Foresta Group Holdings Limited · ASX:FGH
Foresta — Investor Presentation (July 2022)
38 slides from Foresta's investor presentation, Jul 19, 2022
Slide 1: The Future of Sustainable Pine Chemicals
The Future of Sustainable Pine Chemicals Decarbonising the chemical industry INVESTOR PRESENTATION, July 2022 1
Slide 2: Disclaimer: forward looking statements
Disclaimer: forward looking statements IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING. SUMMARY INFORMATION This Investor Update (“IU”) has been prepared by Leaf Resources Limited (ACN 074 969 056) (the “Company”, “Leaf”). The following disclaimer applies to this document and any informatio
Slide 3: Petrochemical industry responsible for 923 million tons of CO2
The traditional petrochemical industry is responsible for an estimated 923 million tons of CO2 last year, making it the third-largest source of global CO2 emissions1. 1. https://www.iea.org/fuels-and-technologies/chemicals 3
Slide 4: Leaf Resources produces carbon-efficient and cost-effective chemicals
Leaf Resources produces carbon-efficient and cost- effective chemicals of superior quality; sourced from renewable pine tree feedstock with no unnatural chemicals. 4
Slide 5: Contents
Contents 01. Corporate 02. Business Overview 03. ESG Circular economy Process Corporate overview Clean biochemicals Natural rosin Directors Revolutionising forestry stump harvesting Natural terpene Social and governance Market dynamics Competitive advantages 04. Business Plan 05. Capital Raising 06.
Slide 6: Corporate
01 Corporate 6
Slide 7: Corporate overview
Corporate overview Strong alignment: Directors currently own 770 million of the 1.8 billion post-money shares on issue or 43%1 LEAF RESOURCES (ASX: LER) DAILY SHARE PRICE CHART AND TOP SHAREHOLDERS VOLUME SINCE ESSENTIAL QUEENSLAND ACQUISITION Position Holder Name Holding % RAMON DUDLEY MOUNTFORT &
Slide 8: Directors
Directors KEN RICHARDS RAY MOUNTFORT GRANT YEATMAN DOUG RATHBONE AM TERENCE GRAY NON-EXECUTIVE MANAGING DIRECTOR EXECUTIVE DIRECTOR NON-EXEC DIRECTOR NON-EXEC DIRECTOR CHAIRPERSON Over 35 years of experience For the last 20 years Ray has Grant is a co-founder of EQ Doug has extensive experience in T
Slide 9: Business Overview
02 Business Overview 9
Slide 10: Organic solvent extraction technology uses only steam and natural solvents
The organic solvent extraction technology uses only steam and natural solvents to extract the pine chemicals Because the process doesn’t use nasty chemicals, there is no additional cost to purchase them or strip them away. Natural terpenes For every tree Trees grown Pine tree Sustainable Waste harve
Slide 11: Natural gum rosin
Found along with terpene in pine logs Leaf prides itself in producing world Natural and stumps, pine rosin is a highly sought-after material, used in various class natural pine terpene and natural pine rosin in its purest form, with zero gum rosin everyday products, from chewing gum to tires. additi
Slide 12: Natural gum terpene
Terpene is an essential product which is used in the formulation of food Natural flavouring essences, disinfectants, health products and perfumes. gum terpene Leaf uses a continuous counter flow steam distillation process, that is chemical free. It is immiscible with water and has a high boiling poi
Slide 13: Addressable pine chemical market
The addressable pine chemical market is estimated at US$10bn1 US$127bn2 global organic chemicals industry NATURAL PINE CHEMICAL DEMAND GROWING AT A 5% CAGR UNTIL 20273 Demand/supply gap Diminishing sources of Reshaping the economics widening4 as: supply of pine chemicals of using natural pine • Decl
Slide 14: Superior over incumbent processes and products
Superior over A TRULY incumbent processes and products1 sustainable solution LEAF’S PINE PINE CHEMICAL PRODUCERS PETROLEUM BASED CRUDE TALL OIL CHEMICALS (GUM TAPPERS) CHEMICAL PRODUCERS IP protection Low relative capex Low waste No toxicity Sustainable manufacturing Sustainable supply Not labour in
Slide 15: Environmental Social Governance DNA
03 Environmental Social Governance DNA 15
Slide 16: Environmental: circular economy
Environmental: circular TREES SOURCED FROM FSC CERTIFIED FORESTS economy HQPlantations, based in QLD, supply Leaf with pine tree feedstock. Its forests are farmed on a 30-year cycle. This means for every tree used, another is planted. HQPlantation forests store 54 million tonnes of C021. CLOSED LOOP
Slide 17: Environmental: clean biochemicals
Environmental: SUPPLEMENTING THE PETROCHEMICAL SUPPLY CHAIN clean The chemicals industry is responsible for roughly 10% of global energy consumption1. biochemicals 1. The industry has historically used petroleum, natural gas and phosphates to make its products, exacerbating air and water pollution.
Slide 18: Revolutionising forestry: stump harvesting
Revolutionising forestry: Together with HQPlantations, Leaf has successfully processed pine stump harvesting stumps that confirm its suitability as a feedstock. Leaf’s relationship with HQPlantations is mutually beneficial for both parties and the environment: INCREASES THE WOOD SUPPLY AND PINE CHEM
Slide 19: Social and governance
DIVERSITY Leaf Resources recognises that an inclusive culture supports a diverse workforce. Social and governance EFFECTIVENESS AND PROFITABILITY The board is passionate about developing environmentally friendly manufacturing processes that can be more cost effective and profitable than incumbent pr
Slide 20: Business Plan
03 Business Plan 20
Slide 21: Recovered, rebuilding, upgrading
Recovered, rebuilding, upgrading In November 2021, the extraction equipment Staff well being has been a Heightened focus on health and control room at Apple Tree Creek was focus of the board since the and safety. Tier 1 independent damaged beyond repair after a lightning strike incident and remains
Slide 22: Process flow
Process flow Power Water mains supply Wood Handling Damaged, upgrading Wood sizing Excavator Wood chipper Screening (secondary) Not damaged, upgrading and Loader (primary) Rosin drumming machine Rosin Rosin storage Distillation Process feed hopper control Rosin flacking machine Terpene Office x3 Des
Slide 23: Upgraded 16,000tpa plant acquired
Upgraded 16,000tpa INITIAL TARGET PRODUCTION WITH UPGRADED EXTRACTION plant acquired1 PLANT IS 8,000TPA, AND IMPORTANTLY, PROVIDES CAPACITY TO SCALE TO 16,000TPA. Equipment has been designed for Near new equipment designed purpose and has been engineered by prominent solvent extraction to meet stric
Slide 24: Capital Raising
04 Capital Raising 24
Slide 25: Recovery schedule and key milestones
Recovery schedule and key milestones Targeted at eventual 16,000tpa production of rosin and terpenes at Apple Milestones Tree Creek, with many expansion opportunities to increase production Concurrently assess greenfield expansion opportunities and optimising supply mix beyond this point Operating Q
Slide 26: Capital raising to fund through to production
Capital raising to fund through to production Pro-forma cash Use of funds ITEM $m % ITEM $m % CAPEX (replacement equipment Cash and cash equivalents 0.71 5 8.8 59 installed and production ready) Insurances recoveries General working capital 4.7 32 3.22 22 expected Equity capital raising 5.13 34 Debt
Slide 27: Pro-forma capital structure
Pro-forma capital structure $5.1m1 170.0m $0.03 CAPITAL RAISING SHARES PER SHARE Capital structure Pre-money Post-money Offer price $0.03 $0.03 New shares - placement (m) 170.0 New shares – convertible note (m)2 55.9 Shares on issue (m) 1,582.1 1,808.0 Market cap ($m) 47.5 54.2 Net cash ($m) 0.73 5.
Slide 28: Pro-forma balance sheet
Pro-forma balance sheet1 Pro-forma Adjustments Pro-forma Change to Convertible note Insurance recoveries Capital raising 18/07/2022 31/12/2021 30/06/2022 raising (net of costs) total Assets Cash and cash equivalents 3,863,849 (4,537,929) 1,419,400 4,794,000 5,539,320 Insurance recoveries - 3,240,000
Slide 29: Appendix
06 Appendix 29
Slide 30: Click to play the video
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Slide 31: Company timeline
Company timeline Initial agreement with November 2021: May 2022: Hancock Timber Lightning strike Replacement Resource Group and subsequent equipment (Hancock) for 15,000tpa events caused acquired and plan feedstock supply explosion at underway to agreement with first Apple Tree Creek rebuild and cho
Slide 32: Positive structural market dynamics creates demand supply gap
Positive structural market dynamics TURPENTINE, ROSIN AND HYDROCARBON DEMAND SUPPLY creates demand supply gap Natural pine chemical demand increasing at a 5% CAGR until 20271 . Pine chemical gum supply is in decline, and CTO2 supply remains static. Petrochemicals are being used to meet the supply ga
Slide 33: Pine chemical gum supply is in decline, CTO supply remains static
Pine chemical gum supply is in decline, CTO1 supply remains static GLOBAL TURPENTINE PRODUCTION2 160 140 120 100 80 60 40 20 0 Y2019 Y2020 Y2021 Current supply gap has been met by resins from petrochemicals. Petrochemicals are being used to meet the supply gap but the pricing indicates customers pre
Slide 34: Current pine chemical supply
Current pine chemical supply 2021 SOURCES OF 42% ROSIN PRODUCTION Tall Oil Rosin 57% Gum Rosin 1% Wood Rosin 34
Slide 35: Existing supply
Existing supply There are three processes commonly used to extract rosin and terpenes from pine trees: Traditionally, rosin and terpene are CRUDE TALL OIL (CTO) extracted using environmentally A by-product of the pulp-making process, is fractionated to unfriendly and labour-intensive produce rosin a
Slide 36: Key terms used in this document
Key terms used in this document TERPENES HYDROCARBON RESINS The essential oil that is present in pine trees A larger group of chemicals that include long carbon chain chemicals from both petroleum based and also pine based chemicals ROSIN The gum or tacky sap present in pine trees SUSTAINABLE Causin
Slide 37: Risks
Risks Risk Mitigant Risk Mitigant Pine trees tend to be resilient. Most storm events tend to be The founders / key personnel have an affinity to the project and localised and will not affect all properties or to the same degree. Personnel hold equity to ensure ongoing retention. Leaf intends to syst
Slide 38: Contact us
CONTACT US investors@leafresources.com.au www.leafresources.com 38
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