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Page 1 © Cellana 2014
Cellana’s
© Cellana Inc. 2014
Second-Generation Biofuels from Multi-Product Biorefineries Combine Economic Sustainability With Environmental Sustainability
Martin Sabarsky, CEOApril 23, 2014
Page 2 © Cellana 2014
Summary of Presentation
• To date, over 20 MT of highly diverse algae have been produced using Cellana’s patented ALDUO™ process, one of the most thoroughly validated outdoor algae production technologies in the world.
• Cellana’s multi-product business model, which is initially anchored by high-value Omega-3s, permits the profitable production of crude oil and animal feed at market-competitive prices based on current yields, costs, and prices of crude oil, animal feed, and algae-based Omega-3s.
• In 2013, Cellana successfully leveraged this technology/business model combination to sign one of world’s largest algae biofuel off-take agreements, with Neste Oil. This industry-leading agreement validates the Cellana model of combining economic sustainability with environmental sustainability for producing commercial-scale quantities of second-generation biofuels.
• To the extent that the prices of food/feed and crude oil continue to rise based on scarcity and population growth/increased demand, a two-product business model based on food/feed and crude oil for fuels may become more commercially viable than it is today, especially for algae companies at commercial scale who will have been able to increase biomass yield and lower unit production costs in parallel.
Page 3 © Cellana 2014
Commercial-Scale Algae-basedBiocrude oil
Off-TakeAgreement
(June2013)
Cellana History: Building Capabilities & Credibility at Every Step
$5.5MM USDA Grant for
Animal Feed
$70MM DOE-Funded Consortium-- National Alliance for Advanced Biofuels & Bioproducts
ALDUO™ patent issued
in U.S.
$9M DOE Consortium
Grant (production + fish feeding
trials)
HRBP Acquires Cellana; New Name;
New CEO, BOD
Kona DemoFacility
Operational
Shell JV Funding ($70MM+)
Demo Facility Production
Cellana JV Formed
Key Publication
CEROS (DARPA) Funding
HR BioPetroleum (HRBP) Founding in 2004
In-license of Aquasearch algae production
technology ($25MM prior investment)
ALDUO™ Patent Filed
Aquasearch / HRBP Pilot Facility Production
20041997 2005 2006 2007 2008 2009 2010 2011 2012
$15MM DOE-Funded Algae
Test-Bed Public-Private
Partnership
Launch of ReNew brand
2013
$1M DoD (CEROS/DARPA) contract for
biodiesel feedstock oilproduction at industrial
scale
Recent Off-Take Agreement with Neste Oil Validates Cellana’s Entire Model
Page 4 © Cellana 2014
Intensive, Efficient Algae Production at the Kona Demonstration Facility (KDF) on Hawaii
• 2.5 hectare site in Kona, HI• $20MM replacement cost;
owned free & clear by Cellana
• >750,000 liter large-scale cultivation capacity
• Produced over 13 tons of microalgae since 2010 for R&D / testing purposes
• Commercially significant biomass/oil yields (over 15 g/m2/day biomass yields)
Page 5 © Cellana 2014
$4B Omega-3 nutritional oils market
$300B livestock
feed market
$1T+ fuels and
energy markets
$9B aquaculture feed / fishmeal market
Omega-3 nutritional oils and high-value aquaculture / animal feed products are an extension of Cellana's core competency - screening, developing, and producing algae biofuel feedstock.
Cellana’s Biorefinery Business Model Builds on a Foundation of Biofuel Research to Address Additional Valuable Products
1
2
= oil separation
Page 6 © Cellana 2014
ALDUO™ Enables Economic Algae Production Unencumbered by Contamination by Balancing Higher-Cost PBRs with Lower-Cost Open Ponds
High
100% Open Ponds
100% PBRs
Risk of Contamination
Low
Cost <50% PBRs / >50% Open
Ponds
HighLow
Covered by US Patents 7,770,322 & 5,541,056, Similar Patents/Patents pending in Europe, Australia, South Africa, Brazil, Japan, Mexico
Page 7 © Cellana 2014© Cellana 2014Page 7
Biofuels from Cellana’sAlgae-Based Biocrude Oil
Page 8 © Cellana 2014
Commercial-Scale Off-Take Agreement with Neste Oil
• Off-Take Agreement for algae oil announced June 2013
• Neste Oil is the largest refiner of renewable diesel in the world
• Multi-year off-take agreement• Commercial-scale quantities of algae
oil • Contingencies for Cellana production
capacity, EU/US sustainability criteria, and other factors
• Non-Exclusive for both parties• “Samples have shown that Cellana is
able to produce algae oil suitable for renewable fuel production by Neste Oil.”
• “The off-take agreement with Cellana allows us access to commercial-scale volumes of cost-competitive algae oil in the future.”
Neste Oil's renewable fuel plant in Rotterdam in the Netherlands was commissioned in 2011.
Neste Oil started up the world's largest renewable diesel refinery in Singapore in November 2010.
Page 9 © Cellana 2014© Cellana 2014Page 9
Animal Feed & FoodSupplements from Cellana’sHigh-Protein Algae Meal
Page 10 © Cellana 2014
Population Growth/Asia Will Drive Increasing Protein Prices
Source: http://www.washingtonpost.com/blogs/worldviews/wp/2013/05/07/map-more-than-half-of-humanity-lives-within-this-circle/
Page 11 © Cellana 2014
Aquaculture growing rapidly and in need of protein; Fish capture peaked in 1990s & is now in decline
Fishmeal trades at ~4x the price of soymeal historically
Opportunity for Algae Meal to Replace Fishmeal in Aquafeeds and Soymeal in Livestock Feeds
Source: FAO, “THE STATE OF WORLD FISHERIES AND AQUACULTURE 2012”
Pri
ce p
er
Metr
ic T
on
Source: prices for fishmeal and soymeal from http://www.indexmundi.com
Page 12 © Cellana 2014
• Finfish, shellfish, chicken, pigs, cattle – most major sources of meat
• Successful large-scale feed trial for Salmon, Carp, & Shrimp– Marine microalgae from biorefinery as a potential feed protein
source for Atlantic salmon, common carp and whiteleg shrimp, V. Kiron (Bodo University) et al., published online: Aquaculture Nutrition, 3 APR 2012
▪ Cellana’s ReNew Feed was acceptable for the three animals at the maximum levels tested (Salmon 10%, Carp 40%, Shrimp 40%)
▪ There were negligible differences in growth and hardly any in the biochemical composition during the study period
• Successful large-scale feed trial for Broiler Chicks– Potential and Limitation of a New Defatted Diatom Microalgal
Biomass in Replacing Soybean Meal and Corn in Diets for Broiler Chickens, Xin Gen Lei (Cornell) et al., published online: J. Agric. Food Chem., 4 JULY 2013
▪ Cellana’s ReNew Feed could substitute for 7.5% of soybean meal alone, or in combination with corn, in diets for broiler chicks when appropriate amino acids are added
Over 6 MT of Cellana’s ReNew Feed in Diverse Feed Trials; All Trials Successful To Date
Page 13 © Cellana 2014© Cellana 2014Page 13
High-Value Nutritional Supplements from Cellana’s Omega-3 Oils
Page 14 © Cellana 2014
Increasing Number of Everyday Products Contain
Omega-3 Ingredients & Make Omega-3 Claims
Milk Peanut Butter Breads Snacks
Cheese Baby Food Eggs Butter/SpreadsYogurt
Sauces Cooking Oil
Page 15 © Cellana 2014
Algae is Key to Sustainable Omega-3 Production
Fish Oil / Omega-3 Food Chain
Fish Oil with Omega-3
+Mercury,
Dioxins, & PCBs
Larger carnivorous fish (e.g., Salmon)
Smaller carnivorous fish
Herbivorous/planktivorous fish
Marine microalga
e
Zoo- plankton
Cellana “Cuts Out the Middle-Fish”™
Sustainable Omega-3 Production Direct from Algae
Vegetarian, Low-Cost, Sustainable Omega-3s without Mercury, Dioxins, or PCBs from
Fish
Algae Oil with Omega-
3
Marine microalga
e
Page 16 © Cellana 2014
30-cent retail premium for Algal-DHA-Supplemented Milk = $1,172 per kilogram = $1.2MM per metric ton!!!
$4.89 - $4.59 = $0.30 premium
32mg Algal DHA per serving; 8 servings per half-gallon container
32mg x 8 = 256mg per container
256mg x 1g/1,000mg = 0.256g
0.256g x 1kg/1,000g = 0.000256kg
$0.30/0.000256kg = $1,172/kg
$1,172/kg x 1,000kg/MT = $1.2MM/MT
Page 17 © Cellana 2014
C20:4 C20:5 C24:0 C22:5 C22:60%
5%
10%
15%
20%
25%
30%
35%
40%
C003 C010 C543 C624 C739 C870 C870 C870C971 KA 21 KA 28 KA 29 KA11 KA19 KA22 KA23KA24 KA18
% f
att
y a
cid
s
EPA DHA
- Large collection of high performing strains, rich in Omega-3 fatty acids
- 3+ MT EPA-rich biomass produced
- Additional strains making both EPA & DHA are in large-scale production at KDF
- Ability to screen for other valuable PUFAs /lipids (e.g., DPA)
Cellana’s culture collection Large collection of strains for high value co-products
Page 18 © Cellana 2014
Flexible Biorefinery Production / Revenue ModelBioproducts Generated from the Use of the Entire Algae Biomass
* Reflects recovery based on initial whole algae fraction of 6% Omega-3 oils,25% Biocrude oil, 69% Algae Meal (Protein/Sugars/Minerals/Lipids/Micronutrients),and 11% total yield loss after two separations
62kg Omega-3 Oil(35% conc.)
121kg Biocrude Oil
708kg Algae Meal
(Residual Proteins,Sugars, Minerals,
Lipids, & Micronutrients)
891kg Total per MT*(11% yield loss)
$6,138
$708
$82
$6,928 per MT (dry weight)
@ $1.00/kg(premium to soymeal px benchmark; discount to fishmeal px benchmark)
@ $100/kg(discount to Martek DHA wholesale px benchmark)
@ $100/bbl, $0.68/kg(fossil petroleum px
benchmark)
1
2
= oil separation
Page 19 © Cellana 2014
Highly Profitable Production of Algae BioproductsProjected Revenue & Costs per MT for 88-ha. Commercial-Scale Facility in USA, 2016
Production costRevenue
$3,712 per MT
depreciation
Estimated 46% Gross Margin and 62% Cash Margin at current yields / costs (Higher margins / lower unit costs at larger scale and over time)
Estimated: Gross Margin 46%Cash Margin 62%
Omega-3 Oil$100 per kg (35% conc. DHA/EPA)
Algae Meal$1.00 per kg
Biocrude Oil$100 per bbl, $0.68 per kg
cash cost
$6,928 per MT
Page 20 © Cellana 2014Page 20 © Cellana 2014
A. Biorefineries with High-Value Anchor
Product(s)
B. Bolt-On Expansions
for Fuel + Feed
C. Standalone Biorefineries for
Fuel + Feed
Crude Oil Production
≤ 1 billion gpy 1-2 billion gpy 10+ billions gpy
Production cost
> $2/kg ≤ $2/kg ≤ $1/kg
Algae biomass yield
< 70MT/yr > 50MT/yr > 60MT/yr
Food, feed, & fuel prices
Low Medium High
Scaling of Algae Biofuel Industry – Easy as “A, B, C”
$1
$2
$3
$4
40
50
60
70
Pro
duct
ion C
ost
/ K
g
Bio
mass Yie
ld M
T / h
a / y
r
Page 21 © Cellana 2014
Thank YouFor further information please visit www.cellana.com
or contact:
Martin SabarskyChief Executive Officer
[email protected] (858) 774-7915
Page 22 © Cellana 2014© Cellana 2014Page 22
Backup Slides
Page 23 © Cellana 2014
U.S. Sugar Prices Up 36% Over Last 5 Years
Source: http://www.indexmundi.com/commodities/?commodity=sugar&months=60,
Description: Sugar, Free Market, Coffee Sugar and Cocoa Exchange (CSCE) contract no.11 nearest future position
Page 24 © Cellana 2014
U.S. Sugar Prices Up 200% Over Last 15 Years
Source: http://www.indexmundi.com/commodities/?commodity=sugar&months=180,
Description: Sugar, Free Market, Coffee Sugar and Cocoa Exchange (CSCE) contract no.11 nearest future position
Page 25 © Cellana 2014Page 25 © Cellana 2014
Sugar: Not So Sweet a Feedstock….
Page 26 © Cellana 2014Page 26 © Cellana 2014
Mass Yields for Microbial Fuel Pathways
Source: Claudia Schmidt-Dannert, University of Minnesota
Page 27 © Cellana 2014Page 27 © Cellana 2014
NREL cost model for biological hydrocarbon production
Source: “Process Design and Economics for the Conversion of Lignocellulosic Biomass to Hydrocarbons: Dilute-Acid and Enzymatic Deconstruction of Biomass to Sugars and Biological Conversion of Sugars to Hydrocarbons,” R. Davis, L. Tao, E.C.D.Tan, M.J. Biddy, G.T. Beckham, and C. Scarlata, National Renewable Energy Laboratory, J. Jacobson and K. Cafferty, Idaho National Laboratory, J. Ross, J. Lukas, D. Knorr, and P. Schoen, Harris Group Inc.
Both this and the previous slide that expected mass yields for free fatty acids (and by extension lipids) from sugar (i.e., glucose) are on the order of 30-35% which is consistent with what Solazyme said as far as requiring approximately 900 ktpa sugar for a 300 ktpa product plant. However, the above are purely theoretical yields so one would expect that actual yields are <80% of theoretical yield, putting them at about 25% by weight. This makes the economics difficult unless the product is higher value than fuels or they incorporate co-products (as they are expecting to do).
Page 28 © Cellana 2014Page 28 © Cellana 2014
Amyris’s Farnesene @ Almost $600/kg
Page 29 © Cellana 2014Page 29 © Cellana 2014
Increasing Cost of Solazyme Fuels….?
Source: Solazyme IPO Prospectus, May 2011http://www.sec.gov/Archives/edgar/data/1311230/000119312511152352/g144178g35w31.jpg
Source: Solazyme Annual Report on Form 10-K, Filed March 2013
http://www.sec.gov/Archives/edgar/data/1311230/000119312513105081/g456356g31m73.jpg
2011: Fuel Cost Target $1,000/MT
2013: Fuel Cost Target $1,400/ton (or higher?)