Northstar Clean Technologies Inc.

Welcome everybody to the North Star Clean Technologies Q2 2022 results and investor update. My name is Aidan Mills. I'm the CEO of North Star and great to be here. Actually, almost one year to the day of the anniversary of me joining as the CEO of the company. So great to be here and great to take you through this. Look as we've often said on these calls this is all about a regular update of the business to our shareholders and to give shareholders the ability to ask questions. Clearly lots going on in the last quarter and lots of press releases to discuss so we'll attempt to walk through a bit of an explanation on the business. And then, so Rosemary will take us through the, so the agenda is Rosemary will take us through the CFO report. And then I'm going to walk through a couple of things that have been pretty pertinent on the market's mind and questions that we've got. I'm going to walk through the kind of Q2 and subsequent events in Q3. I'm going to walk through a quick update in Calgary. I'm going to walk through the Delta operations update, and then I'm going to address a couple of areas where we have had a lot of questions, and that's around marketing and customers and also financing and some of the recent stuff that you've seen from us on that. So that's the agenda that we'll cover. A couple of housekeeping things. So as you know, we have forward-looking statements in here, and so a copy of that is on our IR deck on the website. And as we walk through the presentation, you can submit questions as we've done in presentations before. Carson will collect those questions and then we'll go through Q&A at the end. And last but not least, I'm joined by kind of three key people on the team. So Rosemary Pritchard, our CFO, Carson Seaton, who's our Director of Corporate Development, and of course, the Kin Communications team who are hosting the website for us and provide us with our IR support. So without any further ado, I will hand over to Rosemary to take us through the financials. All right.

Hello, everyone. Yes, I'm going to take you through the Q2 financial statements starting with the balance sheet. So starting at the top, we ended up with $2.3 million in cash at the end of the quarter. I just wanted to make a note here that that to be clear, this does not include the 500,000 that we subsequently received from Renewable You, which Aiden will talk about a little bit later. We have a working capital of 1.8 million, which is still at a healthy liquidity level. And our debt to asset ratio is at 0.33, which is still really good. Other items to note on the balance sheet, not necessarily on this slide, but on the financials themselves, We do still have a GST receivable of $481,000. $209,000 of that is due to the GST audit that is still ongoing. I have tested them a lot and hope it will get resolved soon, but that amount is still outstanding. $120,000 of that we should receive. $120,000 of the $481,000 we should receive next month. and the remaining is just timing of the GST returns. There's deposits on the balance sheet of $466,000, just to remind you that that's pretty much mostly for the Delta pilot plant lease, but there is a small deposits for Metro Vancouver for our collection license and deposit with BC Hydro. We have purchases of $500,000 in equipment, which as I mentioned in my previous session that we had started depreciating assets in February due to reaching steady state production. A new category in the financial statements this year is the equity-based compensation payable. So in January, we implemented a long-term incentive plan for the employees, which includes PSUs and RSUs. There are some amounts that are cash settled, which is now reflected in the equity compensation payable account on the balance sheet. The equity settled PSUs and RSUs will show in the reserves and equity as the stock options do. The details are all laid out in the notes to the financial statements. The loans payable is the capitalization of the equipment loan. and lease liability, net investment and sublease and right of use assets are all to do with the capitalization of leases and subleases under the IFRS rules. On the income statement, the comparative period here is Q2 of 2021. Just a reminder that this is the period prior to us going public and raising funds, therefore It's before we started all the R&D and marketing activities and hiring the executive team, so you'll still notice large variances between the prior year. So we had R&D activities of $290,000. This consisted mostly of consulting fees and site materials, which were necessary to achieve steady state production and to continue the bottlenecking process. G&A expenses, approximately $1.7 million. $1.4 million of those are cash-related. In those expenses, marketing was $134,000, which includes IR costs and publication costs required for being public and a few other marketing activities. Consulting fees of $57,000 were mostly for government relations and HR work. Depreciation, that was on the Delta assets. Professional fees of $234,000. We had a lot of legal fees relating to contract work, securities, governance work. And we had extra accounting fees for our shred applications and tax returns and also doing quarterly review engagements. The share-based compensation of $129,000. This is a non-cash item that relates to the stock options, RSUs and PSUs, and the wages and benefits of $499,000. We had a full executive for the quarter, as well as wages for the plant stuff. On the cash flow side, just to make a note that this is not a quarterly statement, this is a six month statement, so these items are for the January to June period, but we ended the six month period with cash used of 3.6 million. This is made up of 2.8 million of cash-related operating and R&D expenses, as we just discussed, with major cash expense categories being R&D, marketing, consulting, professional fees, and wages. We had purchases of equipment of $503,000. lease payments for Delta of 317,000 and loan repayments of 30,000. On the equity side, compared to Q2 of last year, we increased 69 million shares from 69 to 106 million. And this was due to the equity raise last July. Equity value decreased over the six months which was due to the operations loss and an increase in reserves for the share-based compensation. And that pretty much wraps it up.

Excellent. Thank you. Okay. So listen, I'm going to talk about Q2 and kind of the theme. I think we tried to I tried to share in the press release and, you know, kind of both yesterday on the upside and today on the finance side is that this is all about momentum. At the end of Q1, I came out and I said that I believe we had the elements for a strong ESG company. And to me, that's number one, a technology that works. Number two, it's the ability to scale up that technology. And number three, it's a clear and profitable commercialization strategy, or at least a clear route to that commercialization strategy. And I think we'll cover the operations in a minute, but I think some of the stuff that we came out with and talked about in Q2 and subsequently in Q3 kind of demonstrate that. We issued preliminary project economics just as we came into Q2 in April, and we believe that, and this was on the basis of the fee design for Calgary, so a rough capital cost of $11.7 million, which includes 20% contingency, plus we'll have associated costs for land and et cetera, et cetera. And so that all in my mind always brings the cost out, you know, kind of around about the kind of 13 and a half to 14 million dollar mark. But we believe that, and this is a conservative case, that this is going to generate, you know, over seven and a half million bucks worth of revenue, nearly five million of gross profit and four million of EBITDA per year. And as we did these economics, we were conservative. So this is a relatively conservative asphalt price. It is no sustainability premium for the asphalt sale. It is conservative operating targets. And I'll talk a little bit about that when we talk about Delta. It is no carbon credit revenue and it is very conservative, tipping for the assumption. When we think about the third element of the CSG, which is do we have a clear and profitable commercialization strategy where we believe that we have a clear profitable target and now it's all about the execution to get there. One of the other things that's really, really important was the LCA. I mean, I continue to talk about the low carbon footprint of this business, but ultimately we believe that with this, with the combination of the diversion from landfill that this technology enables and the fact that we have asphalt that's coming out the back end of the plant But even when everything, so ignoring any of the, you know, this takes all of the carbon footprint and puts it on the asphalt, it doesn't allocate anything to the aggregate or anything to the fiber. But even when you allocate it all to the asphalt that we have a 60% lower carbon equivalent footprint than the base case is absolutely huge. What it means is that we basically believe we have the lowest carbon asphalt product in North America. And when we go to municipalities, governments and customers and we say, look, number one, you can divert each one of our facilities, you'll be able to divert approximately 40,000 tonnes of shingles a year from your landfill. You'll save the equivalent of putting 60,000 barrels of oil in that landfill. And we have products that are 60% lower carbon footprint in the base case. That demonstrates to us that not only do we have a technology that will be fantastic when it's scaled up, but actually that delivers the products at the back end that people want. So I think that's important to kind of the important update for Calgary. And I'll talk about the timing of Calgary when we run through the ops updates. And one of the things and i'm not going to detail, but one of the things for for delta that's important, of course, was the receipt of the program license. So the way scale is being installed knowledge should be ready, as we roll into early September, and that will be able that will enable us to collect. To collection goes from from from the local area. And we have good commercial discussions ongoing with the potential for some term agreements for the Delta facility as well, exactly as we have for the Calgary facility and potential to term up supply of shingles coming in the front. I've always said that there'll be the majority, probably, of the shingles that are supplied will be kind of spot business and not termed up. But if we can layer in some business to term up, that'll be good. And obviously, from a revenue perspective, and we're very happy about this, is that that will start to generate revenues we see in the Delta side with our shingles coming in. Okay, so let's talk about Delta. So, I mean, one of the questions that has been out in the market is like, what's going on with Delta? Has the Delta production failed? Like, what's going on with this facility? So this is where I got a bit of reflection from one year in this job. And that is, this has never been done before. There is literally nobody around the world that has been able to develop a process that separates asphalt shingles into their individual component parts. When we've done patent work, the prior art search has said, nobody else is doing this. So this isn't like one of the jobs I had in BP or in, in Husky or any of the divisions that I've worked at where I literally arrived and moved in to run a business or to build a business, which was a multiple or a repeat of something that had been done before, because this has never been done before. So there's no blueprint, there's no manual, like this is the first of a kind. So there is no doubt as I look back over this year, there's been times of frustration with respect to Delta especially, and there's been times of learning But there's three things that I would like to share with you guys that is really important about Delta as you think about this business and the perspective that we have in this business. So the first one is this is a pilot plant. So this is not our first scaled up commercial facility. This will never be close to the performance that we expect from Calgary. So this is where we test everything that we are just about to build in Calgary. This is the test bed for commercialization. And when you test stuff, sometimes it works and sometimes it doesn't. The second thing is, and for you guys that have toured the facility with me, as I always say, this is an entrepreneur plant. It is not an engineer plant. When I walk into a process facility in BP, I will walk up to the control room. I will walk up to the control desk and I will see virtually, or I'll see on the screen, the whole plant and the measurement of the pressure, the flow, the temperature, the pump, which pumps on, what column is running, what height the liquid columns are, what the flow rates are, et cetera? That doesn't exist in Delta because it's a pilot plant and that automation doesn't exist. Calgary will be a fully engineered plant. And so that's where we take the test ideas and we scale them up and we make them commercial. And the third thing is the objective of Delta is not about production. The objective of Delta is to test all the elements that will be used in production in Calgary. So although that sounds like it's a contradiction, it's not. I mean, we have on the left hand, we have the, how do we optimize production? how do we maximize production on the right hand side we we have to just we have to decide okay well how do we actually test a piece of equipment and often that means actually shutting production down and and and and putting it in to test it but the last thing and kind of this is kind of the fourth bullet point which is really really really important is delta works the process actually works. It's producing asphalt and aggregate and fiber at the back end of the facility, such that we have been able to send those products to multi-billion dollar companies. I'll talk a little bit about customers in a minute, but those have been coming out of our facility since the beginning of the year. and continue to come out of the facility to all the people that are interested in offtake agreements and development agreements and et cetera, et cetera, et cetera. So we know it works. Our customers know it works. And it's all about the, OK, now how do we optimize that? So I think we've told people that we did some operational improvements at the last shutdown. And let me tell you how we got that. So firstly, the shutdown, we were able to install some stuff whereby there's no better way to understand how to operate a plant than to operate a plant. So as we ramped up and kind of towards the middle of Q1 out of Q1, that operation told us exactly what was going on and exactly as you move from process six to process seven, what was happening. And if you change process six, why that affected process nine. and process 10 didn't work if the flow was too fast coming out of process nine. So the complexity of actually operating a plant and deep bottlenecking a process is, I mean, technically it's not easy to do, it's a pain in the ass, you need a lot of patients to do it, but operating the plant helped us do that. And so I'll give you a very good example, and I'll give you a couple of examples of each one of these, be interested to hear the questions at the end. When we first looked at the Delta facility, as you guys know, we have a hydrocarbon unit on the facility. And when we first looked at that hydrocarbon unit, we were kind of thinking, okay, well, that's interesting. Let's come in at nine o'clock in the morning. The front end will be running. We'll turn on the hydrocarbon unit and we'll turn that on at night. It'll probably be ready about 11. We'll be able to run production through until about four and then we'll be able to shut it off. Well, I can tell you wholeheartedly that that does not work. So what does work is, You turn that hydrocarbon unit on and it'll be up to temperature and ready to roll probably in about half a day. Probably. Maybe a bit earlier, but that's roughly. And then what you want to have done is built as much inventory in the system to be able to run that 100% through that unit flat out until the inventory is drawn down and you shut the unit down. So it's exactly like a refinery that has interim units and has intermediate storage. And now, interestingly enough, as we look, if you came to, for people that were on the turn belt, if you came to look right at now, you'd see way more intermediate storage whereby sections of the plants are producing and then it's stored before it rolls onto the next section of the plant. And that will have to go into the detailed design in Calgary, which is fine because actually now we know how to run that hydrocarbon unit in an optimal way. One of the other things that's really interesting is the hydrocarbon unit that we will be similar that we will put in Calgary, we've been talking with the manufacturers on the detailed design and the long read items. So that's the second point of input into our process. And the manufacturer, the hydrocarbon unit, was like, well, interestingly, are you doing this? And we were like, no. Are you doing this? If you do this, we would recommend doing this. And so actually by engaging those manufacturers with respect to the detailed design of the plant in Calgary, now we're getting feedback that actually not only can we implement improved production and improved productivity, but actually we can also test it out to make sure that that's going to work in the solution in Calgary when we want this thing to be developed. And the last thing is the customer. So I'll give you a really good example, again, a specific example from customer feedback. So one of the shingle manufacturers, so we have aggregate that comes out the back end of the plant, and we know that can go in the pavement. It matches blend mix for aggregate paving, for roads, absolutely fine. One of the shingle manufacturers came back to us and said, actually, we've taken the aggregate sample, we've analyzed the spec, and probably about 75% of this would be really useful for us. Can you actually get rid of the other 25%? Aggregate handling on the back end of our facility is really easy to do because you just put it through a different sieve and a different sorter to be able to take that 25% split to get to the 75% that they want. But they also said, well, it's interesting, though, because it's actually probably a bit too wet for us can you dry it at the back end? Now that's a different question because that ups the energy level of the plant, but also it's an economic question. So if the shingle manufacturers are going to give them 50 cents more to do all that work, capital equipment and drying versus the paving guy, that's not worth doing. But if it's going to be $30 more per ton and you multiply that by the number of tons that are 20, you know, 20,000 tons a year, that's a sort of a different economic question. So the feedback from the customers on the specification of the products that we've been doing and their recommendations back into our process have been fantastic. So the plant's running now. In the PR yesterday, we said we believe we will exit the year in Q4 of 50 to 75 tons a day. I think that's a reasonable number given what we've seen so far. And we're planning to do one more shutdown. So some of the manufacturing feedback and the customer feedback, we have been able to implement along the way, but actually we need a second and last shutdown of the year to implement the recommendations. And after that, I think we'll be debunking that to get to the 50 to 75 tons a day. Everybody in the market can go, well, is that a risk? Well, of course it's a risk. I go back to my introduction on this topic. This is a pilot plant. So as we think about its operation, it's a risk. But are we testing all the things that we're trying to do in Calgary so we bring this up to be a completely commercial plant? Are Calgary a completely commercial plant? Absolutely. And that's why Calgary has gone to Q1. Calgary has not gone to Q1 because we've run out of money. It hasn't gone to Q1 because we don't think the process works. It's gone to Q1 because through the balance of this year, we've decided as a management team that we want to test everything that we can to make sure we de-risk the Calgary scale-up. So that's why we actually took the explicit decision to move the detailed design of Calgary back to January, because that's the right thing to do from a technical de-risking perspective. I believe we'll come out at the end of the year with a very, I mean, Calgary, does Calgary still have risk? Of course it does. We're going to 3x the production. But I think we'll come out to the back end with a very clear understanding of how our processes are working from 1 to 15 along this manufacturing route. And so that to me is super, super important. And that's why we moved Calgary to Q1, contrary to some of the other views. And okay, so I haven't pulled the slide together with this, but but I actually want to want to want to talk about it and and that's around customers and finance. So. The question about customers is really interesting because we keep on getting asked, where are the offtake agreements? Where are the customer agreements? What's going on with customers? And so let me try and address that. And I'm going to try and address that from a multi-billion dollar company perspective. As I tried to think about how to address this, I kind of thought, well, why don't I just talk about what we would have done at BP? Because the companies that we are dealing with here are the same size as BP, roughly. Okay, so at BP, if we had an independent contractor or an independent manufacturer that had a $20 million market cap and a really great idea come to us with a game-changing new product, we would have done absolutely exhaustive testing. Like our R&D people would be all over it. And when BPR&D people step in to do analysis, they have rigorous, detailed, exhaustive processes that they go through before they even come back with a technical sign-off that says, yes, that's not the commercial sign-off. That's not the strategic sign-off. That's literally the technical analysis that has to go on with respect to the product. So let's think about where we are. So we've got this brilliant idea. We've got this product that's now coming out of our facility that we think is game changing. And we believe there are three sectors that this goes to. It goes to the paving sector, it goes to the shingle manufacturing sector, and it goes to the flat roof sector. And we know because we've been sending the products out to multi-billion dollar companies in those sectors, and we've sent out our asphalt, we've sent out our aggregate, and we've sent out our pressure. But think about these projects and think about these customers. They're under huge ESG pressure, but this is the first product of its kind. We are telling them this is the lowest asphalt, lowest carbon footprint asphalt in North America, full stop. Actually, we think in the world, full stop. So if you're the company that's thinking of buying it, could you be excited about this? Of course you could. But think about the technique. So think about the corporate technical risk of taking that first step. The ESG risk, the PR risk, the commercial risk, if it doesn't work. Now, sitting on this side of the table, I'm very confident that this product works, but you've got to think about the crazy level of sophisticated processes that multi-billion dollar companies have to go through before they sign that off. So, My advice to the market is be calm. We're doing exactly the right things by sending these companies repeated high specification products that we believe works. And they are working on the detailed R&D to integrate it into their manufacturing processes. I can tell you that that is happening. I clearly can't give you a list of who it's happening with, but I can tell you that is happening. So when a multi-billion dollar company decides to make the decision to do wherever the location is, whether it's US, whether it's Calgary, whether it's Delta, whatever, when they decide to do an offtake agreement, we will tell you. But that's what we're working on. OK, and then let's talk about financing. So I'm going to answer the question that isn't everybody's up. OK, well, when's the equity raise? So in June, we came out with a refocus strategy and we said, okay, we had a lot of input to the potential for the $50 million program to build three plants. That was non-dilutive funding. It was dead. It was equity. Lots and lots of feedback, lots of great partners, lots of alternative structures as well. So as you know, we came to the market and said, look, this is not the right time to raise equity. So we absolutely reduced the burn rate. As Rosemary says, our cash position's fine. So we do not need equity tomorrow to fund the business in the way that we're running it now. We focused on Delta and we moved on to a single cloud. So we kind of said, right, let's focus on, let's focus, let's focus just on getting Delta done. And then let's focus on, let's focus on, On Calgary. And then we came out and did the PR about the renewable duty. And it was clear in that, that that was a three plant deal, not a single plant deal. So everybody's like, okay, what just happened? I thought you PR that you were looking at single plant and blah, blah, blah, blah. And like, so what's going on? So here's what's going on. So clearly I can't cover the commercial detail, but I can tell you that the high level for the PR is that this is a three plant deal. It involves not only debt, but also equity. So if you look at Renewable You and you look at the deals that they've done in the past, they've provided debt, they've provided capital, a capital structure for plants and projects to get built. It's on the front end, the capital gets provided. On the back end, it's a dividend sharing structure at the back end. And we said, well, OK, that would be interesting. But actually, to do a deal with us, we would need some equity support as well. So it has to be the three things of three plants, debt support, equity support, and then we'd have the dividend structure at the back end. depending on returns and all that kind of good stuff, you know, lots to be negotiated. And importantly, the discussion with Renewable You was exactly the same discussion I had when I talked about in the PR before, which is we do not believe that the market price that reflects North Star's value is 15 cents. We believe that the market price is in this range. The 40 cent range. So I actually think it's higher when we look at the commercial loans. However, we believe that that was an appropriate level for, for, for equity for North star. And, of course, the surprise in the market was, well, why would these guys pay this amount of money? I'm not going to speak for renewable youth, but I can tell you in the discussions that we've had with them, they believe that the value of this company is not the 15 cents that are reflected today. And the deal that we would do with them, should we move to binding, well, we'll have all of those components that I talked about. So we'll have the debt component, we'll have an equity component, It will have a dividend sharing component and we are engaging with them to move that structure to binding. However, let's be clear, as we said in the PR, When we were engaging a number of different companies around financing options, we had a number of different companies who had good suggestions and good proposals. Renewable You were one of them, and we had a number of others. So that's why the Renewable You deal at this point in time is non-binding and non-exclusive. If we move binding and exclusive, it will become that binding and exclusive. But we still have choices to make and timing to make as to when that point is. But we're talking to a number of different companies, so we have a number of different options. But that's the context on kind of renewable youth and where we are with that deal. And again, the most important thing about this is not the structure, the most important thing is, we have a potential partner who were engaged with who believes that the value of the shares is not 15 cents is reflected in the market today, but they actually see the value that we can deliver us as these plants commercialized. And i'll talk. We don't really need to kind of go through the delivery timeline. I think I've given you kind of enough context as to where we are. I think there's three big things to take away in the summary for this. And it sounds like I'm trying to aggressively answer some of the questions we've had at the marketplace, but actually I think this is just good for us to have an open conversation about what's happening with the questions that we're seeing and what we think that sentiment looks like. Delta works. So the Delta facility, and so in summary, three things. Delta, the facility works, but you have to remember it's a pilot plant. I'm confident about the exit rate as we come out of Q4 and come out of the shutdown in November. I think 50 to 75 tons a day is realistic. But the most important thing that Delta does is de-risk calorie. The most important thing for this company, the big step that we need to take is from Delta to our first commercial scale-up facility. The second, the third, the fifth, the seventh, whatever, all those steps will be incrementally smaller. The biggest risk to this company is the step up to Calgary. And that's why we're using the time to de-risk it by using Dublin. Customer engagement is strong. We are sending samples to multi-billion dollar companies across all of the three sectors we are targeting, paving, shingle, and flat roof. Detail testing is ongoing. We have R&D divisions who are giving us feedback that we can help implement into the Calgary design. That's a set of engaged customers. We're in a spectacularly fortunate position. We're a $20 million company and we've got billions of dollars worth of R&D might helping us with what we're doing. And the last thing is financing. I mean, these are the quarterly results. My view, Rosemary's view is cash is fine. We refocus in the refocusing. We pull the burn rate right down. Do we need equity for the capital build? Of course we do. And we're working on those options. Renewable you is a viable alternative for one of those options. And we're looking forward to engaging in those. and we will we will finance in a structure which will number one minimize or maximize the you know non-diluted funding and number two minimize the equity um but if we need to come to the market at some point in time um to support the project finance funding for uh for for the capital bill then that's exactly what we'll do so Carson, I'm not sure if that generated any questions, but fire away.

Okay, thank you, Aiden. As of now, we only have one question, and that is what sort of process improvements are we finding at the pilot facility? And are we able to talk about how they might improve our key operating assumptions for Calgary?

Yeah, I mean, I... You know, we've got 15 different processes in this, you know, kind of from front to back. And I think, I could literally give a four hour presentation on the improvements and what we've seen as we've gone through the 15 different steps. And some are within the process and some are going from process one to process two. And some are a bit like the discussion, a bit like what I described on the hydrocarbon unit. That unit needs to be run. Essentially, if it had inventory, it could run 24-7. So as we think about the hydrocarbon unit for Calgary, we have to think about how we organize our inventory and how we organize our inventory delivery. which is, ironically, exactly what you have to do in a refinery. If there's anybody in the call who's a refiner, they'll be like, well, of course you have to do that. You've got crude storage at the front end. You've got a crude distillation unit. All that stuff goes into intermediate storage. So when you're dealing with hydrocarbon units, understanding what your inventory and what your blending is, et cetera, et cetera, And so that's operational. The customer feedback has helped us. It's helped us it will actually change the design from Calgary because of the customer testing. And the manufacturing testing that we have for the units in Calgary has also given us some stuff to retroactively fit at Delta and then roll that into the detailed design. So of course, I guess a bit too much... too difficult to list, to go through the list. But those are the three big areas that we've got feedback from that are helping us.

Okay, thanks, Hayden. A couple more questions coming through. With the revised schedule, when do we expect the Calgary facility will be fully operational?

So I think we would, I mean, our target would be to have the Calgary operational constructed and kind of running by the end of Q3. It's going to depend, so the ramp up period would start in early Q4. In our views, we've got that as a kind of three to six month timeline. We think that'll be shortened significantly for future plants, but early 24, I would think, would be my gut feeling.

Okay, thank you. Has the Calgary site location been narrowed down and where are we at with that at the moment?

Yes, it has. So we have selected the Calgary site location and are undergoing the discussions on it and we'll be releasing that likely in due course. We expect the lease to be signed likely in early Q4. Sorry, this year. Okay, thank you.

Have we approached Calgary for a permit for collecting tipping fees? And what's the status of that?

Yeah, so we have discussed with, we've discussed permitting at the provincial and municipal levels for Calgary. Calgary has a slightly different setup than most jurisdictions around tipping fees. I believe, and Alan Gervais, our general manager, isn't here in the office today, but I believe it's an operating license, not a collection license. But all of the permitting, all of the discussion on timeline and licenses, etc. Yes, we have commenced that engagement with both the province and the municipality.

Okay, thank you. What are we seeing in terms of trends for tipping fees or outputs? And are they resilient during recessionary periods?

Yeah, I think so from, I mean, I'll give you a CEO arm-waving view. The 10,000 foot level is the tipping fees are not coming down. And given, despite recessionary effects, given the diversion mandates that governments are continuing to ask municipalities to deliver on, we are not seeing tipping fees come down. And so in the municipalities that we're really engaged with, of course, the discussion is around if they have a viable alternative to divert 40,000 tons of shingles, is there additional incentive that's available for doing exactly that? No municipality will be able to point to us and say, you have to go here. That's not what a municipality can generally do legally, number one. Number two, in general, municipalities, you know, if municipalities decide to incent or put a higher fee in, they have to be certain the diversion that they expect to happen actually happens. So again, from a North Star perspective, we believe that tipping fees will only increase over time, higher than inflation. Number one, that's a fair assumption that we've had. Now, in our commercial models, we have not done that. But that's our expectancy. And number two, when we offer a viable alternative, we think there's upside with respect to tipping the tipping fee charge for asphalt if we offer a viable alternative. And again, it comes back to Calgary has to get built and Calgary has to demonstrate that it's a viable alternative. So that's the big step for the company is to deliver in Calgary.

Gareth J. Regarding regarding delta what's a conservative price for asphalt and is 30% of the weight of shingles a reasonable estimate for the percentage of Asheville.

I think in our models, we have had 25%. It depends on the shingle. It depends on the age of the tile. So, yes, I think our commercial models have 25% in it. So one of the things that the testing in Delta is all about as well is what is the yield as we move through that process? What's the yield? So, sorry, our commercial models, I think, have got 50%. So 50% aggregate, 25% fibre, 25% asphalt. So one of the things that we are doing at Delta as well, as we look at production, is looking at, well, what does that yield actually look like? Are we getting the right yield out the back end? Are we getting the right yield from aggregate? What does that look like? Et cetera, et cetera. So that's one of the ongoing measurements to demonstrate the success of the process and the economics, et cetera, et cetera. I mean, there's indices. uh, in, in a number of publications, um, that has, that has the, uh, market price for industrial asphalt. Now you can't take the retail price, uh, the market price for industrial asphalt. I mean, that's probably across North America ranging anywhere from, you know, kind of 700 to a thousand dollars, uh, per ton. Jack Coldrick- For for you know, like the spot price today not not the long term this kind of contract rate but but that's probably you know where the market will be today spot perspective.

Jack Coldrick- Okay, is the discussion of licensing on the table. Jack Coldrick- And so.

We are not talking to any of the customers at this minute in time around licensing. Our discussion with customers today is as we laid out from the very beginning of the strategy, which is long-term off-ticket agreement. I believe before we license this technology, we probably need to build five-ish facilities so that we can demonstrate this is a deployable technology and we have a package after plan five that can be rolled out either where we build on and operate in different marketplaces or we have a customer that would license the technology. I believe that the licensing of that technology is going to be very, very clear. If you build plant eight, you have to build the exact North Star plant because BBA, the engineering company, are providing process improvement and the process improvement feedback is coming from every single plant. So it will come from, when we've built 10 plants, they will have data from 10 plants flowing back to the process improvement technology where they're saying, actually, that unit, that could be like 5% bigger. That pump, that could be 3% smaller. That water transportation system, that should be going through a six-inch pipe, not a four-inch pipe. So as we look at the optimization, everybody who has a North Star plant will have to build exactly the same North Star plant. I mean, it'll depend a little bit on kind of like climate, I guess. It might be slightly different. But the base plant will be exactly the same and all the data needs to flow back. So until we have the confidence that we can roll plant number seven exactly the same as that working plant number six, we have to do that first. So as we look at the long-term strategy of North Star, could we see licensing in there? Absolutely. Because there are markets that we would find attractive or we would find not so attractive that other people may find attractive and would be like, can I license a technology for a market that isn't one of our, for example, top 10? That's an absolutely appropriate business strategy and it's something that we would entertain, but we have to get the technology to a point whereby it is licensable.

Okay, that wraps up the questions here.

Excellent. Well, listen, once again, Thanks to Rosemary. Thanks to Carson. Thanks to Kin for setting up the setting up the call. And yeah, look forward to look forward to feedback. And, you know, as you know, we've got the contact details here, but, you know, directly to Carson or to Kin. And please, please let us know if there are any other follow up questions or as I've always said with with with. shareholders, it's important for us to listen. And if you've got any additional questions, you want to talk about anything with us directly, please let us know.