Etrion Corp. · OTC:ETRXF
Etrion — Investor Presentation (January 2016)
43 slides from Etrion's investor presentation, Jan 14, 2016
Slide 1: Etrion - Transforming Into a Global Solar Power Platform
ETRION - Transforming Into a Global Solar Power Platform JANUARY 14, 2016 1
Slide 2: Disclaimer
DISCLAIMER These materials and the information contained herein are being presented by Etrion Corporation (the “Company”). By attending a meeting where these materials are presented, or by reading them, you agree to be bound by the following limitations and notifications. These materials do not cons
Slide 3: Corporate Overview
CORPORATE OVERVIEW ( etrion
Slide 4: The Lundin Group
THE LUNDIN GROUP ● Etrion is part of the Lundin Group of Companies, 10 publicly-traded companies in the mining and energy sectors ● The companies range from exploration stage to advanced development and production, operating in over 30 countries worldwide with a combined market capitalization of app
Slide 5: Etrion Corporation
ETRION CORPORATION COMPANY OVERVIEW FINANCIAL SUMMARY ● Independent power producer (IPP) that develops, builds, owns Recent Share Price (TSX/OMX: ETX) C$0.32 / SEK 2.04 and operates ground-based solar photovoltaic (PV) power generation plants in three key markets (Italy, Chile and Japan) Shares Outs
Slide 6: Etrion at a Glance
ETRION AT A GLANCE ● 22 Solar plants with aggregate capacity of 139MW operating in three countries (Italy, Japan, Chile) all centrally Operational monitored with sophisticated web based monitoring system Excellence ● Power plants consistently perform above plan ● Utility-scale solar projects built u
Slide 7: Utility-Scale Solar Power Generation
UTILITY-SCALE SOLAR POWER GENERATION Goal: Build, own and operate solar electricity plants at lowest cost per kWh Montalto, Lazio, Italy – 24 MW Cassiopea and 8.8 MW Centauro Borgo Piave, Lazio, Italy – 3.5 MW Etrion Lazio Atacama, Chile – 70 MW Salvador Competitive Advantages of Solar Power Easy to
Slide 8: Downstream Player in the Solar Energy Market
DOWNSTREAM PLAYER IN THE SOLAR ENERGY MARKET PARTS SERVICES RAW PROJECT ASSET (MODULES, (ENGINEERING, DEVELOPMENT MATERIALS FINANCE MANAGEMENT INVERTERS) CONSTRUCTION) ● Solar facilities are developed in new markets ● Raw materials ● Solar cells are ● Third parties (e.g., polysilicon) then assembled
Slide 9: Business Model – Key Drivers
BUSINESS MODEL – KEY DRIVERS KEY DRIVERS RATIONALE STABLE REVENUES 1. Long-term contracts ● Premium price for solar electricity generation under long-term contracts (i.e., FiT or PPA) REVENUE 2. Solar irradiation ● Annual solar irradiation varies less than 10% per year ● Economic growth increasing p
Slide 10: 2015 Accomplishments
2015 ACCOMPLISHMENTS Refinanced Italian portfolio resulting in increase of project FINANCIAL cash distributions from € 2.6M to € 5.7M Renegotiated O&M contracts in Italy to reduce annual cost by more than 30%, an annual savings of € 1.4M OPERATIONAL Connected 5 solar parks in Japan, 3 months a
Slide 11: Asset Overview
ASSET OVERVIEW 11
Slide 12: Etrion's Global Platform
ETRION’S GLOBAL PLATFORM ● Geographic diversification across Italy, Chile and Japan ● Revenue diversification across FiT, PPAs and spot (merchant) pricing ● Etrion is constantly evaluating new opportunities in high-growth regions 12
Slide 13: Italy
ITALY 13
Slide 14: Italian Operating Assets
ITALIAN OPERATING ASSETS Project Sites Capacity Technology Modules Inverters EPC/O&M (MW) Contractor Cassiopea 1 24.0 Single axis SunPower SMA SunPower Helios ITA-3 2 10.0 Single axis Yingli Bonfiglioli ABB Centauro 1 8.8 Single axis SunPower SMA SunPower Helios ITA 7 6.4 Single axis Solon Santerno
Slide 15: High Availability and Predictable Production
HIGH AVAILABILITY AND PREDICTABLE PRODUCTION Nettuno Brindisi Matino Italy Production Comparison (kWh) 16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 Montalto Weather Adjusted Production (kWh) Actual produced energy (kWh) 15
Slide 16: Unique Competence in Portfolio Optimization
UNIQUE COMPETENCE IN PORTFOLIO OPTIMIZATION Expected annual cash distributions from 60 MW Italian solar portfolio (EUR million) ● Cash flow from operations increased from Euro 2.6M to euro 8M per year as a result of (a) Financial Engineering, (b) Operational Optimization and ( c) Tax / restructuring
Slide 17: Chile
CHILE 17
Slide 18: Chilean Assets
CHILEAN ASSETS Capacity Contract Project Region Sites Ownership Status MW Regime SIC Merchant + Salvador 1 70 70% Operational (Central) PPA Aguas Blancas SING Merchant + Shovel-ready 1 32 100% 2A (Northern) PPA pipeline Aguas Blancas SING Merchant + Shovel-ready 1 24 100% 2B (Northern) PPA pipeline
Slide 19: Chile – 70 MW Operational
CHILE – 70 MW OPERATIONAL Chile Production Comparison (MWh) 20000 ● 160,000 panels over 138 hectares of land 18000 16000 ● Energy sufficient to power over 70,000 14000 homes 12000 10000 ● Competing with traditional sources of 8000 6000 energy 4000 2000 ● Eliminating over 150,000 tons of CO2 per 0 ye
Slide 20: Japan
JAPAN 20
Slide 21: Japanese Assets – Operational
JAPANESE ASSETS – OPERATIONAL Mito Status Operational Sites 5 Region Central (Ibaraki) Capacity 9.3 MW Ownership 87% Technology Fixed-tilt Module Canadian Solar Inverters Hitachi EPC / O&M Hitachi High-Tech Irradiation Yield 1,161 kWh/kWp Mito, 9.3 MW FiT: ¥40/kWh Revenue Stream Term: 20 years Produ
Slide 22: Mito – 9.3 MW Operational as of Q3-2015
MITO -- 9.3 MW OPERATIONAL AS OF Q3-2015 Mito site 1 Mito site 2 Mito site 3 Mito site 4 Mito site 5 22
Slide 23: Japanese Assets – Under Construction
JAPANESE ASSETS – UNDER CONSTRUCTION Shizukuishi Status Under Construction Sites 1 Region North (Iwate) Capacity 24.7 MW Ownership 87% Technology Fixed-tilt Shizukuishi, 24.7 MW Module Canadian Solar Inverters Hitachi EPC / O&M Hitachi High-Tech Irradiation Yield 1,088 kWh/kWp FiT: ¥40/kWh Revenue S
Slide 24: Shizukuishi – 24.7 MW Under Construction
SHIZUKUISHI -- 24.7 MW UNDER CONSTRUCTION View of fix-tilt structures General view of plant View of fix-tilt structures and DC cable conduits October Q4-2014 Q3-2015 Q2-2016 August 2016 October 2016 Notice to Proceed Land preparation Piers and racking Delivery and Plant completion Plant delivery. (N
Slide 25: Building Value in Japan
BUILDING VALUE IN JAPAN Worked Example of Leveraged PV Project Value Creation – Undiscounted Cash Flows per 1 MWp Installed over Lifetime in Japan [m USD] 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Total Distributions (20 years) Dev Fee Net Equity Total Debt Total Value over 30 years Total CAPEX Residu
Slide 26: Japan Backlog
JAPAN BACKLOG 26
Slide 27: Japan – Tohoku Region – 9.5 MW
JAPAN – TOHOKU REGION – 9.5 MW Layout Size 9.5 MWp Region Tohoku Revenue FIT: ¥36/kWh Stage of Development Advanced Irradiation 1,110 kWh/kWp Site 1&2 Site 3 ETX share 55%-70% Expected NTP / COD Q1-2016 / Q1-2017 Site 4 Project Development Status Developer Publicly-listed real estate company Issue S
Slide 28: Japan – Hokuriku Region – 13.2 MW
JAPAN – HOKURIKU REGION – 13.2 MW Layout Size 9.5 MWp Region Hokuriku Revenue FIT: ¥32/kWh Stage of Development Advanced Irradiation 1,100 kWh/kWp ETX share 55%-70% Expected NTP / COD Q1-2016 / Q2-2017 Project Development Status Developer Etrion Issue Status METI FiT secured Developer Etrion has bee
Slide 29: Japan – Kyushu Region – 52.5 MW
JAPAN – KYUSHU REGION – 52.5 MW Layout Size 52.5 MWp Region Kyushu Revenue FIT: ¥36/kWh Stage of Development Advanced Irradiation 1,140 kWh/kWp ETX share 85%-100% Expected NTP / COD Q2-2016 / Q1-2018 Project Development Status Developer Local real estate developer Issue Status METI FiT secured Devel
Slide 30: Anticipated Funding of 2016 Japan Backlog
ANTICIPATED FUNDING OF 2016 JAPAN BACKLOG ● Japanese backlog of 76 MW gross expected to commence construction in 2016. ● Total estimated Capex per MW of US$ 3M will require about 10% of equity and 90% of non recourse debt ● Etrion’s project equity required in 2016 estimated to be approximately US$ 5
Slide 31: Summary
SUMMARY 31
Slide 32: 2016 Strategic Priorities
2016 STRATEGIC PRIORITIES ● Secure financing for 2017 backlog with minimum dilution FINANCIAL ● Secure debt financing for 76 MW backlog in Japan ● Reduce O&M Chile by 30% of current cost ● Connect 24.7 MW Shizukuishi park in Japan by Q3-16 OPERATIONAL ● Commence construction of 76 MW in Japan ● Redu
Slide 33: Overall Project Portfolio – Potential Growth
OVERALL PROJECT PORTFOLIO – POTENTIAL GROWTH (4) (5) 117 MW net operational 22 MW net under construction and fully funded 332 MW net pipeline 4x growth in installed capacity (3) (2) (2) (1) Notes: (1) Etrion’s initial 70% net capacity in 70 MW project. (2) Etrion’s 87% net capacity. (3) Etri
Slide 34: Conclusion
CONCLUSION Attractive returns in downstream solar power generation sector ● Global Platform • Well positioned to expand within Europe, Asia and the Americas • Systems in place to effectively manage operations across multiple jurisdictions • Proven ability to secure high-return projects and attract s
Slide 35: Appendix
APPENDIX 35
Slide 36: Success in Capital Raising for Project Development
SUCCESS IN CAPITAL RAISING FOR PROJECT DEVELOPMENT USD 80m Equity EUR 80m Senior Private Placement Secured Bond Issue EUR 222m Project Bond and (Corporate) (Corporate) Loan Refinancing (Italy) Dec 2013 Jan 2014 Apr 2014 Jul 2014 Sep 2015 Dec 2015 USD 142m Project Finance JPY 9,900m Debt USD 13.8m Li
Slide 37: Italian Power Market
ITALIAN POWER MARKET Overview ● Italy is a leading producer of electricity from renewable energy sources, and it is one of the largest producers of solar energy in the world ● The solar PV sector has historically been the dominant renewable energy technology due to the Italian solar Feed-in-Tariff (
Slide 38: Chilean Power Market
CHILEAN POWER MARKET Overview Chile – Installed Capacity by Source 2014 ● In 2014, Chile had 19 GW of total installed power 2% 15% 23% capacity, of which large hydro and natural gas made up more than 50% 4% ● Renewables accounted for approximately 8% of installed capacity, with solar power at less t
Slide 39: Japanese Power Market
JAPANESE POWER MARKET Overview Japan – Installed Capacity by Source 2014 11% ● Japan is one of the largest solar PV markets in the world 17% today with 25.9 GW of installed capacity in 2014 0% • Relatively low-risk jurisdiction with an attractive 20% solar FiT program ● The Japanese government has i
Slide 40: Etrion Equity Research Coverage
ETRION EQUITY RESEARCH COVERAGE TARGET PRICE TARGET PRICE BROKER LOCATION DATE OF LAST REPORT RECOMMENDATION (CAD) (SEK) 1 Carnegie Oslo November 13, 2015 $0.46 3.0 Buy 2 Cormark Securities Toronto November 13, 2015 $0.45 2.9 Market Perform 3 National Bank Financial Toronto November 12, 2015 $0.35 2
Slide 41: Strong Management Team
STRONG MANAGEMENT TEAM Marco A. Northland (Chief Executive Officer and Director) - has extensive experience leading growth companies. Prior to co-founding Etrion in 2008, he was responsible for establishing and overseeing European operations for SunPower Corporation, a leading U.S. solar energy comp
Slide 42: Experienced Non-Executive Board Members
EXPERIENCED NON-EXECUTIVE BOARD MEMBERS Ian H. Lundin (Chairman) - co-leads the investment initiatives of the Lundin Group and serves on the board of several Lundin companies, specifically, Chairman of Lundin Petroleum AB. In 1984, he joined the Lundin Group as drilling manager for International Pet
Slide 43: Contact Details
Contact Details Etrion Corporation Route de Pré-Bois 29 1215 Genève Switzerland Phone: +41 22 715 20 90 Email: info@etrion.com Website: www.etrion.com 43