BioChip Energy

Systems LP

Opportunity
Presentation
November, 2007
 Fibre Supply

300 million cubic meters of beetle

infested standing Lodgepole pine
Located in Central British Columbia
Life expectancy: 3 to 25 years,
depending on climate
and soil conditions
 Fibre Supplier

British Columbia Ministry of

Forests
District and Regional Forest Offices
Forest Harvesting Tenure Licenses
Special rates for infested timber not
suited for sawlogs or timber production
Special legislation expected next year
for bioenergy tenure licensing.
 Power Buyer

BC Hydro and Power

Authority
Under Its Standing Offer Program
Will purchase all power from Independent Power
Producers for plants of 10 megawatts or less
Price of 7.2¢ per kilowatt hour in Central BC
Addition 1¢ Federal subsidy for “green energy”
 Market Size
Estimated fibre required to produce one
megawatt-year of electricity: 5,500 cubic meters
Gross revenue from 1 megawatt-year =
8.2¢ / kilowatt hour * 24 hours/day * 365 days/year *
1,000 kilowatts/megawatt = $718,320.
Estimated inventory of fibre in megawatt-years = 300
million / 5,500 = 54,545 megawatt-years
Estimated gross production value of dead fibre
inventory = $718,320 * 54,545 = $39,180,764,400.
= $40 Billion
Next Generation BioChip
Power Plants
Based on wood gasification prior to
combustion
Produces less emissions than direct fuel
combustion
Gas combustion produces steam to drive
cost efficient turbines for power generation
Also produces auxiliary heat
for secondary revenue source
in CHP (Combined Heat
and Power) installations
Estimated cost:
$2,000 - $2,600 /
kilowatt hour
 Summary Of Business
Opportunity
The core business
 Massive fibre inventory
 Established buyer
 Advanced but tested generation technology

Environmental Factors
 Additional revenue from surplus heat
 Bioenergy is “carbon neutral”; facilitates
approvals
 Potentially additional revenue from “carbon
trading”
BioChip Energy Power
Plants

Estimated
Revenue
10 Megawatt
Plant
 Assumptions
10 Megawatt Power Plant
 Cost of construction @ $2,300 / kilowatt - $23 million
 Biomass per megawatt year - 5,500
 Price of power - 8.2¢ / kilowatt hour
 Operating costs - $125,000 / megawatt / year
 10 year depreciation (20% / year)
 Debt financing - 35%; Equity Financing - 65%
Fibre Supply
 Stumpage, Roads, Silviculture - $7.25 / cubic meter
 “Stump-Gate” fibre supply cost - $35 / cubic meter
 Cost Inflation - 8%
 15 year tenure license
 Estimated Revenue
Gross Fibre Operati Depreci Net
Revenue Costs ng ation Revenue
Costs
Year 1 $9.3 m $2.3 $1.3 $4.6 $1.2 m
m m m

Year 2 $9.9 m $2.5 $1.4 $3.7 $2.4 m

m m m

Year 3 $10.5 $2.7 $1.5 $2.9 $3.4 m

m m m m
 Estimated Business
Valuation
Gross Fibre Operati EBITDA Valuatio
Revenue Costs ng n@5*
Costs EBITDA
Year 1 $9.3 m $2.3 $1.3 $5.8 $29.0 m
m m m

Year 2 $9.9 m $2.5 $1.4 $6.0 $30.0 m

m m m

Year 3 $10.5 $2.7 $1.5 $6.3 $31.5 m

m m m m
 Accelerating Revenue
Growth
Build more plants; one per year.
Increase efficiencies through
growing scale of operations
Increase plant efficiencies through
new technologies
Increase revenues from heat
through Joint Ventures
Reduce plant costs through design
and construction refinements
Increase % debt financing
 BioChip Energy
Systems

Estimated Returns From

the Second
10 Megawatt Plant
 Assumptions
10 Megawatt Power Plant
 Cost of construction @ $2,300 / kilowatt - $23 million
 Biomass per megawatt year - 5,500
 Price of power - 8.2¢ / kilowatt hour
 Operating costs - $125,000 / megawatt / year
 10 year depreciation (20% / year)
 Debt financing - 45%; Equity Financing - 55%
Fibre Supply
 Stumpage, Roads, Silviculture - $7.25 / cubic meter
 “Stump-Gate” fibre supply cost - $35 / cubic meter
 Cost Inflation - 8%
 15 year tenure license
 Estimated Revenue - 2
Plants
Gross Fibre Operati Depreci Net
Revenue Costs ng ation Revenue
Costs
Year 2 $9.9 m $2.5 $1.4 $3.7 $2.4 m
Plant 1
Plant 2 $9.9 m m m m $1.2 m
$2.5 $1.4 $4.6
m m m
Year 3 $10.5 $2.7 $1.5 $2.9 $3.4 m
Plant 1
Plant 2 m m m m $2.4 m
$10.5 $2.7 $1.5 $3.7
m m m m
Year 4
 Estimated 2-Plant Business
Valuation
Gross Fibre Operati EBITDA Valuatio
Revenue Costs ng n@5*
Costs EBITDA

Year $19.8 $5.0 m $2.8 $12.0 $60.0 m

2
m m m

Year $21.0 $5.4 m $3.0 $12.6 $63.0 m

3
m m m

Year $22.2 $5.9 m $3.4 $13.2 $66.0 m

4
 Investment Opportunity

Current offering:

BioChip Limited Partnership Units: $1,000,000

 1,000 Units @ $1,000 / Unit
 No Minimum
 10% Bonus In Units For $25,000 or More

Full Write-off Against Taxable Income

Optioned For Conversion
 Use Of Proceeds

Power Plant Design & Engineering

Forest Tenure Licensing
Plant Site Location In Consultation With
BC Hydro
Construction Contract Preparation
Legal, General and Administrative
Tax Reduction Benefits
 Conclusion

For more information:

Contact:
 Edgar Froese, General Partner
BioChip Energy Systems LP
426 - 470 Granville St.
Vancouver, BC
 Phone: 604-669-0699
 Toll-free: 1-877-246-3624
 Email: edgarfroese@netequity.biz