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August 2014
The Aemetis Biorefinery Advanced Renewable Fuels and Chemicals Produced
by Conversion of Existing Biofuels Facilities
Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words “may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue” and similar expressions identify forward-looking statements.
Actual results, performance or events may differ materially from those projected in such statements due to, without limitation: (i) general economic conditions, (ii) ethanol and gasoline prices, (iii) commodity prices, (iv) distillers grain markets, (v) supply and demand factors, (vi) transportation rates for rail/trucks, (vii) interest rate levels, (viii) ethanol imports, (ix) changing levels of competition, (x) changes in laws and regulations, including govt. support/incentives for biofuels, (xi) changes in process technologies, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures and (xiv) general competitive factors on a local, regional, national and/or global basis, (xv) natural gas prices, and (xvi) chemicals and enzyme prices. The matters discussed herein may also involve risks and uncertainties described from time to time in the company’s annual reports and/or auditors’ financial statements. The company assumes no obligation to update any forward-looking information contained herein, and assumes no liability for the accuracy of any of the information presented herein as of a future date.
Disclaimer
2
Aemetis
Aemetis means “The One Prudent Wisdom”
Replacing crude oil with renewable resources for fuels and chemicals
“Ae” Means “The One” in Scottish “Metis” means “Prudent Wisdom” in Greek
3
Aemetis Vision
4
G1 G3
PAST PRESENT FUTURE
G2
Traditional Corn Ethanol and Vegetable Oil Biodiesel
Advanced Biofuels (Sorghum/Tallow Feedstocks)
Non-Food, Low Carbon, Less Land Fuels/Chemicals
Aemetis is an international renewable fuels and biochemicals company using patented industrial biotechnology for the conversion of first-generation ethanol and biodiesel plants into advanced biorefineries.
Aemetis Value Proposition
Strong positive cash flow from $178 million biofuels/biochemical revenues in 2013
110 million gallons capacity in California and India cost $165 million to build/upgrade
Revenue growth to $400 million per year without additional capital expenditures
Patented technology to produce advanced fuels by upgrading facilities Lower cost per gallon than gasoline and diesel, with high oxygen/octane benefits
Strong management and board leadership with proven track record
5
Table of Contents
1. Introduction 7 2. Company Overview 12 3. Industry Overview 26 4. Company Highlights 37 5. Financial Overview 42
6
Introduction
7
Aemetis Summary
Aemetis, Inc. was founded in February 2006 by biofuels industry veteran Eric McAfee and has since grown to become a leading second-generation renewable fuels and specialty chemicals company with $178 million in revenues during 2013
Since its formation, the Company’s primary focus has been the development and deployment of patented industrial biotechnology to convert first-generation ethanol and biodiesel plants (which primarily use corn and edible oils as feedstocks) into advanced second-generation biorefineries (which are capable of using non-food substitutes to produce ethanol, biodiesel, renewable diesel and renewable jet fuel, and renewable chemicals and feed products)
Aemetis currently wholly owns and operates two integrated second-generation plants with combined production capacity of 110 million gallons per year:
Aemetis operates a biotechnology R&D lab in Maryland and holds five advanced biofuels technology patents The Keyes plant generated $10 million of Adjusted EBITDA in Q4 2013; $14 million in Q1 2014; and $9 million Q2 2014 The Company is a federally approved EB-5 borrower for up to $36 million of 3% interest rate subordinated debt funding, and
has received $5 million from the EB-5 offering into escrow or funded to Company.
8
Keyes Plant India Plant
Location: Keyes, California (Northern California) Type: Ethanol renewable fuels plant Capacity: 60 million gallons per year Feedstock: Grain sorghum and corn In August 2013, Aemetis Keyes became the first converted corn ethanol plant certified by the EPA as a producer approved to use milo/biogas/CHP to receive D5 Advanced Biofuel RIN’s.
Location: Kakinada, India Type: Biodiesel and renewable chemicals plant Capacity: 50 million gallons per year Feedstock: Waste tallow, cooking oil and Stearine In 2013, India began phasing out diesel subsidies, causing prices to rise and biodiesel margins to grow. The EU market and California are rapidly growing, profitable markets for the non-food, low-carbon biodiesel produced in India.
Aemetis Overview
9
Strong Asset Values
Keyes Plant was originally constructed in 2008 at a cost of $132 million, then upgraded at a cost of $13 million for a total investment of $145 million
India plant was originally constructed in 2008 at a cost of $22 million and upgraded with glycerin refinery $165 million aggregate construction cost for 100% owned plant assets
Strategically Located to Serve Large Addressable
Markets
Proximity of the Keyes Plant to the deep water port of Stockton and Union Pacific rail system provides access to milo feedstock from key international and domestic markets
California is a $1.3 billion ethanol market and a $120 million wet distillers grains (“WDG”) market with more than one million dairy cows
100% of ethanol and distillers grains, an ethanol by-product, are sold within 80 miles of the Keyes Plant India is a large producer of waste Stearine and beef tallow, the key feedstocks for the India Plant
Favorable Demand / Supply Dynamics
Environmental regulation and favorable secular trends are expected to drive substantial increases in the demand for biofuels
Current production capacity of advanced biofuels is well below future mandated levels
Healthy Margins
Production of advanced biofuels using less expensive milo is expected to substantially improve profitability at the Keyes Plant
Deregulation of diesel price in India is expected to result in substantial margin improvement for Aemetis’ biodiesel plant in India
Strong Free Cash Flow Plant conversion, industry trends and margin expansion are contributing to improving cash flow Four quarters positive EBITDA: record Adjusted EBITDA of $10 million in Q4 2013 and $14 million in Q1 2014
Substantial Upside from Next Generation
Technology
Aemetis has five granted patents in next generation technologies First global licensee of renewable jet and diesel fuel technology from Chevron Lummus and Applied
Research Associates (“Chevron Lummus / ARA”)
Experienced Management Team
Founded in 2006, Aemetis is led by biofuels industry veterans with extensive global experience Members of the Board of Directors have extensive expertise in the chemicals, agriculture, food,
molecular biology and biotechnology industries
Management Team
10
Eric A. McAfee, Chairman and CEO Founding shareholder of $800 million revenues Pacific Ethanol (NASDAQ: PEIX) Founding shareholder of several publicly-held energy companies including Evolution Petroleum (NYSE: EPM) Founded seven public companies and funded twenty-five private companies as principal investor Appointed as GlobalScot by First Minister of Scotland to advise on renewable energy
Andy Foster, EVP and President, Aemetis Advanced Fuels Joined Aemetis in 2006 and has held senior leadership positions including Senior Vice President, Chief
Operating Officer and his current role as President of the advanced fuels business Previously served as an executive at BMC Software, Cadence Design Systems and eSilicon Corporation Served in the George H.W. Bush White House (1989-1992) as Associate Director - Office of Political
Affairs and was Deputy Chief of Staff for Illinois Governor Edgar for five years
Todd Waltz, EVP and CFO Joined Aemetis in 2007 as Corporate Controller and became CFO in 2010 Previously held senior financial management roles with Apple, Inc. for 12 years Litton Industries five years in accounting roles Ernst & Young five years to earn CPA and tax training
Sanjeev Gupta, EVP and President, Aemetis International Joined Aemetis in 2007 as head of Biofuels Marketing and became Managing Director of Universal
Biofuels subsidiary in India in 2008 Previously head of petrochemical trading company with about $250 million of annual revenue and
offices on several continents Previously General Manager of International Marketing for Britannia Industries, a subsidiary of Nabisco
Brands in India
Eric McAfee, Chairman and CEO, Founder Founder of Aemetis in 2006; Pacific Ethanol (Nasdaq: PEIX); Evolution Petroleum (NYSE: EPM);
Procera Networks (Nasdaq: PKT) GlobalScot appointed by First Minister of Scotland to advise on renewable energy
Harold Sorgenti, Director/Chairman of Governance & Nominating Comm. Former President/CEO of ARCO Chemical Company (12 years including IPO) Principal of Sorgenti Investment Partners (chemical investments)
John Block, Director Former Secretary of Agriculture from 1981-86 under President Reagan Food industry association executive for 18 years
Fran Barton, Director/Chairman of Audit Committee Former CFO of several multi-billion-dollar revenues companies: AMD, Atmel, Amdahl, UTStarcom,
Digital Equipment (PC division)
Dr. Steven Hutcheson, Director 25 years bacterial molecular biology and molecular genetics at University of Maryland PhD University of California Berkeley in cellular biology Founder of Zymetis, Inc., acquired by Aemetis in 2011
Board of Directors
11
Company Overview
12
Aemetis Key Highlights
Owns and operates renewable fuels and chemicals facilities in US and India − Acquired Cilion, Inc. 60 MGY ethanol plant in Keyes, CA in 2012 • Plant build and upgrade cost $145 million
− Built 50 MGY advanced biofuel plant in Kakinada, India in 2008 • Plant build cost $22 million
Acquired Zymetis, Inc., a novel biorefining technology company, for its patent portfolio and production processes in 2011 − 5 granted patents on enzyme and microbe technology for biofuels production
First global licensee of renewable jet and diesel process from Chevron Lummus / ARA $178 million in 2013 revenues; revenues grew to $117 million in first six months of 2014 $10 million of Adjusted EBITDA in Q4 2013; $14 million Q1 2014; $9 million Q2 2014 125+ employees worldwide
13
Key Customers
Key Company and Industry Milestones February 2007 Acquired Energy Enzymes - Former DOE funded enzyme technology for enzyme production and integration Nov 2008 Built 50 MGY non-food feedstock and biomass energy biorefinery in Kakinada, India to use waste stearine and
tallow to produce biodiesel and glycerin Mid-2009 Obtained necessary permits and approvals to sell biofuel into Europe, U.S. and Indian domestic market April 2011 Leased, retrofitted and restarted operations of 60 MGY ethanol plant in Keyes, California owned by Cilion, Inc. July 2011 Acquired Zymetis, Inc., a novel biorefining technology company, for its patent portfolio and production process Dec 2011 Federal $0.45 per gallon ethanol blender tax credit ended Jan 2012 Completed construction of India refining unit and obtained permits to sell into domestic food markets in India April 2012 Glycerin refining and oil pretreatment units completed at India Plant, producing refined glycerin for pharma and
industrial use July 2012 Acquired 60 MGY ethanol plant in Keyes through acquisition of 100% of Cilion, Inc. for 11% of common stock
and $15m cash Jan 2013 India government begins phase out of 35% diesel subsidies, increasing the domestic India sales price and margins
for biodiesel June 2013 Achieved high-volume production of lower-carbon ethanol using milo feedstock and a Combined Heat & Power
(CHP) system in an integrated process with traditional feedstock June 2013 India Plant generated more than $32 million of revenue in 2013 and $2.5 million of positive cash flow August 2013 Received EPA approval as the first converted corn ethanol plant approved to produce D5 Advanced Biofuels
using milo and biogas with the Keyes plant’s existing Combined Heat & Power system February 2014 Commissioned biodiesel distillation unit at India Plant, the only large-scale distilled biodiesel plant in India May 2014 Received International Sustainability and Carbon Certificate (ISCC) for distilled biodiesel for sales to Europe June 2014 Completed Nasdaq Global Market listing under stock symbol “AMTX”
14
Aemetis Revenues
15
$0
$100
$200
$300
$400
$500
$600
($ in
mill
ions
)
Ethanol Biodiesel Other
Cumulative Ethanol, Biodiesel and Other Revenue
California Ethanol Plant
16
California Plant Aerial View
1) Union Pacific Rail System access 2) Two corn/milo storage tanks (owned by A.L. Gilbert) and one
feedstock bin (owned by Aemetis) 3) Liquefaction Area 4) Three 1.15 MG fermentation tanks and one 1.5 MG beer well 5) Distillation and Evaporation 6) Cooling Towers and three boilers 7) Distiller Grain processing and loading area
8) One 1.05 MG denatured ethanol storage tank, two 210,000 gallon 200-proof ethanol storage tanks and one 63,000 gallon 190-proof ethanol storage tank
9) Ethanol truck loading area 10) 3,100 sq. ft. office building 11) 1.5 MG water storage tank 12) Control center and laboratory
1
2 3 4
11
6
5
7
8
9
17
10
12
A.L. Gilbert Feedmill
California Plant Description
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General Designed by Praj Industries, an industry leading builder of ethanol plants that has been involved in the design and development of more than 450 alcohol plants
Products & Production
Stabilized production capacity of more than 60 MGY, with permits allowing 75 MGY Products include:
− Ethanol – $111.2 million of revenue in FY 2013
• Approved by EPA in August 2013 for production of D5 Advanced Biofuels − Distillers grains – $30.2 million of revenue in FY 2013 − Corn oil – $2.6 million of revenue in FY 2013
Achieved 20 months of continuous operations from May 2011 to January 2013 In June 2013, achieved high-volume production using milo and a Combined Heat & Power (CHP) system
in an integrated process with traditional feedstock
Multiple Feedstocks In January 2013, the plant was retrofitted to accommodate the use of milo feedstock
84 million pounds of advanced biofuels feedstock (milo) used for production in 2013
Systems
Plant control system can be managed from the on-site control center or remotely by the plant’s operations managers
Zero waste water discharge with on-site water recycling and purification system Combined heat and power system fully operational Steam generation system powered by three natural gas-fired Victory Energy steam boilers
4.5 MW steam turbine generator supplies the electrical power required for production by using natural gas or biogas
California Plant Description (continued)
19
Location
Access to the Union Pacific rail line provides access to key feedstock markets
Close proximity (40 miles) to the deep water Port of Stockton allows importation of less expensive milo from key international feedstock markets (e.g., Argentina)
100% of ethanol and WDG production sold locally
California is one of the largest ethanol markets (1.3 BGY) and represented approximately 10% of the total U.S. ethanol market in 2012
Strong regulatory support for ethanol includes the California Low Carbon Fuel Standards and the California Energy Commission biofuels grant programs
Customers
100% of distillers grains production is sold within 80 miles of the Keyes Plant location, thereby eliminating the need and cost of large dryers
100% of the ethanol produced at the Keyes Plant is sold to refiners within 80 miles of the Keyes Plant, and is blended into gasoline sold in San Jose, Sacramento and San Francisco
Value Original build cost of $132 million in 2008, upgraded for $13 million and acquired by the Company in
July 2012 Total plant build cost $145 million
Ethanol Technology & Production Process
20
1) Aemetis’ distillers grains are sold wet and therefore do not require large and expensive industrial dryers which often require significant maintenance.
Typical Dry Mill Ethanol Process(1)
California Production Competitive Advantage
West Coast location and large local markets provide several advantages over Midwest ethanol producers
21
California Dairy Concentration Map
Keyes Plant
10% ethanol mandate in California is approximately a 1.3 billion gallon market yearly − With 220 mgy of California production capacity, California must import over 1
BGY of ethanol to meet local mandated demand
Ethanol produced in California has a much lower carbon content which translates into higher selling prices per gallon − Wet Distillers Grains delivered to local dairies does not require natural gas dryers
Less expensive to ship corn to California than to ship ethanol and distillers grains to California − Unit trains (100 cars); ease of handling; short turnaround times; fewer delays − Proximity to customers avoids the need to dry distillers grains, significantly
reducing energy and handling costs
Ethanol shipments from the Midwest compete with crude oil for rail cars and locomotive power for delivery of ethanol to California − Rail tanker car shortage driven by demand for rail cars from new oil fields (e.g.
Bakken and Canada) without pipelines in place − Safety concerns regarding older tanker cars; new tanker regulations − Long lead times coupled with limited availability of new rail cars will likely result in
a prolonged shortage of tanker cars for fracked crude oil and Midewest ethanol
Aemetis Process Benchmarking
Aemetis sells ethanol in California where it demands a premium price over ethanol sold in the U.S. on average. The Keyes Plant is one of the most efficient and productive facilities in the industry, with a higher yield than the industry average.
22
1) Source: Oil Price Information Service. 2) Source: Industry average yield - Renewable Fuel Association.
2.90
2.80
2.50
2.55
2.60
2.65
2.70
2.75
2.80
2.85
2.90
2.95
3.00
Keyes Industry
Series 1 Los Angeles Ethanol Price vs. Mid-West Ethanol Price Yield (gallons/bushel)
4% higher efficiency than the industry(2)
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
6/1/
11
9/1/
11
12/1
/11
3/1/
12
6/1/
12
9/1/
12
12/1
/12
3/1/
13
6/1/
13
9/1/
13
12/1
/13
LA Ethanol Price Chicago Ethanol Price
$0.18 higher ethanol pricing(1)
India Biodiesel and Glycerin Plant
23
India Plant Description
24
General Built and 100% owned by Aemetis subsidiary Aemetis International
Products & Production
50 MGY nameplate biodiesel production capacity with refined glycerin unit Revenues of $32 million in 2013, growing to about $200 million per year at full capacity
− Biodiesel: $4.3 million in revenue for FY 2012 and $16.6 million for FY 2013 − Refined glycerin: $2.1 million in revenue for FY 2012 and $4.6 million for FY 2013 − Natural refined oil and other: $7.8 million in revenue for FY 2012 and $11.6 million for FY 2013
Expansion to 100 MGY biodiesel capacity ($400 million revenues) can be completed for about $15 million and one year of construction
India subsidiary received an Indian Pharmacopeia license in Q1 2012, enabling sale of refined glycerin to the pharmaceutical industry
Feedstock Largest India plant to use waste stearine and animal fats, saving up to 20% vs. palm oil Feedstock requirements sourced from local suppliers Currently the only India plant not paying 10% tariff when using imported feedstock
Systems Glycerin refining and oil pretreatment units completed in Q2 2012 Location India is a large producer of stearine and animal fats, the key feedstocks for the India Plant
Customers India pharmaceutical and industrial customers for refined glycerin India and European customers for biodiesel, and recent EPA approval allows sales to US
Value Original plant build cost of $22 million in 2008
Market Dynamics
In May 2014, the India plant received International Sustainability and Carbon Certification (ISCC) for sales of distilled biodiesel to EU customers
In June 2014, biodiesel shipments from India to EU began under the new ISCC approval In July 2014, the new Indian Government announced it would end subsidies to the
diesel market, increasing biodiesel market size and margins in India
Intellectual Property
The Company operates an R&D lab in Maryland and earned five granted advanced biofuels technology patents
25
5 Awarded Licensed
Five awarded patents on enzyme and microbe technology:
− Patented plant wall degradative systems
− Patented chitin degradative compound and systems
− Patented cloning abilities
− Patented degradation of whole plant materials by saccharophagus degradans
− Patented processes for plant polysaccharide conversion
Chevron Lummus / ARA renewable Jet and Diesel Fuel:
− Catalytic hydrothermolysis process converts plant oils to crude oil intermediates
− Single reactor process with short residence time
− Only known 100% drop-in renewable jet fuel
− November 2012 Canadian National Research Council, first flight of 100% renewable jet fuel
Industry Overview
26
U.S. Ethanol Production
Ethanol is high octane (113), high oxygen (35%), cleaner burning motor fuel Ethanol is mandated by Federal Air Quality and renewable fuels laws, replacing the chemical MTBE The majority of American consumers are using E10 ethanol blends (10% ethanol), and E15 (15% ethanol)
and E85 (85% ethanol) availability is increasing The U.S. ethanol industry has grown to 211 plants located in 29 states producing 14.5 billion gallons/yr. Cancellation of the $0.45 per gallon subsidy to fuel blenders in Dec 2011 caused a temporary decline in
demand during 2012 and 2013 as blenders used excess RIN’s for compliance rather than buying biofuels
27
1,622 1,765 2,140 2,810 3,404 3,904 4,884
6,521
9,309 10,938
13,298 13,929
13,218 13,312 14,200
600
2,600
4,600
6,600
8,600
10,600
12,600
14,600
16,600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(millions of gallons) U.S. Ethanol Production (1)
1) Source: U.S. Energy Information Administration, Monthly Energy Review 2) Source: Aemetis management estimates based on YTD production (as reported by EIA) and recent industry trends
(2)
Ethanol in Demand in Export Markets(1)
28
1) Source: Renewable Fuels Association www.EthanolRFA.org
Canada 325
Philippines 52
Middle East 40
Mexico 31
Jamaica 10
Brazil 47
Europe 39
Africa 10
India 13
East Asia
8
Peru 30
2013 U.S. exports, in millions of gallons
Rest of world =15
The Increasing RFS Mandate (1)
In order to meet the increasing Renewable Fuel Standards, obligated parties are expected to blend greater amounts of ethanol as excess Renewable Identification Numbers (RIN’s) are delivered to the EPA or mature The current RFS was enacted with the Energy Independence and Security Act of 2007 (EISA2007) RFS created two principal categories – renewable fuels and advanced biofuels
− “Renewable fuels” must reduce greenhouse gas emissions by 20% relative to gasoline or diesel and “advanced biofuels” must reduce greenhouse gas emissions by 50%
29
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Biomass-based Diesel 0.5 0.7 0.8 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Non-cellulosic Advanced 0.1 0.2 0.3 0.5 0.8 1.0 1.5 2.0 2.5 3.0 3.5 3.5 3.5 4.0 Cellulosic Advanced 0.0 0.1 0.3 0.5 1.0 1.8 3.0 4.3 5.5 7.0 8.5 10.5 13.5 16.0 Conventional Biofuels 10.5 12.0 12.6 13.2 13.8 14.4 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0
0.0 5.0
10.0 15.0 20.0 25.0 30.0 35.0 40.0
Billi
ons o
f Gal
lons
Renewable Fuel Standard Mandate Schedule (2)
Existing U.S. Corn-Ethanol Production Capacity
1) On November 15, 2013, the EPA proposed a change to the 2014 Renewable Fuel Standards. Once the proposal is published in the Federal Register, it will be open for a 60 day public comment period.
2) Source: United States Environmental Protection Agency
California Low Carbon Fuel Standard (LCFS)
LCFS is a state-enacted policy to reduce greenhouse gas emissions from motor vehicles
Under LCFS, every fuel has a “carbon intensity value” (CI) − CI values estimate the level of lifecycle greenhouse gas emissions of a particular fuel taking into account the feedstock,
the production process and plant location − LCFS requires substitutes for fossil fuels to have lower carbon intensity than the fuels they replace
Ethanol produced through an LCFS approved pathway can be sold at a premium because it reduces the carbon credits the blender is required to purchase in the market
− The value of LCFS to ethanol plant depends on the price of a carbon credit and the CI value of the fuel • Lower CI values produce higher premiums • Higher carbon credit prices produce higher premiums
30
90.1 80.7 73.75
56.66 68.91
51.82 70.7
53.62
0
20
40
60
80
100
Benchmark MW Corn + NG MW Corn + NG + LCFS
MW Corn + biogas + LCFS
CA Corn + NG + LCFS
CA Corn + biogas + LCFS
Milo + NG Milo + biogas
Chicago Aemetis Pathways
Carbon Intensity Values (1)
RIN Pricing has Escalated with Diminishing Supply (1)
Aemetis is one of the few plants equipped and geographically positioned to obtain milo for production of the D5 RIN and capture the premium in the market D6 RIN prices had historically ranged between $0.01 to $0.05 but appreciated significantly in early 2013 This increase in prices reflected the market’s concern that rising RFS-mandated volumes and the blend wall would significantly
increase the cost to meet the RFS statutory volumes Convergence is a result of D6 RIN scarcity, D5 has always been scarce The price of RINs has decreased substantially since mid-July 2013 and the D5 / D6 pricing spread has widened to $0.07
31
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6 $ / gallon
Ethanol RIN Credit (D6) Advanced Biofuel RIN Credit (D5)
D5 / D6 RIN Pricing Spread in dollars (2)
$0.26 $0.33
1) On November 15, 2013, the EPA proposed a change to the 2014 Renewable Fuel Standards. Once the proposal is published in the Federal Register, it will be open for a 60 day public comment period.
2) Source: Oil Price Information Service
EPA Approval of E15 in 2012 Removed the 10% “Blend Wall”
Prior to August 2012, gasoline / ethanol blends were primarily limited to 10%(1), referred to as E10, by the EPA The term “Blend Wall” refers to the maximum amount of ethanol that can be blended in to gasoline as a result of this 10%
limitation until fuel retailers add pump stickers to show 15% ethanol content
The Blend Wall was effectively eliminated in August 2012 when the EPA approved use of 15% ethanol blends (“E15”) in light-duty vehicles beginning with model year 2001 which represents approximately 85% of all vehicle gasoline consumption
Despite the approval of E15, U.S. oil refiners have opposed blends higher than E10
32
(2,000)
0
2,000
4,000
6,000
8,000
10,000
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
2009 2010 2011 2012 2013
Gallons
% o
f U.S
. Gas
olin
e Co
nsum
ptio
n
Blending (LHS) 10% Blend Wall (LHS) Production (LHS) Net Exports (RHS)
The “Blend Wall”
1) E85 is permitted for Flex Fuel vehicles. Source: United States Energy Information Administration
Favorable Supply / Demand Dynamics
In the near term, Aemetis is well positioned to benefit from the existing supply / demand imbalance
33
1) Source: EPA; calculation based on 133 billion gallons of gasoline supplied during the last twelve months ending June 30, 2013. 2) Source: Renewable Fuels Association; as of January 2013. 3) Sources: American Coalition for Ethanol, Renewable Fuels Association and the Energy Independent (BBI International). 4) On November 15, 2013, the EPA proposed a change to the 2014 Renewable Fuel Standards. Once the proposal is published in the Federal
Register, it will be open for a 60 day public comment period.
Demand Factors Supply Factors
At 15% of U.S. gasoline consumption, total ethanol demand would increase from 13.3 BGY in 2013 to 19.9 BGY(1)
Increased blending of ethanol is RFS mandated (4)
− Corn-based ethanol mandate increasing from 13.8 BGY in 2013 to 15.0 BGY in 2015
− Advanced biofuels mandate increases from 2.8 BGY in 2013 to 3.8 BGY, 5.5 BGY, 7.3 BGY and 9.0 BGY in 2014 to 2017, respectively
As oil prices increase, refiners will likely increase use of ethanol in order to moderate gasoline price increases
The heightened focus on energy independence and security is anticipated to continue to help shape U.S. energy policy and benefit the biofuels industry
The $40 billion ethanol industry is a significant contributor to the U.S. economy by employing more than 400,000 people and is a key industry for many rural communities
There are 211 U.S. ethanol plants with aggregate production capacity of about 15 BGY(2)
New construction of traditional corn based ethanol plants is difficult to debt or equity finance
Only 4 corn ethanol plants with aggregate production capacity of 158 MGY are under construction or expansion(1)
About 100 MGY of cellulosic ethanol production facilities are beginning production in 2014 and 2015 to produce D3 RIN’s for the D3 RIN mandate under the RFS
Demand Outlook
Environmental policy, air quality, energy security and the growing need for domestic fuel sources are anticipated to drive growth for ethanol for the foreseeable future. Other factors driving ethanol demand include increased usage of ethanol for octane enhancement, high gasoline prices in recent years and a desire to boost rural economies.
34
1) On November 15, 2013, the EPA proposed a change to the 2014 Renewable Fuel Standards. Once the proposal is published in the Federal Register, it will be open for a 60 day public comment period.
2) Source: Renewable Fuel Association – 2013 Ethanol Industry Outlook
U.S. Market
In the past two decades, ethanol demand has been dependent on environmental issues, oxygenated fuel requirements, reformulated gasoline programs in the U.S. and the phase-out of MTBE
The major legislative issue affecting future demand for ethanol is the new RFS schedule in the Energy Independence and Security Act of 2007
With the more aggressive biofuel targets, RFS is having more of an immediate impact than the original renewable fuel standard
In 2012, the ethanol industry supported more than 87,000 direct jobs, 295,000 indirect jobs and contributed more than $30.2 billion in household income(1)
California Market
Regardless how the national regulatory environment develops, California will likely continue to be a key market for ethanol
The California ethanol market alone is approximately 1.3 BGY
There are currently only four sizable ethanol plants operating in California with aggregate production capacity of 220 MGY, requiring 1.1 BGY imported from other states to meet California biofuels demand
At 60MGY, ethanol production from the Keyes Plant represents only 5% of the total California market
California has a mandatory ten percent (10%) blend
Benefits of Grain Sorghum as a Feedstock Alternative to Corn
Grain Sorghum (Milo) is a genus of numerous species of grasses and is mainly grown in dry and hot climates of the U.S. which are not conducive to corn production
From an ethanol feedstock perspective, milo has several advantages over corn:
− Unlike corn, in the U.S. milo is used primarily as a feed grain for livestock and not for food products − Milo is more drought tolerant than corn and uses significantly less water to grow − Milo is grown in hot and dry climates where land is less costly, and uses less fertilizer than corn − When used along with advanced process technologies, such as biogas digesters and combined heat
and power, ethanol produced from milo at a plant powered by biogas has 52% lower greenhouse gas emissions compared to gasoline
In addition to these advantages, average imported and domestic milo prices have historically been 5% to 10% below the price of corn, making it an attractive feedstock alternative for ethanol production
35
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00
Pric
e Re
ceiv
ed ($
/bu)
Corn Milo
Sources: USDA, National Agricultural Statistics Service, Quick Stats Database
U.S. Corn and Milo Pricing
Corn $4.41/bu Dec. 2013
MIlo $4.19/bu Dec. 2013
Corn and Milo Prices Have Been Declining to the Benefit of Aemetis
Corn futures prices are falling as U.S. corn production for the 2014 crop year is expected to be as high as 170 bushels per acre
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4.00 4.25 4.50 4.75 5.00 5.25 5.50 5.75 6.00 6.25 6.50 6.75 7.00 7.25 7.50 7.75 8.00
Pric
e Re
ceiv
ed ($
/bu)
U.S. Corn and Milo Pricing
Corn Milo
Sources: USDA, National Agricultural Statistics Service, Quick Stats Database
U.S. Corn and Milo Pricing
Company Highlights
37
Strategically Located to Serve Large Addressable Markets
Aemetis plants are strategically located to cost effectively serve three large target markets: renewable fuels, food & feed and biochemicals.
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Platform Products Market Size Market Drivers Aemetis Strategic Advantage
California Biofuels Advanced Ethanol Renewable Jet and Diesel Fuel
California is a 1.3 billion gallon ethanol market U.S. jet fuel was a $66 billion market and diesel was a $189 billion market in 2012
Environmental Regulation
High gasoline prices Energy independence
and security Economic contribution
to rural communities
Located in CA, the largest advanced fuel mandate in the U.S.
Proximity to Stockton, CA deep water port for shipping cost advantage to import milo feedstock or export biofuels
Food & Feed Distillers Grain and Corn Oil
California WDG market is over $120 million with over one million dairy cows
Population growth Increased demand for
meat / milk from higher median global per capita income
Proximity to more than 200 dairies and feedlots in CA
Reduced shipping distance eliminates costs to dry DG
India Biofuels Biodiesel Global market
Diesel deregulation in India
Population growth Industrial expansion Foreign investment
India is a large producer of stearine and beef tallow, some of the lowest cost non-food feedstocks for renewable fuels
Biochemicals Refined Glycerin and Isoprene
$30 billion market Increased use of biochemicals in pharmaceuticals
Asia-Pacific represents largest and fastest growing regional market for glycerin worldwide
Favorable Supply and Demand Dynamics
Increasing consumption of advanced biofuels is mandated by the new renewable fuel standard (“RFS”) schedule in the Energy Independence and Security Act of 2007
Milo-based ethanol using milo, biogas and a Combined Heat & Power system was approved by the EPA as an advanced biofuel in December 2012 that contains 52% less carbon intensity than gasoline
Aemetis’ Keyes Plant achieved high volume production of milo-based ethanol in June 2013 and is the first corn ethanol plant to be approved by the EPA for the production of Advanced Biofuels and D5 RINs using milo, biogas and CHP
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1 1 1
2 2
3 3
4 4
4 4
11 13 14 15 17
18 21
22 24
26 28
30 33
36
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Billi
ons o
f Gal
lons
Biomass-based Diesel
Non-cellulosic Advanced
Cellulosic Advanced
Conventional Biofuels
Renewable Fuel Standard (by type, 2009 −22)
Existing U.S. Corn-Ethanol Production Capacity
1) On November 15, 2013, the EPA proposed a change to the 2014 Renewable Fuel Standard 2) Source: United States Environmental Protection Agency
Margin Improvement from Advanced Biofuel Production at Keyes Plant
Aemetis is the first converted corn ethanol plant that has received EPA approval to produce advanced biofuels (D5 RIN) using milo/ biogas/ Combined Heat & Power system In June 2013, Aemetis achieved high-volume production of lower-carbon ethanol using milo feedstock and a Combined Heat
& Power (CHP) system in an integrated process with traditional feedstock Further deployment of this technology is projected to drive significant margin improvement as a result of lower feedstock
cost and the increased value of D5 RINs
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Anticipated Gross Profit Expansion Corn Milo
Unit Economics - $/gal
Ethanol Sales Price $2.31 $2.31
Advanced Biofuel RIN/LCFS Value $0.00 $0.20
Co-Product Sales Price (WDG) $0.78 $0.78
Total revenue $3.09 $3.29
Cost of Inputs (1) $1.99 $1.81
Cost of Transformation (2) $0.42 $0.68
Gross Profit $0.68 $0.80
Gross Margin 22.0% 24.3%
$0.68
$0.20
$0.17 ($0.20 )
$0.80
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
Corn-Ethanol Gross Margin
RIN Value & LCFS
Corn/Milo Spread
Natural Gas/Biogas
Spread
Milo-Ethanol Gross Margin
Gro
ss P
rofit
(per
gal
lon)
Anticipated Gross Profit Bridge
1) Based on average discount of milo to corn of 10%. 2) Includes chemicals, enzymes, denaturant, natural gas, electricity and transportation.
Margin Improvement from Ending Diesel Subsidies in India
The Indian Government is reducing subsidies to the diesel market, increasing the price of diesel and biodiesel in India to world market prices Historically, the Indian government set the market price of diesel by providing diesel producers a subsidy that lowered the
domestic India price of diesel significantly, which was politically popular
The diesel subsidy excluded biodiesel, which left producers of biodiesel at a substantial disadvantage In January 2013, amid persistent budget deficits, the Indian government decided to let the free market set the price for diesel The subsidy is being phased out monthly until no diesel subsidy remains
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55.00
65.25 66.40 66.40
51.00
64.25
40.00
45.00
50.00
55.00
60.00
65.00
70.00
2013 Estimated Post-Deregulation
Price per litre (Rs)
Delhi Diesel Price World Diesel Price Biodiesel Price
India Domestic Diesel Prices
Estimated Biodiesel production cost
Source: Aemetis’ management estimates
Financial Overview
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Aemetis Historical Financial Performance
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1) Excludes debt extinguishment costs, intangibles amortization and share-based compensation.
Summary of Aemetis $36 million of Approved EB-5 Funding
Congress created the EB-5 program in 1990 to benefit the U.S. economy by attracting investments from qualified foreign investors
Aemetis is approved for up to $36 million of EB-5 financing by US Customs & Immigration Service (USCIS) Aemetis’ EB-5 Project company is compliant with EB-5 program job creation requirements
$1.5 million of funding has already been received by Aemetis from approved EB-5 investors Additional $5 million in escrow currently pending approval by U.S. authorities 50+ investor applications submitted for review at $500,000 per investor
Benefits of EB-5 Financing to Aemetis 4 year notes at 3% interest with no principal payments until maturity EB-5 investors may convert into common shares of Aemetis at $30.00 per share after 36 months
Aemetis Advantages to EB-5 Investors U.S. citizenship granted for minimum subscription amount of $549,000 ($500,000 to Aemetis and $49,000 admin fee) Investor funds can be immediately credited towards upwards of 1,300 direct and indirect jobs Fully Insured FDIC Escrow Account holds funds until I-526 approval Aemetis subsidiary in India (Universal Biofuels Pvt. Ltd.) with Indian executive management and staff facilitates
communications with India and China investors
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Advanced Renewable Fuels and Chemicals Produced by Conversion of Existing Biofuels Facilities
www.aemetis.com
