ANNUAL GENERAL MEETING May 28 th , 2019 1000 - 925 West Georgia - PowerPoint PPT Presentation

ANNUAL GENERAL MEETING May 28 th , 2019 1000 - 925 West Georgia Street Vancouver BC. Canada

Forward Looking Information - Disclaimer This presentation contains certain forward-looking information that reflects the Company’s current views and/or expectations with respect to, among other things, the markets the Company operates in; the impact of currency exchange rates and other market factors on the results of the Company’s mills; expectations relating to capital expenditure spending; and the Company’s production, biorefinery, and balance sheet initiatives. Persons reading this presentation are cautioned that statements comprising forward- looking information are only predictions, and that the Company's actual future results or performance are subject to certain risks and uncertainties including, without limitation: those relating to potential disruptions to production and delivery, including as a result of equipment failures, labour issues, extreme weather, the complex integration of processes and equipment and other factors; fluctuations in the market price for products sold; trade restrictions or import duties imposed by foreign governments; labour relations; failure to meet regulatory requirements; changes in the market; potential downturns in economic conditions; fluctuations in the price and supply of required materials; foreign exchange fluctuations; availability of financing (as necessary); ability to restructure the Company’s existing debt on satisfactory terms; and other risk factors detailed in our Annual Information Form dated March 29, 2019 available on SEDAR at www.sedar.com and other filings with the Canadian securities regulatory authorities. In particular, financial forecasts and expectations are not indicators of future financial performance and there is no assurance that the Company’s assumptions in support of such forecasts or expectations are correct, accurate, or complete. These risks, as well as others, could cause actual results and events to vary significantly. The Company does not undertake any obligation to update any forward-looking information, except as required by applicable securities law. Unless otherwise noted, all references in this presentation to “ $ ” are to Canadian dollars. The selected financial information presented herein is qualified in its entirety by, and should be read in conjunction with, the Company’s unaudited condensed consolidated financial statements for the quarter ended March 31, 2019 and the related notes thereto and Management’s Discussion & Analysis, which are available on SEDAR. This presentation contains reference to “Operating EBITDA”, which is a non-GAAP financial measure. For disclosure of the manner in which these measures are calculated and a reconciliation to net loss, please refer to the MD&A for the quarter ended March 31, 2019, available on SEDAR. 2

Year 2018 Recap  The Company created a new reporting segment, the Bioproducts Segment, as a result of the acquisition of S2G Biochemicals Inc. (“S2G”)  Integrated S2G team and started front end engineering design for planned demonstration plant  Secured Federal and Quebec Government commitments for up to $17.4 million and initiated negotiations for an additional $12.5 million  Entered into a technology license and collaboration agreement with Mondelēz, one of the world’s largest snacking companies, including commitments in principle relating to the purchase of xylitol from the demonstration plant and a future commercial plant  Completed convertible debenture refinancing announced on Aug 28 th 2018 by amending and extending maturity to December 31, 2022 from December 31, 2019  Giovanni Iadeluca promoted to CEO of Fortress Global Enterprises  Progress was made in productivity, reliability and quality all while managing a baseline capital expenditure program 3

Improved Production Stability Launched leadership Liquor Cycle Volume (ADMT/day) ADMT Phase 1 - KBI/KPI Increase 600 200 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18 4

Production Volume Improvements ADMT 600.0 0.0 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Production ADMT/day Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 5

Improved Monthly Average MW Production Megawatts MW 25 15 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 6

2019 Q1 Recap Milestones  Mill stability continued to improve, however, due to a combination of factors the positive momentum from the prior three quarters was temporarily  Achieved important milestones in the interrupted first quarter of 2019 by advancing engineering for our bioproducts  Extreme weather conditions and unusual region- demonstration plant, and ordering wide electrical outages impacted operating results equipment required for tie-in to the FSC mill’s fifth digester in the first quarter and April of 2019*  Signed definitive contribution  Important cooking process knowledge was gained agreement with NRC for up to $10 which will ensure the winter issues are mitigated million nonrefundable grant. This and throughput increased under diverse conditions funding from NRC is in addition to previously announced Governments of  Entering seasonably more productive months Canada and Quebec commitments for up to $17.4 million *Operating EBITDA loss of $9.7 million, DP operating EBITDA loss of $8.8 million. The Company invested $0.8 million in the Bioproducts Segment which was offset by grants and funding and corporate costs were $0.9 million in the first quarter of 2019. 7

Strategy 2019 Production Balance Sheet Biorefinery Improvements Improvements 8

Strategy 2019 - Production Improvements  Annual planned shutdown in Q2 has been reduced by a day as we were able to perform some maintenance during the power outages in the first quarter  We intend to complete modifications to the fifth digester for Production the extraction of prehydrolysis liquor, an important step for Improvements the bioproducts demonstration plant project  Annual planned shutdown has been moved to Q2 to take advantage of historically stronger seasonal pricing in the second half of the year  Continued integration of the 5 th digester through 2019 will result in increased run rate throughput and reduced costs  Other Production initiatives such as online real-time equipment monitoring system 9

Biorefinery - Pulp Processes and Yields INPUT COOKING PROCESS BLEACHING PROCESS OUTPUT 17t of specialty cellulose grade 20t of rayon cellulose grade Cellulose 43-45% 25t of fluff pulp 100 t of 27t of paper pulp grade Lignin 20-28% Green Wood Inorganics/Organics Water Black Liquor Organics - Energy Inorganics - Recovery Waste water treatments Hemicelluloses (PHK) Bio-products 12-15% Opportunity Burned in recovery boiler for energy 10 Source: Hawkins Wright

Strategy 2019 – Biorefinery Strategic plan to become one of the world leaders in demonstrating and commercializing leading technologies for conversion of hemicellulose to advanced bioproducts High Value Bioproducts Products Other Opportunities • Xylitol • Xylose • Sulfonated lignin • Xylo-oligomers • Biofuels • Bio-oil • Other sugar alcohols PHL Opportunities • Hydrogen • Power • Animal feed • Biochemicals • Non-sulfonated lignin • CO 2 -based products • Furfural • Organic acids Immediate • Sugars for high-value Opportunities bioproducts • Existing waste streams • Low-capital, quick wins 11

Biorefinery - Xylitol Market 350 $1,400 Volume & Revenue Forecast to 2024 300 $1,200 250 $1,000 000s Tonnes US$M 200 $800 150 $600 100 $400 50 $200 0 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Tonnes USD Millions • Average selling price (2018): ~US$4,900/tonne • Volumes expected to grow at CAGR of 6.5% (2017 – 2024) • Market expected to exceed US$1B by 2022 12 Source: Global Market Insights -Xylitol Market Report 2024, ICTS, EPA, FDA, EFSA, ADA, CCM

Biorefinery – Value Added Products  Identify complimentary innovative value – added processes/bioproduct opportunities  Assess business cases & required technology, priortize Biorefinery and select  Identify additional strategic alliances  Finalize demonstration plant funding and commence construction of demonstration plant in second half of 2019 13

Strategy 2019 - Balance Sheet Improvements  Agreement in principle with Investissement Québec for a multi year interest and principal payment deferrals and an extended term on the $105.2 million indebtedness, subject to definitive documentation Balance Sheet Improvements  Restricted cash: CHF 3.2 million (CDN $4.3) expected to become available June 2019  Working capital should improve with operations in second half of the year 14