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spk00: Good day, everyone, and thank you for standing by. Welcome to the Altius Renewable Royalties First Quarter of 2022 Financial Resource Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. And please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Ms. Laura Wood, Investor Relations. Thank you. You may begin.
spk07: Thank you, Delphine. Good morning, everyone, and welcome to our Q1 call. Our press release and filings were released yesterday after the close, along with the new investment announcement. And both of these are available on the website. This event is being webcast live, and you'll be able to access to replay the webcast. along with the presentation slides that are on the website at ARR.energy. Brian Dalton, CEO of ARR, and Frank Getman, CEO of Grace Bay Renewables, are both speakers on the call. And in the Q&A, we'll also have Ben Lewis, CFO of ARR, available for questions. The forward-looking statement on slide two applies to everything we say in our opening and during the Q&A. And with that, I'll turn over to Brian for his opening remarks.
spk03: Thank you, Flora. Thank you, operators. And thanks, everyone, for joining us today. As usual, I'll keep my remarks fairly brief before introducing Frank Kettman, the CEO of the GBR operating business. And he'll overview the quarterly performance and outlook for the sector generally and our investment opportunities more specifically. It was another positive quarter for ARR, and another key milestone was reached, that being the achievement of the first positive cash flow at the operating JV level, and the number of our producing royalties grew to six during the quarter. As the year progresses, we are expecting additional announcements regarding construction progress that will bring clear visibility and continuation of this growth trajectory. I can also attest that the GBR team was extremely busy during this quarter in developing new relationships and advancing a variety of royalty investment opportunities. These included for both operational-level assets as well as new developer relationships. Regarding the latter, we announced last night that we are providing royalty financing to the U.S. Development Division of newly formed Blue Star Energy. This investment shares similarities with our other prior investments in TGE and APEX, but also some differences that we think are appropriate to how the market has been evolving, and that also recognize the pedigree and track record of the Bluestar founders and teams, which ranks amongst the most successful in the sector over the past decade or so. Excuse me. Bluestar is a startup, and its initial project portfolio is actively in the process of being assembled. The list can be considered earlier stage in that regard than the prior developer financing structures. We did, however, gain sufficient comfort in our due diligence that the knowledge base and relationships of the team will easily translate into a sufficient number of projects and likely well beyond, fulfill our investment goals. Another difference is that our base return is not capped by the achievement of defined hurdle rates in this case. The number of defined megawatts we are due does provide our previously stated return thresholds based upon current price assumptions. However, to the extent that these vary, our returns will as well. We have been clear in our state of belief that renewable power prices have strong tailwinds related to both overall demand factors and also because of marginal cost pressures across the entire power generation complex. We therefore see more potential for base case upside with this investment than our prior developer deal and think it makes for a nice mix within the overall diversified portfolio. Final difference is that we added a small component of equity participation to the direct royalty financing. This obviously recognizes the increasing attractiveness of quality development pipelines within the overall renewable sector as more players seek to gain entry. We do know, for example, how lucrative equity participation in APEX would have been if we had added at the time of our royalty financing. We also really like, in this case, gaining exposure and visibility into the broader ambitions of Blue Star and see the corporate participation, including a board seat, as potentially leading to additional investment opportunities. potentially to expanding our royalty offering more internationally. With that, I'll turn things over to Frank for some remarks before opening things up for Q&A.
spk06: Great. Thank you, Brian. I guess first I'd just note that we continue to make great progress in building our company with continued revenue growth and first quarter positive cash flow at Great Bay and the exciting news on Blue Star and new investment opportunities. A few comments about the revenue growth and first quarter positive cash flow at Great Bay. I'd note that we achieved positive cash flow at Great Bay in Q1, which was well ahead of expectations we had at the time of our IPO 14 months ago. We now have six producing royalties, including first revenue from two of those projects in Q1, the Prosper F2 wind project owned by Long Road Energy and WVC Energy's Jayhawk wind project. Revenue from Jayhawk was nominal in Q1 due to the ramp up of operations after coming online in December 2021 and the timing of revenue recognition for ARR. This might be a good place for a quick note on revenue recognition. We recognize revenue when a project receives payment on its production, not when the project generates the megawatt hours and recognizes revenue at the project level. We don't recognize revenue until the project actually gets paid. creating a bit of a lag between generation and operations when we recognize revenue on any specific project. In summary, it was a solid quarter for our operating assets with slightly lower overall production being largely offset by higher merchant power prices. Revenue continues to grow and we expect that to continue over the coming months and quarters. We remain comfortable with the revenue guidance of four and a half to five and a half million for 2022. from our current operating royalties and we expect additional projects within our royalty portfolio to reach commercial operations later this year and further contribute to our revenue growth profile. We continue to see strong demand for renewables projects and we're hopeful to see additional project sales from TGE as the year progresses based upon this strong demand resulting in new additions to our royalty portfolio. I'd like to turn now to provide a few comments on the current state of the renewables market in the United States. There remains an insatiable demand for shovel-ready renewables projects. Virtually everyone in every industry is seeking to reduce their carbon footprint. Continued strong demand from commercial industrial buyers of renewable energy, the Amazon and Googles and Microsofts of the world, as everyone's striving to achieve their own ESG goals and mandates through corporate PPAs, or in some cases, direct investment in projects. And there's strong investor demand across the board. Yet despite the strong demand for renewables, the industry faces some serious headwinds. The two I would note are interconnection backlog in several regions of the country, particularly PJM and SPP. This is probably the single biggest issue facing the industry. It's really a two-prong issue, both with delays in processing applications, and secondly, the interconnection costs are coming in higher than anticipated in some cases. Then also supply chain constraints and physically getting access to solar panels and batteries, solar panels out of China being a particular issue. So the backdrop or the conclusion from the current state of the market is that for the foreseeable future, the global renewables market will be long dollars and short projects. The implications of this are affecting how we're thinking about how we deploy our capital. As I mentioned on the last quarter's call, we're deploying what I'm calling a barbell approach where we're looking to move to earlier stage development projects and then also operating projects where we're helping supplant project equity at the project level. Developers with large pipelines who previously needed capital to advance their pipeline are being pursued by larger strategic and institutional investors who are willing to pay top dollar to basically buy their pipeline at an early stage. Institutional strategic investors used to buy projects. Now they're looking more and more to buy entire pipelines of projects. This fairly recent change in the competitive landscape has made deals with developers with established and sizable pipelines, which is where we started, more difficult to source and less attractive for Great Bay. Last quarter, I shared with you that Great Bay's response would be to seek earlier stage partnerships with good developers who don't yet have a large pipeline and partner with them to help them build that pipeline of projects on which we would receive royalties. It's a similar concept to our TG and Apex deals in that we're looking at pre-production projects just a bit earlier. It's not too dissimilar to Brian's very successful project generation business. He's used it with Altius and Base Metals to essentially create their own royalties. We want to be part of the capital that goes into building out the project pipelines to help feed the beast, so to speak, and meet the incredible demand for new projects. A few comments about our newest deal with Blue Star Energy Capital and Nova Clean Energy. We're extremely to report that, you know, we announced this last night that we closed one of those earlier state partnerships in the barbell, a $32.5 million investment into what we believe can become the next great global renewables platform. The company is Blue Star Energy Capital, founded by Declan Flanagan. Declan is the former CEO of Orsted Onshore and Lincoln Clean Energy and one of the most highly recognized and successful leaders in renewables in the global energy transition. Renewables development is a people business and Declan has one of the best track records in the industry. He's building a great team and we're excited to be part of this exciting opportunity. A few comments about our investment. Our total investment commitment is $32.5 million. with the significant majority of that investment going into Nova Clean Energy, which is the North American renewables development subsidiary of Bluestar. Our investment is staged with our initial investment of $8 million. We'll invest capital as Nova scales its business over the next couple of years. Bluestar's North American renewables development activity will be conducted through Nova, and we will receive royalties on 1.5 gigawatts of renewable energy projects commercialized by Nova. as well as a minority equity ownership in NOVA that Brian mentioned. While NOVA may seek out opportunistic acquisitions of projects, which would accelerate the timeline, our base assumption is that the one and a half gigawatts will come from greenfield development, which will take several years to mature. The royalties we'll receive provide a solid base return on our investment into NOVA consistent with the return thresholds we've discussed previously. The equity ownership was important to us because we've seen firsthand that institutional and large strategic investors will pay top dollar for a quality project pipeline. It would have been terrific if we don't even had owned a small equity position in Apex given their transaction with Aries. Great Bay is also investing alongside another institutional investor for a minority equity stake in Blue Star. The identity of that institutional investor you know, at some point be disclosed when Declan believes that's appropriate. And we have some exposure to Blue Star's international activities because Declan is building up a global renewables platform. So in addition to the royalties and equity ownership we will receive on Blue Star's North American business through our investment in NOVA, Great Bay will have some exposure to international activities through its minority equity ownership in Bluestar. We've always said there's no reason that our royalty model wouldn't work in international markets, but that we would need the right partner to pursue any international investments. While there can be absolutely no promises, we're hopeful that this relationship with Bluestar will flourish and grow into potential opportunities for Great Bay to deploy royalty capital in international markets. To sum up, this is an incredibly exciting opportunity to get in on the ground floor to back a leader and team with a proven track record and be part of what we hope will become the next great global renewables platform. We're highly confident that we'll receive our one and a half gigawatts in royalties and believe our equity participation could have meaningful value. But I don't want to get ahead of ourselves. We're going to do what we always do, focus first on being a great partner and helping others to be successful and grow. That's how we'll get opportunities to deploy additional capital and grow our royalty business alongside them. We've obviously just closed the Blue Star deal, but we remain incredibly busy. We're confident we'll be able to continue to deploy capital throughout 2022 on both ends of the barbell, earlier stage developers and direct investment into operating projects. A few comments on the other end of the barbell, investing into operating projects. We still have a number of conversations underway and continue to believe that represents a significant investment opportunity, especially as projects lead more of the offtake subject to market prices. which reduces the amount of debt capacity they can put on the project and results in a larger project equity check. Great Bay's royalty financing is a terrific substitute that is accretive to the project owners for part of that larger equity check. I would mention that industry-wide, there are fewer projects, especially solar projects, getting into construction in 2022 than would have been projected, say, 12 months ago due to supply chain constraints and interconnection delays. These projects will still get built, but the timelines have been pushed out a bit. In many ways, the mounting pressures in the industry from supply chain disruptions and interconnection delays and the movement toward more merchant exposure creates opportunity for flexible, innovative capital like ours. In every deal we do, we're looking to build long-term relationships where these partners hopefully look to Great Bay for their financing needs again and again. This isn't a short-term trade for us. We're offering permanent, flexible, non-dilutive, partner-like capital. I think this is a big part of what differentiates us in the market and is fueling our growth and adoption. That's it for my update. I'll turn it back to you, Brian.
spk03: Thank you, Frank. My only comment I probably should have led with this when I introduced you is that when Frank mentions numbers, he's speaking from a GBR perspective, so that's 100% GBR, which ARR is a 50% shareholder. Just wanted to make sure everyone's clear on that. And let's open the floor to questions, please.
spk00: Thank you, Mr. Brian. We will now conduct a question and answer session, and I'd like to remind everyone, if you would like to ask a question, just please press star 1. And our first question is with Mr. David Quesada from Raymond James. Your line is open. Please go ahead.
spk02: Thanks. Morning, everyone, and congrats on the new investment there. Excuse me. My first question just related to the Blue Star investment. Wondering if you could just talk about or maybe confirm a timeline, an expected timeline for full investment and when you would receive royalties. Sounds like two to three years maybe to build out that development portfolio and then maybe, you know, I'm assuming another one, one and a half years before you see the first royalties. Is that, you know, the right ballpark?
spk06: Yes, that's accurate.
spk02: Okay, great. And then just on return expectations, I appreciate your comments that it would be in that, you know, your historical 8 to 12 range. Do you expect a bias towards the high end of that range, just given that it is a little bit earlier stage than what you put that in the past?
spk06: I think the way that I think about it is to be – okay, go ahead, Brad.
spk03: Well, I mean, again, I mentioned it in my remarks. There is a difference there, you know, with the PG and APEX deals. We defined return hurdles that sort of capped out when the investment was complete, at least on a base case. It was obviously optionality beyond that. In this case, what we don't know and don't have, we have net total number of megawatts. And the other deals, those are estimates based on where the market is to. In this case, what we don't know is how the pricing will work, whether it's PPA or market-based. So we have a bias, obviously, towards higher prices. going forward, so to the extent that that happens, yes, returns could be materially higher. But just a little bit of an adjustment in terms of the whole risk-reward profile that we're . There is, notionally anyway, because there isn't established quite much more risk in the investment, although we think it's more than offset by the people, but it's, you know, the real difference here is that we're more exposed to improving prices as the market's evolving. A little twist and a good mix with your portfolio.
spk06: I would just add that I think it's appropriate with the equity kicker as well to your point that it's earlier stage in the return thresholds that I think if you think about that base return, that's how we're viewing the capital we're putting into NOVA and the royalties we're going to get. I think because it is, it's entirely appropriate that we have this equity kicker because it's an earlier stage investment, which, you know, who knows what that could become worth, but that's, you know, that's how, that's how we're thinking about it because it is earlier stage. So I think your instincts are correct.
spk02: Okay, perfect. Thank you for that. And then just one more for me, if I could, I'm curious, you know, just surrounding your comments around institutional buyers for development portfolios. Do you have a framework in place for the eventuality of a buyout of a your, your royalty with, uh, under the Nova investment.
spk06: There's no, there's no, uh, Nova is being set up as a separate and independent company from blue star. So that it's a, a North American focus. So that if there was an opportunity down the line, you know, to, uh, someone came along and definitely decided he wanted to sell that business, it would be set up so that you could do that, but there's no buyout provision for the, for the royalties.
spk00: Okay. Understood. Thank you.
spk03: We live, we learn.
spk00: Thank you. Our next question is with Nicholas Dychuk from Cormac Securities. Please go ahead.
spk05: Thanks. Morning, guys. On the Blue Star, I'm wondering if you can kind of comment on the contributions. I know you're starting with the $8 million, but what are the catalysts for you to contribute additional dollars as they develop the portfolio?
spk06: It's really as the business scales and as the need for, you know, as the opportunities present themselves and need for development capital, you know, based upon the, you know, the teams, you know, the greenfield activities. Or it could be if there was a particular attractive opportunistic acquisition that came along, then we would provide the capital. I think it's reasonable to assume the deployment is going to be over the next couple of years, two, three years. And then we'd be harvesting the royalties after that. But there's nothing, there's no specific catalyst for the call. And Blue Star will be contributing capital as well. So it's not like it's being funded just by Great Bay.
spk03: Perfect. I should point out it is their option. It would have been under the APEX and TGE agreements. Not milestone-based, but in this case, matching capital with the parent. So that's the protection.
spk05: Thanks, Brian. And as you look at the track record, can you guys comment on what Declan brings specifically? I understand with Orsted Onshore, obviously wind projects were probably a specialty. The other asset was in Texas. What's the rough profile or region of projects you're expecting to get royalties on from those partnerships?
spk06: I think it's going to be across the United States for NOVA. So I don't think there's any particular region. I think he's going to look where there's less log jams and more ability to get things done in places where there are difficulties. Maybe there's opportunities in those, you know, I've heard him comment that, you know, a little disruption in the Difficulty in the market isn't necessarily a bad thing when you're looking to deploy capital and grow a business. And he's across wind and solar both with making clean energy. He has the knowledge and experience across all the various technologies. And his team, he's building out a top team.
spk03: There's more anecdotal in my conversations with him. I put it this way, for some developers, I think some of the headwinds that are out there when interconnecting everything else, you know, can be really, really problematic and all their growth can get them in trouble if things delay too long one way or the other. But by personality, just the nature of the entrepreneurship here, I really came away feeling like challenges that are out there in the broader sector right now and some of the difficulties others will face as a result are truly the opportunity that we're seeing here because we've got that ability and access to capital and networks and depth of knowledge to, I think, really take advantage of some of those situations. It's not something you really put your quantify at all, but the strong sense that Frank said, very much equals opportunity as far as decking planning is concerned.
spk05: Perfect, thanks. And then last on TGE, as you guys approached the last, I think it was about $8.5 million that you still owe into them, they commented on what their outlook is, what they're thinking for future development and whether they'd want to continue to re-up the partnership or how's that looking?
spk06: There's been, we obviously don't have any specific agreements in place. I'll just comment that that continues to be a very strong relationship. And I believe that, you know, management there is very happy and has seen the benefit of our capital and our partnership. And, you know, we're hoping that that will continue. Okay. Thank you.
spk00: Thank you. Our next question is with John Mould of TD Securities. Please go ahead, sir. Your line is open.
spk04: Thanks. Good morning, everybody. Maybe just going back to the Blue Star announcement and this bigger question of interconnection challenges that you've been talking about for a while now, Frank. I'm just wondering when looking at how you structured the deal in terms of funding milestones your return anticipations and and timeline expectations you know how did you weigh what you're seeing out there in terms of interconnection challenges in the market you know more more broadly with those considerations when you you know when you finalized the terms of the arrangement well we didn't have any there's nothing specific in the agreement about uh
spk06: interconnection delays and the impact on timing of investment. I think there's a strong alignment between Declan's investment and ownership in this vehicle. He's the majority shareholder at Blue Star and investing significant capital of his own capital. And I think that it gets back to what Brian was saying. He's going to be opportunistic. They're going to find opportunities, whether it's out in the West or whether it be you know, other opportunities where, you know, they can either get around over or through some of these challenges. I know he has some creative ideas that he's going to pursue that, you know, wouldn't be appropriate to discuss in a public venue.
spk04: Sure. Okay. No, fair enough. That's helpful context. And then maybe just going to the split between Blue Star and Nova, you know, when you explain why Nova is set up separately and, you know, maybe just focusing more on what might sit at Blue Star instead of Nova, you know, what are you hopeful about? What are your hopes in terms of the timelines for Blue Star's evolution? And you've referenced this global platform in the context of the arrangement. What are you hoping for there? And when do you think we could expect to see more progress at that level?
spk06: Well, the bulk of our investment, 25 of the 32 and a half is going to be contributed, invested into NOVA. So that's the vast majority of our investment. Bluestar is the vehicle which he's using to pursue whether it be Asia Pacific or Europe or other markets. And we have a board seat at Bluestar and we have a equity participation, a minority equity participation at Bluestar. But I think that the bulk of our investment in this deal obviously into NOVA. Whether the relationship results in other opportunities where we can invest additional capital into new opportunities that Declan pursues at Blue Star, that's to be seen. But I think the way to think about it is, you know, this is largely a North American investment, but that we do have some participation at the Blue Star level to start to get exposure to international markets.
spk03: Great, thanks. And then we go to the Blue Star Group that, as they're identifying opportunities in other markets, that we are more than open to participating, contributing capital, joining in that. So that means we've made them well aware of our appetite there and willingness to look at opportunities that offer if you will but as frank said earlier certainly no promises here the bulk of this investment is focused on the north american part of the platform but again the relationship that we hope will blossom into much much more the same reasons that you know
spk06: Longroad and Northleaf and TGE and Apex and others find our non-dilutive capital will be the same reasons why he would find it attractive to use elsewhere. He would be able to leverage his Blue Star equity investment if he brought royalty capital alongside with it. So it's the same concept of why we're getting traction elsewhere. It's just, you know, we have a specific relationship now that we may be able to deploy capital.
spk04: Okay, great. Thanks for that. And then maybe just looking at a few of the projects in the pipeline of the created royalties specifically the projects with leeward i saw they they signed a solar module supply agreement uh for a bunch of non-identified projects with first solar so that should help them get around some of the challenges we've seen you know does that give you i guess maybe increased confidence is or maybe overstating it but you know continued confidence in the timeline uh for some of their some of those projects that end of 2023 timeline for for beginning operations yeah look at leeward is a quality sponsor you know with plenty of capital behind them and they're going to get these projects built the thing i love about the the tge structure is that if it's delayed for a few months
spk06: You know, cause we don't have any control over that, but if it is we're protected, that just means that TG will have to give us some additional royalties. So, um, it doesn't, it doesn't impact our returns on our TG investment really at all. So, but I'm highly confident that those projects, you know, like I said, Leeward is a very high quality sponsor with capital and access to, um, suppliers and the like. And I think that, you know, those projects are in good hands.
spk04: Okay, great. I'll get back in the queue. Thank you.
spk00: Thank you. Our next question is with Luca Nadeau of National Bank. Your line is open. Please go ahead.
spk01: Thank you. Good morning and congrats on the deal. I'd like to know how we should think about the equity interest. Are we more looking at something under 10% or we should see it more as a 25%? And also, could you talk about the size maybe of the global development pipelines, the Blue Star ones?
spk06: We can't go into more detail on the equity ownership at this point. Declan's still building out his company, and that's really not ours to disclose at this point. And there is no pipeline at Blue Star at this point. I know that he's actively engaged in conversations with folks, but again, this is largely a startup, so there is no pipeline at Blue Star to speak of today.
spk03: As far as the broader equity ownership in the business goes, like I mentioned, Blue Star will have more to say on that in due course, including identifying the institutional family office investor, those kinds of things. But we don't want to jump ahead of time there in terms of the broader launch.
spk01: Good. Thank you. And this might be like a difficult question to answer given that you're a lot of discussions and stuff like this. But do you have any target capital deployment for 2022? So how much you could deploy by the end of the year? And also on the $200 million base shelf prospectus, would that just be used if ever you need funds quickly? Or could you use it to fund projects in the long term?
spk03: The base shelf was really just put in place to have it there in case, you know, the way the business work deal can come along quickly. We have a number of relationships that have blossomed to that point where we're kind of on standby on a whole number of things where we could get a real quick call and say, hey, can you write this check? And so it's just another tool in our toolbox as far as capital availability goes, and it's probably something we'll just always keep live from here forward.
spk01: Good. So it would not be used to fund a project and the funds would always be pulled from that. It would just be used in case you need it now, and then you would probably... get other funds to fund the project after, like to repay?
spk03: Well, it's just for expeditiousness. If we need to raise capital quickly at any point, obviously you don't have a place. There's a much longer regulatory road to go and could actually jeopardize deals. So we just felt it was proven to have it in place. We'll keep it alive, I expect, for a long time. All right. Thank you.
spk00: Thank you. Once again, I'd like to remind everyone, if you would like to ask a question, just simply press the star 1 on your telephone. And our next question is from Massa Song, Laurentian Bank. Your line is open. Please go ahead.
spk08: Thank you for taking my question. Good morning. Again, congratulations on the investment. Just looking at the numbers here, um like the expected uh generation of generating from the royalties on the 1.5 gigawatts and also i think that alone will put this nova project um over 40 percent of the entire portfolio so and also with that early stage i think we touched on this a bit more but um earlier uh but with this How should we think about the return or the royalty from this royalty standpoint? Because that will be once this gets developed, it will be more than close to, I guess, 50% of the entire portfolio.
spk03: Keep in mind that 8% to 12% span that we've talked about. What we have here is megawatts. We have assumptions. for prices going forward that are basically what the consensus is out there right now. And if you take that volume time for prices, it generates return within that band. But again, in this case, there is more variability. If prices are lower, the return will be lower. But our bias is towards higher prices. And if that plays out, the returns could be significantly above the stated hurdle band. It's different than TGE and Apex in that regard, and I think that's important to bear in mind and start to think of our own ambitions around more price exposure. As Frank said, we love the TGE structure and how it protects us in that regard, but we also like this on a combination basis. I think it makes for a really neat portfolio for a royalty company in particular around optionality. Again, the price forces that are in play right now, are pretty powerful. Obviously, demand for renewable energy is insatiable, but there are challenges out there that are putting pressures on the marginal cost of generation, whether it's raw materials or natural gas prices, generally speaking. We really like how inflation is developing generally and particularly within the sector, and what that ultimately should result in internal prices so we're really excited to have this exposure in this case obviously at the royalty side these are top line revenue based royalties so full exposure to any future better prices but without that downside pressure from our higher cost consideration and on the megawatts if i could just add we currently have 16 royalties and 3500 on projects totaling over 3500 megawatts
spk06: That's today without the Blue Star deal. This 1.5 gigawatts, or that's 3.5 gigawatts. So the 1.5 gigawatts, by the time that these royalties vest to us, is going to be, you know, several years out that these projects, you know, come into fruition. So, you know, my hope is that at that time we will have many more megawatts, you know, under royalties.
spk03: Yeah, well, we'll get more just from the TGE transaction as it stands. And then obviously, we're hoping for further deployment. So Frank is exactly right.
spk08: Awesome. Yeah, that's really helpful. And just last one from me. You also mentioned that additional realty assets are expected to reach commercial operations later this year. And is there... an internal threshold that your team is forecasting on top of the current 4.5 to 5.5 million revenue guidance?
spk06: No, I mean, we obviously monitor, but we have no control over those construction timelines and the like. So I think it's not really, we haven't stated anything publicly about that. Obviously, we monitor it internally, but we haven't said anything publicly about revenue expectations from new projects coming online.
spk03: We obviously have hopes for a back-end way to ramp up there, but there's also delays and issues out there that make us want to be cognizant of those challenges as well. So again, I think we're comfortable with the guidance that's out there and we'd be really happy if something moved along quicker than Please don't count on that.
spk08: Okay, thank you. That's it for me.
spk00: Thank you. Our next question is with Nicholas Dychuk of Coremark Securities. Your line is open. Please go ahead.
spk05: Thanks. Just want to really quickly come back to the comment made on the future Blue Star royalties. So to my understanding, the reason you're going to get potential greater upside is because you've got a fixed royalty set in place. You guys have already agreed to a percentage of royalty on the top line of those future projects. Is that fair to assume and the right way to think about it? Correct.
spk06: Correct. It's agreed upon. And then the number of gigawatts that that would attach to. But the upside too is... Yeah, I think that's kind of what we were alluding to, is that if you look at the $25 million, based upon current estimates of value, which, as Brian points out, prices could be higher, they could be lower, but we feel comfortable with that investment return and the investment into NOVA in return for those royalties. And then we have the equity participation at both. the minority participation as both NOVA and Blue Star.
spk03: As we get into actually announcing projects, we'll start to disclose actual royalty rates, but it should be pretty straightforward using the return hurdle and megawatts to get to average numbers. And yes, it will be in line with other developments.
spk05: Yeah, no, that makes sense. Appreciate the call, guys. Thanks.
spk00: Thank you. And our next question is with Luca from national bank. Please go ahead.
spk01: I'd like to know my next question would be on the new projects. So with Nova, are some of them already bidding into RFPs or is this upcoming and like, are there any milestones that we could start tracking to know how the development of the portfolio is going?
spk06: No, this is a, this is a, this is a greenfield development company.
spk00: Okay, perfect, thank you. Thank you. And at this point, I'm not showing any further questions on the queue. I would like to turn the call over to Ms. Flora Wood. Please continue.
spk07: Thank you, Delphine, and want to thank everybody for joining the call and for the Q&A session. We'll look forward to speaking with you soon on the Q2 call. Thank you.
spk00: Thank you. Thank you. And this concludes today's conference call. Thank you, everyone. You may now disconnect.
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