Northstar Clean Technologies Inc.

Good morning everybody who's joined us this morning. I'm Brighton Breezy here in In Calgary, and welcome to the North Star Q1 2022 financial results. So as we've done with all the quarterly briefings, we kind of take this opportunity to not only step through where we are in the financials, but also give a bit of a corporate update. As you know, we've released kind of three important things over the last day or so. So number one was the CDAR filing of the Q1 financials. So that was done yesterday. The press release, of course, that accompanied that was also released post-market. And pre-market this morning, we released the press release to talk about our refocused expansion plans. And that's what we're going to concentrate on today. So I'm joined by Rosemary Pritchard here, our CFO, who's in the office here in Calgary, and Carson Seaton, our Director of Corporate Development here. is on the line too. So the plan would be as normal is to just kind of walk through the presentation and then we'll do the corporate update. If you have any questions, please click on the Q&A button at the bottom of your screen. Carson's gonna be collecting all those as normal. And then at the end of the call, we'll go through the Q&A and answer any questions. Okay, well, listen, as always, we have the forward-looking statements on the slides here. And you can also look at the, go on to our IR deck on the website to look at these forward-looking statements. And with that, I will hand over to Ruthmi for the financials.

All right. Good morning, everybody. Just to start off with, in the balance sheet side of things. As I mentioned in my last presentation, when I presented the audited statement, the health of the company can be viewed as both how the available cash, a healthy working capital and low debt to asset ratio. So looking at our statements, our cash did decrease over the quarter by $2 million, but that can be expected because we're still pre-revenue. However, our cash is still at a healthy level. At the end of Q1, we had $3.9 million remaining in cash, which is plenty to cover our expenses for the next while. We also have a healthy working capital at $3.6 million, which shows that we have maintained good liquidity. And our debt to asset ratio is still good at 0.26. So overall, I think the balance sheet is looking pretty healthy. A few other items to note on the balance sheet. We have a GST receivable of $440,000, which is sitting on the books largely due to a CRA audit, which we hope to get completed in the next few months. HAB-Masyn Moyer- The deposits, that is, for the delta pilot plant lease a deposit with metro Vancouver for collection license and deposits for EC hydro. HAB-Masyn Moyer- We did $250,000 of equipment purchases. HAB-Masyn Moyer- Mostly in the delta. pilot plant. And one thing to note is as of February, because we achieved steady state production, we're now depreciating our Delta assets. There was the capitalization of the equipment loan that's on the books and all of the other lease liability and rate of use assets, all to do with the IFRS capitalization of planned in offices. On the income statement, just a quick note on that is that our comparative period is Q1 of 2021. So keep in mind that this period is prior to us going public and before us raising funds. Therefore, it's before all of our R&D and marketing activities and before hiring the executive team. So you'll notice that there's going to be large variances in most categories, which should be expected. So for the quarter, we had R&D activities of 300,000, which consisted largely of consulting fees and site materials, which was necessary to achieve steady state production, which, as I mentioned, we did in February, and also to continue the de-bottlenecking process. General and administrative expenses were approximately 1.7 million, of which 1.2 were cash-related items. These general and admin expenses mostly related to marketing costs of 280,000, which included IR activities that were required for being public and also other various marketing activities that we did. We had consulting fees of $117,000, mostly for government relations and HR work. Depreciation, which, as I mentioned, we just started depreciating our assets. So most of this relates to the Delta assets and is a non-cash item. Professional fees of $109,000. We had a lot of legal work relating to contracts, securities work, patent work, and governance work. share-based compensation of 270,000, which again is also a non-cash item, and wages and benefits of 445,000 as we had a full executive for the quarter and wages for all the plant stuff. Can you go to the next slide? Cash flow. So for the quarter, as you can see, cash changed for the period. It was around $2 million. This was made up of the 1.6 million of cash-related operating and R&D expenses, as we just discussed on the income statement, with the cash expense categories being the R&D, marketing, consulting, professional fees and wages, and the purchase of 250,000 of the equipment and lease payments for Delta of 159,000. Excellent. And on the equity side, compared to Q1 of last year, we increased from 69 million shares to 106 million. That was obviously due to the equity raise that we did in July. And the value of the equity decreased of a quarter mainly due to the loss for the equity. That pretty much wraps it up.

Okay, thank you. All right. Well, listen, thanks, Rosemary, for that. And again, any questions that are coming out, again, click the Q&A button on the bottom of the screen. Okay, listen, corporate update. So I want to cover a couple of things. So the first thing I want to do is I want to go through what we've achieved in Q1. And I think I said it in the press release, I think that this has been a pivotal quarter for us as a company. And so I'll take you through my kind of thoughts on that. Secondly, we'll talk about Q2 and what we've managed to achieve since the end of the quarter. And, you know, kind of like, again, outlined in the PR, but I want to chat through some of those things. And then the last thing I want to talk about is based on the PR that we put out this morning. And that's about the refocus of the expansion plan. And as you step back and look at this company, I keep on talking about how important the three steps for ESGR. So number one, you're proving that you have a technology and demonstrating that that works. The second thing is being able to scale that technology up. And the third thing is to rapidly expand that technology into the commercial market space. And look, from 10,000 feet, what we have done in Q1 is absolutely all, you know, we've demonstrated all three of those, in my opinion. So the first thing is we have the Delta pilot facility running at steady state production. And the back end of that is coming asphalt that is literally being tested by, and I always, you know, kind of jokingly describe that as we now have an R&D division, which is working. which is billions of dollars worth of capability. We haven't created it, but the customers in the sectors that we are targeting are all advanced testing our asphalt. And to me, the scale and the capability of that R&D that's going on is absolutely huge. And we're proving that this technology works. So that's kind of a real reassurance for number one. that the refocus 10 000 foot level uh that we sent out this morning is all about we originally had discussed a scale-up that looked at three facilities so we have as you know we have announced The Calgary facility, the second facility we talked about, which hasn't been approved by the board yet, but we talked about was Toronto. And so we were doing business development around there. And the third one was Pacific Northwest. So when we looked at the scale up of technology, we looked at three plants and the refocusing PR this morning. And what I'll talk about today is actually we've pulled that back to focus on one plant, which is the Calgary plant. And I'll talk about the reasons for that. But ultimately, this is all about protecting shareholder value. This is all about making the right decisions at the right time to not over stretch the company, to make sure when we understand what's happening with these equity markets as is going on today, that we're not going to a market to try and fund an expansion, which is too big. And actually that we're absolutely focused on the most important second step, which is scaling up the first facility. Once that first facility is built, and so once the Calgary facility is built in a very focused way, i.e. single facility, that's what we're focusing on. Then what that actually demonstrates is it demonstrates the technology works. It demonstrates the operation works. It demonstrates our assertions around cash flow and revenue, et cetera. That's all demonstrated. And we do that in a very, very focused way. And so when we talk about the kind of refocus, that's what we'll cover. Okay, so let's talk about Q1. So a number of things happened in Q1, you know, you've got the list in the PR and we've kind of outlined it here. But the two critical things that happened was number one, we initiated steady state production at the pilot plant facility. And number two, we selected Calgary as a site location for the expansion and the expanded facility. And that was approved by the board and we moved forward with that kind of officially. The steady state production at Delta is absolutely essential because the most important thing about that is we have kind of front to back operation and coming out the back end is the products that we want to bring to market. So that's the aggregate products, the asphalt and the fiber. And so all of those, and I've said this, we, you know, we sent out a number of PRs and testing. And I said this a couple of times, we are in a testing phase, whereby we're engaging the three market sectors, especially in the asphalt, which is, you guys know, is that is the highest value product. So we're testing with the customers in the paving sector, the shingle sector, and the roofing system sector. And that is literally billions of dollars of R&D testing capability that's going on. So the good thing about steady state production is it enables you to identify at a pilot plant level how your processes are working, where they're working well, where they're working inefficiently, where, for example, process three causes trouble for process five, or process eight is not as reliable as you thought, or process 11 needs to be rethought about because of the way that the pump system is working, et cetera. So it's real live testing, which is that and that's exactly what you want to do so that you have insight from an operational perspective about how to design the Calgary facility. So the Calgary facility has been, has come through the front end engineering design. We'll talk a little bit about that in a minute. But the most important thing is that isn't done in isolation. So it's not a design that's done in isolation. It's a design that is influenced right until the point of construction on how the operation is working in Delta. The second thing that's really important about that is the testing. So when we have this multi-billion R&D divisions that are helping us analyze our product, they're also giving us feedback on not only the operational conditions at Delta and how to improve, but also any of the design upgrades or modifications that we need to implement in Calgary. So that feedback is fantastic. So what we have is Calgary that is being influenced not only by by steady state operation, but also as being influenced by the R&D that's going on from customers. So as you step back as a kind of an owner of the company or a shareholder, and you think, well, what happened in Q1? Well, in Q1, out the back end of the pilot plant facility came the products that we want to send to this marketplace. And it kicked off a huge testing campaign by a range of potential customers across a range of our sectors that are giving us feedback to make sure that the Calgary design is absolutely spot on. And the obviously we in Q2 since then we've so we obviously we announced the feed study and we'll chat about that in a little bit. And we'll also talk about we'll also talk about the economic analysis. But Calgary was selected as the scale up facility. And look, I've been asked a number of questions about why is that? Calgary is the center of energy transition in Canada, so it has government support for that it has government oversight for that and it is seen as. the center for pivotal thinking on circular economy, on ESG with respect to that, to hydrocarbons and on the transition economy. So if you think about the potential that this business has to anchor in the center of Canada's transition economy, and then roll that out all across North America, this is absolutely the key place to be. And so for the first scale up facility, we think it's the perfect location. Obviously, strong workforce, technical expertise, and also helped by the fact that there's lots of our potential customers here as well. Okay, so let's chat about the, you know, you guys have seen the press release in this note, but front end engineering results came out. And also we had a look at, we had an outline of what the economics started to look like as we started to narrow in on the commercial models for the business. So the first thing is that, you know, $11.8 million worth of capital to build one of these plants, probably an associated non-capital cost of around about one and a half million bucks as well. And that's for, you know, land rent and ops hiring and insurance and, you know, kind of G&A to build up one of these facilities. Um, but that 11.8 includes 20 or 20% contingency. And from my perspective, that's probably the right level at this stage of the engineering design. Um, so, you know, could we, could we be affected by, um, you know, and exchange rate changes and supply chain, et cetera, et cetera, for, for, for sure. And so that's why I think, um, you know, a $10 million cost or $9.8 million cost for, for total of directs and a, And a 20% contingency is absolutely the appropriate level to have. So all of our funding and financing and all that kind of stuff that I'll talk about in a minute was based on that base number. So obviously when we came out and outlined, well, here's what the capital is, then as you know, we released the PR to talk about what the economics looked like. So high level, you know, 7.6 of revenue, gross profit of 4.9 and EBITDA of four per plant per year. But look, our view, and we outlined this before and it's on the kind of the right-hand side of the slide here. We believe that this is conservative. And look, why is that? So we ran the economics are run on a kind of a five day a week, one shift a day operation. And here's a really interesting kind of point of feedback. And it goes back to why you do you bring your pilot plant into steady state operation. The back end of this of this process, as you guys know, has got some hydrocarbon processing in it. And it is. doesn't really like being shut down at the weekend. So what that says to us is that we will likely run the scaled up facility and all the facilities in a seven day a week operation. Now, might it be, you know, six and a half days of full operation and, you know, half a day of kind of, you know, shouting down the back end for maintenance or whatever, for sure. But we will likely move this operation from a five day a week operation to at least a six and a half day a week operation. So that's great feedback from operating a plant. So you start to know how the operation looks and then that affects the economics. So that's why where we say there's operational upside and kind of point three here, that's what that operational upside means. We original in the commercial model, it kicks out the 4 million bucks. It's got 95% capacity and 95% yield. It's got a throughput of 150 tons a day. So our increased capacity, our increased yield and our stretch of up to 200 tons a day is not reflected in this. The asphalt price used in this was fairly conservative, and it also doesn't include any of the green premium we expect. And to be honest, any of the green premium we've been discussing with customers already, it says that this has got the lowest carbon footprint of any asphalt in North America. So as we think about the market for this, then we believe the pricing should reflect that green premium. And then the other thing, you know, from a, you know, we have... Kelly Johnson, our chief sustainability officer, working on what the whole footprint and what the whole protocol for carbon credit should be and how to actually realize that, none of that is in the model. So we needed to be really, and my view is we really need to be very, very clear when we're in the financing conversations that this is not a business that is hanging on carbon credits. This does not need carbon credits to be successful. This is an infrastructure business where we get paid in the front end, and we get paid for the stuff that comes out the back end. We have efficient conversion and processing in the middle, and it's like a midstream business model. The fact that it is kicking out very, very low carbon efficiency, carbon fuels out the back end with respect to the asphalt is an added benefit, but we did not include the carbon credit revenue in the analysis. And then the last thing is we have a fairly conservative tipping fee in there. So we have a discount to municipal tipping fees, and we only are assuming that we have 85% revenue in the tipping fee coming in the front end. So, as you look at the $4 million number, I believe it's conservative, I believe it's a bankable number, and we think, you know, if any of the elements on the right-hand side go up, then that gives us a real benefit. So the other thing that we we announced last week actually was so front end engineering design is done. So that means we've got, you know, a really good set of engineering numbers with respect to the Calgary design. And so what we did was we took that set of numbers and we went back to our lifecycle analysis for Calgary and recalculated it. When we announced the Delta life cycle analysis, we also did the Calgary one, you know, in Q4 last year. We didn't announce the Calgary one because it was pre-feed and we waited until feed came out. But what a great result. So pre-feed, the Calgary, the CO2 equivalent emissions reduction was 42%. Now, post feed, it's 60.3%. So from that, I mean, not only is that important from a market perspective, that's hugely important from a government perspective. And it's hugely important from for the kind of the ESG footprint of our of our business that says, you know, versus the base case of putting asphalt into the ground and replace it into landfill and replacing that asphalt with with the quarter ton of virgin asphalt. We have a 60.3% reduction. I can tell you that's one of the things that's hugely beneficial and especially for customers as well. And all the customer conversations, that number, now that it's actually come out and we've got it cleared at 60%, Now, again, I will caution this, however, this is a design number. It's just after front-end engineering design, so it hasn't been done after detailed design. And as Kelly works on the protocols of how we're going to measure when the plant goes into operation, one of the key things will be, OK, how are we measuring the CO2 equivalent emissions from the plant? And what is our measurement technique? What does the protocol look like? And what is the ongoing auditing and measuring system? So that's very important as to say that this is a, you know, it's a line in the sand. And we've got a chunk more detailed work to actually, you know, get to get to realize any of those benefits. And again, that's why we didn't include it in the economics for the base case. All right, so let's talk about project financing and let's talk about where we are with the refocus plan. So as I said, we had a vision of phase one whereby we would have an expansion program of three facilities, Calgary, Toronto, Pacific Northwest, kind of either Seattle or Portland. So we went out to the marketplace to search to get indicative term sheets, both in the debt and equity side for a project of about 50 million bucks. So our thinking here is that's facility, that's capex for the three facilities, plus the associated costs of, you know, one and a half to two million per facility, and the ability to run the Northstar business corporately till the end of 2023. So as we thought about all the next steps and all the plants that follow on from this, that that was all funded. So $50 million and then subtract from that our expected level of government funding. So as you know, we have an internal view on what that government funding could, non-recourse government funding could be, whether it's loans or grants. And so the funding package that everybody looked at was the $50 million minus the government funding level. So we've outlined it in detail in the PR this morning. The response from my perspective was fantastic. The level of, you know, the breadth of the support, the depth of the support was huge, not only from, you know, Canadian commercial banks who generally Don't touch a pre-revenue company. From the Canadian investment banks, from the equity perspective, from Canadian and US infrastructure providers, both on the debt side. on a full project funding side of debt and equity side. So, so fantastic support, I think, um, for the business and, you know, great reassurance to us that we could decide to fund it if, if we needed to. Um, so when you added all of that up, it was sufficient to fund the full program. However, this is where, um, you should be reassured in listening to this call that it was absolutely an inappropriate moment with what was going on in the market to fund a $50 million three-plant plant. In the risk-off environment that was happening, the TSX venture was going down, ESG companies were under pressure, pre-revenue companies were under pressure. So we had a really good discussion with the board with the board special finance committee that was formed, and we said, this is absolutely not in the shareholders best interests to go out and try and fund a $50 million three plan plan. So what we decided to do was we decided to say, okay, well, let's step back and think about where we are as a business and refocus this plan. So I'll talk about the financing of that a little bit later, but let's actually go through what the refocus plan looks like. Okay, so three elements to this refocus plan. The first one is to make sure we get the pilot plant facility to commercial delivery. So I think that's a two step process and again all informed by what's going on at the plant today and what we've seen from steady state operation. So the first step is to increase the production to a target of 40 tons a day so up from the kind of 10 to 20 that's going on today and that also needs to be more consistent. you know, we're running, you know, in that 10 to 20, we're running, you know, we've got days where we can, or weeks where we can run, you know, up to four days a week, but not to max volume. We've got days where we can run at max volume, but then the next day, not as much. And so this is all about, as I've said, steady state production is all about repeatability. And so the 40 tons per day here, as we outline, is a 40 tons per day and repeatable. That's what we really need to have five days a week and 10 hours a day. So then the next step, and so we've identified the plant steps to do that. And that's happening first to come into Q3 with that level. Then we've also identified, look, the longer term upgrades, and that's been, that's come from both the Calgary engineering design coming back, but also the customer feedback. And so that is the second step to go to 50 to 75 tons. And when we look at the balance sheet, we have enough funding to do this. So this is not, this doesn't need any additional funding. We have enough in the balance sheet to do that. The second thing is to develop the work for Calgary. So finalise the site selection. We have two sites that we've narrowed in on and are in negotiation with to execute the agreement for the 100% offtake of the production at the back end of the plant. And this is about a long-term agreement. So if we're going to underpin financing for the plant, ultimately, this needs to be a long-term agreement. And so negotiations are going on on that. Commence the site permitting, which is obviously will happen once the site selected and place the long lead orders and complete the engineering studies. So long lead orders we've identified as part of the plan, what the key pieces of equipment are that are long lead items and could cause some timing risk. If we don't order them, we have the capital available to do that. And that's one of the next stages in the next month here is to order the long lead equipment. And then the last thing is to complete the engineering studies. I mean, as you come out of feed and go into detailed design, there's always two or three engineering studies that you have to do to get yourself into detailed design so you can advance the whole project in parallel. And so those are continuing. And there's, you know, again, capitalizing. We'll talk about that in a minute. And then reduce corporate costs. Now, let's be clear about what the corporate costs we are reducing are. As we look at the 2022 plan, we had in the 2022 plan things like, you know, early site selection at Toronto, So we had Toronto lease costs. We had Toronto business development costs. We had government and public affairs support for the Pacific Northwest. We had a general manager hire for the Pacific Northwest. So as we've looked at the plan, we're saying, look, are we gonna stop talking to the government guys in Toronto? Are we gonna stop talking to the people in the Pacific Northwest? Absolutely not. But we should be doing that with internal resource at this point in time. and stepping back to focus completely on delivering Calgary. The biggest de-risking that can be done for this business is, as I say, developing Calgary and delivering it out the back end such that it's commissioned, operating, and delivering the profitability that we think it should, you know, by the middle of, you know, as we come through and we're move to operation and commissioning in the middle of next year. That's the focus. But we won't stop the development work on Toronto and we won't stop the development work in Pacific Northwest. We'll just reduce the costs right back such that it's done internally and then when we're ready to go and we need third party support, then we can do that. So what does that mean from a funding perspective? Okay, so here's the refocus plan. We have a strong balance sheet, as I said, so that can enable the procurement of the equipment needed to step up the production at Delta, ordering of the long lead items. So we've already been to the board with that as part of the financing plan, and that's been approved. And then the third thing is continue the key engineering study. So any of the external support that we're using for consultants or engineers is not affected at all by this. So that continues on. So the focus of funding is going to be on the Calgary facility. We have had a huge amount of engagement with respect to this non-diluted funding and also the equity support too with respect to the whole phase one plan. And we don't need to do that. We just need to focus on Calgary. So the due diligence has been completed in most cases, and that's commercial, legal and technical due diligence ongoing by the same parties. And when we went back to the same parties to say, listen, we're not going to do a three plan programme, we're just going to do one plan programme, all of them were like, Okay, that's fine. Let's focus in on the one plan. We're still interested. And so that's a great place to be. And again, I've often said the target for this is between 50 to 60% from non-equity and non-dilutive sources. And that is before we add on the government money. So as we think about the engagement we have with the government agencies, to seek funding for the Calgary development. That is additional non-dilutive funding above 50 to 60%. So, I mean, the question is often, well, do you think you need to do equity at the same time? As you know, to do debt, often you need to have some equity involved in that. However, this is a much, much, much reduced scope. And the equity raised, we now have completely under our control to do it exactly the right time and to do it in the least dilutive way possible and not to do, you know, a $50 million funding, but actually have it way more focused. So... I hope that gives you a good view on where we are. So it kind of tells you where we are in the Q1 financials. It outlines what we've delivered in Q1. It outlines what's happened in Q2 and where we are in this refocus plan. Again, from a 10,000 foot perspective, where we are now is we have proved that this technology works. We have ongoing testing in all three of our key sectors. We have a scale-up plan that is being, where the design is being influenced not only by the pilot plant operation, but also from customer feedback, which is a phenomenal place to be as a designer and from a technical perspective. And as part of the, can we roll this out? We've just had affirmation from the market for step three about can we roll this out quickly? That there is huge appetite from a range of financial And infrastructure providers there's a huge appetite when we are ready to roll this thing out at scale so from the esg kind of 123 perspective of can we be successful, I think you ones kind of proven for sure we're in a phenomenal position. And then lastly. hopefully you can see that the leadership team and the board here absolutely is thinking about shareholders. It was a completely inappropriate time, despite my, you know, the appetite that we had to fund, you know, three plants, five plants, whatever the number was, it was absolutely an inappropriate time in this marketplace to do it. And so we think the refocus is exactly what we need to be doing as a business. So a bit of a blast through. Hopefully you can have a look at the PR as well that went out this morning to talk about the refocus plan. But yeah, Carson, do you want to fire out any questions?

Sure. Thanks, Aidan. I have a couple of questions here. First question is just on the site leases for Calgary and how those are coming along.

Yeah, so we've narrowed it down to two potential locations. We've always said that one of the things around site leases is that the critical point is not being necessarily close to customers or whatever, but it's being close to landfill, such that the guys here in their trucks are turning left to us rather than right to the landfill. And both of these are close to within 10 kilometers away from the Calgary landfill. So well situated. And one of the other things that's ongoing, of course, is the discussion, you know, in parallel is the discussion with the suppliers. I've always said that at the front end of the facility, it's likely given uh in in general you know it sort of depends on the city but a lot of cities have fragmented uh you know bin haulers and roofers etc and so the important thing is to you know to to appeal to each one of those and so that's where we have the discount to landfill uh quick offloading um you know giving the drivers a coffee etc and and kind of looking after the drivers but um The discussions in Calgary are kind of well underway and engaging those guys and Calgary a fairly, you know, kind of a number of different providers, so not concentrated. We've been having conversations in some of the other jurisdictions whereby the providers are more concentrated. And so all of that to say that I suspect that the contracting on the front end of the Calgary facility likely be kind of rolling front end contracts. I think in some other jurisdictions, we may have the potential to do some longer term agreements, which of course is fantastic from a financing perspective, and it's good from a customer relationship perspective. And so always we're kind of saying, well, as we look at the providers of the shingles at the front end, how do we extend that to get longer contract durations? But yeah, so I think likely as we go into Q3 here, we should have the site confirmed and then that will enable us to start the formal permitting process. Lots of engagement has been going on with both the kind of city level, municipal level and the provincial level with respect to permitting and respect to starting the process. But of course, we need the actual physical piece of land, the long term lease of the physical piece of land. And I would actually say, I kind of tripped across that, but the last thing I would say is likely we will not be purchasing the land, but it looks like for both opportunities that it would be a long-term lease. And my view, that's a kind of 10 to 15 year lease to make sure we're underpinning the success of the business going forward.

Justin Delacruz, hey Thank you i'm so just on the back of that, what is the level of government that approves the tipping fee collection and then similar to that what when can we expect to secure the collections license or the for tipping fees for the delta facility and is there any risk to that looking ahead.

No, the conversations with Metro Vancouver are ongoing. And so that process is progressing well. So we're very confident that we will be awarded the collections license for Vancouver. And so that is one of the underpinning factors of moving into commercial commercial operation in Delta is obviously being able to collect and we think the collection license in Q3 will get the collection license awarded in Q3. Sorry, Carson, what was the first question about municipalities?

What level of government approves the tipping fee collection and then the collections license essentially?

And yes, so. The jurisdiction in Calgary is slightly different, you need a permit to operate, but not a collections license so so each city has a slightly different jurisdiction in terms of what the permitting at the permitting is not only for collections, but also for operation, etc. But we don't see, we think the permitting process for Calgary will likely take a couple of quarters. So if once we have the site, you know, in the next while and we kick that off, we expect that to be concluded around about the end of the year and the conclusion of detail design.

Okay, thank you. Next question, just on the Calgary offtake agreement, if we could just touch on that with regards to timing.

Yep, so we think that that will be a... you know, Q3 event as well. The, you know, we have ongoing discussions and ongoing negotiation for a term offtake agreement. And again, I've talked about this before. I think it's important that at the back end of these facilities, you know, the offtake agreement is secure. It's for, you know, at least 75% of the asphalt, if not, you know, 100%. And it should be for a three to five year duration. As you know, I continue to talk about market-based pricing. And we've often talked about the way that these contracts should be set up, which is a market price, plus a locational differential, plus, you know, sustainability or green premium, plus a, you know, a quality effect, which can be up or down depending on the buyer. So we continue to discuss term off take at a market based price. And yeah, we would hope to announce something something soon enough for sure.

Okay, thank you. Next question. How does the new refocused expansion plan impact timelines?

Well, as you can see from the capital on the balance sheet and as Rosemary described it, the only thing that I think that it affects with respect to timelines is I don't think it affects the Calgary timeline as we've looked at it because the critical part of the critical element for Calgary is long lead items. And we have the capital to be able to buy the long lead items. So that's not an issue with respect to timing. So calorie timing, I think, remains the same. The only thing that I think it affects is the speed with the follow on for Toronto and the Pacific Northwest in phase one. And to be honest, I think the feedback has been, look, it's actually better from a timing perspective to have a little bit more perspective of getting Calgary to the point whereby it's up, running, commissioned, et cetera, before we start to construct in Toronto and Pacific Northwest. So that's not to say we will stop the discussion on Toronto and Pacific Northwest around offtake agreements, location, non-dilutive funding, government support, all the things that we need to do from a business development perspective, we would continue using the internal team. So I think it's literally the spade in the ground in Toronto and the spade in the ground in Pacific Northwest. probably my view would be that it's moved back, as we kind of looked at the timelines, probably moved back a quarter to two quarters. And I think that is reflective of making sure that Calgary has started up successfully. So from de-risking the full rollout of this across the continent, I think it's the right step to take. But in terms of in terms of Delta and in terms of Calgary, I think the timeline is unaffected.

Okay, thank you. Just two more questions here. First question is on Catalyst and for both the second quarter and the third quarter and what can we look forward to?

Well, look, I think Catalyst for second quarter and third quarter are all around are all around this refocus plan. So I think in Delta, it's going to be around, okay, you know, announcing the collection license. I think it's about announcing, you know, the first, you know, trucks of production that are going out for manufacturers testing and long-term testing, and then obviously moving towards the, you know, the full sales contract. I think for Calgary, it's the selection of the site. I think it's the offtake agreement. I think it's the commencing of the permitting process. And those are all, in my view, kind of Q3 catalysts. If we get to a point whereby we're comfortable with the level of financing support on the debt side, I believe that that is a Q3 catalyst as well, that just basically brings to the fore what we've been talking about today, which is the huge support on the infrastructure, whether it's infrastructure fund or debt side, the real capability there. So I think it's all about these two areas of focus, about delivering on Delta, and delivering the scale-up of Calgary.

Okay, thank you. Last question is just on carbon credits and how we should be thinking about that looking forward.

Well, Kelly Johnson, our Chief Sustainability Officer, is working on this plan. it's interesting, there's probably two things to talk about it. So the first thing is, you know, we need to establish a protocol and that's the protocol by which you can measure and then realize the carbon credits. That is not a speedy process. So again, that's why we don't have carbon credits in the $4 million worth of EBITDA that's in the model. So not a speedy process, i.e. it's kind of like, probably a year's worth of of kind of development or six months to two years worth of development so i think our goal would be that we have worked on on a protocol that starts to come into effect by the time we have you know calgary up and and fully operating because again protocol needs to be established but also you need the measurement in place in your and then you have to have the auditing place in the realization etc so so it's a it's a it's a fairly um It's a process that you have to, and you also have to get it right. So that's what we can do by ourselves. However, it is interesting that as people analyze the asphalt and some of the major customers analyze the asphalt, these are guys not only as I keep on talking about that have got billions of dollars of R&D, but they've got very sophisticated, they're looking at carbon in a very sophisticated way and all through their value chain. So we may have the ability to take this asphalt into, for example, some of these manufacturers into not the front, excuse me, the front end of the process, like a virgin product, but actually into the middle of the process. And so that might save not only the energy at the front end, but also potentially give a huge carbon advantage. So there's an integrated play here with our customers potentially where we look at the integrated carbon chain that includes us and the customer. So the protocol can be standalone or we can work with customers to develop an integrated protocol. And so, I mean, from a revenue perspective, I don't see any revenue potentially until certainly not next year, but into the following year. And I think there's a lot of work to do, but actually I think that the feedback from customers, again, because of all this testing that's been ongoing, the feedback from customers looks like there could be an integrated value chain play which can not only help our kind of asphalt sales price, of course, but can actually underpin the kind of ESG credentials of the business. Because when you have customers supporting you in that, it's very, very, very strong.