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TSX : PIF APRIL 2016 WWW.POLARISINFRASTRUCTURE.COM IMPORTANT - PowerPoint PPT Presentation

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POLARIS INFRASTRUCTURE INC. TSX : PIF APRIL 2016 WWW.POLARISINFRASTRUCTURE.COM IMPORTANT NOTICE This Presentation includes general background information with respect Polaris Infrastructure Inc. (Polaris) and does not purport to be

  1. POLARIS INFRASTRUCTURE INC. TSX : PIF APRIL 2016 WWW.POLARISINFRASTRUCTURE.COM

  2. IMPORTANT NOTICE This Presentation includes general background information with respect Polaris Infrastructure Inc. (“Polaris”) and does not purport to be complete. It has been prepared solely for informational purposes and is not to be considered a solicitation or an offer to buy or sell any securities and should not be treated as investment advice. The information contained in this Presentation is confidential and the property of Polaris. It is made available strictly for the purposes referred to above. This Presentation must not be disclosed, copied, published, reproduced or distributed in whole or in part at any time without the prior written consent of Polaris and, by accepting this Presentation, you agree not to do so. You also agree to return any written copy of this Presentation to Polaris at the request of Polaris.

  3. 3 SNAPSHOT  Plant completed in January 2013 at a Total Cost (including drilling) of US $421mm.  Operating Geothermal power plant – producing approx. net 50-52 MW today.  Above ground turbine capacity of 72 MW.  PPA in US$ for up to 72MW to 2029  US$115/MWh in 2015 WITH 3% per annum price escalator for 8 years; 1.5% per annum thereafter (TO 2029)  Current annual EBITDA at plant approximately US$41mm  Drilling program commenced in October 2015 to increase capacity of plant

  4. 4 CAPITAL MARKETS SNAPSHOT P I F S y m b o l : Price (C$): Debt March 31 (US$): C$8.24 187 mm Shares Outstanding (FD): Enterprise Value (US$) 15.6 mm 241 mm Market Cap. (C$): 129 mm Run Rate EBITDA (US$) Market Cap (US$): ~ 39mm 98 mm EV to Run Rate EBITDA Cash On Hand - March 31 (US$): ~ 6.2x 44 mm * as of April 4, 2016

  5. 5 SHAREHOLDER SUMMARY Goodwood Inc. 11.5% Barometer Capital Management Inc. 9.9% Sentry 8.6% Sprott Inc. 7.0% Harrington Global 6.0% Vertex 5.2% 5.1% Impex Enterprises Limited Earlston Investments Corp. 4.2% Pender Funds 4.1% Polar Capital 4.1%

  6. 6 MANAGEMENT/BOARD CHANGES  CEO – Marc Murnaghan  20+ years Investment banking/renewable experience  CFO – Shane Downey, CPA, CA  12+ years accounting, M&A and corporate banking  New Board Members:  Jaime Guillen : Faros Partners - 25+ years in development/financing of infrastructure projects in Latin American; fluent in Spanish  Jorge Bernhard : ex-CEO Sherritt Metals Marketing, fluent in Spanish  Retained Jim Lawless (Geothermal expertise) and Tony Mitchell (Chairman)  Approx. 115 employees in Nicaragua including Plant Manager, Reservoir Manager, CFO, etc.

  7. 7 CORPORATE STRUCTURE P o l a r i s I n f r a s t r u c t u r e I n c . Polaris Energy Nicaragua, S.A. Juan Escalante Antonio Duarte Julio Guidos Alexis Osorno Johnny Bendaña Gustavo Molina Plant Operations Finance HR & Admin Special Projects Legal & Govt Relations Reservoir  Manages all  Manages all  Oversees  Manages  Manages all legal  Oversees human matters related matters related to drilling project matters, govt accounting, resources,  56 direct relations, CSR and to O&M. the geothermal accounts payable, general services,  53 direct resource procurement & IT employees environmental medic and health  40 indirect  10 direct  26 direct compliance employees & safety  04 direct  26 direct employees employees employees employees employees

  8. 8 PLANT OVERVIEW  2 x 36 MW fuji turbines “above ground” – BOTH ONLINE SINCE JAN 2013  8 production wells producing approximately:  425-450 tph of steam and  1000-1200 tph of hot brine.  Production wells 500M-2,500m in depth  CURRENT steam results in power production of 55- 57 MWs “gross” or 50- 52 MWs “net”  5 Injection wells re-inject the hot brine into the reservoir to create a “closed loop”  RENEWABLE ENERGY IN LITERAL SENSE  Plant re-certified for CO2 credits - ~250,000 tons per year available

  9. 9 HISTORICAL KEY PARAMETERS Gross MW Net MW Average Unplanned Planned Turbine Year Hourly Hourly Steam Downtime Downtime Availability Mass (%) (%) (%) Production (1) Production (1) 2012 35.7 33.2 276 0.70 2.6 99.3 2013 53.3 48.4 416 0.19 1.8 99.8 2014 54.1 49.1 434 0.20 5.9 99.8 2015 54.6 49.5 428 0.22 3.1 99.8 2016 (2) 53.5 49.3 424 0.00 0.43 100.0 (1) Net of Planned / Unplanned Downtime (2) Thru March 2016

  10. 10 MONTHLY PRODUCTION 45000 40000 35000 30000 25000 Scheduled Plant Maintenaince 20000 15000 10000 5000 0 * After backing out planned maintenance , production has been quite stable since Mar/14 and is not exhibiting large declines

  11. 11 SAN JACINTO – WELL SUMMARY PRODUCTION WELLS INJECTION WELLS Gross TPH # Well Name Depth (m) Date # Well Name Date Depth (m) MW (injection) 1 SJ4-1 729 1994 9 1 SJ1-1 2326 1993 360 2 SJ5-1 2339 1994 3 2 SJ9-2* 1725 2007/08 200 3 SJ6-1 1881 1994 2 3 SJ10-1 1200 2008 250 4 SJ9-1 1200 2007 7 4 SJ12-1* 2383 2010/11 250 5 SJ6-2 2000 2008 8 5 SJ11-1* 2186 2011 70 6 SJ9-3* 1975 2010/3 4-5 TOTAL 1,130 *Fork/Sidetrack 7 SJ12-2* 2296 2011 14 8 SJ12-3* 2465 2011/3 8-9 TOTAL 55-57 *Fork/Sidetrack

  12. 12 SJT STEAM FIELD LAYOUT Production Wells SJ4-1 Vertical – 729m SJ5-1 Vertical – 2339m SJ6-1 Vertical – 1881m SJ6-2 Deviated (E) – 2000m Pad 12 SJ9-1 Deviated (NW) – 1200m SJ9-3* Deviated (E/SE) – 1975m Pad 5 SJ12-2* Deviated (SW) – 2296m Pad 6 SJ12-3* Deviated (E/SE) – 2465m Pad 9 Pad 4

  13. 2015/16 DRILLING PROJECT

  14. 14 WELL SJ6-3 Update  SJ6-3: Oct 12 to Dec 30, 2015.  Standard diameter deviated well (1918mMD / 1676mVD).  Achieve production from shallow reservoir and modest step out to the west.  Utilize exisiting infrastructure to tie-in for production.  Currently undergoing thermal recovery .

  15. 15 WELL SJ14-1 Update  Spudded on January 09, 2016.  @1996mMD / 2339mMD (target depth).  Well was sidetracked to change direction and inclination.  Looking for confirmation of temperature and permeability.  Well targeting deep reservoir (BT Fault).  If well successful for production, will commence procurement and construction of a High Pressure Steam separation station.

  16. 16 SJ9-4 (THIRD NEW WELL) Option 9C – preferred  Depth: ~1200m  Direction: NNW 9C  Target: Shallow reservoir between SJ6 and SJ5 Option 9A  Depth: ~2000m  Direction: SE  Target: BT Fault (Deep) 9A  Area of known temperature, permeability and proven production  Estimated 5 MWe based on other wells drilled to same part of resource (80% POS )

  17. 17 PROJECT SCHEDULE SJ6-3  Completed on Dec 30, 2015  Thermal recovery to be completed in June 2016  Expected tie-in in July 2016 SJ14-1  ~10 days to complete (if drilling conditions allow)  Thermal recovery approximately 75 days  Expected tie-in in Q1 2017 Workovers (SJ11-1, SJ12-1, SJ10-1 & SJ1-1)  To commence in Apr 2016  Expected duration ~70 days SJ9-4  Spud date end of June 2016  Expected duration ~50 to 60 days  Expected tie-in in Q4 2016

  18. 18 DRILLING CAMPAIGN FINANCIAL IMPACT  Each new MW will provide ~$1 mm per year in additional EBITDA / Free Cash Flow  Current PIF RUN RATE EBITDA of $39mm  Given 2016 debt service of $22-23mm and MMRA contributions of $5 - $6mm the free cash flow to equity holders is $11 mm.  Approximately US$0.70 per share  Given debt service is “fixed” the impact on free cash flow to equity holders is significant  Each additional MW added would increase FCF per share by approximately US$0.06 per share annually  10 year tax holiday (with a likely extension) enables tax free “distributions” to Canada  Recently announced initial quarterly dividend of US$0.10 per share

  19. 19 FUTURE GROWTH OPTIONS  Drilling of new wells to increase power generation  9-2 “Option”  Binary Unit  Plant Output Optimization Projects  Carbon Credits  Western Sector  Casita – San Cristobal Geothermal Field Feasibility and Development Project

  20. 20 FUTURE WELL OPTIONS Ref Depth (m) Direction 9C 1200 NNW 9A 2000 SE PP 1200 SW 6A 2000 SW 6B 1200 SSE 6C 1200 ESE 9C 6D 4-500 Vertical PP 8A 1000 Vertical 9B 2000 ENE 9D 1200 W 6D 8A 9B 6C 9D 6A 6B Deep Shallow 9A

  21. 21 BINARY UNIT Binary Unit Options  Polaris is currently assessing binary unit feasibility  Need to know approximate brine flow after dully program  Cost - $25 - $30mm  Additional MW - ~6 – 10 MW  Equates to approx. $6 - $10mm additional revenue and cash flow  Need to incorporate silica solution

  22. 22 CASITA PROJECT  $11 million invested to date  Geophysics  Access road  “Slim” hole drilled to 850 m in 2011  Confirmed geophysics and potential “DRY STEAM” resource of 100 MW+  In government’s plan to come online in 2019  Working with World Bank to access “drilling” capital to de -risk  SYNERGIES AVAILABLE:  Use same rig from San Jacinto drilling campaign  In-place administrative and operations personnel

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