SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): June 2, 2017
Synthesis Energy Systems, Inc.
(Exact name of registrant as specified in its charter)
Three Riverway, Suite 300
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CRF 240.133-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
In accordance with General Instruction B.2. of Form 8-K, the information presented under Item 7.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
|Item 7.01||Regulation FD Disclosure|
The Company has prepared an updated investor presentation regarding Australian Future Energy Pty Ltd., a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K. In addition, the Company has updated its general investor presentation, a copy of which is furnished as Exhibit 99.2 to this Current Report on Form 8-K. Copies of the presentations are also available on the Company’s website as www.synthesisenergy.com.
|Item 9.01||Financial Statements and Exhibits|
*99.1 Corporate presentation regarding AFE – June 2017.
*99.2 General corporate presentation – June 2017.
* Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|Synthesis Energy Systems, Inc.|
|Dated: June 2, 2017||/s/ DeLome Fair|
|President and Chief Executive Officer|
* Furnished herewith.
Synthesis Energy Systems, Inc. Clean - Economic - Sustainable Global Energy AUSTRALIAN FUTURE ENERGY OVERVIEW – MAY 2017
SES Forward - looking Statements 2 This presentation includes “forward - looking statements” within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . All statements other than statements of historical fact are forward - looking statements . Forward - looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected . Among those risks, trends and uncertainties are our ability to successfully raise additional capital to continue as a going concern ; the ability of Batchfire and AFE management to successfully grow and develop their Australian assets and operations, including Callide and Pentland ; the ability of our project with Yima to produce earnings and pay dividends ; our ability to develop and expand business of the TSEC joint venture in the joint venture territory ; our ability to develop our power business unit and our other business verticals, including DRI steel, through our marketing arrangement with Midrex Technologies, and renewables ; our ability to successfully develop the SES licensing business ; the ability of the ZZ Joint Venture to retire existing facilities and equipment and build another SGT facility ; the economic conditions of countries where we are operating ; events or circumstances which result in an impairment of our assets ; our ability to reduce operating costs ; our ability to make distributions and repatriate earnings from our Chinese operations ; our ability to successfully commercialize our technology at a larger scale and higher pressures ; commodity prices, including in particular natural gas, crude oil, methanol and power ; the availability and terms of financing ; our customers’ and/or our ability to obtain the necessary approvals and permits for future projects ; our ability to estimate the sufficiency of existing capital resources ; the sufficiency of internal controls and procedures ; and our results of operations in countries outside of the U . S . , where we are continuing to pursue and develop projects . Although SES believes that in making such forward - looking statements our expectations are based upon reasonable assumptions, such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected by us . SES cannot assure you that the assumptions upon which these statements are based will prove to have been correct .
Australian Future Energy (AFE) Overview 3 • $US 1B + resource ownership & clean energy project opportunity. • Differentiated by unique lower emissions from SES syngas production technology. • Large pipeline (circa $US 10B) projects under evaluation today and down - selecting two initial projects for advancement. • SES technology enables low cost production from lower cost lower rank coals and biomass. • Increasing NGCC power generation & LNG export commitments creating gas shortages & increasing prices on domestic supply. • AFE developing agrichemicals and synthetic natural gas businesses for local and Asian export markets. • AFE developing coal and biomass resource businesses for direct local and export market sales. • AFE projects to be environmentally “class leading” with low carbon dioxide syngas production.
AFE Background • Australian Future Energy Pty Ltd (AFE) was formed in November 2014 by Edek Choros and Synthesis Energy Systems Inc. (SES) • Edek Choros is a coal mining veteran with over 25 years of successful professional experience in coal mining and mine development in Australia and the USA. • SES is a NASDAQ listed, global energy and technology company, owning proprietary technology for producing valuable synthesis gas from coal and renewable resources. • SES technology offers unique benefits which allows for low cost syngas from conversion of high ash coals (~20% to 50% ash) as well as in combination with renewable resources such as biomass. • SES technology has been installed in 5 projects in China consisting of 12 SES syngas systems and two of which SES developed and owns equity interest.
SES Ownership Structure – Australia April 2017 5 Choros SES, Inc AFE Directors and Others AFE Pty Ltd Great Northern Energy Pty Ltd SPV Batchfire Resources Callide Coal Operation Pentland, 270MM ton resource Other Batchfire Shareholders Others 88.6% SES 11.4% SES ~40% Future AFE Project Companies SPV SPV Choros ~45% Other ~15%
AFE Strategy AFE is building a large - scale vertically integrated business in Australia based on developing, building and owning equity interests in financially attractive and environmentally responsible projects that produce agrichemicals and energy products from local coal and renewable resources and acquiring ownership positions in local coal and biomass resources for its projects and for selling into local and export markets . 6
AFE Business Model • Exclusive rights in Australia to SES unique syngas generation technology through which AFE receives shared licensed fee income with SES. • Securing investment into financially attractive projects and delivering financial results through its equity ownership in the projects developed by AFE. • Generating income from AFE ownership in coal and biomass resource businesses which sell these resources to both local and export markets. • Securing long term, coal and/or biomass supply agreements to provide low cost secure feedstock supply for its projects. • Together with SES, advancing the low - carbon coal conversion capability of SES technology via blended coal/biomass resource utilization and licensing this capability to other parties in Australia. 7
AFE Business Model Diagram Mining and coal processing operations Coal resources Export thermal coal Syngas Production & Purification Synthetic Natural Gas (SNG) Low Emission Power Fertilizer Urea By - products: Ash (Cement) Steam, Sulphur Coal Biomass Pelletizing Biomass resources Export Biomass Methanol Hydrogen 8
AFE Progress Report Date Milestone 2013 AFE Concept Initiated by Edek Choros and Robert Rigdon (SES) 2013 Market test confirmation (Kevin’s Corner, Callide) Dec 2014 MOU for AFE Formation and Master Technology Agreement June 2015 AFE Shareholding and Master Technology Agreements 2015 Secured exclusive right to acquire Callide Mine from Anglo Coal Jan 2016 Spin - off of Batchfire Resources (BFR) for Callide Acquisition Feb 2016 Secured MOU for 50 year supply of unmarketable coal from Callide Oct 2016 Successfully led BFR to complete Callide acquisition. Mar 2017 Created Great Northern Energy and acquire 270MM JORC resource near Pentland May 2017 Completed transferable Project License and Services Agreement with SES for first AFE project
Australia Market Outlook NG & LNG 10 • LNG Exports of ~28 MM tonnes of LNG in 2015; likely over 40 million tonnes in 2016 and forecast of 64 million tonnes in 2017 and over 70 million tonnes in 2018. • Further, decommissioning of coal fired power plants shifting more demand to NG. • Increase of A$4 - 6/GJ to approximately A$8 - 10/GJ poses dramatic impact on both major industrial users (e.g. fertilizers, alumina refineries) and there are prospects for some plant closures. • B ase - load power generation will face a significant increase in the short run marginal cost to around $32/MWh for a $4/GJ wholesale gas price increase. • AFE has opportunity to produce SNG in Queensland locations for the domestic gas market. • While a long term price forecast post - 2022 is difficult to provide, AFE believes it is reasonable to assume a real price ex - plant of A$8.00/GJ (2017). Source: Oakley Greenwood, “Gas Price Trends Report”, Feb 2016
Australia Market Outlook Urea 11 • Import replacement & export market opportunities for AFE • Urea most commonly made from NG. • Local Urea demand is ~ 2Mt pa & local manufacturer is Incitec Pivot (IPL) via Brisbane plant producing around 0.3Mt (NG based). • Fertilizer consumption in South Asia has been increasing at a fast pace. It is the second largest fertilizer consuming region in the world. Its share in world consumption of nitrogen is 19.8%. Nitrogen, is expected to grow at 1.7% pa during 2014 to 2018. • AFE will supply the domestic market based on delinking cost from NG plus freight advantage over importing urea from overseas. • AFE will also supply export market in Asia with AFE projects at/near existing port facilities. • Market price AFE assuming USD$260/tonne for projects 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (1) Australian Urea Consumption, kt Imports Consumption Source: (1) FAOSTAT and FAO report, “World Fertilizer Trends and Outlook to 2018”: Year 2014 2015 2016 2017 2018 Nitrogen (N) 113.15 115.1 116.51 117.95 119.42 (1) World demand for fertilizer nutrients, 2014 - 2018, Mt
Fertilizer (Urea) plus SNG Project Overview 12 Urea/SNG & By - Products Coal Power O&M plus Other Urea 88% SNG 10% By - Products 2% Preliminary Assumptions ($ AUD) • Total Installed Cost ~A$2.5B • Products: Urea 1.6MM MT/a; SNG 10.5 PJ/a • Coal rate: ~2.3MM MT/a • NPV (10%) ~ A$2B; IRR + 15% (ungeared) • Urea ~A$350/MT; SNG A$8/GJ; Coal ~A$35/MT 1GJ = .9478MMBTU Note: Preliminary indicative profile for Urea + SNG project. Pre - Tax Margin Source: AFE Internal Data
AFE Project Pipeline ~US$10B Under Evaluation • P1 Agrichemicals Urea and By - Product SNG • P2 Agrichemicals Urea and By - Product SNG • P3 Agrichemicals Urea and By - Product SNG • P1 Synthesis Gas for Aluminum Manufacturing • P2 Synthesis Gas for Aluminum Manufacturing • Great Northern Energy - Pentland Resource • Biomass Pelletizing • Coal to SNG - Asia • SNG Based Power Generation Locations: Primarily Queensland East Coast but also South Australia and New South Wales 13
Initial Advice Statement to QLD Initial offtake commitments PDP and FEED (10 months) Start Permitting Process Definitive Agreements EPC Contract Project 2 Project Funding – Const. Start Plan Overview & Key Milestones IM Prep and initiate fund raise $20MM Initial Advice Statement to QLD Initial offtake commitments Secure sites Close funding Set up Project Cos 2 SPV PDP and FEED (10 months) Start Permitting Process Definitive Agreements EPC Contract Project 1 Project Funding – Const. Start 14 18 to 24 Months Not to scale
AFE Organization Top Line AFE Board of Directors Stephen Lonie – Chairman Robert Rigdon (SES) - Deputy Chairman Edek Choros – AFE Executive Director Richard Barker – Director Industry Experienced Professionals • Australian and International Project Development • Clean Energy and Coal Industry • Large Scale EPC • Financing and Debt structuring • Environmental Modeling & Project Permitting • Technology Application and Design Edek Choros Executive Director & CEO Ron Higson COO Kerry Parker CFO SES Technical Team Francis Lau - CTO SES Technologies Jim Devine External Affairs Luke Gracias Environment Pat Larkin Chief Eng.
16 An AFE Success Story • Created by AFE and spun - out in 2016 • Acquired Callide Coal Mine • Open pit thermal coal mine and associated processing infrastructure • Produced 7.6 million tonnes (Mt) of coal in 2014 • Two adjacent power stations under long term contracts. • Local and export market sales • Adjusting mine operation for lower strip ratio coal • Lowering production costs and increasing profitability • Potential for expansion • SES 11.4% shareholder with meaningful dividend potential
AFE Directors’ profiles Edek Choros – Executive Director • Geologist with over 25 years of professional experience in coal exploration, mine design, mine planning and management of “tu rn around” operations for a number of coal mines in Australia and the USA • Founder, CEO and MD of Millennium Coal Pty Ltd – company founded in 1999, and which developed a very successful hard coking coal mine in Bowen Basin in Queensland, which in 2004 was sold to Excel Coal Ltd • Founder, CEO and MD of Ambre Energy Ltd – company founded in 2005 and currently owns and operates two large coal mines in the US A and is developing the Millennium Bulk Terminal at Longview on the USA west coast to export coal to Asia • Founder of Australian Future Energy Pty Ltd – company formed in 2014 to develop large scale coal gasification projects convertin g waste coal to urea and SNG • Founder of Batchfire Resources Pty Ltd (spin - out of AFE) company formed in 2015 to acquire the Callide mine from Anglo American . Stephen Lonie - Chairman • Chartered Accountant having over 30 years with KPMG in Australia where he Queensland Managing Partner and was responsible for Queensland management consulting and corporate finance practices • Currently on several boards of public and private companies in Queensland, was the former chairman of an ASX listed company, for mer Chairman of CS Energy and formerly Deputy Chairman of Ambre Fuels (a CTL company) • Has a great understanding of the Coal To Liquid (CTL) industry and has a very strong personal interest to see the CTL industr y d eveloped in Australia 17
AFE Directors’ profiles Richard Barker – Independent Director • 25+ years of investment banking and corporate finance, including mergers and acquisitions, valuations and general corporate g uid ance • Strong and broad contact network • Former Managing Director and co - head of the metals & mining investment group for RBC Capital Markets • Former CEO of a publicly traded company, with a strong understanding of ASX listed company issues • Significant investment banking experience Robert Rigdon – Director and Deputy Chairman AFE • Former CEO of SES and current Vice Chairman • Former leader in GE’s gasification business including manager of gasification engineering, director of IGCC commercializatio n, director of gasification industrials and chemicals • 23 years at Texaco (ChevronTexaco) in worldwide power & gasification group as project development leader, engineering manager , p roject director and vice - president gasification technology. Specialist in chemical plant operations, reliability engineering and gas tu rbine, steam turbine, compressor design, application and operations. • BS Mech engineering, Lamar University; Beaumont, Texas 1981 18
Synthesis Energy Systems, Inc. Clean - Economic - Sustainable Global Energy June 2017 Growth With Blue Skies
SES Forward - looking Statements This presentation includes “forward - looking statements” within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . All statements other than statements of historical fact are forward - looking statements . Forward - looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected . Among those risks, trends and uncertainties are our ability to successfully raise additional capital to continue as a going concern ; the ability of Batchfire and AFE management to successfully grow and develop their Australian assets and operations, including Callide and Pentland ; the ability of our project with Yima to produce earnings and pay dividends ; our ability to develop and expand business of the TSEC joint venture in the joint venture territory ; our ability to develop our power business unit and our other business verticals, including DRI steel, through our marketing arrangement with Midrex Technologies, and renewables ; our ability to successfully develop the SES licensing business ; the ability of the ZZ Joint Venture to retire existing facilities and equipment and build another SGT facility ; the economic conditions of countries where we are operating ; events or circumstances which result in an impairment of our assets ; our ability to reduce operating costs ; our ability to make distributions and repatriate earnings from our Chinese operations ; our ability to successfully commercialize our technology at a larger scale and higher pressures ; commodity prices, including in particular natural gas, crude oil, methanol and power ; the availability and terms of financing ; our customers’ and/or our ability to obtain the necessary approvals and permits for future projects ; our ability to estimate the sufficiency of existing capital resources ; the sufficiency of internal controls and procedures ; and our results of operations in countries outside of the U . S . , where we are continuing to pursue and develop projects . Although SES believes that in making such forward - looking statements our expectations are based upon reasonable assumptions, such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected by us . SES cannot assure you that the assumptions upon which these statements are based will prove to have been correct . 2
SES: Investment Opportunity Summary Superior and proven technology • 30 years of R&D development • 5 commercial facilities built with 12 gasification systems • Replaces expensive natural gas • Opportunity to capitalize on ten years of investment Current Assets • Batchfire Resources ~11% • Australian Future Energy (AFE) ~40% • Yima JV Plant 25% • Tianwo - SES Clean Energy Technologies Co. JV 35% Robust global pipeline of opportunities • Technology & Licensing • Equity Platforms – First project license signed, AFE Guided by industry leaders • Fortune 100 engineering & business backgrounds – management and BOD ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Tomorrow’s Global Clean Energy Opportunity Today 3 NASDAQ: SYMX As of June 1, 2017 Market Cap $60.3 MM Shares Outstanding 87.3 MM Public Float 47.6 MM % Officers and Directors 4.3% % Held by Institutions 23.7%
CO 2 Low Grade Coal Biomass Syngas Processing Syngas (CO+ H 2 ) SULFUR Ash iGAS Power Low Value Feedstock SES Gasification Processing $3 - 6 per MMBTU Cost of Syngas (1) High Value End Products MSW Industrial Fuels Chemicals & Fertilizers SNG DRI for Steel Production Diesel & Naphtha 4 H2 for Cleaner Fuels SES Gasification Technology (SGT) • High efficiency conversion to syngas (CO & H 2 ) • Syngas can be converted to multiple useful products alternatively made from natural gas • Economic alternative to expensive natural gas • Clean use of coal – greener solution ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Superior Economics, Environmentally Responsible, Proven Proprietary Technology Notes: (1) SES economics based on internal data, (2) Assumptions on Slide 15 Coal Power, Chemicals & Other Labor & Maint . Sulfur Sales Capital Recovery (~25% IRR) ( 2)
• Proven commercial technology » ~$ 200MM R&D: Gas Technology Institute (GTI) » ~$ 200MM Commercialization & Investment: SES » >$300MM Investment and Debt: Chinese Partners & Customers • Twelve commercial - scale gasification systems built over the past 10 years • Technology license for first AFE project signed May 2017 • Over 50 Coals, biomass, and wastes successfully converted to syngas, including feedstocks from US, Europe, China and Australia • Technology performance validated at commercial scale Tons/day Low Pressure Coal (<5 bar) Mid Pressure Coal (5 - 15 bar) High Pressure Coal (15 - 55 bar) Biomass SGT: The Road to Commercialization U - GAS® SGT 5 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved R&D Early Commercialization Final Commercialization 2015 - 16 SES - Tianwo Chalco Seven SGT systems for fuel gas (China)
Best Performance Moderate Performance Worst Performance SGT is the Superior Gasification Technology Slag Non-slag Dry Feed Slurry Feed Cost Factors Capital Cost Low Capital Cost Operating Cost Lowest Operating Cost Performance Factors Carbon Conversion Best in class Cold Gas Efficiency Best in class Feedstock Properties Low Quality, Fine Coal & Lignite Unmatched range for Biomass, MSW, Other Wastes 2 coal and renewable feeds Environmental Factors Relative Environmental Impact Low water usage, no tars / oils Commercialized Gasification Technology Comparison 1 SES Gasification Technology (SGT) Fluid Bed Moving & Fixed Bed Entrained Flow Notes: 1) Analyses based on SES internal results and publicly available information for other technologies 2) For Biomass & Waste contents > 50% of total feed 6
SGT: Greener Solution Minimal air pollutants (coal reaction vs burning) • SO x , No x and Particulate Matter near natural gas levels • Lower cost of electricity than natural gas in many parts of the world Reduced water consumption • >30% less water consumption than coal burning technologies • Lower water consumption than competing gasification technologies Transition technology – simple modifications • Add in Biomass or MSW to reduce carbon footprint • Modify to capture carbon when carbon utilization technologies are ready Setting a New Paradigm for Responsible Coal 7 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Affordable Power Generation with Minimal Air Pollutants Reduced Water Consumption Transition Technology – easily modified to reduce and capture carbon in the future
8 Project Year Gasifier Systems Product Syngas Capacity (nm3/hr) Pressure Cost SES Role Zao Zhuang 2008 - 2014 2 Methanol 20,000 3 Bar $40MM (1) 100% Equity, Technology & Equipment Yima 2012 - present 3 Methanol 90,000 10 Bar $250MM (1) 25% Equity, Technology & Equipment Chalco Shandong 2015 - present 2 Fuel 80,000 3 Bar $30MM (2) Technology & Equipment (3) Chalco Shanxi 2016 - present 1 Fuel 28,000 3 Bar $15MM (2) Technology & Equipment (3) Chalco Henan 2016 - present 4 Fuel 120,000 3 Bar $60MM (2) Technology & Equipment (3) SES Project History (1) Total plant cost – including syngas processing (2) Estimated cost based on turnkey contract value – actual costs unknown (3) Technology and equipment provided through SES’s Tianwo - SES Joint Venture ©2017 Synthesis Energy Systems, Inc., All Rights Reserved
Operating Structure Licensing Proprietary Equipment Sales Technology Engineering & Services O&M for SES Projects SES Technologies SES Capital Development Packaged Products SES Asset Management Financing & Capital Management Project Investment Holdings Project Development & EPCM • SGT Licensing & Equipment Sales • SGT Process Design • SGT Equipment Design • Packaging Design & Manufacturing • Facilities Operations • Acquisition Due Diligence • Project Development • Project Management • Acquisition Funding • Project Development & Equity Funding • Equity Management • Debt Financing Management Existing Emerging Future Capital - Lite, High Margin Business Royalties, Engineering Fees, Equipment & Product Sales Specialized Services Operating, & Management Fees Capital Intensive, High Cash Flow Potential Energy Project Income, IPO, MLP/ Distribution, Levered Equity, and project disposition 9 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved
Success Story: Australian Future Energy Partnership established 2014, SES Ownership Position: ~40% Differentiated by SES syngas production technology • Unique lower emissions • Low - cost production from lower cost, lower rank coals and biomass $10 billion pipeline of projects under evaluation • Technology Licensing and Equipment Supply – SES • Equity Participation – AFE AFE development goals: • Multi project agrichemicals and synthetic natural gas businesses for local and Asian export markets • Coal and biomass resource businesses for direct local and export market sales • Projects to be environmentally “class leading” with low carbon dioxide syngas production Local management: deeply experienced group of Australian coal and financing industry executives Note: (1) The JORC Code is the Australasian Code, overseen by the global Committee for Mineral Reserves International Reporting Standards (CRIRSCO) Project Coal Resource: • Great Northern Energy Pty Ltd • AFE’s wholly owned subsidiary • Acquired 270 million ton JORC (1) compliant coal resource lease near Pentland , Queensland, Q2 2017 10 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Resource Ownership & Clean Energy Project Platform
Several project opportunities identified, totaling approximately $10 billion in installed costs (1) • Multiple locations, multiple end products • Technology and equipment, and equity ownership for long - term recurring revenues AFE currently down - selecting two initial projects for advancement Signed SES Technology License for first project, May 2017 • First project will be ~$2 billion total installed cost, expected to generate ~$ 150 million top - line revenue for SES from technology and equipment related sales • Additional dividend income via SES’s direct or indirect ownership share in project which can generate annual project level revenues of ~$600 million (2) • Attractive margins, due to low production cost basis of SES technology • AFE expected to carry project forward into development, design and construction, pending necessary government approvals and funding 2nd AFE Technology License and equipment order expected late 2017 or 2018 • Combined, initial two AFE projects, when signed, represent potential to generate ~$300 million in orders for technology licensing and equipment related sales alone Initial Markets: • Agrichemicals - Urea • Substitute Natural Gas (SNG) • Synthesis Gas 11 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Notes: (1) Identified projects vary somewhat in project capacity and in end products, (2) AFE internal calculations February 2017, based upon currently proposed product slate and current commodity pricing AFE: Initial Two Clean Energy Projects Multiple Large - scale Project Opportunities in Australia
Assets: • Yima JV Plant – Henan Province » 25% SES, 75% Yima Coal Industry Group – Joint Venture » 330,000 metric tons per year production capacity » 3 SGT Systems, 10 bar operation » Plant is currently operational • China Regional JV: Tianwo - SES Clean Energy Technologies Co. » Sino - Foreign JV: SES 35%, Suzhou THVOW Technology Co., Ltd 65% – a leading Chinese process equipment manufacturer » First customer: Aluminum Corporation of China – 3 industrial fuel supply plants with 7 total SGT systems » Territory includes China and five Asian Regions Project Development Opportunities Under Evaluation: • Dongying City industrial park pipeline hydrogen projects to supply local refineries for cleaner transportation fuels, with China Environment State Investment Co., Ltd. • 160MW iGAS syngas - to - power distributed power plant, using local coal feedstock, with state - owned Dengfeng Power Group Co., Ltd. • Silk Road global alliance with China Coal Research Institute, a subsidiary of China Coal Technology and Engineering Group Corp. • Restructured Zao Zhuang (ZZ) Joint Venture project with Weijiao Group – evaluating new ZZ syngas facility in Zhouwu Industrial Park in Shandong Province 12 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved New China Focus Follows 10 Years of Technology Deployment Success at Commercial Scale Goal of self - funding and generating positive cash flow from assets and future opportunities Note: Yima JV plant pictured
13 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved SES’s iGAS Packaged Product For Electricity Production Large global demand for power > 900 GW required for China & India to reach EU electric power per capita standard (1 ) iGAS product features: • Standard configurations (40,80,160,+ MW) • Clean power , meeting World Bank standards • Highly deployable , distributed power scale • Attractive economics • SGT license , proprietary equipment , and Engineering, Procurement, Construction Management (EPCM) • Industry - leading g as t urbines General Electric LM2500 Solar Turbines Titan 130 Notes: (1 ) Source: International Energy Agency Statistics, (2) Capital costs estimated for projects in China and Pakistan, costs may vary based on specific locations and sites Typical Project Economics 80MW 160MW Coal Price ($/MMBTU) $1.50 $1.50 Capex ($/kw) (2) $2,150 $1,980 COE ($/kWh, RMB/kWh) (with 12% CAPEX recovery) 0.057, 0.35 0.054, 0.33 Standard Configurations 40MW 80MW 160MW Pressure (barg) 35 - 50 40 - 50 40 - 50 No. Operating SGT Gasifiers 1 2 4 No. Gas Turbines 2 (ST Titan 130) 2 (GE LM2500) 4 (GE LM2500) No. Steam Turbines 1 1 1
Emerging Global Business Projects in discussion/bidding/early development: • Substitute Natural Gas (SNG) • Fertilizer • Electric Power ( iGAS and Repowering) • Industrial Syngas • Methanol SES Projects & Opportunities • SGT projects provide: » Topline revenue for technology and licensing, and equipment supply » Platforms bring additional equity participation that can provide long - term recurring annual income • Strong pipeline with multiple global projects, total i nstalled c ost totaling >$20B • First technology license for initial project in platform outside of China signed May 2017 • Levered estimated Rate of Return on individual projects: ~20 - 30 % ( 1) • Creating clean energy business platforms for key markets with abundant low rank coal and limited access to affordable natural gas » Currently evaluating potential future platform opportunities in the Caribbean, South America and India 14 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Robust Pipeline of Clean Energy Opportunities Note: (1 ) Based on SES internal models Platform Development Projects in Active Discussions Existing Platform
SES Value Creation Potential – Examples 15 • ~$75 - $100 MM order value (top line revenue) (1)(2) • Order (contribution) margins of 20 - 30% • Revenue stream flows to SES during 24+ month development, construction and startup cycle (3) Technology & Equipment Single Example Project – Clean Syngas Island $500MM Assuming 3 Example Projects / Year Technology & Equipment + Equity Participation ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Assumptions: Total Plant Investment ~$500MM, 25% levered return Coal Cost - $30/ton, $1.50/MMBTU Syngas Sale Price - $5/MMBTU Debt/Equity – 60/40 Interest Rate and Term: 10%, 10 years Depreciation – 20 years, Tax Rate – 25% Construction Period – 2 years from financial closure Operating Life – 20 years SES Value Technology & Equipment Equity Participation = + Notes: (1) Assumes project not in Tianwo - SES JV territory (2) SES order value is dependent upon site location and end product slate. Example project is assuming clean syngas island in Southeast Asia (3) Cash payments for license fee, engineering fee, and equ ipm ent supply are expected during this period and will be defined by contract. Revenue recognition will occur according to SES revenue reco gni tion policy
16 SES Pipeline Projects Notes: (1) List of active projects in current SES pipeline, it is not expected that all projects will follow through to compl eti on, but it is also anticipated that new projects will be identified that are not known at this time. Project names are not included to protect confidential information, (2) Capital costs are preliminary estimates by either SES or by the customers, (3) SES equity participation is shown in areas where it is highly likely (platforms), SES equity participation is possible on ne arly all projects if desired, (4) Technology and Equipment for projects in China will be provided through SES’S JV (Tianwo - SES) of which SES owns 35% ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Location (1) Product Estimated Cape x (2) SES Expected Scope (3) Total Plant (MMUSD) South America SNG $1,500 Technology & Equipment Australia Urea, SNG $2,000 Technology & Equipment + Equity Participation Australia Urea, SNG $2,000 Technology & Equipment + Equity Participation Australia Urea, SNG $2,000 Technology & Equipment + Equity Participation Asia SNG $2,500 Technology & Equipment + Equity Participation Australia Fuel Gas $2,000 Technology & Equipment + Equity Participation Australia Fuel Gas $2,000 Technology & Equipment + Equity Participation Caribbean SNG $1,800 Technology & Equipment + EPCM Caribbean Fuel Gas $1,700 Technology & Equipment + EPCM India Fuel Gas $310 Technology & Equipment India Ammonia $592 Technology & Equipment Southeast Asia Fuel Gas $37 Technology & Equipment Poland Chemicals $200 Technology & Equipment + Equity Participation Poland Fuel Gas $2,000 Technology & Equipment North America Power $200 Technology & Equipment South Africa SNG $1,900 Technology & Equipment South America Methanol $500 Technology & Equipment + Equity Participation South America Methanol $100 Technology & Equipment + Equity Participation South America Power $400 Technology & Equipment China (4) Multiple Projects $2,000 Technology & Equipment
Batchfire Resources: An AFE Success Story Australian company created by AFE and spun - out in 2016 Acquired Callide Coal Mine, Central Queensland, October 2016 • Open pit thermal coal mine and associated processing infrastructure • Mature and significantly sized coal producer: » ~230 million tonnes (Mt) of recoverable reserves (1) » ~850 Mt of resources (1) • Produced 7.6 Mt of coal in 2014 • Two adjacent power stations under long - term contracts • Local and export market sales • Adjusting mine operation for lower strip ratio coal • Lowering production costs and increasing profitability • Potential for expansion SES ~11% shareholder with meaningful dividend potential 17 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Note: (1) Information provided by Batchfire Resources
Why Synthesis Energy Systems Now 18 • Superior and proven technology » 5 Projects built, with 12 SGT Systems; >$700MM total invested over 40 years (1) » Fully commercialized clean energy solution • Positioned to grow globally » AFE is SES’s first successful resource ownership and clean energy multi project platform, a strong and repeatable model, with technology license and equipment orders, and expected ownership participation in projects » SES’s business development strategy has opened up into commercially viable international markets: Eastern Europe, South America, India and the Caribbean • SES near - term performance drivers » Flawless execution on AFE projects; first license signed, second license forthcoming » AFE currently planning to develop two equity projects – each with a potential to bring equity ownership to SES » Continued advancement of key global SES pipeline project opportunities in multiple countries » Continued development of additional emerging opportunities in regional platforms • Guided by industry leaders » Fortune 100 engineering & business backgrounds – management and BOD ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Superior Economics, Environmentally Responsible, Proven Technology Notes: (1) ~ $200MM SES; ~$ 200MM GTI R&D; >$ 3 00MM Chinese partner and customer investments, (2) SES projections based on current opportunity status
Appendix • Leadership Bios • Vertical Markets • SGT China JV Plants • Licensed SGT Projects • World Coal Reserves 19
SES Leadership: Management DeLome Fair, President and Chief Executive Officer • Appointed SES’s chief executive in February 2016. Joined the SES executive team as SVP, Gasification Technology in December 2014. 25 years’ gasification and IGCC technology expertise in energy and petrochemical industries Francis Lau, Senior Vice President and Chief Technology Officer • 36 - year tenure at the Gas Technology Institute, with six years serving as GTI’s Executive Director of Gasification and Gas Processing Center Chris Raczkowski, President – Asia • 25 - year clean energy technology executive experience, managing investment, deployment, commercialization and operations in China and Southeast Asia David Hiscocks , Corporate Controller • 23 - year accounting and finance experience, including extensive worldwide tenure with Transocean and its prior merged companies. Texas CPA Wade A. Taber, Vice President of Engineering • 19 - year gasification engineering career, with most recent 9 - year tenure as GE’s Senior Engineering Manager – Components/Technology Innovation Dr. John Winter, Chief Engineer • 30+ year career in petrochemical industry career includes 15+ gasification technology research, engineering design, technical services, and plant operations Donald Huang, SES China Managing Director • One of the original SES team members in China, with extensive GM and project development experience including gov’t approvals and financing Khee Yoong Lee, Director of Commercial Development for China • 10+ year career in project development related to the power, energy, and chemical industries 20 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved
SES Leadership: Board of Directors Lorenzo Lamadrid , Chairman • Ten - year tenure as Chairman of SES. Since 2001, Managing Director of Globe Development Group Robert W. Rigdon , Vice Chairman • Served as President and CEO from 2009 until February 2016, with an eight - year tenure with SES Harry Rubin, Director • Broad executive and financial management background, with a particular focus on acquisitions and divestitures Denis Slavich, Director • 35+ year career in large scale power generation development, with cross border transaction expertise Ziwang Xu, Director • Financial and investment banking executive, manages CXC China Sustainable Growth Fund Charles M. Brown, Director • Led 20 different operating businesses and more than two dozen factories around the world DeLome Fair, Director • SES’s President and CEO. One of the world’s leading experts in clean energy gasification technology commercialization and IGCC power generation technology 21 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved
SGT: Well - positioned for Large Energy Markets 22 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Advanced Technology Cleanly, Economically, and Sustainably Answers Demand, Brings Energy Independence Note: (1) GE press release reference to GE’s “The Rise of Distributed Power” White Paper, Feb 2014 • Power SGT: SES’s reliable and efficient iGAS power for affordable clean power for the developing world. Fast - growing distributed power capacity additions projected to outpace electricity demand by 40% in developing regions. (1) Positive project economics when power > $60 per megawatt - hour. • Industrial Fuels: Syngas SGT: economically advantaged clean coal natural gas replacement markets include industry, aluminum , and ceramics. • Industrial Fuels: H2 SGT: high - purity pipeline hydrogen (H2) for cleaner transportation fuels. Replaces costlier and more time - intensive H2 derived from methanol - cracking. • Substitute Natural Gas SGT: clean syngas for conversion into pipeline natural gas, with superior environmental performance and lower cost for substitute natural gas (SNG). • DRI for Steel Production SGT: advancing developments with global partner Midrex Technologies, Inc., a subsidiary of Kobe Steel Limited, for coal gasification - based Direct Reduced Iron (DRI) facilities which will combine SGT with the MXCOL™ DRI technology. • Agrichemicals SGT : ammonia for nitrogen fertilizer and ammonium nitrate product are required to produce large quantities of ammonia for agricultural fertilizers, critical to improved and sustainable food sources. SGT is the perfect fit to produce th ese and myriad additional chemical building blocks. • Transportation Fuels SGT: Clean syngas conversion of local energy sources such as coal and biomass into gasoline and diesel products for regions where crude oil is expensive or scarce, or refining capacities cannot keep up with demand. Total available market for all verticals is estimated by SES at over 10,000 Yima - sized gasification systems worldwide
SGT China JV Plants 23 Yima JV – 3 SGT Systems ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Yima JV Plant – Henan Province • 25% SES, 75% Yima Coal Industry Group – Joint Venture • Higher pressure, 10 bar operation • 377,000 metric tons per year (MPTY) nameplate methanol design capacity – at full production rates, 365 days per year • Mature plant expected to be capable of producing ~330,000 MPTY – includes planned and forced outages based on customary Chinese operating practices for coal - to - chemical plants ZZ Demonstration Plant – Shandong Province • Commercial proof - of - concept SGT demonstration plant and feedstock test facility • 90K TPY design capacity • Syngas/coke oven gas to methanol operating plant • Proven successful operation on waste coals with ash content > 55% WT • Operation commenced in 2008; the gasification plant ceased operations in 2014 ZZ Demonstration Plant – 2 SGT Systems
Licensed SGT Projects • Aluminum Corporation of China (CHALCO): • China’s largest alumina and primary aluminum producer and the world’s second largest alumina producer • SGT economically advantaged clean coal NG replacement projects • 3 industrial fuel supply plants • Secured by China JV Tianwo - SES partner, Suzhou THVOW Technology Co., Ltd. 24 Chalco Shandong – 2 SGT Systems Chalco Shanxi – 1 SGT System Commissioning 4/2016 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved Chalco Henan – 4 SGT Systems
USA Total: 237.3 Bituminous & Anthracite: 108.5 Sub - bituminous & Lignite: 128.8 Africa Total: 31.8 Bit & Anthracite: 31.6 Sub - bituminous & Lignite: 0.2 India Total: 60.6 Bit & Anthracite (high ash): 56.1 Sub - bituminous & Lignite: 4.5 Australia Total: 76.4 Bit & Anthracite: 37.1 Sub - bituminous & Lignite: 39.3 Russia Total: 157.0 Bituminous & Anthracite: 49.1 Sub - bituminous & Lignite: 107.9 China Total: 114.5 Bit & Anthracite: 62.2 Sub - bit & Lignite: 52.3 Vietnam Total: 1.2 Bit & Anthracite: 1.2 Turkey Total: 8.7 Bit & Anthracite: 0.3 Sub - bit & Lignite: 8.4 Pakistan Total: 2.1 Sub - bit & Lignite: 2.1 Indonesia Total: 28.0 Sub - bit & Lignite: 28.0 Brazil Total: 6.6 Bituminous & Anthracite: 0.0 Sub - bituminous & Lignite: 6.6 World Coal Reserves Total: 891.5 Billion Tonnes Bituminous & Anthracite: 403.2 Sub - bituminous & Lignite: 488.3 World Coal Reserves Billion Tonnes • More than 50% of recoverable global coal resources are untapped sub - bituminous and close - to - surface lignite (brown) coal • Renewable biomass and municipal wastes are alternative SGT feedstocks Source: BP Statistical Review of World Energy June 2016 25 ©2017 Synthesis Energy Systems, Inc., All Rights Reserved
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