WISCONSIN FREIGHT RAIL DAY 2013 OCTOBER 9 TH MADISON, WI Capitalizing on a “Once in a Lifetime Opportunity” Richard J. Shearer President & CEO Superior Silica Sands

THE EVOLUTION OF WELL STIMULATION HORIZONTAL VERSUS VERTICAL DRILLING Hydraulic fracturing and horizontal drilling has driven “Hockey stick” propant demand 85% of proppants are natural sand

U.S. BECOMES ENERGY SELF SUFFICIENT 89% of needs currently being met Global shift in energy “power players” Manufacturing returns to North America Lower energy costs North America is an environmentally enhanced continent Conversion to natural gas is reducing our carbon emissions 45% per energy unit versus coal

LOCATION OF BEST FRAC SAND  The Cambrian quartz sandstone deposits (marked in red on the attached map) found in Wisconsin are a scarce resource  The Cambrian deposits in Wisconsin are unique in that the sand:  Is of unusually high quality  Can be mined in a manner that is cost efficient and environmentally friendly WHERE THE BEST FRAC SAND IS (RED) Source: Where-the-best-sand-is – Brown Presentation

 St. Peter’s  Jordan  Wonewoc  To date, no high quality frac sand deposits found on the globe better than Wisconsin and Eastern Minnesota INDUSTRIAL SAND GEOLOGY

NORTH AMERICAN SHALE DEVELOPMENT

THE WISCONSIN PROPPANT MARKET HAS CHANGED Barriers to entry continue to increase Limited high quality frac sand reserves (Wisconsin) Fewer deposits near rail service NIMBY Permits – regulations – ordinances and moratoriums Industry Consolidation The leading frac sand suppliers get stronger Logistics “arms race” continues We are actually in the logistics business as much as sand

THE WISCONSIN PROPPANT MARKET HAS CHANGED Frac sand supply growth slows as demand catches up 31MM TPY demand in 2013; current capacity = 52MM TPY Projections show proppant supply demand in – balance by 2018 Demand will escalate if natural gas prices get above $5/ MMBTU High quality natural frac sand from USA could be in global demand Current geology suggests that USA (Wisconsin) has superior frac sand Unconventional drilling is lagging the USA but beginning to develop Argentina, China, Mexico, Australia, South Africa, and Eastern Europe all show strong proppant demand potential

THE SUCCESSFUL WISCONSIN FRAC SAND BUSINESS MODEL Must have high quality sand deposits Must have various efficient shipping options (rail, truck, barge, etc) Must have an infrastructure and organizational “culture” in place to exceed customer expectations Provide full service to the well-head: servicing the “last mile” Must be as expert in logistics as in industrial sand Must be flexible and nimble Must form strategic partnerships; customers, railroads, etc

US PROPPANT DEMAND: ANNUAL GROWTH * * The Freedonia Group, Inc 2006 – – 2016 Total Proppants Demand 28.2%10.5% Sand Proppants32.8%11.2% Ceramic Proppants21.9%9.1% Other Proppants34.1%11.3%

FRAC SAND ECONOMIC IMPACT IN WISCONSIN SSS IS INVESTED IN WISCONSIN  Two “best in class” frac sand operations New Auburn, WI: Progressive Rail (WN)/ Union Pacific Clinton, WI: CN Railroad  SSS Wisconsin frac sand capacity = 3.8MM TPY  $100MM capital invested in both operations  Post opening capital improvements = $2MM Onsite storage track for 800 railcars ($6.5MM)  215 employees in the Badger state; all local hires  SSS annual operating budget of $70MM Local economic impact = $420MM/ year

SSS PARTNERED RAIL LINES Canadian National Union Pacific

SSS NEW AUBURN, WI 1.4MM TPY CAPACITY UNIT TRAIN CAPABLE

SSS CLINTON, WI 2.4MM TPY CAPACITY UNIT TRAIN CAPABLE

WHAT IT ALL MEANS TO YOU …. THE RAILROADS  Shipping more sand to numerous new destinations  More railcars in the system  Unit train shipments more common  Managing bottlenecks and turnaround times becomes more crucial  With freight prices not dropping, service is king  Storage and Transload sites are over populated in some locales  Railroad Partnerships

CONCLUSIONS  The Frac Sand Boom is a “Once in a Lifetime” event.  Wisconsin is the proppant Global Epicenter  Efficiency and cost Effectiveness in shipping this important proppant is critical  Rail is a major focal point to complete market success  Any successful frac sand producer is actually in the Logistics Business!