Northstar Clean Technologies Inc.

everybody welcome to the q4 2024 and full year 2024 financial results uh an investor update um as usual same kind of uh admin as we've done over over the last um few quarters so please Put your questions in and we'll pick those up as we go along. And then we will have the team ask the questions at the end. And so, yeah, the plan, of course, is to take you through where we are with the financials and the results, obviously, that came out with the press release this morning and do an investor update. So without any further ado, and obviously, of course, forward-looking statements. We will be making forward-looking statements, and this is obviously the disclaimer with respect to that. And now I'll hand it over to Greg Feneff to take us through the financials.

Greg. Thanks, Aidan. Good afternoon, everyone. This represents my first North Star earnings call with the markets. I'm honored and privileged to be part of the team. And I look forward to many, many more of these calls with you as we begin to post operational results. Just a few financial highlights for me that occurred during the 2024 fiscal year prior to handing it back over to Aiden. 2024 represented a significant year in the capitalization and funding of the company, the proceeds of which served a multifold purpose. One, funding construction efforts on the inaugural Calgary facility. Two, providing capital dedicated to sourcing, analyzing, and securing future sites as part of the exciting growth plan for the company. And three, funding the operations of Northstar itself. Cash balances at the end of fiscal 2024 were $10.2 million compared to $7.6 million at the end of fiscal 2023. During 2024, Northstar through various vehicles raised over $28 million, the majority of which were non-dilutive to existing shareholders. Together with receipts from government agencies, the company received nearly $30 million in cash to fund the business. The majority of these funds were dedicated to the construction during 2024, as I mentioned of the Calgary facility. The company recorded $19 million in capital expenditures and $1.5 million in deposits paid for existing facilities during fiscal 2024. 2024 also represented an important year from the perspective of generating increased revenues from tipping fees. Revenue for 2024 was $640,000 compared to just $206,000 for fiscal 2023. As has been communicated in various press releases, we anticipate commencing full operations in mid-2025, and as such, quarterly results will reflect material increases in revenue and operations. From a cost perspective, cash expenses for the year totaled $4.8 million, As compared to 4.1M for the prior year, the increase is due to additional personnel and a broader scope and operations for the business. Research and development expenses were nil for the period compared to 778,000 for fiscal year 2023. As the company evolved from pilot operations to full commercial operations, requirements for R&D diminished. Having said that, we would anticipate only minor amounts to be spent on R&D going forward as we fine tune operations and perform product testing for specific future markets. Comprehensive loss for the period was $9.3 million compared to $6.7 million for fiscal 2023. As the company moves to full-fledged operations and anticipated profitability, these losses will be used to significantly shelter income from taxes. We forecast our tax payable horizon, assuming our state of growth plans for plants, to be several years into the future, thereby leaving more cash in the business itself to fund growth and in turn minimize dilution to existing shareholders. One final note from me. We included a more detailed analysis of our issued and outstanding and fully diluted share capitalization in our management discussion and analysis to aid current and potential shareholders understand the somewhat complex capitalization of the company. Assuming all existing securities that are issued and that could be issued upon conversion of certain debentures are in fact converted, Northstar would have an outstanding share base of 274 million shares, but would bring in an additional $20 million in proceeds upon various securities being exercised. I would welcome any questions as part of the Q&A, but for now, Aidan, back over to you.

Great. Thanks, Greg. That's great. And great to have Greg on board and great performances we got through the audit, which is always a heavy lift for the finance team. So great to have that team here delivering that. Okay, so investor update. So look, we chatted about this as we came into the year, that there were kind of three objectives that we had for 2025. So the first one was to deliver the Calgary facility and ensure we were up and operating by kind of middle of the year. The second was to develop the 2026 site such that we could start construction in 2026. And then the last thing was obviously to develop the portfolio such that we could really identify, you know, at least the next 10 facilities or next 10 locations For us to start to start the development work in it, because obviously, you know, permitting, you know, the earlier you can identify areas, start to secure supply and start the permitting process, the better. So the key to liberals, I'll talk through most of these in the in the next slides, but obviously all of them align with those three objectives. And I think it's also worth reflecting just at the end of at the end of the at the end of the year, kind of like what we actually delivered in kind of 2024. So, you know. The left-hand side are all the things that we think are important with respect to, you know, where are we with the strategic offtake customers, where are we with the strategic investors, et cetera. And if you look at the highlights that we had for 2024, it was a fairly barnstorming year. You know, obviously discussions ongoing with Hamilton and US One, you know, secured 14 million from our partners at CVW, you know, 1.8 came in from Tamco and the completion of one of the, you know, one of the ERA funding stages. We had ERA come in for the first milestone we delivered on milestone one. We had 2.25 million come in from strategic Calgary investors, including the Chew family with Patrick joining the board. You know, we secured feedstock supply for Calgary. We started, you know, we identified exactly where the first TAMCO facility to be supplied was. And remember with the TAMCO investment as well, so we extended the number of sites that TAMCO will take from three to four with the extension of the MOU. So all of that lays a phenomenal foundation for stepping into the U.S. I'm actually at the Planet Microcap investor conference in Vegas today, and one of the key points that I've been making to investors here is, if you think about the 16.5 million tons going into landfills or destined for landfills across North America, You know, about one and a half of that is in Canada and, you know, 15 in the US. So really understanding as we develop this portfolio, what the US options look like is absolutely critical. So, you know, we started to draw on the BDC loan. We had, as I said, milestone one payment come in from ERA. And most importantly, we started construction during 2024 on the Calgary facility. We've been putting out the construction videos and we'll talk about that in a little bit more detail later. But yeah, obviously a very important milestone for the company. You know, technology continues to go, so R&D work is continuing to develop. The IP, you saw most recently that we added another patent for Canada. And with respect to emissions, the measurement and monitoring protocol that we have to adhere to with the emissions reduction Alberta work has already been kicked off and we've been doing measurements through commissioning. So You know, like we always talk about what are the, what are the fundamentals of the business and what, what are the foundation? And, and I think, you know, that's one of the things that we've been building as we've gone over the last kind of three or four years. Um, but yeah, I think we can might've, uh, I think we can might've 2024 with a very, very solid foundation. And clearly one of the most important things, and again, ruthless focus from the company is the Calgary facility. So we collected the feedstock for commissioning. We constructed it, you know, completed construction in kind of March. And then we started commissioning. So as you'll have seen from the video at the beginning of this week, commissioning on the front end, on the aggregate separation, is actually complete. One of the things that happens with commissioning uh construction projects and that i've seen through my time in uh you know mbp and the like is that construction hands the plant to commissioning to commission it and commissioning hands it to operations to operate it and that's the ultimate um kind of destination is when it when it gets to operations and the front section of this plant that does the aggregate separation and the production of aggregate. So our first product has actually been handed from commissioning to operations. So as the commissioning guys are focusing on the back half of the plant, The operations guys are now running the front half to give them the feedstock to process and commission in the second half. So that's a phenomenal place for us to get to. We continue, as I said in the video on Monday, we continue to expect the plant to be operational by mid-year. And that that has not changed. We've got great confidence in that. And, you know, the the first stage, the water stage, which obviously, you know, provides aggregate that first product, but also provides the fiberglass covered in asphalt to go on to the hydrocarbon side is working really well. So we're very, very we're very happy with with the progress of that. You know, the expansion plan, you know, we've looked at 2026, we've always had kind of, you know, kind of been chatting about three options. So Hamilton, US 1 and Vancouver. So kind of in reverse order, as you saw the press release, we were able to extend the lease agreement in Vancouver, an extension from five years to 15 years, which obviously can work, you know, the economic life of a facility. And so that's obviously, you know, an expansion option. Hamilton, we have kicked off the permitting process. So the consultation of our pre-consultation process has started. We've been working with HOPA on the lease agreement. And as you saw already in Q1, we had the LOI with York 1 for our first tranche of supply. And again, All those things are important to make sure that we have this pulled together to be able to sanction it in the second half of the year. US1, again, in 2024, we identified the Frederick site in Maryland to supply for TAMCO. And so now it's all about site selection. And so we've been going through kind of pretty rigorous site selection all the way kind of from Philadelphia down to Baltimore and, you know, Delaware in the middle. And so lots of, yeah, lots of work being done on that. And we're hopefully going to have something to kind of announce here in Q2 with the site selection. And obviously important because then, you know, that kicks off the permitting process as well. So good progress on all those three. I'm not going to go through in detail either the Mid-Atlantic or Hamilton. It's in the slide pack and it's also on the deck on the web. And look, the last thing I would say is, you know, people have heard me talk a number of different times that this isn't, we are absolutely at the tipping point of the stock here. I chatted with, you know, when we're chatting investors down here at the MicroCab conference and my point has been, Look, up until this point, this has been a technology story. Like this has been a technology stock. It's kind of like, can they take this idea and make it commercial? We're literally, in my opinion, you know, six to eight weeks away from demonstrating that, you know, middle of the year. And I think this story will pivot rapidly to be not a technology story anymore, but to actually be a deployment story. And so we're not going to be measured necessarily against the highly progressing the development of our technology here. we're going to be measured against how can we deploy this um more quickly you know how when you know what stage do we add licensing that we've always talked about in our strategic plans you know how do we how do we develop the 10 next sites and actually have the resourcing to start working those straight away and if you think about the 10 000 foot number and you think about you know and you think about, you know, 10 sites all delivering, all having the potential to deliver something like, you know, five to 10 million bucks, depending on what the volume that goes through that, that gets us to a completely different conversation with respect to, you know, as Greg says, the earnings calls will be talking about how we're deploying plants, what are those plants delivering, what is the EBITDA, you know, difference between kind of plant one, plant three, plant five, et cetera. and it'll be a completely different conversation. So when I say that I believe we're at a tipping point, those are the fundamentals that I kind of hang on to as we chat about how we expect the stock to do. I mean, great, we got awarded the Venture 50 for TSX performance last year, and I'm expecting, hopefully, to do exactly the same again this year. So, yeah. I think lots of upside, I feel. And I think from the business perspective, I think we're in great shape. We've got an excellent facility that's literally, you know, commissioning as we speak. And by mid-year, we're expecting to be supplying some product. So, guys, I think, Matt, I think those are my remarks.

Thank you, Aidan. We can move on to some Q&A now. Our first question is related to tariffs. So how do you foresee the Donald Trump tariffs impacting the fundamentals of the business?

You know, I think I got quoted at the end of last year saying that I wanted this business to be the Tim Hortons of asphalt shingle reprocessing. Actually, down in Vegas, I've had to change that to the Dunkin' Donuts, to be fair. But yeah, we have a local collection market. So it doesn't matter if you're collecting in Hamilton and Canadian dollars or you're collecting in Philadelphia, Atlanta, and US dollars, the collection is local, the manufacturing is local, the jobs are local, and the production stays in country. So US one, it's getting collected locally, produced locally, and it's going to TAMCO. Calgary, it's getting collected locally, it's getting produced locally, and it's going to McAshfall. Now, to be fair, it's in US dollars. So we have US dollar exposure because all commodities, as you know, from an asphalt perspective are in US dollars. Whereas collection in Canada would be in Canadian dollars. So there's definitely an exchange rate difference. And I think the only thing where there could be any impact whatsoever is if we were buying, if we're constructing in the US and buying equipment in the US and the equipment was coming from Canada or vice versa. There may be a tariff on the equipment, but of a $20 million build, it could be 250K or 500K maybe. And all our suppliers have got international options too. So we may be able, for example, to get a piece of equipment, which in Calgary we bought from Texas, that they may have a European division where we may buy it from France. So, I mean, there's definitely supply options and I don't think the core of the business is affected really at all because we're so localized.

Thanks for the very rigorous answer there. Sure. I have a few Calgary questions here, so I'm going to combine three or four of them. So what are some of the biggest lessons you've learned through the construction and commissioning process for the Calgary site? And also, how does that carry forward as you deploy the business?

Well, I mean, I've always used the technical term to say when you're constructing the first of its kind or you're commissioning the first of kind, it's always going to be a bit of a shit show at times. And, you know, you learn a lot of lessons about, well, what would you do with your plan? What would you do with your process? What would you do with your equipment? How do you put it together? How do you interface between the various modules that we've built? And all of that provides brilliant learning. The board came to site at the beginning of April. We took them through the plan and then we went through the lessons learned of how we think we can improve it. And it was like two slides. And that was just as we were coming into commissioning. And I suspect by the time we get to the end of commissioning, there'll be another slide with bullet points on it about lessons that we've learned as we've gone through. So I definitely think, and I've always said that I believe the capital for the run rate to build new facilities will be lower than Calgary. I continue to think that. And I think the speed of deployment will be quicker. One... Really good example of that is when we run Calgary, we know the set points to put in the control system for the next facility. Today, we do not know that. That's why we're commissioning. So that's why commissioning has taken... longer in calgary because it's the first facility but once it's once it's operating and you know you know the the set point for the level on one of the mixing tanks is x um like you literally just pre-program that into into the hamilton system and the control system is literally ready to turn on and go now yeah you still have to make sure the interface works you still have to start at the front you still have to you know work your way through commissioning But it will not take the length of time that it takes now. So I think the lessons learned will provide benefit for, you know, for lower capital and faster deployment of both construction and certainly commissioning.

Thank you. The next question is sort of more about the Calgary site from the community perspective. So how has the reception been locally? You know, any noise complaints from the neighbours or anything of that sort?

No, I mean, the Calgary site, we've been we've been. working there since the beginning of last year when we started collections. So I think truck traffic has been pretty steady. I think some of the neighbours in the area were getting fairly excited about the parking on the street because there were lots of people involved in constructing this building, as you saw. you know, we've, you know, and touch wood and, you know, great without a lost time incident, which was very, very, very good for the safety for the site, which was important. But yeah, and I think, you know, obviously one of the things as we hire workers, as you've seen, you know, we're bringing on the operations team. The key reason that we are able to operate the front end of the plant is because we have You know, the operations team in place, not fully resourced quite yet, but pretty close. And so I think that that's been good. It has been interesting, actually, that, you know, the people that have joined from the operations team are also very excited about not just joining and not just getting a job with a company that's kind of like building, you know, has built a facility in London. in Calgary, but actually are very excited about the development and growth journey that we're on with this company and that this is the first of its kind and this is number one in a line of 300 or however many we end up building. But yeah, so I think that's been really well received and it's been great to bring local workforce on in the Calgary region.

Our next question is related to, so how do you view expansion opportunities comparing the United States and Canada? Like how are you evaluating?

I mean, as we think about expansion opportunities, I mean, people who've heard me talk about how we analyze sites, we kind of, we have a pretty sophisticated matrix that looks at both kind of objective and subjective kind of things. subjective kind of measures. So the three big ones are what is the local oil price or what is the local asphalt price? Because obviously there's regional differences, number one. Number two, what is the tipping fee in the region? Because obviously we generally discount to incentivize, but the starting point of the index is the tipping fee. And more Interestingly, this year we've now started, or sorry, 2024, we've actually started to assess and what is the shingles kind of, what is the shingle size in that location? And what I mean by that is if we can do 80,000 tonne, sorry, if we spend the capital and the Calgary facility capital is spent, to build a 40,000 ton facility. And a 40,000 ton facility is defined by essentially you run the facility using a day shift. And the constraint to move to 80,000 tons is not capital. It's just shingle availability. So clearly an 80,000 ton facility is, you know, more efficient than twice the EBITDA of a 40,000 ton facility. So we're now looking at, you know, to start with, and I chatted about it earlier, the portfolio of the next 10 facilities, one of the criteria will be, and can it support 80,000 tons? Now, it's always really important to not go to 80,000 tons necessarily straight away, to establish your operations team, to establish your processes, to establish your shipping and your customer offtake, etc., But ultimately, you know, within three to six months of setting that up, hiring the second shift to make it go to 80,000 tons is the criteria. One of the other criteria, of course, is like the speed of permitting, the support from the local government. And often the support from the local government will show up as kind of what is the tipping fee. So there's kind of like a bit of a symbiosis between the objective and the subjective, but those are the three key criteria we're looking at now as we think about that. So if you do think about that, then look, and if you think if you take our 16.5 million tons and you divide it down, it's about, you know, 15 in the US and one and a half in Canada. So that's why we're at conferences like this one in Vegas to start to familiarize not only the market. and investors, but also people in general, that the U.S. is a major target market. And again, because of the localized nature of the business that we build, we believe we're fairly immune to the noise that's kind of going on between Canada and the U.S. Yeah, and we think it's a very strong plan.

For our last question here. So what is your long-term vision for the company? Say five, 10 years.

My long-term vision for the company? Well, I clearly had to include some sort of a Rory McIlroy quote. We haven't won the Grand Slam yet. This is going to be our first major by delivering the Calgary facility. Look, I... And we've said repeatedly that we thought we have the capability to build, you know, three to four plants a year organically. I think the size of this market is so huge with the potential of, you know, 440,000 ton facilities, that licensing the technology is something that we think is a natural step. And remember, if you look at the if you look at the ARMA statistics for the, you know, their strategy to build to divert 50 percent of all shingles away from landfill by 2035, that would need to that would require two hundred forty thousand ton North Star plants, which is absolutely massive, an absolutely massive market. So I think what we need to do is I think we need to build the organization together. And my vision is to have an organization that can repeatedly build three to four facilities a year under our control and three to four facilities licensed per year. I think that will give us huge financial capability, but I also think it will establish a program whereby we would have cities coming to us to build facilities. And this will be self-sustaining, not only from a no need to raise any capital perspective, you know, great cash flow coming in, but also in that development pipeline. And so my vision is less about the numbers and more about the point where we get to where literally the phone's ringing off the hook for us to come to a municipality and divert 80,000 tons away from their landfills. That to me is the... Uh, that's not, that's not my kind of, we're always moving to the seniors tour, uh, moment, but it's, but it's certainly a, uh, it's certainly a vision, um, that I'm very excited about.

Excellent. Thank you, Aidan. Uh, that's all for questions.

Well, listen, thanks as always, Natalie and Trenton and Kim for helping to set this up, as always, and guiding us through. So thanks for that. Great to have Greg on board. And his first, as he said, his first drive through the numbers. I think these are going to get very exciting as we go through the year and look forward to the next one where we've got some... Some operations to tell you guys about. And yeah, we'll continue to do the commissioning videos and you'll see those coming out regularly. Yeah. And look forward to delivering on this and having this facility operating in this business generating cash by the middle of the year. So thank you.