June 2018 Update from CEO Jay Johnson

CONDITIONAL USE PERMIT 

The project received the CUP on February 28, 2018. The CUP application included a complete environmental CEQA review.The project has agreed to comply with the 47 conditions and mitigation measures described in the permit. An appeal was filed by a resident who lives across the highway from the landfill and industrial park. The basis of the appeal has already been addressed in the extensive studies done in conjunction with the permit application. The appeal is scheduled to go before the Board of Supervisors on July 10. We need all biomass project supporters to be there to show their support for the project. The original goal of the project has not changed. Use the sale of electricity to pay for the cost to maintain fuel breaks and forest thinning operations to protect our communities from wildfires.

PG&E ELECTRICAL INTERCONNECT AND POWER SALES AGREEMENT 

PG&E has completed the System Impact Study. The project has agreed to pay $1.3M to $1.7M to connect to the grid. The project is now in the process of entering the BioMat queue in advance of receiving a Power Purchase Agreement. PG&E has tried to cancel the BioMat program by appealing to the Public Utilities Commission. The PUC has rejected PG&E's appeal and ordered PG&E to issue Power Purchase Agreements.

AIR PERMIT 

The air permit application has been submitted to the county. Since all air quality issues were addressed under CEQA, we do not expect any issues with receiving the permit.

FUEL CONTRACTS Cortus Energy has hired Phoenix Energy to secure the fuel contracts necessary to secure financing.

FINANCING 

The California Energy Commission has approved funding of the $5M EPIC grant for the project. Cortus Energy has secured approximately $3M in equity funding. Phoenix Energy is tasked with securing the balance of financing in the form of loans.

INVESTMENT DECISION 

The final decision to go forward with the project will not be made until the all the financing is in place and Cortus Energy's full scale project in Sweden has achieved commercial operation. The project in Sweden is in the early stages of startup and commissioning with commercial operation expected in September. SCHEDULE Cortus Energy estimates the plant will be operational approximately 15 months after the investment decision. This puts the operational date for our project in the forth quarter 2019 at the earliest.