Chairmans Letter from AGM

I know a few people were interested in being able to read the Chairman's letter from the AGM. I asked for it and have been given permission to post a copy below.

When one considers the status of Steven White, his experience in valuing and establishing funding for power projects, his reputation in North America then it really makes you take a step back and think we may actually be on to something here.

This raise was done at levels way below what any of us would want to see. However credit to the company, they gave shareholders the chance to protect their position rather than just hand a dilutive raise over to untrustworthy sophs and aussie brokers. And by underwriting the whole thing, one could take confidence in taking up rights. I understand that not only did our CEO underwrite $300K of the raise, but he was also quite determined that he be allowed to take his rights up as well (I presume he needed Board approval as he is not an Australian/NZ citizen). That really does underline just how confident Ross is that KPO is about to be transformed into a power project owner. And with the regulations only getting more and more favourable....now Alberta wants to pay us 12% of our CCS CAPEX to add to the 50% Ottawa are already offering, why wouldn't he be confident. Its like they are paying us to build our own highly profitable units generating electricity into super high power prices!

Now we have the funding in place to see us through to securing finance for our projects, one feels the tide might finally be turning on our little company. For once we look to be in the right place at the right time. What a lucky break to be able to take an investment now compared to when we all loaded up....

STEVEN WHITE AGM SPEECH:

I am pleased to extend a warm welcome to all those participating through our online meeting platform.

Before we start the formal part of the meeting, I would like to provide a brief update on recent progress to our commercial mission to deliver innovative and sustainable energy solutions that are fundamental to the Green Energy Transition to a Net-Zero Economy.

In recent years Alberta and Canada commenced implementing the most wholesale regulatory changes I have seen in my 30 plus years in the energy infrastructure business. These changes had significant impacts on our project development.

Our 64MW Saddle Hills combined cycle power project was designed with the KALiNA Cycle, in the context of utilizing the available Distributed Generation credits which had been in place for over forty years and provided a substantial portion of project revenues. When these were removed it was a significant surprise to everyone.

More significantly, broader legislation was then introduced to implement a net zero economy that includes the staged establishment of extremely high carbon tax rates for carbon emitters as well as potentially requiring the enforced closure of carbon emitting projects by 2035.

Our team of power professionals has utilised the experience gained in developing over 9GW’s of power project to amend and refashion our strategic direction and project development efforts so that Kalina could take advantage of these profound changes in the regulatory and commercial environment.

At Saddle Hills we had completed permitting to construct & operate as a combined cycle facility utilising KALiNA Cycle® modules. We decided to re-model the project in Simple Cycle Peaker mode to take advantage of high prices available for conventional energy during periods of peak demand. We anticipate that, in line with the very recent draft regulations, there is the potential to now profitably operate multiple intermittent gas ‘Peakers’ at Saddle Hills and elsewhere in Alberta. We will consider adding the KALiNA Cycle and possibly carbon capture & sequestration at Saddle Hills as legislative and commercial circumstances warrant.

Over the past two years we also commenced an important program to develop gas-fired Combined Cycle Power project integrated with Carbon Capture and Sequestration. We are now developing a multi billion $ platform of Power-CCS Projects that will produce over 600 MW of near-zero emissions power. The projects use standardized design and execution plans across several secured sites with excellent access to gas and electrical interconnections. These projects will play a critical role in achieving the net zero goals of the provincial electricity grid and providing near-zero emissions baseload generation.

KALiNA has engaged PricewaterhouseCoopers Corporate Finance Inc. (“PwC CF”) to advise on the funding of our Alberta project development program and subsequent long-term funding mechanisms for the debt and equity of its projects.

As a board we are enthused by the level of engagement our process has attracted for both our Saddle Hills and Power-CCS projects. A considerable number of strategic and financial investors continue to conduct active diligence on the assets. Discussions around potential tolling agreements, EPC contracting and financial participation in the projects are ongoing. However, the progress has been slower than anticipated hence our immediate need to implement our $2 million rights offering to maintain momentum.

In our view, the slower than anticipated progress was in part caused by marketing during the quiet months of the Northern Summer and also due to the uncertain regulatory environment punctuated with the new draft legislation tabled in August. As everyone has had a chance to better understand the impacts of the pending legislation, we have seen a notable increase in third party engagement and interest levels have never been higher and are very encouraging.

I believe that as a company we are on the right strategic path. We are at the forefront of this pathway to net zero emissions electricity. As the final fiscal and regulatory details are finalized in Canada and Alberta, we will be a leader and I believe that will drive significant value for us all as shareholders.

We look forward to continuing this engagement in the coming weeks and months and to reporting back to shareholders on our progress.