Cielo Waste Solutions Corp.

Good morning, my name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to the CLO Waste Solutions Operational Update and Q2 2022 Results Conference Call. Note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press star then number two. Thank you. Some of the statements on today's call might contain forward-looking information. Listeners are cautioned not to place undue reliance on these forward-looking statements since a number of factors could cause the actual future results to differ materially from the targets and expectations expressed. The company undertakes no obligation to update or revise any forward-looking statement whether as a result of due information, future events, or otherwise, unless expressly required by applicable securities law. For further information on risk factors, please see the company's press release dated December 16, 2021, or Cielo's Q2 2022 Management Discussion and Analysis File with the Canadian Securities Regulatory Authorities, and available on the company's website, on CDAR, or by contacting Cielo directly. All amounts discussed today are in Canadian dollars, unless otherwise stated. Mr. Gagan, you may now begin. Please go ahead.

Thank you, Sylvie. Good morning, everyone, and thank you for joining us today. I am joined by my colleagues Stephanie Lee, Chief Financial Officer, and Chris Zabat, Chief Legal Officer and Corporate Secretary. We appreciate the opportunity to provide additional context regarding our operational and corporate update press release from December 16th, along with our Q2 2022 financial results. We are pleased to provide greater visibility to our shareholders as Cielo continues to advance the commercialization of our technology that transforms waste into fuel. As we move towards commercialization, Cielo continues to take steps towards the groundwork that is late for long-term success and to reinforce our mission to create a cleaner energy future with a more responsible approach in addressing landfill waste. In the December 16th press release, we shared updates on both the Alderside Demonstration Facility and the Fort Saskatchewan Research and Development Facility. We continue to be on track with our schedule and commitments for both the Alderside Continuous Steady State Production and Optimization Project and the development of our Fort Saskatchewan 60 liter per hour pilot. Earlier this year, we experienced several processing related issues due to equipment reliability, performance, and plugging problems that contributed to extended periods of downtime at Alderside. One of the primary problems with maintaining steady state production rates was the coking and mechanical plugging issues with our process. To better describe this, using your barbecue as an analogy, a fair comparison is the black material that forms on your grill. Over time, this coking can accumulate And in our case, it plugs pipes, impacts reliability of heat exchangers, pumps, and other process equipment. As I'm sure you can imagine, that where coking causes an issue, it takes significant time and effort and cost to clean out our equipment. As I described previously, we have committed engineering resources and time over the past two fiscal quarters to assess and diagnose the performance deficiencies and impediments to flow at a much deeper level. I am pleased to say that we have identified several design changes, equipment modifications, and operational philosophy changes that are necessary to achieve the desired outcome. That is, to achieve steady state production of distillate, further improving the overall quality of the diesel and nap that we produce from wood waste utilizing used motor oil as a carrier fluid. We are confident that these design changes to our process will result in a significant improvement in the quality of our distillate and minimize the stress on equipment and consequential maintenance on reliability issues which we have experienced. In our September 29th conference call, I discussed the changes that we made to the organization. We have bolstered our internal engineering strength with the implementation of internal experienced engineering team and strong leadership. We've implemented stronger control systems for managing our workflows and external engineering services, focused on delivering on our timelines and commitments. At the operational level, we have strong leadership and have invoked key measures and controls for improving health and safety standards and management. We've implemented standards that improve operator accountabilities, operating cost controls, plant maintenance programs, and reporting. We have been focusing on improving all aspects of our business performance metrics, and we are committed to continuously strive towards operational excellence and best practices across all aspects of our organization. At Alderside, we remain on track with our plan in executing the work required to achieve a steady state mode of production. Engineering design has been completed for our first phase, equipment procurement in progress, and we plan to commence fabrication and construction next month in January of 2022. We are anticipating startup and commissioning in April of 2022, and after tuning the process, we expect to be in a production mode where downtime has been greatly reduced. We are excited about the anticipated positive impacts to the facility with the work that we are undertaking, which includes an optimized inlet feed system, a drastically improved waste management system, and greater control over process and improved product distillation. As we continue to improve our process, the initial plans also included modifications and retrofits to the existing reactor. But after greater consideration to costs and functionality, we concluded that the best solution is to replace the existing reactor with a new reactor, implementing the design criteria learned and studied. Installation of the reactor will be scheduled to coincide with a planned maintenance plant turnaround currently scheduled for July of 2022. I want to emphasize that this will not impact the anticipated April 22 operational timeline, nor will it prevent us from operating the process to establish steady-state production flow. The new reactor will optimize our existing process by permitting a wider range of operating parameters and conditions as we continue to streamline the process. With these design and construction enhancements, we are aiming to achieve improved reliability steady-state production, and potential throughput increases, all of which are expected to drive revenue generation and bring per-unit costs down. We are committed to continuously improve, optimize, and build our learnings on what will contribute to the inputs towards commercialization. In parallel with this work on the Elder Side facility, we are also making progress on development of the Fort Saskatchewan Research and Development Facilities. In order to design and construct a full-scale, state-of-the-art waste-to-fuel facility at our Fort Saskatchewan site, we must complete the R&D facility, which represents a scaled-down version that will be equipped with the latest process control technology for data trending, system automation, remote monitoring, and process analytics. We are frequently asked why the R&D facility is a necessary step in the evolution of Cielo. There are three primary reasons for this. One, Alderside is intended to produce revenue for CLL. If we are using it as an extensive experimentation, we cannot use it to its full capability to generate revenue. Two, the size of the Alderside facility is cost prohibitive. The reactor is 10 meters tall, the equipment is full size, and there are hundreds of meters of piping. It would be cost prohibitive to make incremental changes to test alternative designs. And three, Alderside was designed with a limited capital available to Cielo through its history. It lacked some of the automation and measurement necessary to generate the material balance and energy balance calculations necessary to complete the engineering of a full-scale facility. We cannot responsibly use Alderside as the basis for design for the next facility. We would likely leave significant value on the table, and when Cielo commits to building its next facility, It needs to clearly justify to its shareholders the benefit from the capital commitment that the Fort Saskatchewan full-scale facility entails. The R&D facility objectives include determining optimal reactor design for various biomass inputs and catalyst combinations that can maximize distillation production, improve its carbon intensity, and establish stringent operational practices at Fort Saskatchewan. all critical information that cannot be obtained from Alderside given its size and scope. Thus far in 2021, we have completed the detailed engineering design, procured the necessary equipment, and commenced construction preparation for the 60 liter per hour R&D facility at Fort Saskatchewan. During the first quarter of 2022, Cielo intends to commence vessel and equipment fabrication along with structural fabrication. In the latter half of 2022, we expect to commission and start up the R&D facility along with pilot testing and controlled experimentation. We remain on track with our previously communicated milestones announced in our November 12th press release. While taking these initiatives, we remain focused on health and safety measures that protect our people and the planet. As a responsible and trustworthy organization, Cielo is committed to ensuring our employees, contractors and partners stay safe while also striving to minimize the environmental footprint of our operations. With our release last week, we also confirmed that Cielo has successfully eliminated all future royalty and refinery fees that would have been paid to 1-888-711-Alberta Inc., referred to as 1-888, a firm from whom Cielo received an exclusive global license for the waste-to-fuel conversion technology. Consideration for this transaction included the issuance of 10 million common shares of Cielo to 1-888. We now have full rights to and ownership of our proprietary and game-changing technology, and the transfer of all intellectual property from 1-888 to Cielo is also underway. By eliminating third-party fees with this closing, we expect to realize improved earnings potential going forward. I will now hand the call over to Chris Abbatt, the Chief Legal Officer and Corporate Secretary, to provide additional context on the announced board changes.

Thanks, Greg. In prior press releases, webinars, and quarterly calls, we have discussed many of the changes to the Cielo organization. From the board and executive team to the field, there have been many changes. The Calgary office has enabled Cielo to attract the necessary professionals to support new processes to manage costs, devise and execute the capital strategies necessary to support Cielo's growth for 2022 and to ensure that the organization is ready to realize its full potential once Cielo attains steady state production at Alderside and begins to move forward with the design of its first full scale facility at Port Saskatchewan. We believe that 2022 will be the pivotal year for Cielo and the organization will be ready. This month, we announced that Don Allen, Cielo's founder, president, and the board chair intends to retire as president in February of 2022 and that he attended his resignation as board chair. For continuity, Don will continue to serve as president until his retirement and will continue on as a member of the Cielo board. Cielo is grateful for Don's contributions and commitment to building the company, and we wish him the best in his retirement. Greg, Stephanie, and I expect to jointly assume Don's responsibilities as president, and as such, we do not expect to replace this rule. Mr. Larry Schaffran, a current board member, has assumed Don's duties as board chair. Concurrent with these changes, we also announced the appointment of Ms. Sheila Leggett to our board. Sheila is a strategic leader. She has extensive experience with corporate governance matters and Sheila has a background in sustainable resource development. Sheila's skill set is expected to be one of great benefit to Cielo in this pivotal growth stage. As Cielo progresses forward towards the annual general meeting, Cielo intends to identify additional members or additional individuals for appointment to the Cielo board in order to provide additional expertise and oversight for the benefit of Cielo stakeholders. Shareholders will then have the opportunity to vote at the EGM in relation to the final composition of the board. With the exception of the identification of additional members of the board, we are very comfortable that the recent enhancements and streamlining of internal processes and structure will enable the company to advance the commercial production at an accelerated pace with improved internal controls. We are all excited for all of the activity planned for Q1 and for the results of that work. Stephanie Lee, our Chief Financial Officer, will now discuss the highlights of Cielo's fiscal Q2 2022 financial results.