Brennan McArthurDan Wilson

Amanda JohnsonAndrew Larson

Company Overview

founded in 1998 Recycles drywall into gypsum soil

amendment and drilling mud additive 137,000 tonne gypsum drywall on site

Industry Overview

Gypsum is a naturally occurring rock 20% Calcium, 15% sulfur by weight

12% of new drywall wasted Growing environmental concern

Potential uses: New drywall processing Agricultural fertilizer Industrial absorbent Drilling mud additive Composting “Natural” lawn food

Goals and Objectives

To market and sell bulk quantities of gypsum with as little production prep as possible

To sell 82,000 metric tonne of gypsum within 10 years

To create and sell a well branded product To raise general awareness of benefits and

uses of gypsum

Operations

Organizational Structure

Site Plan

Floor Plans

Process Flow

DISC

TROMMEL SCREENER

1° PRODUCT

Waste

GASDRYER

HAMMER MILL

DOUBLE SCREEN

SCREENER

2º PRODUCTOVERHEAD

HOPPER

BAG

3 tonne/hour Take Moisture

Coarser product for farmers

Fine Product for Oil Industry

Capital Budget

Description Cost (Can $) SourceLand 0Cover All Storage (includes construction) $45,000 Cover all

Total $45,000

EquipmentTractor Case 2470 $8,000 Jeff Howsam (Oct. 4 2007)14Ft Breaking Disc $5,000 Jeff Howsam (Oct. 4 2007)Screener $40,000 Jeff Howsam (Oct. 4 2007)Machinery Gas Dryer

Hammer MillSmaller Screen

Movable Container Bagging MachinerySkid Wrapper

Total $100,000 Jeff Howsam (Oct. 4 2007)Truck (1990) $5,000 Jeff Howsam (Oct. 4 2007)Trailer $10,000 Jeff Howsam (Oct. 4 2007)

Loader Vovlo $30,000 Jeff Howsam (Oct. 4 2007)Small Bobcat JCB (forks and bucket) $30,000 Jeff Howsam (Oct. 4 2007)Fork Lifts Ford $5,000 Jeff Howsam (Oct. 4 2007)

Electric Indoor Use $10,000 Jeff Howsam (Oct. 4 2007)

H2S Gas Monitor $220 All gas

Equiptment Total $243,220

Office SuppliesComputer $1,209 Dell CanadaDesk, File Cabinet $2,000 Office DepotChair $200 Office DepotPrinter, fax copier $200 Office DepotPhone & Answering Machine $70 Office DepotReception Chairs $500 Office DepotMiscellaneous Equipment $2,500 Estimate

Office Total $6,679Working CapitalFuel $19,900 Co-op Miaintenence/Repairs $12,161 EstimateInsurance $2,000 Jeff HowsamBags $9,240 Bulldog BagsSkids $3,000 Wood PalletUtility Tarps 3 Quantity $75 Peavey MartSaftey Supplies $500 EstimatePlastic Wrap $2,112 Soap GoatOffice Supplies $2,500 Estimate

H2S Training (2) 175 each $350 Parkland Regional College

Building (lease rate) $12,250 Jeff Howsam (Oct. 4 2007)Waste Disposal 410 tonne (5% total) $18,450 City of Saskaoon

Total Expenses $82,537$377,436Total Capital Requirements

Cost of Goods Manufactured

Dircet MaterialsGypsum $0Bags $9,240Fuel $19,900Skids $3,000Plastic Wrap $2,112Maintenance $12,161Saftey Supplies $500Waste $18,450Miscellaneous $2,500

Total Direct Costs $67,863Direct LabourYard Manager $30,000Indirect Labour costs $2,856Total Labour and Benefits $32,856

Manufacuturing OverheadBuilding Rent and Bills $12,250Total Capital Cost Allowance $42,072Variable Overhead $2,425

Total Overhead $56,747Total Cost of Goods

Manufactured$157,466

Cost of Goods Sold

Beginning Inventory -$ Cost of Goods Produced 157,466$ Cost of Goods Available for Sale 157,466$ Ending Inventory 25,885$

Cost of Goods Sold 131,581$

Human Resources

Job Description

Three employees President

Oversees day to day operations Marketing and business decisions

Secretary Reception and administration

Yard Manager Manages yard duties Product preparation and equipment operation

Labour Requirements

Total Direct and Indirect Labour Source of Estimates obtained

President $37,500 25% of $150,000 annual wageYard Manager $30,000 50% of $60,000 annual wageSecretary $4,000 10% of $40,000 annual wage

Presendent $37,500 1.87% 4.53% 3.12% $3,570Secretary $4,000 1.87% 4.53% 3.12% $381Yard Manager $30,000 1.87% 4.53% 3.12% $2,856

Total Benefits $6,807$78,307

NSIG Salary

Total Wages and Benefits

Total Benefits

Employment Insurance

Canada Pension

Workers Compensation

Marketing

Marketing Mix

Product Agricultural soil amenity Drilling mud additive

Price $40/tonne- soil amenity (bulk) $160/tonne- drilling mud additive (bagged)

Place Farmers within Saskatchewan Oil and gas industries in Southern Saskatchewan and Eastern

Alberta Promotion

Trade shows in the ag and oil industries Advertisements in the Western Producer

The Market

Segmentation

Agriculture soil amenity Oil industry drilling mud additive Soil amenity for home and garden

Small scale Recycled into new drywall

Needs to be shipped to Alberta Grease absorption

Targeting and Positioning

Focus on Ag and Oil Sectors Most potential for bulk sales

Soil Amenity Sulfur fertilizer substitute Highly competitive market

Drilling Mud Additive Price takers Differentiated product

NSIG STRENGTHS WEAKNESSES Human Resources Strong leadership and

business experience from the president

Production and business familiarity between: president, yard manager, and secretary

Hierarchy of authority Good internal

understanding of gypsum Small number of

employees must manage and use time well

Workers have other duties during workday than gypsum.

Lack of direction in marketing product.

Secretary is in a separate building from main work area.

Little experience in the Gypsum Industry

Small number of employees little room for lost time

Physical Resources Processing equipment already established.

Located just off 51st with access to a rail-line.

Slow release form of sulphur

Large yard, with easy access to big trucks.

Cover-All building to hold an abundance of bulk product.

Shared building with other company

Can screen 40 tonne/hr, but only dry 3 tonne/hr.

Aging machinery and equipment

Lots of non-NSIG traffic in the yard due to shared spaces.

Distance to market

Financial Resources Owns machinery ($243,220) and land

Low labour requirement

Tough to secure loan since the product is worthless to others.

Ability to pay bills and wages if sales are slow

Opportunities Threats Markets Rising cost of synthetic

Fertilizer New idea-early market entrant in Saskatchewan Environmental shift in industry Long Term Data (works as well or better than expected)

Less practical, one more application step No customer awareness City Regulation on Industrial Waste Crop input regulation Lack of Long term Data Companies competing directly using other gypsum

Competition

Advantages Disadvantages

Northstar Innovative

Gypsum-Agriculture

- Affordable: $40/tonne - Slow solubility -One in five applicat ion - Environmentally friendly - Soil amendment - Source of Calcium - Recycled product - Waste products useable

- Extra application process - Extra product to handle - Blend requires extra processing - High applicat ion rates - Specialized equipment - Lower availability - No awareness - Not easily stored - Currently only one formulat ion

Sulphur Fertilizer

Manufacturers

- Ease of use - Oligopoly/Monopoly market - Readily available form of sulphur - Can be blended - Source of Nitrogen - Lower application rates - Regular equipment - Applicat ion flexibility

- Expensive: $300/tonne - Rising costs - Can be toxic to plants -Yearly practice

Northstar Innovative

Gypsum- Drilling

Mud

- Raises cation levels - Environmentally safe - Easy handling - Lubricant

- No awareness - Highly competit ive market - Distance to market - Limited market - H2S gas issues

Drilling Stabilizer

Products

- Proximity to market - Brand awareness - Low toxicity - Highly competit ive - Majority market share

- Limited market - Mud lagoons - Expensive

Marketing Budget

Marketing Budget

Booth for Agriculture Shows $5,000 Heydey CommunicationsBrochures for Agriculture Producers $5,000 Heydey CommunicationsHotels $345 115 3 Regina InnMeals $123 41 3 U of S Policy In prov.Mileage (Regina) $202 0.3875 520 Google maps, university policyOil and Gas Show Booth $5,000 Heydey CommunicationsBrochures to Oil Industry $5,000 Heydey CommunicationsHotels $172 86 2 Weyburn Travel LodgeHotels $210 105 2 Edmonton, Ab.(Ramada)Meals $123 41 3 Weyburn, U of S policyMileage (Weyburn) $294 0.3875 758 Google maps, university policy WeyburnMeals $153 51 3 U of S EdmontonMileage (Edmonton) $406 0.3875 1048 Google maps, U of S policy Out of ProvinceWages (Managers Time) $7,244 37500 0.1932 Time to Marketing at booths, ect. Western Producer (Banner) $400 7.70 52 Western ProducerTotal $29,672

ActivityDays, time or Distance(KM)

Cost ($) SourceTotal Cost

Financials

Equity Financing

Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Sales $400,000 $408,000 $416,160 $424,483 $432,973 $441,632 $450,465 $459,474 $468,664 $478,037COGS $131,581 $182,427 $170,608 $167,520 $168,279 $160,120 $162,067 $165,912 $160,606 $155,966Gross Margin $268,419 $225,573 $245,552 $256,963 $264,694 $281,512 $288,398 $293,563 $308,057 $322,071Expenses $67,879 $69,236 $70,621 $72,033 $73,474 $74,943 $76,442 $77,971 $79,531 $81,121Net Income Before Tax $200,540 $156,337 $174,931 $184,930 $191,220 $206,569 $211,956 $215,592 $228,527 $240,950

Income Tax $20,054 $15,634 $17,493 $18,493 $19,122 $20,657 $21,196 $21,559 $22,853 $24,095Net Income After Tax $180,486 $140,704 $157,438 $166,437 $172,098 $185,912 $190,760 $194,032 $205,674 $216,855Net Cash Flow to Equity $1,313 $201,223 $137,625 -$71,311 $80,953 $3,452 -$63,971 $77,420 $4,800 $4,581

40.0%

Net Present Value (NPV)Internal Rate of Return on Equity External Rate of Return on Equity

$486,70760.4%

Critical Variable Analysis

Critical Variables Base Case (IRR 60.4%) IRR =0 % Allowable % Change Bulk Sales 7600 tonnes 488 tonnes -94% Bagged Sales 600 tonnes (-1178) tonnes -296% Bulk Price $40 $16 -59% Bagged Price $160 (-139.33) -187% Labour (Yard Worker) $30,000 $192,058 540% Fuel $19,900 $347,117 1644% Lease Rate $12,250 $189,901 1450% All Bulk Sales 7600 tonnes 2890 tonnes No bagged Sales IRR = 28.9% ERR = 22 % NPV= $106,818

Debt and Equity Financing

-$20.00

-$10.00

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Years

Bu

lk P

ric

e

Economic B/E Cash Flow B/E

Net Income B/E Base Run

Scenario Analysis

Worst Case Scenerio Base Best Case ScenerioBulk Sales 5000 Tonnes 7600 Tonnes 10,200 TonnesBagged Sales 600 Tonnes 600 Tonnes 600 TonnesBulk Price $16.00 $40.00 $64Bagged Price $160.00 $160.00 $160NPV -$419,179 $486,707 $1,695,981IRR N/A 60.4% 169.2%ERR N/A 40.0% 83.3%

Questions???