1

EnergyWorks BioPower,LLC71 Old Mill Bottom Road NorthAnnapolis, MD 21409Tel 410-349-2001Fax 410-349-2063www.energyworks.com

New Bay Peake-DB Market Event

Clean Air

CleanWater

FoodSafety

Confidential InformationThe information contained herein is property of EnergyWorks BioPower, LLC and shall not be reproduced or disclosed to others

without the express written permission of EnergyWorks.

Adams County Penn State Extension OfficesJune 3, 2015

Welcome and Objectives• Thank you for coming – we deeply appreciate your time

– Our Energy and Nutrient Recovery Facility (ENRF) mission ultimately compliments the needs and strategic objectives of PA Agriculture

– Effectively commercializing and maximizing the value of our mineral product is a key to ENRF’s overall business success

– The smartest thing we can do is make an open and complete presentation of the situation and opportunity to you and then … listen.

• Today’s objective:– Gather inputs around which we can develop an action plan to

complete product development, pre-market testing, commercialization/pricing, and successful market launch of one or more products based on ENRF’s layer manure ash.

Agenda: How to Accomplish• We Talk

9:00 to 10:30– Project Background– GENRF Walkthrough– New Bay Peake Evolution– Planned Manufacturing Process

• We Listen 10:30 to 12:00– Discussion of ideas for further product development– Discussion of product testing requirements and options– Discussion of market release process

ENRF Concept and Opportunity• Animal manure is becoming an increasingly larger liability and

growth limiter for agriculture, particularly in PA:– PA is ~23 million pounds of N behind on its 2017 WIP for the Bay TMDL– MD is now pressing EPA to take enforcement action against PA mostly

due to ag-originating nutrient pollution– A part of the manure solution is comprehensive at-source processing

and nutrient selection. i.e. Solid waste treatment for CAFOs.

• U.S.-sourced Phosphorus is a diminishing resource. The best economically available global deposits are in North Africa and Saudi Arabia. Also, phosphorus mining creates an EPA-regulated, moderately radioactive tailings stack. – Recycling phosphorus in a safe and economic way, is a good thing to do.

• Manure has energy value. In the course of addressing the two opportunities above, it can be used to produce electrical power on a “community scale.”

GENRF: Realizing Opportunity• Built, owned and operated by EnergyWorks BioPower, a

Pennsylvania LLC – Substantially completed December 2012• Feedstock: Egg Layer Manure (ELM) – no additives• Throughput: 240 tons/day (expandable to 310 tons/day)• Core Technologies:

• Rated Electrical Output: 3,240 kw (~2,500 homes)• Mineral Product Recycling: 35 tons/day (expandable to 45

tons/day)• Revenue Streams:

– Certified Nutrient Trading Credits– Recycled Mineral – Electricity – Net Metering via Farm Host interconnection

1. Steam/Air Dryer2. Gasification/Thermal Oxidation3. Heat Recovery Boiler

4. Steam Turbine Generator5. Air Cooled Condenser6. Flue Gas Particulate Filtration

Hillandale Site 3Hillandale

Site 1

Hillandale Feed Mill

GENRF

Hillandale Site 5

GENRF and Hillandale Farm

Hillandale Site 2Grid

Interconnect Point Hillandale – Gettysburg

5.0 million layer hens

GENRF: Realizing Opportunity

• Revenue distribution is based on estimated unit prices

• Current outlook will be for mineral and N credits to take a larger portion of the pie.

• POINT: At GENRF, power is definitely a by-product

Operations Summary• “Substantial completion” – December 31, 2012• Grid interconnection approval by FirstEnergy – June 13, 2013• Past two years spent operating intermittently due to elongated

N credit market development:– Currently, PA is only market available. PA market damaged by policies

that increased credit supply and reduced demand. EPA-mandated changes will impact the market beginning in October 2015.

– GENRF has serviced N credit customers including PPL and Scranton Sewer Authority and will be the largest proven credit source in the next water year.

• Mineral product development has progressed:– Sales to date as “liming agent”– Research, development and discovery

Current Status and Plan• Holding pattern while market develops:

– Plant is in “maintenance mode” until positive operating margin emerges– 400 T of manure ash in storage in food-grade warehouse near Hershey. This

quantity is enough to meet all testing and product ramp-up requirements.– All WY 2015 commercial obligations are met.

• Several very positive situations opening up now:– The opportunities will produce the marginal profitability originally anticipated

by the GENRF investors and that would be required by future private capital.– Timing of the opportunities will be within 3-9 months.

• In addition to GENRF, we are discussing the development of a second and third ENRF in Lancaster County. This would capitalize on the N credit market improvements and generate 3X the mineral product of GENRF.

• In the meantime, we are executing a plan to maximize mineral value and establish a profitable long-term market for mineral-derived products.

GENRF Walkthrough - Process

GENRF Walkthrough – Facility Plan

GENRF Walkthrough – Automation• Process is designed for a single point of

control. Remote access allows for support and diagnosis.

• All primary variables are collected and available for process analysis.

• IR Camera used to monitor reactor activity.

GENRF Walkthrough – “Take away”• GENRF is a state-of-the-art process refinery with many degrees

of monitoring and control.• This level of data acquisition and reporting is a foundation for

our compliance with the Food Safety Modernization Act. • Manure receives a two-stage thermal treatment to eliminate

all organic material except for small amounts of fixed carbon:– Drying 20 minutes at 330 deg F.– Gasification 60-90 minutes at minimum 600 F.

• EnergyWorks has the commitment, experience, and staying power to undertake and execute difficult technical projects.

Mineral Product – “New Bay Peake”Baseline Characteristics of Layer Manure Ash

• pH originally reported as 12. However, we have experienced higher pH in subsequent analysis.

– High pH means that post-processing is needed for most applications to lower pH.

• As-manufactured material is irregular, but contains high proportion of fine material (37% 30 mesh and smaller)

– Granulation will expand the range of application for the material.

Mineral Product – “New Bay Peake”Variability

• Incoming feedstock P value varies due to changing diets among egg-layer flocks:– Blending and P normalization are required in post-processing to achieve

2% CV on P (Hillandale standard) and 5% variability on Ca as required by PA Feed and Fertilizer laws.

• The use of phytase in diets leads to reduced P excretion and introduces additional potential source of variation.

• Close coordination with Hillandale and subsequent feedstock providers is crucial.

Mineral Product – “New Bay Peake”PSU Egg-Layer and Broiler Study Results

• Study conducted at PSU involved 360 hens with experimental diets beginning at 20 weeks through 80 weeks

– Hens divided into four groups fed a control diet, plus diets with layer manure ash being substituted for dicalcium phosphate at 33%, 66%, and 100% replacement rates.

• Results indicate that the 33% formulation produced results that were comparable to the control diet:– Egg production, yolk color, feed conversion, body weight, shell breaking

strength were comparable.– No statistically significant differences in mortality– Slightly lower egg weight with LMA diet versus control– Slightly higher albumen height and Haugh unit scores with LMA

• LMA hens had an incidence of moderate tongue lesions that increased with the inclusion rate.

• Overall study results indicated 33% LMA as a safe and effective dicalcium phosphate replacement for egg-layers.

Mineral Product – “New Bay Peake”AAFCO Listing Process and Results

• Results of the Penn State study were peer-reviewed, with positive conclusions.

• Then, the ingredient – Layer Manure Ash – was submitted to AAFCO for inclusion in their handbook. AAFCO referred to FDA for technical review.

• After an extended period of time, FDA replied in December 2014 that their concern over the tongue lesion trend would require EnergyWorks to modify the product to reduce pH prior to listing.

• EnergyWorks may re-engage with FDA at some point in the future, as we see advantages to having a discrete listing of manure ash. However, a better and more flexible path is available to us.

Mineral Product – “New Bay Peake”Calcium Phosphate Definition

• Prior to receiving feedback from FDA, we determined, and PDA Bureau of Plant Industry has concurred, that we can use the AAFCO 57.134 definition for Calcium Phosphate.– We meet the definition because our manufacturing process involves

the addition of ingredients to react with Calcium Oxide to lower and control overall pH and we can manage Fluorine levels to less than 1%.

• Also, earlier in 2014, we engaged with Agri-Nutrients Technical Group (ANTG) of Petersburg, VA to assist us in product development and to act as our initial manufacturing partner.– ANTG made the initial recommendation that we explore dairy markets

• Within the last two months, ANTG and EnergyWorks have collaborated to produce a formulation range that we will use as the basis of the market launch for New Bay Peake.

Mineral Product – “New Bay Peake”Calcium Phosphate Formulation

NOTE: Formula and general method protected by USPTO Provisional Patent “Method of Producing a Calcium Phosphate Feed Ingredient from Inorganic Manure Residue”

Mineral Product – “New Bay Peake”Buffer Capacity

Mineral Product – “New Bay Peake”General Manufacturing

• Process will be similar to that performed in typical commercial mineral feed ingredient manufacturing operations

• Objective will be to maximize profit. We are finalizing formulation now and seeking to minimize acidification and maximize hydration to lower pH.

Planned Manufacturing ProcessFSMA Compliance

• We have background in HACCP, GMP, and general FDA-oriented manufacturing process management.

• We have been working with Hillandale to ensure that we comply with their FSMA vendor requirements for process and insurance.

• In general:– Our receiving process provide lot control for all ELM entering the system– Automatic sampling allows for collection and analysis of wet and dry ELM

along with manure ash.– HACCP procedure focuses on temperature and residence time assurance to

ensure product sterilization– Facility will use a dual-bin quarantine/release system prior to shipment. All

LMA held for a minimum of 18 hours prior to shipment for analysis and evaluation.

– Process historian allows integration of receipts, shipments, and process data into a single reporting environment common to the process industries.

Planned Manufacturing ProcessPlan During Volume Development

• While we are building customer volume for New Bay Peake, our plan is to contract manufacturing to ANTG and Wilson Group Companies.

• This will allow us time to fine-tune manufacturing operations and ensure that we remain flexible while customer needs and large-scale ash production outcomes are being focused.

• This period of time is anticipated to last 12 to 18 months during which time, New Bay Peake will lose any transportation advantage it would have in the marketplace.

Planned Manufacturing ProcessStrategic Plan – Ingredient Manufacturing

• EnergyWorks’ strategic plan is to co-locate an ingredient manufacturing process with an existing ENRF.

– ENRFs will have waste heat and process steam available to support manufacturing operations.

– The facility will enhance the New Bay Peake transportation advantage and long-term cost competitiveness.

• Payback on the facility is anticipated to be on the order of two years. Investment will be easily justified once supply and demand are assured.

New Bay Peake - ELAction Plan

• EnergyWorks is working on a timeline together with PA egg-layer operators to bring New Bay Peake-EL (Egg-Layer) to its commercial introduction:

– Because we have a manufactured product and because we seek a higher inclusion rate, we will conduct additional testing with Dr. Patterson at PSU:

• 150 bird trial• 4 diets• 16-week analysis period with evaluation of tongue lesions and all other factors as per original study

– At the end of the initial 16-week period, a maximum of two egg-layer operators will begin introducing New Bay Peake-EL to new flocks with monitoring of actual egg production performance, mortality, yolk color, and albumen height.

– At each 16-week break, inclusion rate adjustments will be made to reflect study results from both PSU and from the on-farm testing

– This process is anticipated to run from approximately June 15 to October 15 when initial product sales will begin

– EnergyWorks will remain engaged with PDA Bureau of Plant Industry as testing proceeds and production-scale feeding begins.

New Bay Peake - RBOpen Discussion

• The egg-layer market is a logical one for EnergyWorks. However, we believe that more product value will be available if we working closely with the PA dairy industry to adapt the product to its needs:– Same high concentration of animal operations in region– Same “high” Ca and P needs as egg layers– Plus – opportunity to benefit from Potassium in product– Plus – opportunity to use product buffer capacity to replace current alternatives

New Bay Peake - RBOpen Discussion

• Our questions of you:– What ideas do you have for further product development to

enhance value and marketability?– What testing do you see as being required to successfully

convince local markets to use the product to its greatest potential?

– How can we best execute a market release process?• With a pricing baseline driven by the economics of ingredient

replacement• In highlighting advantages of the product:

– Sustainable, local, environmental

• In overcoming objections that may arise:– “Animals eating manure”