Leading Diversified Plant-Based Health & Well-Being Company Investor Presentation - Q4 2018 - www.affinityenergyandhealth.com.au - Algae.Tec
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*Formerly Algae.Tec Ltd.
Leading Diversified Plant-Based Health &
Well-Being Company
Investor Presentation – Q4 2018
ASX:AEB
www.affinityenergyandhealth.com.au
DISCLAIMER This presentation has been prepared by Affinity Energy & Health Ltd (formerly Algae.Tec Limited) (the Company). This presentation is being provided to a limited number of investors for the sole purpose of providing information to enable recipients to review the business activities of the Company. It is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any securities. This presentation should not be relied upon as a representation of any matter that a potential investor should consider in evaluating the Company. Affinity Energy & Health Ltd (formerly Algae.Tec Limited) and its affiliates or any of its directors, agents, officers or employees do not make any representation or warranty, express or implied, as to or endorsement of, the accuracy or completeness of any information, statements, representations or forecasts contained in this presentation, and they do not accept any liability for any statement made in, or omitted from, this presentation. Prospective investors should make their own independent evaluation of an investment in the Company. Nothing in this presentation should be construed as a financial product advice, whether personal or general. This presentation consists purely of factual information and does not involve or imply a recommendation or a statement of opinion in respect of whether to buy, sell or hold a financial product. This presentation and contents has been made available in confidence and may not be reproduced or disclosed to third parties or made public in any way without the express written permission of the Company.
COMPANY OVERVIEW
• Affinity Energy and Health (ASX:AEB) (formerly known as Algae.Tec Limited) is a leading diversified plant-based health
and well-being company
• Focused on developing industry-leading growing technology to produce commercial quantities of algae and medicinal
cannabis for supply to five key markets:
1) Algae-based Nutraceuticals (for Humans)
2) Algae-based Aqua Feed
3) Algae-based Animal feed
4) Algae-based Biofuels
5) Medicinal Cannabis
• Invested $30M USD over 10-year period on proprietary algae technology
• Producing multiple high-demand species of algae for the growing nutraceutical & aqua feed markets at its state-of-the-
art growing facility in Atlanta, Georgia
• Company is utilizing its industry-leading growing technology to produce and sell medicinal cannabis through strategic
partnerships in the rapidly expanding cannabis market
ASX:AEB www.affinityenergyandhealth.com.au 1
EXPERIENCED BOARD & MANAGEMENT TEAM
Mr. James has over 30 years’ experience in finance, project development and public company management. During this
period Malcolm James has worked in several countries and been involved in over $2 billion in capital and debt raisings. He is
currently the principal of MRJ Advisors, a boutique investment, advisory and project development organization with offices
in Perth and New York, and is the Non-Executive Chairman of Anova Minerals Ltd. Mr. James is well known for his
philanthropic work in Australia and overseas and was the inaugural CEO of the Australian Employment Covenant, an
Malcolm Raymond James organization set up to promote long term employment for Indigenous Australians.
Executive Chairman &
Managing Director Mr. James currently holds directorship in Anova Metals Ltd as Non-Executive Chairman. Malcolm James also held
directorship in Peninsula Energy Limited to 2013 and Triton Gold Limited to 2014.
Mr. McConchie has over 35 years’ experience over a broad field of chemistry and associated technologies, including global
markets, bulk chemicals and plastics, differentiated commodities and intermediates, specialty chemicals, polymers and
interaction with environmental sectors. Mr. McConchie’s field experience includes international business management, plant
operations, and project engineering in the US, Europe (especially Germany, Holland, Switzerland, UK and CIS), Latin America
(Brazil, Argentina and Mexico) and Asia (Korea, China and Australia).
Garnet Earl McConchie Mr. McConchie was employed with Dow Chemical Company for 25 years. Mr. McConchie has over 10 years of specific
Executive Director technical and business experience in the biodiesel and glycerine industry sectors. He is a founding director and controlling
shareholder of Teco.Bio LLC, and is based in Atlanta, Georgia where he has coordinated the microalgae development.
Mr. Hatfull has over 30 years’ experience in a range of senior executive positions with Australian and International
companies. He has an extensive skill-set in the areas of business optimization, capital raising and company restructuring.
Prior to joining Algae. Tec, Mr. Hatfull held senior financial and Board positions in Australia, Africa and the UK. He has
particular experience in revitalizing business plans, attracting investor funding, and implementing profitable strategies. Mr.
Peter Hatfull Hatfull graduated as a Chartered Accountant in the United Kingdom, where he worked for Coopers and Lybrand (now
Non-Executive Director PriceWaterhouseCoopers), and subsequently moved to Africa, where he spent 8 years in Malawi, where he was CFO of the
Company Secretary Malawi operation of international trading group, Guthrie Limited.
ASX:AEB www.affinityenergyandhealth.com.au 2
EXPERIENCED BOARD & MANAGEMENT TEAM
Mr. R.V. Venkatesh is one of the founders and Managing Director of Gencor Pacific Limited, part of the Gencor group
worldwide, which is Affinity Energy and Health’s offtake partner for algae oils. He is a chemist with over 30 years’ experience
in key industries namely Healthcare, Pharmaceuticals and Nutraceuticals. He has extensive experience in International
Business in the Pharmaceutical and Nutraceutical sectors worldwide, having done business in over 70 countries. His expertise
includes R&D Management, scientific reviews, product development, clinical trials, product branding, strategic partnerships
and he has a track record of successful nutraceutical product launches worldwide.
R.V. Venkatesh
Non-Executive Director Mr. R.V. Venkatesh was appointed as Non-Executive Director on 15 August 2017.
Mr. Tan is a lawyer with 22 years of corporate and regulatory experience. He is currently lead independent director of Nico
Steel Holdings Limited and independent director of CNMC Goldmine Holdings Limited, both listed on the Singapore Stock
Exchange. Mr. Tan was appointed as Alternate Non-Executive Director on 15 August 2017.
Allan Tan
Non-Executive Director
ASX:AEB www.affinityenergyandhealth.com.au 3
OVERVIEW OF BUSINESS DIVISIONS
Specialist commercial producer of plant derived products currently operating in two key global markets
Algae-based Products Medicinal Cannabis
Nutraceuticals Aqua Feed Animal Feed Biofuels
• Supply agreement signed w/ • Collaboration and • Livestock applications • Contracted with Australian Strategy:
U.S. leading wholesaler of commercial supply include: egg Reliance Industries • License pending
algae-based nutraceutical agreement with Seachem enrichment, broiler (India) (NSE:RELIANCE, • Access to heirloom
products, Gencor Pacific Laboratories (largest U.S. meat enrichment, Mkt Cap: USD $970M) cultivars
(owns 9.3% equity stake in aquarist distributor); initial Ruminants (cows), milk for demonstration • Institutional / industry
AEB) 4 products on retail shelves enrichment and swine biofuels plant collaborations
• State-of-the-art algae growing and 10 new product lines protection • Operating plant will Global Strategy:
facility in Atlanta produces currently under • Provide significant demonstrate AEB’s • Targeting near-term
high quality products; development health benefits when capacity to produce commencement of CBD
nutraceutical products • Trials underway with large- applied to companion economic biofuels from oil sales into Europe of
stockpiled set to undergo oil scale aquaculture foods and well-being CO2 sequestrations, GMP/TGA certified
extraction/refining for sale companies to develop new products which is the key fuel product
• Partnership with Radient specialized product line • Increases produce source that grows the • European licences being
Technologies (TSXV:RTI) aimed at increasing levels quality of meat algae applied for (Malta)
targeting production of high- of Omega-3 in farmed fish • Combined CBD/Algae • Successful • South American Licences
value products for supply into • FeedMe™ Algae naturally stress and pain commissioning of being applied for
the global nutraceutical derived product line management products demonstration plant will • Multi continent facilities
market launched in April 2017 – provide Reliance with a targeting global market
• Undergoing Feasibility Study growing sales pipeline “Real Green Solution”, • Partnership with
into development of +300tpa • Advanced discussions with which can be rolled out University of Sydney for
commercial algae plant in major retail outlets in N.A. across multiple sites in R&D program
N.A. India
ASX:AEB www.affinityenergyandhealth.com.au 4
ALGAE INDUSTRY OVERVIEW
• Global algae products market is expected to reach USD $3.3 Billion by 2022, representing a CAGR of
6.7% during the forecast period of 2017 to 20221
– Key growth drivers include: demand for algae products from pharmaceutical and nutraceutical industries, increasing utilization of
pigments from Microalgae due to strict regulations regarding the use of synthetic colors and flavors, and increasing preference for
algae sourced products
• North America dominated the global algae products market in 2016, mainly attributed to the nutraceutical market 1
– Growth of the nutraceutical industry in North America is mainly due to various factors such as rising aging population, increasing
healthcare awareness, and higher incidence of allergies and intolerance
• The algae cultivation process focuses on carbon capturing; these innovations have helped companies involved in algae cultivation and
production to generate funds from government and private investors2
– Algae-based projects are driven by public and private investments to set up demonstration facilities through cutting-edge proprietary
technology
• Increasing awareness about health and hygiene among consumers is anticipated to drive the market for algae-based protein supplements
and pharmaceutical products in the next few years; in the year 2015, almost 53.7% of the total algae market's revenue was contributed by
DHA production (protein sales & pharmaceutical applications)2
– The market for DHA production (pharmaceutical applications) is expected to expand at a CAGR of 6.5% from 2016 to 2024
• Algae oil is being employed in food and beverage applications as a natural source of omega-3, fatty acids, antioxidants, and proteins3
– Rising demand from the food and beverage sector on account of its low fat content is expected to have positive impact on the market
• The global animal feed additives market size was estimated at 256.8 kilo tons in 2015; globally increasing consumption of meat and milk
products as a source of protein and other nutrients is expected to be a key factor driving market growth 4
– Fodder additives are the coherent parts of the globally rising meat production industry; these products are the catalysts that help in
diseases prevention in animals, improving the rate of weight gain, vitamin intake, digestion and conversion and thereby enhancing the
quality of meat production
– Rising demand for algae-based products from the animal feed market can be attributed to its higher nutritional content as compared
to the grain feed; the algae production and harvesting requires comparatively lower amount of water and land as compared to the
land crops grown for animal feed1
Sources:
1. January 2018 “Algae Products Market – Global Opportunity Analysis and Industry Forecast (2017-2022)”
2. September 2016 “Algae Market, By Application, By Cultivation Technology, and Geography - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast - 2016-2024”
3. February 2017 “Algae Oil Market Report” from Grand View Research
4. March 2017 “Animal Feed Additives Market Analysis” from Grand View Research
ASX:AEB www.affinityenergyandhealth.com.au 5
AFFINITY’S STATE-OF-THE-ART ALGAE GROWING FACILITY (ATLANTA, GA)
Proprietary tech controlled environment for Nutraceuticals, Aqua Feed and Animal Feed Production
Production Capacity
• Product Development Plant – current production capacity of 100tpa
• Real-time operation confirms 4 fold increase in production capacity with nominal
Capex
• Plant currently producing six high-end algal species in a totally controlled indoor
“photo bioreactor” system; these six algal species account for over 95% of global
market
Power Efficiency (Solar)
• Atlanta facility uses AEB’s proprietary light systems including:
– Direct Visible Light Energy Solar Collector
– Indirect Light Energy Solar Collector Affinity’s Atlanta growing facility
• AEB’s solar lighting technology significantly reduces operating cost base across
business divisions
Affinity’s Solar
Lighting Technology
Affinity’s Photo Bioreactor System
ASX:AEB www.affinityenergyandhealth.com.au 6
AFFINITY’S PARTNERSHIP WITH RADIENT TECHNOLOGIES
Producing high-value algae-based products for supply into global Nutraceutical market
• AEB entered into a research agreement with
natural compound extraction company Radient
Technologies Inc., of Alberta, Canada
• The Company will utilize RTI’s extraction
technology as the final step in the production of
high-value algae-based products for supply into
the global nutraceutical market
• A key focus will be on the extraction of high
quality lipid content from AEB’s algae powders,
with initial algae samples having already being
shipped to Radient’s facility in Edmonton. Initial
results from this extraction have achieved +85%
yield
• Radient’s proprietary Microwave Assisted
Processing (MAP™) technology has successfully
demonstrated over the last decade increasing • 20,000 square feet commissioned in 2014
the yield and consistency of the active • Designed for 5 ton per day biomass throughput,
ingredients from plants, including algae, in a GMP compliant, NHPD licensed
cost-efficient manner • Many commercial runs completed successfully
(contract manufacturing and proprietary products)
• $7M expansion nearing completion
ASX:AEB www.affinityenergyandhealth.com.au 7
AFFINITY’S PARTNERSHIP WITH RELIANCE INDUSTRIES
Rollout of commercial green energy solutions in India as part of Affinity’s Algae-based Biofuels Division
• Affinity is to build a pilot biofuels plant using its algae fuel technology
as part of an agreement with Reliance Industries, one of India’s largest
privately owned companies
– Reliance expended ~USD $10M, including a 4% holding in AEB
• AEB has commenced Phase 2 of contract with Reliance to build a
demonstration algae plant in India – full plant commissioning
scheduled for Q4 2018
• Operating plant will demonstrate AEB’s capacity to produce economic
biofuels from CO2 sequestrations, which are the key fuel source that
grows the algae
• Successful commissioning of demonstration plant will provide
Reliance with a “Real Green Solution” which can be rolled out across
multiple sites in India
• AEB plans to develop commercial sized plants for sale - ~USD $100
Million per plant
• Biofuel production economics dependent on global oil price; when
>USD $75-80 / bbl, 30% EBITDA margins (excluding environmental
credits)
ASX:AEB www.affinityenergyandhealth.com.au 8MILESTONES
Algae Division
Nutraceutical Products
❑ Q4 2018: Complete Feasibility Study with Radient Technologies on 300+ tpa, utilizing Radient’s
MAP™ technology (targeting high quality market with pricing in range of USD $100 – 150 / kg)
❑ Q4 2018: Production of high-value products, including oils, to be sold globally via Gencor Pacific
partnership
❑ Q4 2018: Maximize production at current plant
❑ CY 2019: Expand existing plant to 250+ tpa
❑ CY 2020: 250+ tpa plant at capacity
❑ CY 2021: Increase capacity to ~1,000 tpa (requiring estimated USD $6M in CapEx)
Aqua Feed Products
❑ Q4 2018: Expand aquarist product range from 4 to 10 products (product range targeting small
volume, high margin aquarist market segment)
Animal Feed Products
❑ Q4 2018/2019: Establish partnerships with major distributors in Australia, New Zealand, North and
South America
Biofuel Products
❑ TBD: Production economics dependent on global oil price (+100kt plants); sells for premium to
Brent (~$100/bbl)
ASX:AEB www.affinityenergyandhealth.com.au 9CANNABIS INDUSTRY OVERVIEW
Rapid global adoption of legal cannabis
• Global medicinal cannabis market valued at USD $3.5 Billion in 2017 and is expected to expand at a CAGR of 24% to 20251
– Canada’s legal cannabis market (medical cannabis only) is the largest federally legal cannabis market in the world, estimated at
$1.5 billion in 20172
• Global medicinal cannabis market is expected to be worth over USD $55 Billion by 20243
– The extensive demand for marijuana in the treatment of chronic pain due to cancer, arthritis, HIV/AIDS, and cancer will foster
the global medical marijuana market growth.
– The rising inclination toward marijuana as opposed to opioid narcotics will also influence the industry trends
– Canada medical marijuana industry is projected to witness 32% CAGR over 2018-2024 as the country has completely legalized
the sale, production, & consumption of medical marijuana and is thus witnessing robust product sales
– In June 2018, FDA approved first cannabis-based drug for epilepsy (Epidiolex by GW Pharma)
• Industry is attracting significant investment
• Constellation Brands has announced plans to invest $5 Billion in Canopy Growth
• Marijuana businesses have raised $4.3 billion in first half of 2018, up from $3.5 billion in 2017
• Australia became 4th country in the world to legalize medicinal cannabis exports in hopes to capture USD $55 Billion Cannabis
Market4
• In June 2015, the Lambert family donated $33.7 Million to the University of Sydney, establishing the Lambert Initiative; this is
the largest medicinal cannabis research group in the country, providing an invaluable boost to the development of treatments
for childhood epilepsy, cancer, chronic pain, obesity, anorexia and dementia
• Australian medicinal cannabis market could spark initial demand for as much as 8,000 kg of product, creating an
industry worth more than $100M a year5
• Australia’s legal cannabis market is forecast to grow from USD $52 Million in 2018 to USD $1.2 Billion in 2027, the 5th
largest in the world
• As at February 16, 2018, there were 30 licenses granted in Australia; as at July 11, 2018, a total of 47 licenses have been issued
under the scheme: 18 medicinal cannabis licenses (commercial cultivation and production), 10 cannabis research licenses, and
19 cannabis manufacture license
Sources:
1. June 2018 “Global Medical Cannabis Market to Surpass US$ 20.17 Billion by 2025” from Coherent Market Insights Research
2. 2018 Cannabis Investment Report from Ackrell Capital
3. August 2018 “Medical Marijuana Market worth over $55 billion by 2024” from Global Market Insights Research
4. “Australian Cannabis Market” Report from Cannabis Business Plan
5. “Medicinal Cannabis in Australia: Science, Regulation and Industry” from University of Sydney
ASX:AEB www.affinityenergyandhealth.com.au 10CANNABIS INDUSTRY OVERVIEW
Global legalized recreational and medicinal cannabis access
• Countries with legalized cannabis access (including Australia for medicinal cannabis)1
Source:
1. 2018 Cannabis Investment Report from Ackrell Capital
ASX:AEB www.affinityenergyandhealth.com.au 11AFFINITY’S MEDICINAL CANNABIS STRATEGY
Strategic exposure to key global markets, with a current focus on the animal market
• Application submitted (Dec 2017) to the Office of Drug Control for a license to cultivate and produce medicinal
cannabis in Australia
• Federally legal to export (ex Australia)
Partnerships / Agreements
• Negotiations progressing with a number of market-leading Licenced Producers (LP’s) in respect to development of
multiple medicinal cannabis products
• Radient Technologies Inc. has a proprietary extraction technique and is partnered with Aurora Cannabis, a leading
cannabis producer
– Affinity & Radient partnership to explore high-value algae-based products
– Potential partnership for other cannabis-related opportunities
• Agreement with Queensland Bauxite Limited (ASX.QBL) to exclusively license Low THC Delta 9 cannabis cultivars
from unique Australian cannabis seed bank owned by Medical Cannabis Limited (“MCL”)
– Provides Affinity with exclusive rights to cultivars to develop veterinary products and human products
ASX:AEB www.affinityenergyandhealth.com.au 12MILESTONES
Medicinal Cannabis Division
✓ Dec 2017: Submitted application to the Office of Drug Control for a license to cultivate and
produce medicinal cannabis in Australia
❑ Q4 2018: Approval of Australian medicinal cannabis license (submitted application to
cultivate and produce medicinal cannabis)
❑ Q4 2018: Commence CBD Oil Sales (50kg per month)
❑ Ongoing: Progressing with a number of market-leading Licenced Producers (LP’s) in respect to
development of multiple high demand stock and veterinary medicinal cannabis products
❑ Q1 2019: Commence Phase 1 of European and South American medicinal cannabis facility
❑ CY 2019: Phase 1 operational
❑ CY 2020: Commence Phase 2 of European and South American medicinal cannabis facility
❑ CY 2021: Phase 2 operational
ASX:AEB www.affinityenergyandhealth.com.au 13CORPORATE SNAPSHOT
Overview Major shareholders % held
ASX code AEB Teco Bio LLC (Earl McConchie) 18.94%
Shares outstanding 931.37m Medical Cannabis Limited 14.60%
52 week low – high $0.011- $0.07 BNP Paribas Noms Pty Ltd 6.96%
Market capitalisation at $0.014 per ~$13.04m (Gencor)
share Reliance Industrial Investments 4.90%
Cash at bank and funding availability ~$5.6m (India’s largest private company)
Total for major shareholders 45.40%
Unlisted options 108,706,795
Listed options 210,092,326 Directors & Management* 27.10%
Prices as of October 11, 2018 * Includes Teco Bio LLC and Gencor
52-Week Stock Chart
ASX:AEB www.affinityenergyandhealth.com.au 14CONTACT AFFINITY
Want to learn more about Affinity?
Please watch the below interview with AEB Chairman and MD Malcolm James on
Worldwide Business with Kathy Ireland: https://youtu.be/4livguNfXAU
CONTACT INFO
Unit 2, 100 Railway Rd
Subiaco, Perth
Western Australia 6008
(+61) 8 9380 6790
admin@affinityenergyandhealth.com.au
Postal Address:
PO Box 2146
Subiaco, WA 6904
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