PM2.5 small inhalable particulate matter Contributes to nitrogen runoff One of the largest sources of greenhouse gases Hydrogen sulfide (multiple health issues) Nitric oxide (acid rain) Pathogens Food-borne illnesses Antibiotic resistance 13

14 14 Economic Impacts Rising U.S. Clean Water Costs

15 Economic Impacts Livestock Industry Dislocated supply chain is inefficient Industry cannot adapt to changing conditions Cannot expand without more land Cannot consolidate or relocate Profits are falling Resources wasted or underutilized Energy Nutrients Water Manure handling costs increasing Regulation will come if they do not clean up voluntarily Consumers and big institutional investors are increasingly demanding sustainability 15

16 Technology Platform Overview Proven comprehensive waste treatment for large-scale livestock production facilities High-impact low-cost verifiable environmental solutions largely eliminate environmental impacts Platform closes the loop: recovers value from the waste stream Clean water, renewable energy, and nutrients High-value byproducts help offset costs of environmental cleanup Verification allows USDA-certified SUSTAINABLE BRAND Bion is first no other proven comprehensive solutions yet 16

17 Dedicated and Capable Team Mark Smith, Chairman Ed Schafer, Exec Vice Chairman Former U.S. Secretary of Agriculture Jon Northrop, Director (Founder) Dominic Bassani, CEO Steve Pagano, Chief Engineer Jeremy Rowland, COO Craig Scott, Dir of Comm 25 years 7 years 25 years 17 years 25 years 11 years 24 years 17

18 Critical Industry Relationships Coalition for Affordable Bay Solutions (CABS) Founding members Bion JBS USA (JBS SA: largest meat processor in the world) Kreider Farms (a leading U.S. egg producer) Fair Oaks Farms (large U.S. dairy) Legislative and policy support National Milk Producers Federation Dairy Farmers of America Land O Lakes PA Farm Bureau PennAg 18

19 Bion s Technology Second generation tech platform Proven at commercial scale Patented in U.S. and other countries Accepted by US EPA, USDA Qualified for federal loan guarantees Third generation (3G) tech platform: successful pilot trials Next generation advanced technology patents pending Little technology risk: combines processes and equipment with known reliability and history Produces high-value byproducts and renewable energy Small-scale commercial pilot in 2018 Anticipate initial development of full-scale commercial installation in mid

20 3G: Multiple Revenue Streams Byproducts High-value pure organic 1 nitrogen fertilizer Organic 1 soil amendment products Bion s 3G process was developed to meet OMRI standards (no chemicals or outside sources) Renewable energy Pipeline-quality renewable natural gas Renewable energy and carbon credits USDA-certified 2 sustainable brand Nutrient reduction credits 1 Application for organic certification pending 2 US Department of Agriculture conditional approval received - pending final inspections 20

21 Credit Trading Will Save Billions RTI/ Chesapeake Bay Commission study (2012) Bipartisan Pennsylvania Legislative Budget and Finance Committee study (2013) 80 percent savings $1.5 billion annually by 2025 if the state adopts a competitive bidding program to buy nutrient credits from the private sector. Bion is featured prominently in the study. Univ of Maryland Chesapeake Bay Financing Strategy Report (2015) Colorado State Univ/ US EPA/ NPS Study (2016) on atmospheric nitrogen Pending stormwater requirements represent billions in additional costs EPA supports trading 21

22 Policy Change Pennsylvania and the Chesapeake Bay Real sanctions can begin after 2017 Competitive bidding legislation in PA legislature Gov t reform Supported by Republican leadership, ag groups, taxpayer groups Federal energy tax credit for biogas/nutrient recovery Introduced in US Congress (House and Senate) in 2017 Bipartisan 30% Investment Tax Credit (ITC) Tax-free bonds Market-driven solutions supported by Trump Admin Livestock industry support US EPA Letter of Expectation to PA DEP Not going to happen happening NOW 22

23 Organic Nitrogen Byproduct Ammonium bicarbonate crystals stabilized nitrogen Without phosphorus, salts, micronutrients, fiber, pathogens Preparing application to Organic Materials Research Institute (OMRI) to certify for use in organic production HIGHLY DISRUPTIVE PRODUCT OMRI-certified organic carries a significant price premium Low-end products ( impure ) start at $3/lb N $12/lb N bulk Grower s $40/lb N retail KF2 potential Ammonium crystals: 6M lbs N/yr Solids: 60,000 85% dry matter 23

24 Renewable Energy Pipeline quality, renewable natural gas Federal energy tax credit: 30% ITC on biogas capex Bill in US Congress to extend and apply to nutrient-control RE Subsidies/Credits robust markets today RIN Credits (D3) under the Renewable Fuel Standard national market LCFS Credits under CA s Low Carbon Fuel Standard market KF2 potential Renewable nat gas produced: 475,000 MMBTU/year (~9M gal) D3 RINs: D3 RINs per MMBTU LCFS Credits: 13.5 MMBTU per LCFS credit Primary risk: pricing (nat gas; RIN and LCFS credits historical market data available) 24

25 Sustainable Branding Increasing consumer demand for sustainable practices Organic industry growing at 11% No analog in meat production Livestock industry under attack Water pollution, greenhouse gases, antibiotics, animal welfare Ceres and other large activist investors are pushing for increased sustainability in the livestock ag sector Positive drivers Market differentiation; premium pricing and higher margins Negative drivers Avoid foodborne illness incidents and future regulation; public image (toxic algae blooms, dead zones, greenhouse gases, antibiotic resistance, Meatless Mondays, etc.) Sustainable brand = market share with pricing power 25

26 Bion Sustainable Brand Verifiable metrics: Reduced nutrient footprint Reduced carbon footprint Pathogen kill Point of sale verification with barcode Produced when and where Farm description and history Animal husbandry and waste management practices Steps to improve sustainability Quantified results/impact calculator USDA Process Verified Program (PVP) Provisional approval pending final inspections 26

27 Beef Cattle Feedlot Comparison The table below compares a traditional beef cattle feedlot to a state-of-the-art facility with waste treatment and byproduct production. The table only illustrates the added value from waste treatment and resource recovery and is not intended as a model of an actual or anticipated Bion project. Revenue/EBITDA Analysis Revenues EBITDA Feedlot Bion Feedlot Bion Cattle Ops $273M $290.4M $5M $11.3M Branding M M Byproducts M 0 9.7M Carbon 0 5.3M 0 3.8M Nutrient Credits 0 6.6M 0 5.5M Total $273M $330M $5M $42M 27

28 Anticipated Upcoming Catalysts PA legislation to implement competitive bidding (Q4 2017/Q1 2018) Build small-scale pilot/ produce ammonium crystals (planned for Q4 2017/Q1 2018) Apply for OMRI approval of organic certification (in process, expect to apply by Q1 2018) Energy tax credit bill for biogas/nutrient control technologies now in the U.S. House and Senate (2018) Begin development of first 3G commercial installation (Q1 2018) Begin development of Kreider 2 (Q2/3 2018) Timetable is based on management s current expectations and is subject to a number of variables beyond Bion s control, including political processes, vendor schedules, etc. 28

29 Opportunity 2 billion chickens 80 million beef cattle 62 million swine 9 million dairy cows 5% market penetration of beef, swine, poultry layers only (not including dairy, poultry broilers) $565M est. annual revenue Bion s current valuation: $20M (~$40 million fullydiluted) 29