Pinnacle Renewable Holdings Inc. (TSX: PL) Investor Presentation, November 2018

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Hilary Hodges
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amended and restated preliminary prospectus

the securities described in this presentation

authorities in each of the provinces and

A copy of the , and any amendment, is required

an offer buy the securities until a receipt for

prospectus and any amendment for disclosure of

to the securities Investor Presentation,

1 Pinnacle Renewable Holdings Inc. (TSX: PL) A preliminary prospectus and an amended and restated preliminary prospectus containing important information relating to the securities described in this presentation has been filed with the securities regulatory authorities in each of the provinces and territories of Canada. A copy of the amended and restated preliminary prospectus, and any amendment, is required to be delivered with this presentation. The amended and restated preliminary prospectus is still subject to completion. There will not be any sale or any acceptance of an offer buy the securities until a receipt for the final prospectus has been issued. This presentation does not provide full disclosure of all material facts relating to the securities offered. Investors should read the amended and restated preliminary prospectus and the final prospectus and any amendment for disclosure of those facts, especially risk factors relating to the securities Investor Presentation, November 208 offered, before making an investment decision.

2 Disclaimer FORWARD-LOOKING INFORMATION This presentation may contain forward-looking information within the meaning of applicable securities laws in Canada. Forward-looking information may relate to Pinnacle s future financial outlook and anticipated events or results and may include information regarding its financial position, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company s expectations of future results, performance, achievements, prospects or opportunities or the markets in which it operates is forward-looking information. In some cases, forwardlooking information can be identified by the use of forward-looking terminology such as plans, targets, expects or does not expect, is expected, an opportunity exists, budget, scheduled, estimates, outlook, forecasts, projection, prospects, strategy, intends, anticipates, does not anticipate, believes, or variations of such words and phrases or state that certain actions, events or results may, could, would, might, will, will be taken, occur or be achieved. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management s expectations, estimates and projections regarding future events or circumstances. If any of the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those expressed in the forward-looking information. The Company has no obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors, including those described in Risk Factors which are described in the Company s Annual Information Form ( AIF ) filed on SEDAR on March 27, 208. We caution that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect our results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See Forward-looking Information and Risk Factors in the Company s AIF filed on SEDAR for a discussion of the uncertainties, risks and assumptions associated with these statements. NON-IFRS MEASURES This presentation makes reference to certain non-ifrs measures. These measures are not recognized measures under IFRS, and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non- IFRS measures including EBITDA, Adjusted EBITDA, Adjusted EBITDA per Metric Ton, Adjusted Gross Margin, Adjusted Gross Margin per Metric Ton, Adjusted Gross Margin Percentage and Free Cash Flow. These non-ifrs measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-ifrs measures in the evaluation of issuers. Our management also uses non-ifrs measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. As required by Canadian securities laws, we reconcile these non-ifrs measures to the most comparable IFRS measures in our Management Discussion & Analysis for the fiscal fourth quarter and year ended December 29, 207.

3 Capital Market Profile TSX: PL IPO issue price (Feb. 6, 208) $.25 Recent closing price (Nov. 22, 208) $ week high / low $7.00 / $0.50 Market Capitalization (Nov. 22, 208) ~ $420 million Quarterly Dividend $0.5 / share Yield (Nov. 22, 208) ~ 4.4% Ownership (millions of shares) Common Shares Owned ¹ ONCAP Entities 0.4 Other Shareholders.4 Public Shareholders 9.6 Basic Shares Outstanding 3.3 Stock Options.6 Fully Diluted Shares Outstanding 33.0 Analyst Coverage. As at September 28,

Our Company 3 rd largest industrial pellet producer in two strategic fibre baskets in a rapidly growing global market 8 production facilities, new facility near completion and a wholly-owned port

0 billion of contracted backlog under long-term contracts with large utilities Lowest quartile cost supplier Annual capacity of approximately 2,27,000 MTPA Westview Rail line Pellet Plant Expansion

4 Our Company 3 rd largest industrial pellet producer in two strategic fibre baskets in a rapidly growing global market 8 production facilities, new facility near completion and a wholly-owned port terminal in BC Canada / US Facility Network British Columbia Alberta $5.0 billion of contracted backlog under long-term contracts with large utilities Lowest quartile cost supplier Annual capacity of approximately 2,27,000 MTPA Westview Rail line Pellet Plant Expansion Facility Port Office Smithers Houston Prince George Burns Lake Meadowbank Entwistle Williams Lake Vancouver 2 Richmond Lavington Armstrong Management team that drives continuous improvements and maintains industry-leading safety Mississippi Alabama Aliceville Georgia. The Aliceville facility, Houston facility, Lavington facility, and Smithers facility are partiallyowned facilities. 2. Pinnacle does not own shipping terminals at Vancouver or Mobile ports. River (barge) Pellet Plant Port Mobile 2 3

5 Industry Growth The industrial wood pellet industry is experiencing an extended period of rapid demand growth Potential demand for pellets is expected to more than double from 206 to 202 European potential demand expected to be primary growth driver through 202; Asia forecast to drive potential demand growth beyond 202, largely driven by Japan By 2026, Hawkins Wright believes that global production capacity of pellets will need to continue to grow to meet expected potential demand Global Industrial Wood Pellet Demand (millions of MT per annum) A 204A 205A 206A 207A 208E 209E 2020E 202E 2026E Japan 22.5M MT Current Capacity Source: Hawkins Wright The Outlook for Wood Pellets, No. 7, Quarter Potential demand is significantly higher than current operating capacity 4

6 Update on Contracts YTD 208: Pinnacle has entered into six new long-term contracts in Japan and South Korea totaling $2.3 billion Current contracted backlog is $5.0 billion (as at Sept. 28, 208) / weighted average remaining term of > nine years Counterparty Annual Volume (MTPA) Start Year 70,000 Late , ,000 Late Fiscal , ,000 Early ,000 Late 2022 Strong progress in business development in Asia 5

7 Industry / Market Update Industrial wood pellets help countries and regions meet de-carbonization targets Frameworks and policies have been put in place to facilitate a shift to a cleaner energy mix Global Regulatory Frameworks U.K. Largest pellet market in the world Continued growth in next 5 years of ~3.2 million MT, driven by investment from EPH and MGT Power Japan Compelling feed-in-tariff ( 2 24 / kwh) In 208, five new dedicated biomass plants and three cofiring projects are due to come online Targeting 22% - 24% of national electric supply generated from renewable sources by 2030, with 3.7% to 4.6% from biomass (20 million MTPA in pellet equivalent terms) EU (excl. U.K.) Netherlands demand expected to increase to 3.5 million MT by 202 Continued growth from RWE, Uniper and ENGIE s investments in the Netherlands and Belgium where coal facilities are being converted to co-firing South Korea Anticipated growth of 3.8 million MT by 2022 and an additional 0.8 million MT by 2027 Renewable Portfolio Standard policy aims to increase of energy generated from renewable sources to 0% by Draft national energy strategy targeting an additional GW of biomass power capacity may be needed by 2030 Source: Hawkins Wright The Outlook for Wood Pellets, No. 7, Quarter Regulatory frameworks driving continued industrial pellet demand 6

5 x run-rate EBITDA¹ Capacity: 270,000 MTPA EBITDA per MT consistent with Pinnacle s BC assets at ~$36-44 per MT

8 Aliceville Facility Acquisition 70% 30% Purchase price of US$37. million for 70% interest Equates to acquisition price within Pinnacle s target range of x run-rate EBITDA¹ Capacity: 270,000 MTPA EBITDA per MT consistent with Pinnacle s BC assets at ~$36-44 per MT Platform asset positions Pinnacle for growth in U.S. Southeast, both with Westervelt and other potential fibre partners. Inclusive of capital spending program. Transaction accretive to FCF/share in 209 7

improvements Pellets are cost-effectively shipped by barge downriver to Mobile, where they are loaded directly onto cargo ships

9 Aliceville Facility Operational Update US$0 million capital spending program (US$7 million Pinnacle share) to improve safety, product quality and plant efficiencies Pinnacle team making strong progress on integration, asset configuration and process improvements Pellets are cost-effectively shipped by barge downriver to Mobile, where they are loaded directly onto cargo ships Barging costs are comparable to rail transport costs in western Canada Pinnacle s strategic entry into the key U.S. Southeast fibre basket 8

Western Canada Expansion Entwistle Production Facility Q3 208 production volumes / costs impacted by: Below standard quality of initial fibre supply now resolved Delay in storage silo

Facility 70% 30% Commenced initial pellet production in Q4 208 Simpler facility design and clean fibre supply will facilitate seamless commissioning process No storage silo required due

10 Western Canada Expansion Entwistle Production Facility Q3 208 production volumes / costs impacted by: Below standard quality of initial fibre supply now resolved Delay in storage silo completion now completed CN Rail failure to meet interim unit train service expectations now resolved Higher production volumes and lower costs expected for Q4 208 Smithers Production Facility 70% 30% Commenced initial pellet production in Q4 208 Simpler facility design and clean fibre supply will facilitate seamless commissioning process No storage silo required due to close proximity to Westport shipping terminal Run rate production of 25,000 MTPA expected in Q3 209 Initial production from Smithers and Aliceville facilities coming on stream in Q

11 Investment Highlights 0

12 Investment Highlights Leading Producer and Global Supplier of Bioenergy Products in a Rapidly Growing Global Market 2 Vertical Integration and Operational Efficiencies Result in an Attractive Cost Position 3 Long Term Contracted Revenue with Stable Free Cash Flow Characteristics 4 Proven Project Development Capabilities and Attractive Project Pipeline

13 Leading Producer and Global Supplier of Bioenergy Products in a Rapidly Growing Global Market Industry consolidating around three global suppliers with scale and capabilities required to service major global utilities Growth in potential demand expected to be driven by major utilities, concentrating procurement around global enterprise suppliers Nameplate Production Capacity of Global Industrial Wood Pellet Suppliers (000s of MT per annum) We are one of only three global enterprise suppliers in a fragmented market Global Enterprise Suppliers Enviva Graanul Pinnacle - 2,000 4,000 # of Facilities Major utilities demand reliable, long term supply from counterparties with established operational capabilities Captive Utility Suppliers Drax Biomass RWE (Georgia Biomass) 3 Trusted supplier to the global utility market Smaller Regional & Merchant Suppliers Source: Hawkins Wright The Outlook for Wood Pellets, No. 7, Quarter 3 208, publicly available disclosure. An Việt Phát FRAM Highland Pellet German Pellets Pacific Bioenergy Tanac SA 3 3 Denotes capacity under construction / financed One of three global enterprise suppliers 2

14 Strategically Located Production Facilities Strategically located production facilities Pellet Facility Expansion Facility Port Office Houston 2 Burns Lake 3 Meadowbank 4 Williams Lake 5 Lavington 6 Armstrong A Westview 7 Entwistle Alabama 9 B Fibreco 2 8 Smithers C Mobile, AL 2 Illustrative Cost to Transport One GJ Energy 00 km 9 Aliceville. Houston, Lavington, Aliceville and Smithers are partially owned facilities. 2. Pinnacle is not the owner of Fibreco or Mobile. Truck (Raw Fibre) $2.00 Rail (Pellets) $0.4 Sea (Pellets) $0.0 Integrated network and scale create significant barriers to entry and position Pinnacle as a lowest quartile cost supplier to Europe and Asia 3

15 Scaling our platform Geographic diversification of our asset base provides enhanced flexibility to cost-effectively allocate supply to our customers in both Europe and Asia 4

16 2 Vertical Integration and Operational Efficiencies Result in an Attractive Cost Position Lowest-quartile cost supplier to rapidly growing markets in both Europe and Asia Substantial wood fibre basket and operating flexibility Strategically located production facilities Terminal operations Operational efficiencies EUROPE Supply Cost Curve to CIF ARA (Q3 208; US$ / tonne) JAPAN Supply Cost Curve to CIF Tokyo Bay (Q3 208; US$ / tonne) YTD Average Cost: $ YTD Average Cost: $ ,000 8,000 2,000 Cumulative Global Industrial Wood Pellet Supply, Thousand MT per Annum (80% Operating Rate) Cost advantage in supplying global markets 0 0 4,000 8,000 2,000 6,000 Cumulative Global Industrial Wood Pellet Supply, Thousand MT per Annum (80% Operating Rate) Source: Hawkins Wright. Represents the short run marginal cost curve to each specified location, excluding capex recovery. ARA represents Amsterdam-Rotterdam-Antwerp area, a generic term for the area encompassing the three ports in the Netherlands and Belgium. 2 Our costs have been converted to USD at an exchange rate of.32 CAD/USD. No other foreign exchange adjustments have been made to the supply curves. 5

17 3 Long Term Contracted Revenue Highly contracted revenue and backlog momentum 06% of production capacity is contracted through 202 and nearly 98% through to 2026 (on an aggregated basis) $5 billion contracted backlog represents an increase of ~67% from the end of Fiscal 207 Pinnacle continues to advance contract negotiations with additional counterparties focused on long-term supply Contracted Production Profile 2% 24% 23% 23% 23% 08% 05% 0% 2% 99% 94% 93% 88% 83% 208E 209E 2020E 202E 2022E 2023E 2024E 2025E 2026E Contracted Production Contracts Subject to Extension Option A total of $2.7 billion was added to the contracted backlog during YTD 208 6

18 4 Proven Project Development Capabilities and Attractive Project Pipeline Ramping up Production Final Development Commissioned Entwistle, AB Key Project Facts Capital Costs $92 million (4.4 to 4.8x Run-Rate EBITDA) Run-Rate EBITDA $9 to $2 million Status Smithers, BC Production commenced in Q 208 Full run-rate production expected in Q2 209 Capital Costs $22 million (4.2 to 5.x Run-Rate EBITDA) Run-Rate EBITDA Status Approximately $4.5 to $5.0 million (our share) Production commencement expected in Q4 208 Aliceville, AL (United States) Acquisition / US$44 million (4.0 to 5.5x Run-Rate Capital Costs EBITDA) Run-Rate EBITDA Status Anticipated to be in line with Pinnacle s other production facilities Ramping up production Optimizing asset configuration, distribution logistics and fibre supply Acquisition of 70% stake closed on October 5, 208 Note: Run-Rate EBITDA is the incremental annual earnings, before depreciation and amortization, finance expense and provision for income taxes that the Company expects to generate from the project. Represents Pinnacle s proportionate share of overall spending. For Smithers, $22 million is the midpoint of Pinnacle s share of the project cost estimate ($2-$23 million). 2 Includes wholly-owned, partially-owned and in-development facilities (please refer to the Annual Information Form dated March 2, 208 for detail).,373 Historical & Forecast Tons Sold (000s MT) 2,020-2,070 2,27 Strong track record of successful project development E Annual Capacity 2 Facility Aliceville Smithers Year Operation Commenced or Acquired Q4 8 Q4 8 Entwistle Q 8 Lavington 205 Westview 203 Burns Lake 20 Meadowbank 2008 Armstrong 2007 Houston 2006 Williams Lake

19 Financial Review & Outlook 8

20 Q3 208 Financial Review (In $000s) Q3 208 (3 weeks) Q3 207 (3 weeks) Variance Revenue 87,606 82, % Adjusted Gross Margin 7,925 9,373 (7.5%) Adjusted EBITDA 4,454 6,772 (3.8%) Free Cash Flow 4,957 2,942 (6.7%) Cash from operations¹ 4,2 5,460 (8.%) Metric Tons sold 42, ,000 ~8.8% 4.7% same-facility production volume increase in Q3 208 Q3 208 results impacted by B.C. forest fires, rail disruptions and temporary commissioning issues at Entwistle Higher production volumes and lower costs at Entwistle anticipated for Q4 208, with initial production from Smithers and Aliceville facilities coming on stream. Before net change in non-cash operating working capital. Adjusted EBITDA forecast of $57-$60 million for Fiscal 208 9

21 % 35.00% 30.00% 25.00% 20.00% 5.00% 0.00% 5.00% 0.00% % 35.00% 30.00% 25.00% 20.00% 5.00% 0.00% 5.00% 0.00% Annual Financial Review Production (millions of MT per annum) Revenue (C$ millions) 995,37,320,357,24 $226 $266 $293 $244 $ YTD YTD Adjusted Gross Margin (C$ millions) Adjusted EBITDA (C$ millions) $66.9 $56. $ % $44.8 $ % 9.9% 22.9% $ % $ % $34. 5.% $ % 9.2% $ % YTD YTD Includes 00% of production from the Houston facility weeks ended September 28,

22 Growth Strategy 2

23 Identified Growth Projects Customer demand driving development funnel Qualifications Before a Capital Project is Undertaken Development Blueprint Development Funnel Securing long term sales agreements for our production output Project Identification and Initial Evaluation Selecting logistically advantageous locations Securing a sustainable long term supply of wood fibre Obtaining all permits and authorizations Strategic Fit Financial Attractiveness Capacity to Execute million MTPA Conceptual Design and Engineering Final Development and Construction 5 Utilizing proven engineering, design, construction, and commissioning program 395,000 MTPA Aliceville and Smithers 22

24 Future Growth Proven ability to exploit growth opportunities We have identified and intend to pursue several new production development opportunities in geographies such as Western Canada, Eastern Canada, U.S. Southeast, and the U.S. Pacific Northwest Strategic acquisition targets are assessed based on the quality of the asset, price and ability to integrate within our network of production facilities Satisfy end market demand Support fibre suppliers BC AB QC NL WA OR PEI NB NS Leverage development and operational expertise TX MS LA AL NC SC GA FL Enhance geographic, customer and wood fibre supply diversity Significant room to grow 23

25 US Southeast: Growth Opportunity Pinnacle s strategic entry into the key U.S. Southeast fibre basket 24

The US Southeast: Growth Opportunity Extensive sawmill development plans from major forestry companies (including Canadian firms) entering SE US basin Exceptional opportunity pipeline for Pinnacle to

26 The US Southeast: Growth Opportunity Extensive sawmill development plans from major forestry companies (including Canadian firms) entering SE US basin Exceptional opportunity pipeline for Pinnacle to partner with forestry companies Arkansas Mississippi Alabama Pinnacle s operating strategy of targeting long-term residual fibre supply agreements is attractive to new sawmills Louisiana Pinnacle s strategic entry into the key U.S. Southeast fibre basket 25

27 Appendix 26

28 Directors and Executive Officers Management Team Name Position Notable Prior Experience Rob McCurdy Chief Executive Officer, Director LafargeHolcim Ltd. Leroy Reitsma Chief Operating Officer, President and Director Canfor Corporation Andrea Johnston Chief Financial Officer Dassault Systèmes GEOVIA, Natural Resources Industry, NGRAIN, BC Hydro Scott Bax Senior Vice President, Operations Interfor Corporation Vaughan Bassett Senior Vice President, Sales & Logistics Sappi Trading, VP of the Wood Pellet Association of Canada Erin Strong Director of Human Resources Mark Anthony Group, Tolko Industries Ranj Sangra General Counsel & Corporate Secretary Ritchie Bros Auctioneers, CHC Helicopter Corporation Board of Directors Name Position Notable Prior Experience Gregory Baylin* Director, Chair of the Board Managing Director at ONCAP Pat Bell* Director, Vice Chair of the Board Former Minister of Forests for the Province of British Columbia; Director of Conifex Timber Inc. Rob McCurdy Director CEO of the Company Leroy Reitsma Director President and COO of the Company Michael Lay* Director Managing Partner of ONCAP Hugh MacDiarmid* Jane O Hagan* * Denotes independent board member Director Director Former President and CEO of Atomic Energy of Canada; Former President and CEO of Laidlaw Transit Inc.; Director of SeaCube Container Leasing Limited, Terrestrial Energy Inc. and BWXT Canada Inc. Former Chief Marketing Officer and EVP of Canadian Pacific Railway; Director of USD Partners GP LLC, the general partner of USD Partners LP based in Houston, Texas and Descartes Systems Group of Waterloo, Ontario 27

29 Pelletizing Process Sourcing & Logistics Raw fibre is delivered to the production facility, either from nearby sawmills, or directly from the forest block We strategically allocate raw fibre amongst our facilities, to optimize the wood fibre input mix across our network Grinding & Hammering Drying Pelletizing In order to achieve the industrial wood pellet quality standard, larger fibre particles must be reduced in size and filtered We target 95% fibre reduced to fewer than two millimetres, of which 65% is less than one millimeter For a pellet to achieve the optimal energy density and combustion rate, it needs to have a moisture content that is approximately 5% We achieve optimal moisture content by utilizing either bed drying or a rotary drum drying technology Pellets are created by taking the previously ground, hammered and dried fibre and putting it through a roll and die system The pelletizing machines form a pellet through a combination of temperature and pressure created as the fibre is forced through holes in the die Cooling & Screening Storage & Load to Rail Pellets are air-cooled in order to allow for the pellets to solidify and strengthen We use a vibrating screen to remove any fine material (particles less than 3 millimetres) We have developed, along with our logistical partners, loading systems to maintain the pellet quality Gentle pellet loading, storage and transport systems are essential to minimize the amount of dust or fine material generated during the handling operations 28

Pinnacle Renewable Energy Inc. (TSX: PL) Investor Presentation, February 2019

Pinnacle Renewable Energy Inc. (TSX: PL) A preliminary prospectus and an amended and restated preliminary prospectus containing important information relating to the securities described in this presentation