Confidential & Proprietary
Norwegian Crystals
pow er ing the grow ing solar industry by bui ld ing
the w estern leader in Per fect S i l icon Crysta ls
P R E S E N TAT I O N T O G E N E R A L M E E T I N G O F S H A R E H O L D E R S
3 D E C E M B E R 2 0 1 8
Page 2Confidential & Proprietary
Key facts Ideally positioned in the PV value chain
Core competency: Crystal growth
Norwegian Crystals is uniquely positioned as a leading western player in the fastest growing technology segment of the solar industry
• Long and proud Nordic heritage in the solar industry, with roots in the semiconductor industry
• State-of-the-art facility in Glomfjord; current capacity 400 MW, i.e. >1500 metric tons of perfect mono crystals
• Sustainable competitive advantage through NC proprietary process technology, as well as inexpensive and abundant hydro power providing low production cost and a unique low carbon footprint
Established: 2012
Headquarters: Oslo, Norway
Production: Glomfjord, Norway
# employees: 95
Revenues:(USDm)
MODULECELLCRYSTALSSILICON WAFER
- - - -Outsourced
Production facility, Glomfjord
HQ, Oslo
11
26 28
44
2015 201720162014
• Unique capability to cost-effectively produce both p-type and n-type products, according to the strictest customer specification
• Highest product quality and lowest carbon footprint allows NC´s customers access to premium markets
Page 3Confidential & Proprietary
Development in prices for monocrystalline silicon wafers for PV (USD/wafer) Comments
Transition to mono started in 2015 with mono prices reducing the gap vs. multiand in June 2018 mono became the technology of choice – causing some pain in the process
• “Directive 531” brought changes in Chinese PV-Incentives that caused the sales price of mono wafers to drop 34% from May to August 2018
• Price path has leveled out since August and the mono-multi price gap is back to normal level of 20-35% effectively making all multi wafers unprofitable
• NCR maintained its price premiums, but still saw strongly reduced ASPs
• The “531” price drop hit upstream PV hardest; polysilicon ASP at all time low
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
110.0%
120.0%
180104 180503 180802 181129
Week ending on date -- Source: PV-Energy Trend
ASP (USD) Developments in the PV Value Chain
Polysilicon ASP in USD
''Black Silicon' Multi-Si Wafer ASP in USD (spot)
Mono-Si Wafer ASP in USD (spot)
High eff. Mono cell ASP in USD
Mono module ~290Wp ASP in USD
0.403
0.413 0.4080.385 0.385
0.6970.610
0.580
0.473
0.3
75
0.3
60
0.3
37
0.3
10
0.3
05
0.698 0.710 0.710
0.651
0.562 0.562
0.497
0.452 0.452
0.000
0.100
0.200
0.300
0.400
0.500
0.600
0.700
180104 180503 180531 180628 180802 180830 180927 181101 181129
Week ending on date -- Source: PV-Energy Trend
Mono-Si Wafer ASP in USD (spot)
''Black Silicon' Multi-Si Wafer ASP in USD (spot)
NCR ASP in USD
Page 4Confidential & Proprietary
NCR IS NOW PREPARING TO RESTART OPERATIONS - SECURING FUNDING
• NCR issues convertible loan for USD 10 million, of which USD 3 million already raised from existing
shareholders and management team members
• Certain suppliers and customers have indicated their interest in participating in this convertible loan
program, thereby signaling support to the NC production platform
• NCR returns to production with a more competitive cost base
• Volume requests from Tier 1 clients expected to exceed NCR capacity
• NCR seeks better commercial terms and more balanced risk sharing in agreements with suppliers and
customers
• Financial runway next twelve months defined
• Restart of production will commence after approval of convertible loan by the EGM held on 3
December 2018, and final close of sales agreements
• NCR is in early stage discussions with international partners to establish a solar production platform
as an alternative to the, at present, China dominated solar production
• NCR remains committed to growth plan scaling to 4+ GWp of production
• Continued growth in the PV market with pricing pressures in the wafer market has seen strong
substitution of multi wafers by mono wafers driving a sharply increased market share of
monocrystalline wafers for cells and modules
NCR decided to hibernate rather than produce with insufficient gross margin and focus first on cost reduction rather than immediate expansion
Page 5Confidential & Proprietary
Solar has become the largest source of new
electricity capacity globally and continues to
grow strongly
Norwegian Crystals ticks all the strategic boxes –giving confidence towards a competitive and profitable position
1) IEA, World Energy Outlook 2017
• Solar PV is predicted to capture 1/3 of global investments in new electricity capacity through 2040 1)
• After 10+ years of massive cost reduction, solar PV is among the most cost effective sources of electricity
• Solar PV cost continues to fall, further improving already attractive economics for PV system owners
1
Market momentum towards high efficiency
mono cells
Norwegian Crystals is market leading within
low carbon footprint and high quality mono
Proven operationaland cost reduction track record, now even more aggressive on scale and
cost roadmap
2
3
4
• High efficiency = Higher energy harvest = Lower LCOE = Mono crystals
• Mono market share rapidly increasing and expected to grow significantly going forward
• The worlds leading PV companies are choosing high efficiency mono crystals
• Monocrystalline stands to benefit the most from China’s “531 Policy”
• The Company is in the final stages of renegotiating commercial agreements with Tier 1 customers and suppliers to obtain better terms and more balanced risk sharing
• French low-carbon PV-market alone needs 1.5GW annually to 2023 to meet the Multiannual Energy Plan
• Skilled management team with extensive solar and capital market experience
• Sustainable target margins; driven by geographical advantage and proprietary process technology & know-how
• Low cost electricity plus CO2 footprint price premium
• Processing cash cost reduced 75% last 4 years through tech innovations; another 60% identified until 2021
• CAPEX on par with Chinese peers due to opportunistic acquisition of pullers and available infrastructure
Page 6Confidential & Proprietary
Solar PV has become the largest source to global electricity capacity additions
Global annual capacity additions DNV GL – Energy Transition Outlook 2018
1 2 3 4
• After 10+ years of massive cost reduction, solar PV has become one of the most cost effective sources of electricity
• Solar PV cost continues to fall, further improving already attractive economics for PV system ownersSource: Solar Power Europe 2018
• Expected to return to double digit growth on annual installation volumes that exceed 100 GWp
Page 7Confidential & Proprietary
Dramatic technology shift to monocrystalline silicon PV expected
1 2 3 4
Monocrystalline is already competitive with multi 531 – catalyst for change
• Lower cost per kWh – higher energy harvest
• Better Levelized Cost Of Energy due to:
• Higher module efficiencies
• More Watt-hours per m2
• Better temperature coefficients
• Reduced Balance of System costs
• Technological innovations and improvements
• Higher cell efficiencies
• Low resistivity
• Better minority carrier lifetime values
• Enables N-type
• PERC, hetero junction, shingle cut, multiwire, bifacial
• Manufacturing cost reductions
• Multiple ingot crystallization
• Larger crucibles, longer ingots
• Wafer thickness reduction
• Reduced polysilicon consumption (expected to reach 3g/Wp)
Source: PV Manufacturing & Technology Report, August 2018
PV-Tech & Solar Media Ltd 09/2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2018 2019 2020 2021 2022
Pre China 531Cell Production MW
C-Si p-type Multi Standard Process C-Si p-type Multi Advanced Process
C-Si p-type Mono Standard Process C-Si p-type Mono Advanced Process
C-Si n-type Mono Thin film
C-Si n-type
Mono
C-Si p-type M
ono Advanced
Process
C-Si p-type M
ulti Standard Process
C-Si p-type Multi Advanced Process
Thin film
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2018 2019 2020 2021 2022
Post China 531Cell Production MW
Page 8Confidential & Proprietary
Norwegian Crystals invites suppliers and customersto explore Industrial Partnerships
PURPOSE
• Achieve/rearrange commercial relationships in the immediate term to demonstrate support by suppliers and customers and potentials for business combinations in the midterm, e.g.:
• Cooperative commercial models rather than straight sales/supply arrangements
• Margin preservation in the PV manufacturing chain
• Synergies in purchase prices for major feeds and consumables
• Synergies in production cost reductions
• Synergies in process and technology development
• Facilitate a path to profitability for NCR to immediately produce positive gross profit and positive EBITDA with minimum expansion of production capacity
• De-risking of NCR’s business case, i.e. shift more risk to suppliers and customers for feedstock acquisition/price fluctuations/inventories, wafer slicing services acquisition/price
• Provide “bankable” contracts as basis for NCR’s acquiring growth capital; i.e. loans/prepayments, take-or-pay contracts
1 2 3 4
Page 9Confidential & ProprietaryNotes:
Customer demand vs NCR growthNCR customer base
NCR customer portfolio and demand from existing customers –2019 volume requests exceed Norwegian Crystals’ production capacity
1 2 3 4
Customers with supply agreements last 2 years
• AUO
• Talesun
• JA Solar (SMSL*)
• Trina Solar(SMSL*)
• DMEGC
• Solartech
• Gintech
• Photowatt
Qualified customers with volume request
• Hanwha Q-Cells(SMSL)
• Jinko Solar (SMSL)
• REC Solar
*Member of PV-Tech’s “Silicon Module Super League”
GW Capacity
48
24
0,8
2,3
Total customer
capacity**
Mono
share**NCR 2019 NCR 2020
**NC estimate 2018
Page 10Confidential & Proprietary
NCR revising and de-risking wafer ASP Polysilicon to wafer CO2 carbon footprint
ASP premium due to excellent product quality and low carbon footprint
World class product quality:
Customer claims only amounted to 191 ppm in 2017
and15 ppm in 2018 YTD
Benchmark analysis (CO2 eq / kWp)
638
503 495
410
357
242
98
0
100
200
300
400
500
600
700
China Malaysia Taiwan Germany Japan Norway -Others
NorwegianCrystals
NCR with ultra-low carbon footprint due to:
• Usage of hydro electric power in Norway (99% of
energy mix)
• Proprietary NCR silicon recycling process
• NCR's ability to choose wafer slicing partners with
a low slicing carbon footprint
1 2 3 4
The company decided to implement a pricing policy
revision as a reaction to the challenging market context
of wafer ASP reductions exceeding 40% YTD.
The pricing revision entails a full year 2019 upfront
fixed contract price with down-payments/prepayments,
instead of continuing with sales contracts that link the
ASP to low-volume based PV-indexes.
The quality and demand of the NC product allows the
company to pursue this revised pricing strategy.
The revision is now in process of being implemented
with customers and the results will be communicated
as soon as the deals are closed.
Page 11Confidential & Proprietary
Improvements and technology
Improved puller technology and productivityOngoing process development leading to further productivity growth (GIMP)
• Increased Growing Yield (GY)
• Increased charge size
• Introduced feeders and re-charging
1 2 3
• Optimized feeder systems
• Active cooling (by using Cooling jacket)
• Optimized charge size by pulling 4 ingots
per run
• Optimizing furnace Hot Zone
• Increasing crucible and charge size
• Increasing pulling speed
• Shop floor management and Statistical
process control (SPC)
1 2 3 4
1
23
NCR start up level Q1 2014
Growing Yield Improvements
NCR continued process development
Optimizing 22 inch Hot Zone
NCR Feeder technology
NCR Active cooling systems
Next Generation 24 inch Hot ZoneTop 5 pullers in 2018 = 200
Page 12Confidential & Proprietary
NCR Technology and process improvements
New NCR Technology – NCR Feeder Systems and Cooling Jacket Next Generation 24inch Hot Zone
Feeder technology:
• Enabled hot recharging – pulling multiple ingots
• Reduced turnarounds by 2/3
• Reduced cycle time
1
Water Cooling Jacket
• Increasing Heat radiated from solid silicon – enabled higher pull speed up to 1.4 mm/minute
• Increased crystallization speed
NCR Water cooling Jacket
NCR Feeder system
1 2 3 4
3
Optimizing furnace Hot Zone
• Increasing crucible and charge size
• Increasing pulling speed
• Oxygen reduction and reduce boron-
oxide complex
• Higher purity and higher minority-
carrier lifetime
Reduced Cycle Time Increased Charge Size
NCR 24 inch Hot Zone
Page 13Confidential & Proprietary
NCR recalibrated roadmap to relevant scale and competitive cost:≥ 2 GWp per year and ≤ $0.35 per wafer
• Current 66 pullers’ capacity will generate positive gross profit – from 2019 Q3
• Expanding to 96 pullers’ capacity will generate positive EBITDA – according to plan from 2019 Q4
61
37 32 32 18 17 15 14
13
5 4 4
4 3 3 3
20
10 4 2
2 1 1 1
14
7
6 4
4 3 2 2
16
7
5 4
4 4 3 3
24
13
8 8
6 3 2 2
55
21
17 22
8 4
2 2
40
34
28 19
10
8 6 6
242
134
104 95
56
42 35 31
2018 H1 Roadmap64
2018 H1 Roadmap48 41
0
15
30
45
60
75
90
105
120
135
150
165
180
195
210
225
240
255
SINGLE CHARGE SINGLE CHARGE TRIPLE CHARGE ACTIVECOOLING
24" HOT ZONE 1 GWp 2.3 GWp 4.4 GWp
50 PULLERS 50 PULLERS 66 PULLERS 66 PULLERS 66 PULLERS 96 PULLERS 210 PULLERS 400 PULLERS
2014 Q1 2015 Q1-'16 Q2 2017 Q2 2018 Q2 END 2018 END 2019 END 2021 END 2022
Total Cost Roadmap per 2018 November
SILICON RELATED ELECTRICITY CRUCIBLES HOT ZONE
OTHER VARIABLE COST DIRECT LABOR OTHER FIXED COST WAFER SLICING
13 5 4 4 4 3 3 3
20
10 4 2 2 1 1 1
14
7
6 4 4 3 2 2
16
7
5 4 4
4 3 3
24
13
8 8 6
3 2 2
55
21
17 22
8
4 2 2
140
63
44 45
27
18 13 11
2018 H1 Roadmap28
2018 H1 Roadmap17 13
0
15
30
45
60
75
90
105
120
135
150
SINGLE CHARGE SINGLE CHARGE TRIPLE CHARGE ACTIVECOOLING
24" HOT ZONE 1 GWp 2.3 GWp 4.4 GWp
50 PULLERS 50 PULLERS 66 PULLERS 66 PULLERS 66 PULLERS 96 PULLERS 210 PULLERS 400 PULLERS
2014 Q1 2015 Q1-'16 Q2 2017 Q2 2018 Q2 END 2018 END 2019 END 2021 END 2022
Roadmap NCR Controllable Cost per 2018 November
ELECTRICITY CRUCIBLES HOT ZONE OTHER VARIABLE COST DIRECT LABOR OTHER FIXED COST 2018 H1 Roadmap
1 2 3 4
Page 14Confidential & Proprietary
Investment case significantly de-risked Substantial flexibility with regards to future growth
Norwegian Crystals is de-risked and poised for expansion and profitability
Additional capacityCurrent capacity
144 pullers
Acquired pullers Future potential
190 pullers
66 pullers
400 pullers
6x current # of pullers
400 MW 1,900 MW 2,100 MW
Capacity in MW (run-rate 12 months after installation)
+ + = 4,400 MW
NOK 300m NOK 1,100m NOK 1,200m
Annual revenues (run-rate 12 months after installation)
+ + = NOK 2,600m
NOK 250m NOK 900m NOK 1,250m
Required CAPEX for each phase
+ + = NOK 2,400m
STEP 2: DE-RISK & IMPROVE
• Expanded capacity from 200 to 400 MW through installation of 16 new pullers, recharge process and active cooling
• Opportunistically acquired 144 new pullers
• Demonstrated ability to expand, develop and implement key process technology
STEP 1: START-UP & STABILIZE
• Acquired Glomfjord facility, recruited operational team and ramped commercial production on original 50 pullers
• Production capacity sold out to high-quality customers
• Ramped and stabilized production, sold out original capacity
STEP 3: ECONOMIES OF SCALE
• Install 144 new pullers (already acquired and paid for) and expand towards 400 pullers, taking capacity to 4.4 GW
• Continue to deliver on technology roadmap to further reduce production cost and increase puller productivity
• Achieve world-class size and cost position by fully exploiting production site advantages & continue improvements at scale
NOK 0m (Q4 2019 est.)
NOK 320m NOK 480m
Annual EBITDA (run-rate 12 months after installation)
+ + = NOK 800m
Puller acquisition already
funded by existing
shareholders in Dec’17
equity raise
Page 15Confidential & Proprietary
Offering details Sources and uses
Transaction overview
Offer size:
Minimum USD 3 million with the potential to upsize to fund installation of additional pullers
Maximum USD 10 million in one or more additional tranches
Terms of Secured Convertible Loan:
Convertible Loan at 14% p.a.
Conversion at NOK 60 (pre-money valuation of NOK 420 mill)
Maturity in 18 months with an option to prolong for further 18 months
Collateralized against all operational assets (pullers etc) after banks
Super pro-rata subscriptions within 31.12.2018 by exiting shareholders will be granted oversubscription-warrants
Pre-issue shares:
7,026,326 shares are currently outstanding. Further, 437,762 warrants (3 NOK) and 348,050 employee warrants (88 NOK) have been granted. After the June 2018 share issue at NOK 80 per share, 713 500 (3 NOK) anti-dilution warrants are issued to the subscribers in the December 17 share issue. The Company also have issued convertible loans to its shareholders with a right to 741 182 shares (80 NOK). The loans and the right to convert matures 30 June 2019. Number of anti-dilution warrants stemming from the June share issue is subject to the share price in the next significant issue. The BOD has got a proxy from the general meeting to issue 773 982 new shares.
Use of proceeds:
Net proceeds from the convertible loan will be used to transport pullers to Glomfjord, maintain existing pullers as well as for general corporate purposes. When USD 10 million is raised, the company will install 30 pullers in the existing production facility
Documentation:
Company presentation, Third Quarter 2018 Report, Loan agreement
Allocation:
Allocation resolved by the Company’s board at its sole discretion
Closing conditions:
Approval for the issuance of Convertible Loan of 3 – 10 MUSD at Extraordinary General Meeting to be held 3 December 2018
Listing:
In February, the Company’s board resolved an intention to pursue a listing of NC’s shares on Oslo Stock Exchange or Oslo Axess within 12 months. Furthermore, OTC-listing of NC’s shares may be considered prior to such listing being implemented
Timeline for Convertible Loan 3 – 10 MUSD
2018 2019
Dec Jan Feb
49 50 51 52 01 02 03 04 05 06 07
Payment and delivery
Tranche 3
03/12/2018Minimum amount
Tranche 2
06/12/2018
Week
Month
31/12/2018 15/02/2019
Recommended 10 MUSD Full expansion to 4.4 GW
Sources
Debt, WC fin, grants NOK 130m
Customer prepayments NOK 30m
New equity NOK 80m
Total NOK 240m
Uses
Working capital / OPEX NOK140m
Maintenance / CAPEX NOK 100m
Total NOK 240m
Sources
Debt, WC fin, grants TBD
Customer prepayments TBD
New equity TBD
Total NOK 2,000m
Uses
Working capital / OPEX NOK 250m
Puller installation CAPEX NOK 2,150m
Total NOK 2,400m
Page 16Confidential & Proprietary
Key financialsAudited 2017, Reviewed pr 30 September 2018
2017 Per 3Q 2018
Revenue 374,1 165,1
Cost of goods sold 364,1 192,0
Gross profit 10,0 -26,9
Gross profit margin 3% -16%
R&D 3,0 0,0
SG&A and other expenses 103,1 88,4
EBITDA -96,1 -115,3
EBITDA margin -26% -70%
D&A 11,0 14,6
EBIT -107,0 -129,9
Net financial -5,6 -14,3
EBT -112,5 -144,2
Tax 0 0
Net income -112,5 -144,2
2017 30.9.2018
Fixed assets 106 112
Receivables 32 7
Inventory 67 50
Other assets 47
Cash & equivalents 125 8
Total assets 330 224
2017 30.9.2018
Equity 128 59
LT interest-bearing debt 42 0
Current debt 160 165
Other debt 0 0
Total equity and debt 330 224
NIBD 30.9.2018 71
Long term IBD:
Classified as temorary short term debt due to post 3Q 2018 breach of covenants. Expected to be amended within year end and said debt to be classified as long term
Other assets/cash & equivalents:
NOK 47 Mill reclassified from fixed assets to other current assets. Represents 114 pullers available for sale.
Write offs;
NOK 5.3 mill in fixed assets
NOK 4.3 mill in inventories
P&L Balance sheet Comments
Page 17Confidential & Proprietary
CashflowCondensed Cashflow
Norwegian Crystals AS2017 YTD Q3 2018
Cashflow from operations Audited Reviewed
Net profit -112 539 130 -144 163 498
+/- Loss/profit from sales of fixed assets
Net Financial Cost 14 268 669
Extraordinary Financial cost (Augusta)
+ Depreciations/Impairments 11 045 477 14 623 967
Gross cash flow from operations (EBITDA) -101 493 653 -115 270 862
+/- Change in inventories, accounts receivables and accounts payables
Changes inventory 37 857 535 17 235 826
Changes in receivables 3 946 208
Changes in payables -26 115 850
Changes other receivables 21 562 056
+/- Change from other periodization items -129 524 625 -6 856 627
A = Net cash flow from operations -193 160 743 -105 499 250
Cashflow from investments
- Investments in fixed assets -55 514 680 -73 742 641
+/- Other investments -24 000
B = Net cash flow from investments -55 538 680 -73 742 641
Cashflow from financing
+ Issuance of new debt (short and long term) (Credit line) 116 609 213 14 690 940
- Payment of old debt -4 327 364
Change Credit Facility DNB -15 493 571
Net Financial Cost -14 268 669
+ Issuance of new equity 136 753 089 188 137 898
Miscellaneous grants and refunds 6 200 000
Exchange rate differences
C = Net cash flow from financing 253 362 302 174 939 234
+ Opening cash balance 1 January 2017 7 974 894 12 637 772
A+B+C Net change in cash during year 4 662 878 -4 302 657
= Closing cash balance 12 637 772 8 335 115
• Gross Cash Flow from operations (EBITDA)
• Negative 115 MNOK YTD Q3 2018
• Negative 52 MNOK YTD Q2 2018 and accelerating negatively by further EBITDA Loss of 63 in Q3 isolated
• Closed down production mid September to limit further lossmaking operations until improvements can be seen and positive gross margin can be regained
• EBITDA YTD and for rest of 2018 would be worse without the actions taken
CommentsCondensed Cashflow 2017 and YTD 30 September 2018
• Investments reflect remaining payment for pullers
• Investment in productivity enhancing technology• Feeders• Cooling Jackets
• Financing• Share issue in December 2017 136 MNOK • Of which paid in January 2018 113 MNOK• Share issue June 2018 (net proceeds) 75 MNOK• Total new equity paid in 2018 188 MNOK
• DNB LC facility gradually paid down, but remains as a source for financing of Working Capital once operations start
Page 18Confidential & Proprietary
• The global PV market is expected to stay in the 90-110 GWp range in 2018 and
return to two digit growth in2019
• NCR’s core product, monocrystalline P-type silicon, is the fastest growing
technology and demand exceeds current monocrystalline supply
• Customers’ volume requests for 2018 exceed NCR capacity
• NCR seeks better commercial terms and more balanced risk sharing
NORWEGIAN CRYATALS IS PREPARING TO RESTART OPERATIONS –SECURING FUNDING TO REACH POSITIVE EBITDA
NORWEGIAN CRYSTALS’ MARKET
CONTINUES ITS STRONG GROWTH
LONGER TERM OBJECTIVES
• NCR remains committed to growth plan scaling capacity to 4+ GWp/year
• Potential to partner up to create PV-production platform outside China
• NCR issues convertible loan• Minimum amount of 3 MUSD subscribed at EGM 3 December 2018
• Maximum amount of 10 MUSD not fund installation of 30 additional pullers
• Early access to 10 MUSD funding enables positive EBITDA in Q4 2019
• NCR returns to production with a more competitive cost base
• Restart of production will commence after final close of sales agreements
NCR
“REBOOT”
