Interview with: Donald F. Mardak, Chairman, President and CEO - featuring: their wind energy development in the Haida Energy Field off the coast of British Columbia.

NaiKun Wind Development Inc. (NKW-TSX-V)

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With Strong Demand and Public Support for Clean and Green Energy

The Timing is Right for NaiKun Wind Energy Group’s Offshore Wind Farm

Wind Energy

NaiKun Wind Development Inc.

Suite 1705, 1066 West Hastings Street
Vancouver, BC V6E 3X1
Phone: 604-639-8460

Ray Castelli
President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
Published - January 25, 2008

Ray Castelli was previously a co-founder and Senior Vice President of Quadrem, a Dallas-based supply chain solutions business owned by 19 of the world's largest natural resource companies. Prior to joining Quadrem, Ray was Director of Corporate Development for Alcan Aluminum, the world's second largest aluminum company. This role involved evaluating acquisition and development projects around the world.  Ray joined Alcan in 1995 as Director of Corporate Affairs in Vancouver. His mandate included resolving an energy project-related dispute with the BC government, negotiating a 285 MW power purchase agreement and handling all corporate and community affairs in British Columbia. He was promoted to Montreal in 1997 as Director of Strategic Planning. Prior to Alcan, Ray spent six years in the federal government, serving as Deputy Chief of Staff to the Prime Minister, Chief of Staff to the Minister of Indian Affairs and Northern Development, Chief of Staff to the Minister of Justice and Executive Assistant to the Minister of Fisheries and Oceans. Ray was born and raised in Prince Rupert and worked in the fishing industry prior to moving to Vancouver.

Company Profile:
NaiKun Wind Development Inc. has been engaged in wind energy development in the Haida Energy Field off the coast of British Columbia since 2001. When fully operational, its five-phase 1,750 MW offshore wind farm will generate enough electricity to power 600,000 homes. Construction of Phase I is expected to begin in 2009. NaiKun Wind Development Inc. is a wholly owned subsidiary of NaiKun Wind Energy Group Inc. (NKW).

CEOCFO: Mr. Castelli, what is your vision for NaiKun Wind Development?
Mr. Castelli: “What we see with NaiKun is the potential to develop a very significant clean energy company utilizing offshore wind power on the north coast of British Columbia to sell into the western North American market.”

CEOCFO: Where are you in the development of the project?
Mr. Castelli: “Right now, we are focusing on developing the first phase (320 MW) of the NaiKun project in northwest British Columbia which will provide 120,000 households with electricity. The permit area that we have the rights for could enable us to build four additional projects for a total of 1750 megawatts of clean green energy. We think the timing is very good for this because there is a strong demand in the public for development of clean and green energy. In addition, British Columbia, as well as states like California and Washington and Oregon, have developed specific legislative requirements for energy that is sold in their jurisdictions to be increasingly cleaner over the next 15 years. We think that is going to create an incredible demand for products like those which will come from NaiKun.”

CEOCFO: What is involved getting the project off the ground?
Mr. Castelli: “The first thing you have to do is identify an area that has industrial wind energy potential. That is done by first looking at publicly available wind atlases, which is a combination of information that governments and environmental departments collect through weather balloons and wind monitoring stations. You would also consider the outlook from the scenario where it is traditionally high-speed winds and where they are located. You zero in on a particular area that you try to seek your permits for, meaning that we have the exclusive right to go over that area of ground to develop wind energy not unlike what you would do with a mining claim or if you optioned a piece of property for a real estate development. Then we go and do more detailed wind studies on site as well as look at the environmental impacts, the potential soil issues, foundation issues, construction and so on. That creates a picture for us of what it will cost to build the project, what it will cost to maintain the project and that in the context of what the local market is like. That would include the demand for that product, how far away the connection point is and ultimately what kind of price can you get for it at a reasonable return so that you can attract shareholders to help you finance it and determine whether you have a feasible project or not.”

CEOCFO: Are people willing to pay more for green energy?
Mr. Castelli: “They are. There are surveys and in many places, there are companies that have become secondary resellers of green energy at significant premiums to the normal electricity rate. Therefore, we think that this is going to become more and more prevalent and in fact in many jurisdictions they may not get a choice. This is because what local governments are doing is putting in place legislative requirements that of all the energy that is sold, an increasing percentage has to be green energy. The utilities that operate in the jurisdiction are then forced to go and find both sources of green energy and bring them in to increase that part of that mix.  In the future we believe some customers may be given a choice within certain jurisdictions, but the trend is very much toward growing into the overall mix and putting the onus on the utilities to develop or buy sources of green energy.”

CEOCFO: Are the various entities that you need approval from, such as government and environmental, in step with what you are doing and are there concerns that need to be addressed?
Mr. Castelli: “They are very much in step with what we are doing; we have got strong support from the local community. We are getting strong support from the First Nations in the area who claim constitutional rights over how resources get developed in their traditional territories. They are in fact shareholders in the company. Federal and provincial governments are very supportive and have put in place, in the last year, significant new policy initiatives. From the local utility and the transmission company, there is a very strong signal that they are interested in our project. They like the fundamentals and they recently announced a clean power call. We have told them that we intend to participate. We have very strong support across the board; that is not to say that there has not been local interest, and local fishing interest. We have a process through the environmental assessment act where we are doing studies and we are in discussions with them about their concerns to ensure that we can build the project without any detrimental effect.”

CEOCFO: What is the financial picture for NaiKun?
Mr. Castelli: “We have been working at this for four or five years. We started off being funded out of a small resource company that was listed on the Toronto Stock Exchange. We then did some financing a year ago, just a few million dollars in order to get the company up and running. With part of that, we ended up taking over the company that was funding us and went public on the Toronto Stock Exchange last fall as NaiKun Wind Energy Group Inc. We then did a second financing in the spring for another $4 million and then closed significantly larger financing a few months ago for $35 million. All totaled, we have about 40 to $45 million in cash and that is more than enough to fund our development and also give us some resources to be able to negotiate with key equipment suppliers in case we need to put deposits down to secure places in the production queue. In addition, we intend to use some of that money to fund our equity position in our construction projects.”

CEOCFO: Do you need to add more to your management team?
Mr. Castelli: “We are pretty much where we need to be on the management team. We just recently added a couple of new people to round out some areas where we thought we needed additional help. Overall, we have built a very strong team and it is augmented by an excellent consulting resources. I think for the future adding people should come after we secure an energy contract with the local utility.”

CEOCFO: In closing, why should potential investors be interested now and what should they know that they might not realize when they first look at the company?
Mr. Castelli: “The most important thing is we very much view NaiKun and our first project as the getting off the ground phase, of what could be a very large project entity. The area where our wind regime is, off the coast of northern British Columbia, is one of the best wind regimes in the world. Given the demand, we see in British Columbia and the United States on the west coast today and what is projected for those areas over the next twenty years, we think there is going to be a very strong demand for green power. In addition to that, because of all the climate change focus, public demand and the policies that are going to be put in place by various jurisdictions, it is going to additionally favor green energy and disfavor fossil fuels driven energy over the next five to fifteen years. Therefore, that is going to have a significant impact on price and demand. There is just not that much supply of this kind of green energy out there, so if all of this comes to pass we think we are going to be in very favorable market conditions for the next ten to twenty years, to develop not only the 1st phase projects but the second, third, fourth and fifth and potentially beyond.

At this point, an investor in NaiKun has an opportunity to get into the ground floor of which could become, if all this comes to pass, a very significant company. I think you can add to that the fact we’ve been able to assemble a very credible team: you can go look at our website. If you look at our management team and our board of directors, we have assembled a first class, world-class team of experienced energy executives. We have more than a hundred years of development experience on our management team. Our board has been augmented with ex-CEOs and current CEOs, from pretty significant energy companies. We have augmented that with consulting firms in Europe where a lot of the wind energy, offshore construction expertise, and design knowledge comes from. Therefore, we have been able to marry development experience, financial, development knowledge on the west coast of North America but also the wind industry experience into a team. The demand is there, the resource, we think the potential is huge and have put in place a team we think can actually deliver on that. The final point would be, if you look at the number if shares that we have outstanding at about 30 million shares, given the value of this could be someday; it is a small float and it is tightly held so that if this thing takes off, the upside for the investor is considerable.”


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“What we see with NaiKun is the potential to develop a very significant clean energy company utilizing offshore wind power on the north coast of British Columbia to sell into the western North American market.” - Ray Castelli does not purchase or make
recommendation on stocks based on the interviews published.