BHM - Wawa Fibre Supply

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OverviewFibreSupply

• OntarioFibreAccess• OverviewofSupplyArea• HistoryofSupplyAccessandSustainability• FirstNationandCommunityExpectations• FibreSupplyDetails&Cost

– StatusofSupplyAgreements

• RateDeterminationModelandCrownCostDetails• Questions

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AccesstoFibre

•  SustainableForestLicense– Management

•  SingleEntity(SFL)•  Enhanced(eSFL)•  LocalForestManagementCrownAgency•  Crown

•  Tenure–  SFL–  FRL–  SupplyAgreement

•  Businesstobusinessagreementwithlicenseeorprimaryuser•  ForestResourceProcessingFacilityLicence(MillLicence)•  PrivateLand•  MillResiduals

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StepstoSecureSustainableSupply

•  BusinesstobusinessagreementwithSFLholderorprimaryforestproductcompany

–  Access/Supply/orparticipationoneSFL•  FirstNationAgreement(s)and/orproofofAboriginalConsultation•  BusinessPlansubmissiontoacquireMillLicenceandWoodSupplyAgreementifoffered

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OntarioSFLs

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PrivateLandOpportunities

Thereareinexcessof20privatelandtownshipswithin50kmofthefacility

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WawaSupply-Forests

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WawaSupply-Sawmills

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WawaSupply–History

•  Stage2CompetitiveprocessforfibredirectedtopotentialbiofuelplantinWhiteRiver

–  RecognitionletterrelatedtoWawawhenthebusinessplanchanged– MillLicenseandMROLweregrantedacknowledginguseofsupply

•  RemovalofvolumesonMNRAvailableWoodSupplyReport•  DraftletterprovidedfromMNRF

–  AcknowledgesthefacilityinWawaandtheBusinesstoBusinessarrangementswithSFLHolders

•  MNRFdesirefuturetenuresecuritytobeintheformofparticipationinESFL’sasshareholdersandbusinesstobusinessonothermanagementunits.

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Stable,Abundant&SustainableFeedstockSupply

FeedstockRequirements:

§  Proofofbiomasssustainabilityandindependentcertification

§  CertificationsincludeFSCChainofCustodyandSBP

§  ~85%ofOntario’sCrownmanagedforestisthird-partycertified

Sustainability:

§  Bestinclassharvestpractices

§  Wildlifehabitatmanagement

§  Endangeredspeciesandfeaturedspeciesmanagement

§  Biodiversity

§  MaintenanceofFirstNationculturalvalues

§  Long-termfibresupply

Source:GovernmentofOntario

FeedstockCharacteristics:

§  Nofibresupplytensionwithpulpandpaperindustry

§  Sawmillresiduals

§  Roundwoodageof65-100years(~70%Aspen,~30%Birch)

§  MillRecognizedOperatingLevel(MROL)legislativemandatesupportslong-termfibresupply

§  Costbasedharvestanddeliverysystem

§  Stumpagefrozenatminimums

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First Nation & Community Expectations

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FirstNationExpectations

Ecological,SocialandEconomicExpectations•  Ecological-Sustainableuseandrespectoftheland

–  respectfortraditionalecologicalvaluesandknowledge,aswellasfortheneedsofFirstNationsforestusers,andamoreecosystem-basedapproachtoforestryincludingavoiceinthemanagementoftheland

•  Social-Abilitytobenefitfromtraditionalareas–  Skillsdevelopmentandyouthopportunities.

•  Economic-Communitydevelopmentandcapacitybuilding–  Throughemploymentorbusinessopportunities–  value-addedandnon-timberforestproductsbusinesses–  resourceskills&businessdevelopment

•  FirstNationConsultationisaprimaryrequirementtoachieveawoodsupplyormilllicencewithMNR,ForestManagementCompany,orForestProductProducer.

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CommunityExpectations-Benefits

•  Ensuringlocalopportunitiesexistwithintheforestsector•  Economicdevelopment&abilitytoattractinvestment•  Interesttounderstanddirectionforforestmanagementandharvestingactivitiesaroundtheircommunities

–  Somehaveinteresttoprovideinputonforestmanagementorharvestingareas

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Forest Supply Details and Costs

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SupplyAgreements

•  AlgomaForest–  2yearOLA(expiredMarch31,2017)providedaccessto192,226m3andanewonemaybe

established–  HistoricallytheClergueBoardwasinterestedtoseeRentechandthefacilitybecomea

shareholder–  Clerguehasadditionalbiomassavailableandmayberequestedformally.

•  Magpie/MartelForests–  Possibletonegotiatetotransfer“10Year”AgreementwithRayonierformerlyTembec(expires

2024)–  SinceAugust2014RentechhadparticipatedintheeSFLdevelopmentprocessasapotential

shareholderintheamalgamationoftheMagpieandMartelForest.•  Processiscurrentlyatthedraftshareholdersagreementstagewithplannedtransferof

theMagpietoNewcoSeptember2017withMNRtoissueneweSFLfortheamalgamatedforestsApril1,2021.–

•  ThepartiesareveryinterestedtohaveanewownerentertheESFLdiscussions.

• WhiteRiver/NagagamiForests–  FibrepurchaseagreementswithWhiteRiverForestProducts(shortterm)maybeavailable–  BothWhiteRiverandNagagamiForestarescheduledtobecomepartoftheLFMC

(NawiinginokiimaFMC)–  InitialdiscussionswithNFMCandareveryinterested(onceamalgamationoccurs)toestablish

longtermbusinesstobusinessagreement

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MNRFFibreSourcebyManagementUnit-Historical

SummaryTableofRTKWPCanada,ULC-WoodSourcesbyManagementUnitComparisonofVariousProductTypesfromtheManagementUnitsandOpenMarketWoodAvailable

Forest AnnualMNRCommittedVolume ForestManagementPlanVolumesbyProduct(m3/Yr)-FromTableFMP15

Management forRentech(m3/Year) Rentech OpenMarket

Unit Merch Non-Merch Total Sawlogs Veneer Pulp Fuelwood BioFuel Merch Non-Merch TotalAvailable

Algoma 96,113 96,113 149,600 6,100 70,000 12,500 96,113 495,116 495,116Magpie 131,064 33,750 164,814 199,000 6,000 500 165,814 114,825 67,062 181,887Martel 222,254 37,800 260,054 636,387 30,218 450,000 1,233 1,233

Nagagami 131,837 131,837 185,113 26,249 43,647 152,184 -WhiteRiver 148,240 148,240 473,903 59,261 59,061 155,000 237,176 105,855 343,031

Total 801,058 1,644,003 127,827 172,708 13,000 1,019,111 848,350 172,917 1,021,267

Source: OntarioMinistryofNaturalResourcesElectronicForestManagementPlanWebsite,fromFMP-15PlannedWoodUtilizationbyMill.Dataisfromthe2010-2020AlgomaForestManagementPlan-PhaseII,the2009-2019MagpieForestManagementPlan-PhaseII,the2011-2021MartelForestManagementPlanPhaseII,the2016-2021NagagamiForestManagementPlanPhaseIIandthe2013-2018WhiteRiverForestManagementPlanPhaseII.

Notes: TheAnnualMNRCommittedVolumeisfromtheMinistryofNaturalResourcesandForestryreporttitleProjectWoodUseandUtilizationSummary-Rentec,Inc.(Wawa)-BioproductsdatedMarch13,2015.

The"biofuel"columnisthevolumethatisbeingshownineachForestManagementPlanasbeingcommittedtoRentech.

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SampleTableFMP-15AlgomaForest

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Regional“Crown”AvailableWoodSupply

MERCHANTABLE UNMERCHANTABLEREGION MANAGEMENTUNIT BW CE OC PO PWR SPF TOL Total BW CE OC PO PWR SPF TOL Total TOTAL

Northeast AbitibiRiverForest (6) 11 14 (50) - 258 - 227 17 - 6 88 - 229 - 340 567AlgomaForest 63 4 1 39 4 31 75 217 25 - - 10 - 27 47 109 326BigPicForest 37 5 - 152 - - - 194 13 - - 40 - 59 - 112 306GordonCosensForest 38 14 76 260 - 93 - 481 13 1 21 79 - 174 - 288 769HearstForest 14 12 14 222 - 37 - 299 5 - 4 44 - 146 - 199 498MagpieForest 39 1 1 100 - - - 141 14 - - 25 - 36 - 75 216MartelForest 53 21 14 26 8 - 4 126 29 1 3 44 - 85 - 162 288NagagamiForest 1 4 - 132 - - - 137 4 - 2 34 - - - 40 177NipissingForest 56 3 13 37 47 153 56 365 37 - 2 33 14 43 28 157 522NorthshoreForest 37 5 7 70 22 - 60 201 20 - 1 32 5 34 14 106 307PicRiverForest 47 1 - 78 - 8 - 134 20 - - 20 - 60 - 100 234PinelandForest 44 22 8 66 1 - - 141 15 1 2 28 - 35 - 81 222RomeoMaletteForest (1) 11 17 1 - - - 28 20 - 4 24 - 7 - 55 83SpanishForest 107 3 1 108 57 1 21 298 39 - - 69 7 119 4 238 536SudburyForest 60 1 5 104 39 1 34 244 17 - 1 25 9 31 7 90 334Temagami 15 3 - 1 17 31 2 69 7 - - 16 5 21 1 50 119TimiskamingForest 3 1 - 8 3 28 (1) 42 1 - - - - - - 1 43WhiteRiverForest 69 8 11 25 - - - 113 3 - - 5 - 21 - 29 142

RegionTotal 676 130 182 1,379 198 641 251 3,457 299 3 46 616 40 1,127 101 2,232 5,689

ONTARIOAVAILABLEWOODREPORTNovember2018(thousandscubicmetresperyear)

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WawaFacilityFibreSupply

56percent

17percent

12percent

5percent9percent

1percent

MartelForest-(10yr.Agreement)

AlgomaForest-RTKLicense

MagpieForest-Merch(BtoB)

WhiteRiverForest-Merch(BtoB)

MillResiduals-SupplyAgreements

MillGatewood(OpenMarket)

Fibre Supply Source

Annual Facility Fibre Requirement: 800,000 Tonnes (design capacity)

§  136,000 tonnes were controlled directly through Overlapping License Agreements

§  450,000 tonnes was secured through a long term business to business agreement (expires 2024)

§  Shorter term (1 to 3 year) business to business (B to B) agreements provide up to 214,000 tonnes

TheOntarioMinistryofNaturalResourceshasprovidedaRecognizedOperatingLevelof800,000m3/year(FacilityLicense)inconjunctionwithaMinistryrecognizedfibresupplyof801,058m3(note:1m3fibre=1tonnefibre)

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WawaFacilityFibreSupply(continued)

Roundwood64percent

BushMicrochips/Grind27percent

Millresiduals9percent

Roundwood-512,000GMT

BushMicrochips/Grind-218,000GMT

MillResiduals-70,000GMT

§  Wawa Facility can accept deliveries of round wood or processed fibre (microchips, grind or mill residuals)

§  Current ability to accept processed fibre is limited by the truck dumper capacity; as efficiencies in dumper are realized, there is potential to increase processed fibre mix

FibreSupplyType

AverageBlendedFibreCost: 2018–$41.21perGreenMetricTonneForecastConversionFactors: 2018–1.88GMTperPelletTonne

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FibreSourcingAdministration

•  Fibrewaspurchasedthroughvariousmechanisms:–  LongTermAgreement

•  Longerthan3years(Rayonier/TembecAgreement,Narinmillresidualagreement)

–  Rentechheldlicences(OverlappingLicences)…Algoma,Martel–  ShorterTermAgreements

•  Upto3years(Columbia,Eacom,Kenogami,LongLacLumber,WhiteRiverForestProducts)

•  Twostaffwereresponsibleforallaspectsofsecuringagreements,administrationofthecontracts,fibrequalitysamplingandcomplianceonRentechheldlicences.

–  Supportedbymillstaffinoperationoftheweighscalesandpaymentforfibredeliveries.

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Rate Determination Model & Crown Charges

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RateDeterminationModelDeliveredFibreRateModel

ConventionalRoadSideProcessed

Chipping(InBushfullTree)

Chipping(HarvestResiduals)

FuelatPrice $1.18

Volume(m3) RoadsideCosts($/m3)

Felling $4.00 $4.00 $-Skidding 4.00 4.00 4.00Delimb 4.00 - - -Slashing - - -Processor - 5.65 - -Chipping - - 12.00 12.00

SubTotal $12.00 $13.65 $12.00 $16.00

Overhead($/m3) Commute $- $- $- $-Supervision - - - -Mobilization - -- -Roads 3.00 3.00 OHandAllow. 3.00 3.003.00 3.00

SubTotal $6.00 $6.00 $3.00 $3.00 HaulAssist - - - -Profit 1.50 - - -

TotalRoadside($/m3) $19.50 $19.65 $15.00 $19.00 LoadingCosts(includesprofit) 1.89 1.89 - -

TotalCostLoaded($m3) $21.39 $21.54 $15.00 $19.00 ConversionFactor 1,000 1,000 1,000 1,000

TotalHarvestingCost $21.39 $21.54 $15.00 $19.00 SFLFees CapitalRoadsandMaintenance 0.50 0.50 0.50

TotalCostLoaded($/Tonne) $21.89 $22.04 $15.00 $19.50 TruckingCost@$110/hour(40TonneLoad) $15.97 $15.97 $19.00 $19.00

TOTALDELIVEREDCOST(BeforeCrownDues) $37.86 $38.00 $34.00 $38.50 CrownDues $2.00 $2.00 $2.00 $2.00

TotalCost $39.86 $40.00 $36.00 $40.50

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DistancetoMill–Haul/TransportationCost

Haulingcostsarebasedoncycletimeswhichareinfluencedmainlybydistanceandspeedtravelledbasedonthetypeofroadutilized.Basetruckinghourlyrateis$110/hourwithfuelat$1.00perlitre.Wawapricingsetbasedondeliveredexpectation$38-40/gmt

150km-$16-19/gmt

100km-$12-15/gmt

50km-$8-10/gmt

0km-Consumer

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HaulRateCalculator

•  Averagelogsizeload=40tonnes,averagechipsizeload=35tonnes•  Loadsize,road“type”,speedanddistanceaffectratepertonne•  Hourlytruckingratevarieswithfuelpricing.Someagreementshavefuelsurchargemechanismsbuiltin.

ASSUMINGLOGS ASSUMINGBUSHCHIPSHaulRateCalculation(WawaPellets) HaulRateCalculation(WawaPellets)

***63,500KG'sMaxLoad ***63,500KG'sMaxLoad

BlockNumber RouteDescription Speed Distance Time BlockNumberRouteDescription Speed Distance TimeXYZ TertiaryRoad(blockcenter) 20.0 10.0 0.5 XYZ TertiaryRoad(blockcenter) 20.0 10.0 0.5XYZ SecondaryRoad 60.0 25.0 0.4 XYZ SecondaryRoad 60.0 25.0 0.4XYZ TertiaryHighway 80.0 - XYZ TertiaryHighway 80.0 -XYZ MainHighway 80.0 130.0 1.6 XYZ MainHighway 80.0 130.0 1.6XYZ MainHighway 90.0 - - XYZ MainHighway 90.0 - -Total 165.0 2.5 Total 165.0 2.5

Hours $perHour Hours $perHourDrivingTime 5.08 105.0$ 533.8 DrivingTime 5.1 105.0$ 533.8Waitingtime 1.0 105.0$ 105.0 Waitingtime 1.25 105.0$ 131.3

TotalTime 638.8 TotalTime 665.0Tonnesperload 40.0 Tonnesperload 35.0

Ratepertonnehaul 16.0$ Ratepertonnehaul 19.0$

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Code Name Conifer Hardwood Grade 1 & 2

Poplar / White Birch

AllSpecies(Hardwood&Softwood)

615AlgomaForest 5.25 2.12 1.73 5.25565MagpieForest 5.50 1.00 1.00 3.50509MartelForest 0.50 0.50 0.50 0.50390NagagamiForest 5.00 0.50 0.50 5.0060WhiteRiverForest 4.50 0.50 0.50 0.50

Crown Charges Table # 1

Ontario Crown Timber Charges (Stumpage) Crown Charges Payable To Consolidated Revenue Fund (C.R.F.) CFSA Section 31(1) and Forestry

Futures Trust (F.F.T.) CFSA Section 51(5) 2017/2018 Period 12: March 01 - March 31 ($/m3)

Species Group Pulp Veneer Sawmill Composit

e Paper Fuelwoo

d Bioprodu

ct NES Mixed Woods (Bioproduct Sector Only) CRF Price (CFSA S. 31(1)) Minimum Price 0.00 Residual Value Price 0.00 Forestry Futures Trust (CFSA S. 51(5)) Forest Resources Inventory 0.59 Forestry Futures 0.52 Subtotal Crown Charges 1.11

CrownChargesforCrownFibre

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OtherAssociatedFibreCosts

•  SFLFees–  FeepayabletoSFLholderforforestmanagementrelatedcosts(onOverlappingLicences).$1.50to$2.25

•  RoadsFees–  FeepayabletoSFLorLicenceholderformaintenancecostsonforestaccessroads.$1.00to$2.00

•  SFL&RoadFeesincludedinthedeliveredfibrepricewhenpurchasingdirectlyfromtheSFLHolder

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ForestRoadsFundingProgram

TheprovincialgovernmentsupportstheconstructionandmaintenanceofforestaccessroadsonCrownforeststhatservemulti-resourceusesbyprovidingfundingrelatedtoroadconstructionandmaintenance:

•  100%ofprimaryroadcostsand50%ofbranchroadcosts(forbothconstructionandmaintenanceexpenses)

•  AlgomaForestHistoricalrateof$1.50perm3

George Hasenberger

(613) 242-1612