Evergen Infrastructure Corp.

good morning everyone thanks for joining us today we have an update with evergen infrastructure who just reported their q2 numbers so this webinar will review those numbers and have a q a section for anyone that's brand new to the story i'd recommend checking out some of the previous webinars on the adelaide capital youtube channel because this really will be about the quarterly numbers and as always this session will contain forward-looking statements if you'd like to know more about those you can find them on the presentation on the website With that out of the way, I'd like to introduce the Evergen management team. So Chase Edgelow, CEO, Misha Zatman, President and COO, and Sean Hennessy, CFO. Thanks for joining me today, guys.

Thanks, Debra. Thanks for hosting us and thank everybody for tuning in to our Q2 earnings call here.

Sounds good. So why don't you walk us through some of the numbers and then we'll do Q&A at the end.

Great. Thanks. I'll kick off and then pass it on to Sean. If you take a look back at Q2, what you'll see is we really delivered on a number of our key milestones that we've set out for our core expansion projects. And that's what really excites us. As we head into Q3 and the end of the year here, what we'll be doing is ramping up our production at GrowTech and as well as bringing on our newly expanded Fraser Valley biogas infrastructure. So I think with both of those two key projects under our belts, we're set to deliver $8 to $10 million of EBITDA from bought and paid for assets. And that's really the crux of this exciting time for Evergen. If we take a look back at the key milestones that we have to get to 420,000 gigajoules, really the construction projects were the main ones. And I think a testament to our team's hard work and determination we've we've been able to deliver both of those projects keeping them within budget in a in a really challenging environment when we've seen a number of other rng projects see 30 40 cost expansion we've you know we've kept ours under control That, coupled with an award that we received for a grant at our PCR project, really, I think, sets the stage for Evergen's growth in the coming months. As we look forward to the back half of the year, we've got a couple of key milestones for investors to look out for. The execution of the long-term offtake at Fraser Valley Biogas. You'll see that come in connection with bringing the expanded facility on, as well as with our project radius. We'll touch on that at the end of the call here and moving into the development phase of PCR post the award of the grant funding that we received, the $10.5 million grant from NRCan. Cool. I think with that, we'll jump into the quarterly results. We'll give a brief recap at the end and then leave a bit of time for questions.

Yeah, thanks for that, Chase, and welcome everyone to the Q2 results call. So as Chase has touched on during Q2, we continue to progress on the delivery of our projects, and we're extremely excited with the successful injection of RNG at our Grotech facility in Alberta. and as well as continuing to move forward with our Fraser Valley biogas project with approximately 2.8 million of capex additions during the quarter. Our Q2 2023 cash position of 9.5 million was bolstered through the drawdown of the previously announced debt facility and those funds are being used to partially finance the Fraser Valley biogas project. Looking at the P&L results, revenues were down slightly relative to Q2, mainly due to lower RNG production associated with downtime at Fraser Valley Biogas during the course of construction. However, revenues year to date remain consistent with last year. A real highlight for the quarter was we're seeing the benefits of cost management through significant reductions in both our direct operating costs as well as our G&A costs. These are being driven by lower disposal costs through operational improvements taken throughout the course of the prior year and lower consulting fees through insourcing. Overall net income decreased by $270,000, and that was mainly driven by 700,000 of insurance proceeds recorded during last year. And adjusted EBITDA was relatively consistent with last year, with a decrease in insurance proceeds offset by the reduction in expenses. So in summary, Q2 2023 continues to pave the way for Evergen with first gas at Grotech and the progression on the Fraser Valley biogas project, which when complete and coupled with the already implemented cost management is expected to generate a significant uptick in net income and EBITDA from our RNG production operating segment. I'll pass it back to Chase to continue the remainder of our presentation. Great.

So I think if everyone's familiar with our company or if you're not, if you're a new shareholder or investor joining this call, certainly we've got a full presentation and we talk about our balance sheet. We look at our peer comparables on that presentation available on our website and we'll have an investor update call shortly coming in the fall. Just for a quick recap, we are a relatively clean capital structure. Our 13.8 million shares outstanding drives our market cap. And you can look at our options and warrants. But for the most part, there's no significant options or dilutives in our capital structure. We have some warrants left over from the IPO that we're at a 1050 strike price. If we look at our cash position and balance sheet, this is really what allows us to execute on our core growth projects, plus add additional expansion projects and pipeline projects to our portfolio. Our debt position is $15.4 million with the drawdown on the first tranche, as Sean mentioned, on the Royknap facility with EDC. I think what that shows in this market that we've been able to access additional forms of capital and we really haven't tapped The leverage that our assets can withstand, what we're seeing on similar projects is 50%, 60% leverage. And when we look at our capital structure, we're well below 30% leverage in terms of equity and debt invested. And then finally, I think our research coverage universe, obviously, we've got a few of these analysts on the call, and thank you to them for their coverage. They go into detail. If you need access to those reports, please reach out to us, and we can set that up. But overall, we're looking at an average target price of just south of $6 and 128% return to current share price. Just taking a step back from the quarterly, I think really what we used Q2 to do was to set the stage for growth in the back half of this year. When Sean talks about downtime at Fraser Valley Biogas due to construction, just a little bit more context on that. We took the opportunity during construction to go into both of our producing digesters at Fraser Valley Biogas. And without getting too technical, if you look at the production impact of what we were dealing with, which was a facility that was 10 years old, there was about... We were operating on one of six agitators. And these are giant propellers that stir the organics in our digesters at Fraser Valley Biogas. And that agitation causes gas production or is correlated to gas production. We're operating on one of six due to wear and tear and events of the last few months taking out electrical systems or last few years. taking out electrical systems. We've now gone into both digesters, cleaned them out. So we've increased the productive capacity by removing sediments. And we now are operating on six of six agitators. So we should be able to really increase our gas production from digesters one and two. And then with completion of construction, we bring on digester three. And that really drives our RNG production at Fraser Valley Biogas. With Grotech, we're about halfway through wrapping up gas production there, and one of the The nuances at Grotech is our productive capacity increases in the wintertime. So there is some seasonality to our annualized gas production there. And July and August are the months where we've got the lowest gas production due to pipeline capacity this year. We're looking at ways to continue to optimize so that we can push phase one capacity beyond our design. But currently, that's the operational reality that we're dealing with. just to cap off wanted to leave um leave with a bit of color on on what we're seeing in terms of the market and again there's more information in our in our investor deck but What we've seen in the past three years since inception of Evergen is a real boom in the RNG sector. A lot of excess capital, particularly in the U.S., chasing assets and bidding those assets up. And platforms like Evergen that in some cases have taken on more than they could chew. And ultimately, what that means is we're seeing a number of assets out there that are available to us. And we see ample opportunity for additional growth outside of our existing portfolio. So we will... We will continue to evaluate those opportunities, look to do accretive transactions. But I think just within our own portfolio, we're laser focused on delivering Fraser Valley Biogas, GrowTech, ramping those projects up, ramping up gas production into the end of the year. And then we're shifting focus to PCR, our expansion at PCR and delivering Project Radius. I think that's a project where we've gone out and sought external debt and equity capital it's phase one is a 80 to 100 million dollar build depending on on exactly how we uh we tackle phase one we've identified a partner there we're working uh closely with them on diligence and we'd expect to have news before the end of the year on the the next phase of project radius, which is moving into construction. So with that, I think we'll turn it back over to Deb and answer any questions that came up through the call.

Sure. I've got a couple audience questions. So can you talk through your unannounced project pipeline in detail, timing, magnitude, type of project, geography?

Sure. I think I mean, I think in Typical fashion, the project pipeline is going to change. In some cases, it involves working with smaller developers. So there's only so much that we want to disclose for competitive purposes or that we would disclose based on the status of those projects and evaluation that we've been doing. Ultimately, if we look at it, there are around eight to 10 projects at any given time that we're evaluating closely. These could be projects that look like Fraser Valley Biogas when we acquired it. Facilities, existing legacy facilities in need of optimization where our team can come in and evaluate expansion capabilities of that facility and look to provide capital as well as RNG expertise to owners that may be smaller or farm-based owners that may not have that expertise in-house. There are projects like Project Radius, which are greenfield projects that we're working with smaller developers that again don't have specific RNG expertise and or access to development capital. And then thirdly, I think there are assets that others have held that they're not able to pursue, and we're sifting through those for good projects. So for context, for size and scale, I think there are projects in our pipeline that look like Project Radius and are very repeatable, large-scale projects that we would likely bring in. a co-investor to to accelerate those we would continue to own and operate uh projects like that uh with a minority interest and bring in a larger partner to provide funding and there are things that we can take on um with our own with our existing means and and those look like more like project uh our projects at razor valley biogas and grow tech

Can you provide updated thoughts on what you're seeing for tipping fees, both high level and by project?

Yeah, Misha, do you want to touch on that? Yeah, sure. So the tipping fee environment remains constructive. What we're seeing is more waste being converted from landfill, more organic waste being converted from landfill and less facilities available and permitted to take that waste in. And that's definitely the dynamic in the region in British Columbia, and that's translated to across Canada as well as more municipalities are implementing an organic waste collection program and diversion program. So we're also seeing more stringent requirements to get these facilities permitted by the Ministry of Environment. We're in the fortunate position to have facilities stocks in. And what that's translating to ultimately is a constructive tipping fee environment for us. And we think that we'll be in a position to translate that into higher tipping fees for Evergen in the near term.

Thank you. And can you provide updated thoughts on what you're seeing for offtake arrangements, both high level and by project?

Yeah, sure. I think the The offtake market continues to be the bright spot in terms of tailwinds or the brightest spot. What we've seen is a transition. I think we talked about this when we went public. FortisBC was out buying gas early. They had the first program 10 years ago to pay for RNG because of the you know the carbon negative attributes that it brings their entire portfolio so paying a premium for gas on a 20-year fixed price contract due to localized you know bc goals and then what we saw at the time of our ipo was a number of other utilities that had similar mandates to have you know 15 20 or 30 rng in their portfolio by a certain date and you know the difference the difference between now and and the time of the ipo is they had aspirations to do that you know now they're off signing contracts i think we've talked about energy in the past and their program to where they can pay up to 45 a gigajoule so they're they're paying a premium to what uh we're seeing from other utilities although you know the volumes are are a little bit smaller than what we're seeing for demand from the U.S. That's the utility side of it and that's sticky and it's long-term contracts and it's driven by percentage mandates for them to have RNG in their system. Then, beside that, what we're seeing is the credit markets driving driving value. So that is either the California LCFS market and the US RIN market, where any buyer of RNG is seeing value and attributes that allow them to pay an overall RNG price that is somewhere between $30 and $90 a gigajoule, depending on the attributes in the gas. I think the newest iteration or the newest set of buyers on the market are strategics that have exposure to global markets that are also looking to RNG to be that transition fuel that gives them a lower carbon intensity for their emissions, whether it's shipping emissions, manufacturing, or otherwise. And that's really brought a new set of strategic buyers to the market. So ultimately, we're seeing continued strength, continued price appreciation, on a long-term fixed price basis. And the spot market continues to fluctuate based on carbon credit pricing. So that spot market really is referring to the California and the U.S. written market. Those are bouncing around, strengthening at the moment, but ultimately it's the long-term offtake agreements that we're seeing get stronger and stronger.

Thank you. And at what point do you increase leverage to peer average? How do you expect to utilize this capital?

Yeah, sure. as as most most people probably be aware some of our you know all of our assets are quite under leveraged um we're actively looking at new opportunities to raise debt against those under leveraged assets to uh utilize that capital for um expansion within those existing assets and to be able to optimize the production capacity of those assets as well as utilizing that capital to expand on pipeline projects as well.

Okay. And I had another question on funding. The federal grant fully funds the PCR project for growth beyond that, such as grow tech phase two, project radius, et cetera. Can you provide some color on levers available to the company to boost liquidity on these projects? I guess you already touched on debt. So any others that you have available that you're thinking of?

Yeah, I mean, specific to Grotech, there's no debt in that subsidiary. So with Phase 2, we would be looking to put in a loan there to be able to fund the majority of the CapEx expansion for Phase 2 to optimize the R&G production. And we also have the opportunity to draw on a debt facility for the existing asset as well, because as I touched on, there's zero debt at that operating asset at the moment, which just came online the end of June.

I think as we look at larger projects like Project Radius, I think that'll be a good example of what's available in the market. Certainly, we continue to have inbound interest on co-investing in projects and leaving Evergen in an operating position with a carried interest or the types of deals that we're seeing. We want to be we want to be selective on that because ultimately our goal is to grow the platform. And the best way to grow our platform is to have 100 percent working interest exposure to as many projects as possible. But if there's an opportunity to bring in external capital and conserve our capital for future projects that have a higher rate of return, certainly we were open to to co-investment opportunities. And and that has been that has been sort of continued. continued interest and inbound interest. We haven't run a process on anything other than project radius. And we've been pleasantly surprised with the access to capital that we have even in the current market with interest rate pressure where it is and what we're seeing from other industries.

And is there potential for additional federal grants? What were the key terms and requirements that were required to secure the 10.5 million federal grant?

Can we touch on that, Sean? I think just maybe just overall the grant funding that we've applied for and then what pushed us over the edge on NRGAN I can talk to.

Yeah, sure. So, I mean, we actively monitor all of the grants available, and I believe we have somewhere in the realm of 10 grants outstanding. If we are successful with all of those, we'll be looking at somewhere between $40 and $50 million of grant proceeds. It's really making sure that the grants that are released are applicable to our projects. We're seeing more and more of those grants come into the space and more and more government support on our projects. So whenever there's a grant available, we're actively monitoring that. And if it's applicable to either our current projects or future projects, we're actively applying for those.

Okay, moving on from funding. Rotech, when should we expect the project to ramp to full production and how should we expect electricity sales to decline now that phase one is complete? Is this mainly due to pipeline capacity? For phase two, when should we expect a final investment decision and more detail on the project economics? Is it possible to provide a ballpark cost estimate? It's a bit of a run-on question. It's the first one if anyone needs to revisit it in answering it.

Yeah, I can take the first part of that question. So in phase one, we're ramping up right now, and as Chase touched on, the timing of the project coming online was probably the worst timing in terms of pipeline capacity. We're seeing production volumes in line with our expectations, and we've been able to tweak operations at both our end and with the pipeline as well to open up additional capacity. In terms of electricity sales, no electricity sales will continue throughout the project. That's something that's unique with Grotech. The unit that produces electricity is required at the facility to provide the heat for the digesters. So we will still be producing electricity at that facility as well. And I expect that the level of electricity sales in terms of the volumes would remain consistent. Obviously, we're subject to the spot market there, so pricing can change.

And then in terms of phase two, we're actively evaluating our opportunities to expand Grotech and want to do that with data that we get from production coming on in phase one. Our goal is to have a detailed design for phase two in place towards the end of this year and be ready to move into construction next year, depending on where we land on that design. That's going to fluctuate our CapEx. So I don't want to comment on exactly how we see that CapEx playing out, but I would say it hasn't changed from our expectations at Acquisition.

And what will the EBITDA run rate be post ramp up at Fraser Valley and Grotech by year end?

So post post ramp up, I think if we look at Fraser Valley, the ramp up period post completion of construction for projects is typically in the realm of three to six months. At Fraser Valley, it's going to be shorter than that because we're already we're already ramped up. We're already producing out of that facility about half of our expansion volumes. and we're continuing to ramp up through the month of august from bringing our bringing our digesters back online in june so we're already on that ramp curve once we're fully ramped up at fraser valley biogas and grow tech and with our existing assets contribution We are expecting $8 to $10 million of EBITDA, and the majority of that is on fixed price contracts, long-term fixed price contracts. So really, that is driving, from our perspective, our underlying valuation of our core assets that are in production. That's where we think we're heavily discounted given what we've delivered to date relative to, say, 12 months ago. We've eliminated almost all of the construction risk and we're in that ramp period. The ramp up timing, we think we're going to be largely complete ramp up at Grotech by the end of the year. And then Fraser Valley Biogas will be midway through ramp up, expecting to fully ramp up in Q1. But certainly from a From a plan perspective, we're executing on the plan. We're going to see that ramp up in our production volumes reflected in the next couple of quarters, and we're going to be moving as close as we can towards that $8 to $10 million run rate EBITDA.

Sorry, I'm still on mute. There's one more question that I had related to that. Sorry, there's a few in the chat. What is the expected timing on the remaining 2.5 million contingent consideration for Grotech? Is the 2.5 million number correct, given 3.5 million on the balance sheet and post-quarter payment of 1 million?

Yeah, I can touch on that. So the For GrowTech, there's two contingent consideration payments required of $2 million each. In our financial statements, we disclosed as a subsequent event that we paid $1 million of this post-June 30th. We're working on, there's some nuances in the settlement of the second half of that. So we're working on being able to release those funds, and those funds are currently tied up in our restricted cash balance. In terms of the second payment of an additional $2 million, that's tied to the successful integration of phase two of the project.

Okay. And moving on to project radius, do you expect to be in a position to move forward with construction shortly after an announcement? Can you touch on how the deal would be structured and whether there would be further equity contributions from Evergen?

sure i think with uh with project radius uh the timing of construction really is is working around seasons i think we're you know we look at uh there is there is a time of year in ontario where it's not ideal to start uh construction given breaking ground and pouring concrete costs and can be avoided later in the year so where we're looking at, and I think where we've been for a while here is construction would begin in 2024. The structure of the deal, I don't want to say anything that's confidential at the moment, but what we're seeing in terms of offers in the first phase was certainly what we'd expected in terms of Evergen continuing as operator of the assets, receiving a developer fee upfront, and then a carried interest in the project. So the goal being that we've got flexibility if we want to increase that working interest and contribute more capital. But our goal is that there's no further funding required for RADIUS phase one. That said, we're really excited for what Project Radius means to the RNG space. It is a project that uses about 5% of the feedstock in any given area. So it's different than a lot of the projects that we see in the sector. It's using proven technology and with lookalike facilities in Europe, but first of its kind in North America. And what we like about that is it leaves us a fairly open fairway to template that design across countries. jurisdictions that mirror Ontario. And there's quite a number that we've been looking at. In particular in the US, I think with the ITC credits available, the returns are significantly greater than without ITC credits. And right now that's a real A real advantage for us is taking projects that we've we've templated and then and looking at places that we might be competitive in the US and then activating that. And that certainly is a portion of our pipeline.

I did have a question about that, which you just answered, but just to answer the second part, are there other tax incentives or incentives from the US government on the IRA program other than ITC?

We've seen, so we've seen an evolving market in terms of what those credits look like. We're, we're certainly active looking at assets and, you know, what it, what it looks like is there are also production credits and that some assets are available. There's some additional credits available. So I think the answer, the answer is yes. I think, you know, the long, the longevity of those programs, I think is, is the question. So what we're looking at is, is assets that can be brought into production quickly and, or where we can leverage off of design work that we've done in Canada. I think the other important note on that is what's happening north of the border. I think we want to stay focused on our core. And one of the key incentives that has been discussed and is, I think, tabled for evaluation is a similar program in Canada. So we're looking at We're looking towards the fall economic statement to see if RNG projects are included in the tax credit schemes that the federal government has announced. And I know our industry group is lobbying hard in that respect. And so we're expecting to see or hopeful to see some inclusion there that would significantly increase the economics in our existing portfolio.

Makes sense. And then moving on to PCR. Any updates on PCR? How is permitting going?

Yeah, I can. I can take that. So the permitting process is ongoing with PCR. As you know, we've we've upgraded that facility significantly and mostly adding leachate capture systems and bunkering concrete bunkering in place. That's really put us in a strong position with the Minister of Environment who are now hopefully going to be in a position to deliver a permit on that facility for the expanded project. Once that's in place, that should fast track us with our other on our other permitting avenues that we're working on concurrently with both the city of Abbotsford and the Agricultural Land Commission. So we're making progress there. It's slow going, as I'm sure you are aware, in this regulatory environment in Canada, at least, and B.C., permitting has definitely been a timeline and permitting have been a headwind as they've taken longer than anyone in the industry would like them to. But we're certainly making progress and we're happy with where that's moving in the moment.

And then on the construction timeline, I think what we've seen is if we look at Fraser Valley Biogas as an example, our strategy has shifted as we're a trailblazer in the R&G space in Canada in terms of how we want to deliver projects. And so as Misha talks about, permitting is the first step. Once that is clear, we can move into a much tighter construction timeline than we've seen on our previous projects. So that's really the goal. I think from a construction standpoint, we believe we can get construction down to almost six months if we've got the right conditions and everything is fully permitted.

Okay, and you've invested 5 million in PCR versus total cost of 32 to 35 million. Just to make sure, does that mean you have 25 to 38 million left to spend on that project?

Yeah, that's right. I think if you look at the grant funding of $10.5 million, that's an endorsement for the project that, along with a source of funding, that plus the $16 million credit facility that we have with Roynet and EDC is about $26 million. we expect the additional equity contribution to be minor based on the design of the facility and that 35 million dollar capex is a total capex and certainly uh we have spent seven million dollars five to seven million dollars in total on that facility and then moving on to fraser valley it appears that roughly half the spending is still required post q2 to reach cod can you provide some color on what is still required

and the timing of the remaining CapEx spend, how quickly can the project ramp to full capacity?

Sure. I think if you look at our construction, I think we press released that we were 75% complete. We've made steady progress over July and the first couple weeks of August here. The remaining construction is relatively... minimal in terms of what hasn't been done to date. There's some utility connections and there is the implementation of our compressor skid and tying that into the existing piping that has been installed. So Sean can touch on additional details in terms of how invoicing typically works, but we're well ahead of that as we've got good line of sight to what the total cost of that project will be. And the reality is that the majority of the work has been completed. The second part of the question, can you repeat that, Deb?

Yeah, for sure. So it was how quickly can the project ramp to full capacity or timing the remaining capex spend?

Yeah, so I think the timing of the remaining capex, most of that capex has been spent. It will probably be straddled over Q3 and Q4, Sean, just in terms of invoicing.

Yep.

and then in terms of our ramp up you know we're we're historically the facility's done about 80 000 gigajoules of production uh we're surpassing that now with daily production numbers that we're seeing post digester clean out and our our budgeted uh production post completion of the expansion is 160 000 gigajoules we're going to continue to ramp up beyond 80,000 gigajoules here as we move into September and October. As we complete construction, we're then limited by the timing of bringing on our thermal oxidizer, which is a new piece of equipment that is designed to lower our emissions. But ultimately, that is expected to come online in October, November, and then we're ramping up to that 160,000 gigajoule level. So months, I think, is the answer to that. Whether it's three months or six months will depend on just the timing of bringing on those additional pieces of equipment. And that will be a steady... When I say three to six months, when are we going to hit that peak? 160,000 gigajoules, I think, is the biggest question. I think we'll be well north of 120,000 gigajoules in the short term.

And when do you expect to have the new offtake in place? Will it be easier since you just finalized the Grotech offtake?

Yes, we're in advanced discussions on the final version of an offtake agreement there. And guidance that we've got is that we're going to have an execution ready document here in September in advance of construction completion.

Okay, and then non-recurring GNA was $614,000 in first half of 23, but was the same amount in the first half of 2022. Why do you classify it as non-recurring?

Yeah, so I mean, why do we classify it as non-recurring? Because they're typically only recurring during that quarter. It's a one-off expense. The biggest driver of the non-recurring expenses this year was the diversion costs that we had to pay from transferring our organics from between our facilities while PCR was under construction. As I recall, I think we're seeing a drop off in those non-recurring GNA costs in Q2, and we expect those to continue to drop off in Q3.

And then going back to the tax incentive question, we had a follow up. Do you expect an ITC on RNG in the fall economic statement would apply to Grotech and Fraser Valley?

That's a good question. I think certainly to future expansion phases that we haven't constructed yet. Typically, we're not seeing these being backward looking in the US. The ITC is applied to anything that was pre-COD or basically pre-production for those that are not familiar with the term. So there's a possibility that it will apply to some of the historical CapEx if it is included in the fallen economic statement. I think what we've seen Historically, this legislation has been relatively slow to turn into programs that you can actually write a check against. So whether that fall economic statement means that we're waiting for the budget for details and whether that we can argue that CapEx that was spent in 2023 applies when the program doesn't begin until March 2024 in earnest would be what we'd be looking at and certainly trying to thread that needle and hopeful that we could.

And a follow up question for Fraser Valley, how much would the additional digestate storage cost?

It's a question that depends on a number of factors. When we look at digestate storage, the optimum outcome for us is that the manure that we bring in from the farmers can go back as digestate. The challenge that we have at Fraser Valley is just a seasonal challenge. manure comes in throughout the year, the spreading of digestate is only allowed during certain months or the spreading of manure is only allowed during certain months outside of the rainy season. we've you know we've historically dealt with digestate storage as an operating cost and and that's the way we built it into our models additional digestate storage depends on whether or not we're you know we're taking that digestate off-site or dealing with it on-site uh i think that you know whatever we're investing there in capex would be would be offsetting existing operating costs so but but i mean this you know this is an accretive uh expansion if we did it and it would be in the context of one or two million dollars uh with that type of equipment and we would be looking for a three to four year payback versus opex and final question uh do you have enough organics for your rng projects i guess energia was mentioning that they're having feedstock issues at multiple sites Yeah, I think that's something that we've thought about as we get compared to others in the space. And I think when we look at our organics, first of all, the majority of the organics that we've got coming to our facilities today are under long-term contracts. the market that we're going after in the lower mainland of BC is organics that are already diverted. They're going to either composting or landfill, multi-family homes, industrial and commercial organics. And And that product is already being diverted. I think where we've seen issues in the US is California, as an example, has talked about putting those programs in place and having mandatory diversion of those organics from landfill. In BC, we already have that diversion happening. So we're not waiting on legislature to see feedstock come our way. It's currently bypassing our facility. And we're looking to bring it in at a competitive cost to the alternative. So the answer is that we see more than enough organics in the market. And we think our pricing is competitive. And these are a spot market. So we're We're hoping that we can transition that to a longer-term contracted market, but ultimately, we're looking at the flows of organics, the pricing that we can provide, and the abundance of that as mitigation for any feedstock risk. The flip side of that is project radius, where all of the feedstock will be spoken for and under contract with local aggregators for organics in terms of crop residuals and manure. So it really depends on which projects. And when I talk about the market here, I'm really comparing the market in BC to the market in California.

Okay. I don't see any other audience questions. Was there anything you wanted to talk about today that we didn't touch on?

I think that was just about everything and a comprehensive update just to leave our shareholders and investors with uh the excitement that we have you know moving into this this period of growth that has been a long time coming and you know it's really testament to the hard work and dedication of our team and uh certainly jamie our vp of ops who's not on the call here has been watching you know watching pennies at fraser valley biogas and ensuring we deliver those projects on budget i think that sets us apart in the space It gives our platform tremendous value. I think outside of just our core project expansions and the EBITDA growth there, we have a pipeline of projects and we're seeing platforms continue to attract significant valuations from strategics that are looking for the only carbon negative energy source that we have right now. uh in market and and that's rng and and that's why we focused here the returns the abundance of capital and the lack of platforms that are able to deliver uh i think that that's really what's going to set us apart in the next few months okay and maybe just for investors um maybe you could give us what you anticipate in terms of catalysts over the next three to six months Yeah, to focus on the key catalyst for us, that is, it's bringing on Fraser Valley Biogas, completing construction there. In connection with that, signing a new long-term offtake agreement at Fraser Valley Biogas, continuing to ramp up gas production at Grotech and Fraser Valley Biogas on the back of construction completion. And then I think we're going to continue to evaluate opportunities and grow the projects in our pipeline towards entering our core in terms of new development projects. So we're very active there. And it's a really interesting time where we're seeing less competition on the smaller end of projects than we had in the past. And I think that's going to be a very good thing for Evergen.

Awesome. Well, appreciate the update. Thanks to everyone that participated and for your questions. And thanks to you guys for taking the time to update everyone.

Yeah, thank you, everybody. Thanks for your support.