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									         ALGETECH INDUSTRIER AS

Attractive investment opportunity within biotech
   Microalgae are key to meet future raw materials




          Powered by CO2 and sunlight

                     March 2007
            Business and investment
                 opportunities
Business opportunity
• Production of algae biomass is an environmentally friendly alternative
  to the exploitation of ”krill”
• Algae biomass is an unlimited and renewable resource
• Algae biomass can secure demand for omega 3, proteins, vitamins and
  anti-oxidants
• Algetech Industrier AS possess the technology and experience for
  greenhouse production of algae-biomass


Investment opportunity
• Investing in a first plant for large-scale production and sales of micro
  algae in Norway
Algetech Industrier AS
Business idea
• Production and sales of micro algae in Scandinavia
• Sales and deliveries to three separate overall market segments

The Markets
• The Aquaculture industry
• The Nutraceutical industry
• The Agricultural industry

• An already existing and expanding market for algae-based products
• Current marked needs exceeds greatly supply capabilities – high prices
                                                    2
               Algetech Industrier AS
Vision
To establish a sustainable industry in Scandinavia, based on cultivation of micro
algae in photo bioreactor installed in greenhouses using sunlight and artificial
light

Goal
Become a leading company in Scandinavia, producing free of toxins and
environmentally friendly substances for the feed, functional- and health food
industries

Novelty
• First in Scandinavia providing access to technology that works
• Introduce environmentally friendly raw materials into different industrial
  products
• Will contribute to the development of new production methods
• Reduce the use of antibiotics and other synthetic products
              Market opportunities
Existing markets:
• Feed additives for use in agricultural and aquaculture industries,
  particularly production of fatty acids and proteins
• Micro algae are used to a significant extent in the health food products
• Pharmaceutical/medical products

• Existing algae biomass market USD 5 bill
• Expected significantly strong growth

Future markets:
• Energy source – hydrogen gas and biodiesel
                       Algae
total production                 total sales
5.4 mio t p.a.                   4.9 mrd US $ p.a.

  brow n algae                                 red algae
     56,0%                                       24,9%




                                      others
                   green algae
                                      18,8%
                      0,3%
Algetech project partners
 Algetech Produkter AS – Project Management
 NIVA - extensive research and competence base within micro algae
  characterisation and cultivation. Large collection of micro algae species
  available
 IGV GmbH – 20 years experience in algae research and industrial
  production.
  Proven technology for large scale micro algae biomass production in
  photo bioreactors
 Gavita AS – Manufacturer of lighting systems for greenhouses. Extensive
  experience in combined use of artificial light and sunlight
 Billerud AB – Large scale process industry expertise and technology

Technology is based on extensive research and trial production
Mixotrophic production of micro
   algae in photo bioreactor

   Minerals
N, P, K, Mg, Na, S
                          Light
  Trace elements



                                  Biomass
    H2O



     CO2
                     Organic
                     substrate
The cultivation in the PBR 4000 with
     artificial light, 24 h / day
The mixotrophic cultivation in the
  PBR 4000 with artificial light
Growth of micro algae by combining
    sunlight and artificial light
                     35


                     30


                                                                                                                  Combined
                     25
                                                                                                                  sunlight and
                                                                                                                  artificial light
                     20
    Yield (g/m /d)
    2




                     15


                     10

                                                                                                                  Sunlight only
                      5


                      0


                     -5
                          1

                              4

                                  7




                                                                                                   46

                                                                                                        49

                                                                                                             52
                                      10

                                           13

                                                16

                                                     19

                                                          22

                                                                25

                                                                     28

                                                                          31

                                                                               34

                                                                                    37

                                                                                         40

                                                               week nr.                       43
       Products from Micro algae
Protein-rich biomass
-e.g. as ingredient in aquaculture and animal feed products
Astaxanthin
-red-orange, carotenoid, e.g. for use in salmon feed
Nutraceuticals
-e.g. dietary supplements, natural remedies, food, skin care
Pharmaceutical and drug compounds
-potential for use in prevention and treatment of various diseases
Bio-compounds
- e.g. fatty acids (DHA)
              The Norwegian market
The aquaculture market
    – Fish feed - total consumption 700.000 t/year
    – Fatty acid and protein ingredients in fish-farming - yearly
      consumption 7.000 t/yr
    – Annual growth in consumption: 10-15%, 700-1.000 tons
    – Few participants

Animal feed
   – Large market, protein supplement for pig and poultry
   – Poultry - yearly consumption 2.000 t/year
   – Lack of new resources to satisfy increasing demand
   – Few players

Nutraceuticals – dietary supplements
   – World retail nutraceutical market estimated to USD 106 billion
   – Functional food USD 77 billion
   – Growth rate annually 6,2 %
   – Fatty acids, fastest growing market, annually 16%
   Customer benefits and price level
• In aquaculture, cod larvae
   – Faster growth, Less mortality, Free of toxins
   – Expected market price: NOK 160 - NOK 175 pr. ltr.
   – Price level: Competitiveness with synthetic feed products

• In agriculture, poultry
   – Faster growth, Less mortality, Free of toxins, less cholesterol
   – Expected market price NOK 160 - 175 pr. kg

• Nutraceuticals
   – Demand surpasses supply
   – Expected market price: NOK 400 - NOK 450 pr. kg.
   – Price generate profit high profit
                      Business model
Production     Marketing       Distribution   Value added      Retailer    End-customer
                           .



       Proven technology                              - Contract manufacturing

       Idendification and                                            ribution network
                                                      - Sales and dist
       application of new technology
                                                      - Licesing,royalties, direct sales
                                                        andcombinations
     - Continuous new product
       development with partners



              Core area                                     Cooperation with
                                                            Industrial players

•   Core business: Innovation, production, product development, marketing and sales

•   Production, sales and distribution in co-operation with others

•   In special areas Algetech Industrier AS do it alone
                         Competitors
The aquaculture market
- Start feeding of cod larvae:
- Import of algae biomass from U.S and Japan, Read Mariculture dominant
- IDUN - Norwegian producer of yeast
- Feeding of farmed fishes:
- Krill producer Aker BioMarine and Igene/ProBio


The agricultural market (animal feed)
- Many small players, no dominant


The nutraceutical market (dietary supplement)
- Many large int. industrial players in the market - Abbott, BASF, DuPont
- Small Norwegian producers - Aker Biomarine, Alpharma, ProBio
         Distribution Channels
• The aquaculture market
    Start feeding of cod larvae:
    - Distribution carried out by Algetech
   Feeding of farmed fishes:
    - Distribution through EWOS and Skretting AS

• The agricultural market
    Feeding of animals:
    - Distribution through public and farmed controlled channels:
       Cermaq ASA and Felleskjøpet. In Sweden: Lantmânnen AB

• The nutraceutical market
    - Distribution through integration with a partner which has its own
       trademarks and a need for raw materials.
    - Distribution and sales to drug chains as Alpharma AS
    - Sales and distribution to producers of dietary supplementary
      products as Pharmatech AS and Nutri Pharma ASA.
                        Budget – phase 1
Based on production from the first plant, one photo bioreactor
                                2008          2009          2010          SUM
Sales volume:
Wet algae biomass             17000 l     25000 l     32500 l             72500 l
Dried algae biomass             850 kg     5000 kg     7500 kg            12350 kg
Revenue (NOK)               3320000    6000000     8000000             17372000
Costs (NOK)                 2960000    5025000     6862500             14847500
Profit (NOK)                 400000     975000      1137500             2512500

Capital need, including start up costs: NOK 12,5 Mill.
Financed through: risk loan, public support, private equity and equity offering

The company has, up till now, spent NOK 5 mill in research and development.

Plant 1 may be extended by a second photo bioreactor.
Investment approx. NOK 9 mill. Decision to be taken after commercialisation.
    Investors are invited to participate in Algetech

• Private placement
• Active involvement and part of the board
• Equity offering 35% of shares

Phase 1
• May 2007: Search for financial/industrial partner
• Aug 2007: Planning first plant
• Jan 2008: End of construction
• Feb 2008: Commercial production and sales

Phase 2 (2009)
• Public offering: NOK 100 Million
• Investing in existing greenhouses – large scale production
• Annually revenue of appr. NOK 100 mill.
                      Project status
2000: Proven photo bioreactor technology
        - mixotrophic technology, combining sunlight and artificial light

2006: Trial production completed confirms
         - large scale production in Scandinavia feasible and
         flexible production, applicable for a variety of algae species
                    Risk and Exit
Risk factors
     • Establish a competent organisation

     • Market finds other and cheaper product alternatives

     • Energy price development


Exit strategy
     • Listing the shares on the OTC-list of OSE

     • Project or trade sell

     • Great share value potential on project success
          Why invest in Algetech Industrier AS

•   Important and experienced partners
•   Environmentally friendly biotech company for the future
•   Low start-up costs and fast expanding opportunities
•   End-customers are already established
•   Huge opportunities for high revenue
•   Micro algae based products are key to meet future demands
•   Revenue making in early stage

								
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