Northstar Clean Technologies Inc.

Good to go? Good to go. Excellent. Well, good afternoon and welcome everybody to the Northstar Clean Technology second quarter 2025 financial results and corporate update. So as you guys know, my name is Aidan Mills. I'm the President and CEO of Northstar. And today joining me is Greg Vanoff, our VP of Corporate Development and CFO. So before I begin, I'd like to remind everybody that the comments made on this call may contain forward-looking statements. These statements are based on management's current expectations and assumptions and involve certain risks and uncertainties. Actual results may differ materially for those described in these forward-looking statements, and please refer to our CDAR filings for discussion of these risks. And, you know, second slide here has a more detailed description of this. Okay, so as always, there's a question and answer session after the presentation. Trenton Grant from Kin is going to help us with that and will moderate the Q&A session and ask the questions today. And as before, just enter the questions in the Q&A box on the bottom of your screen and Trenton will review those to ask and pick out themes to ask us as we go forward. The YouTube, the presentation will be on YouTube tomorrow, and we'll take this Q2 presentation and upload it onto the website, replacing the Q1, and that will be done for tomorrow as well. So that's kind of, that's the admin. So let's chat quickly about today's agenda. So of course, we'll cover the financials. Greg will cover that. I'll do an update from Calgary, obviously based on the PR that we released this morning. I'll talk about the next steps for Calgary as well. And I'll give you an update on the expansion plans. I think one of the things that's important about this presentation are the themes. And we'll talk about this all the way through and I'll kind of summarize them at the end. But the major theme is that we are creating great momentum for North Star. We have our first commercial facility constructed, commissioned and starting ramp up. We've produced high quality products and we've also made a technical development, technical development and innovation, obviously with the pallets that we've produced as well. Our focus is now on getting to the ERA production target, but also not losing the focus on the next facilities and developing a strong financial framework to support that growth and expansion. And lastly, and this is, of course, a bit of a personal comment, I've been at Northstar for, was Northstar for four years on the 1st of September this year. And my objective is to continue to deliver the milestones as we have done since I have been at the company. So that's a bit of the theme of what we're going to talk about today. And I will hand it over to Greg to talk about financials.

Thanks, Aiden. Good afternoon, everyone. The second quarter of 2025 represented another 90 days of preparing for full operations. No product revenues, as you know, were generated during the quarter, aside from a collection of waste shingles from IKO, one of our suppliers, which have been securely stored at a nearby off-site location to be processed once commercial operations begin. As far as the numbers are concerned, comprehensive loss for the period equaled $3.1 million compared to $1.4 million for the comparable prior period as the company increased full-time equivalent personnel and incurred other non-capital costs associated in preparation for operations. In addition, a non-cash expense of $367,000 was recognized for the quarter, which was $721,000 for the six months, relating to the fair value remeasurement of the CBW Royalty to Venture, which is essentially North Star Picking, otherwise known as Payment in Kind. the interest due in adding that to the principle of the debenture in continuing efforts to preserve working capital. As the debenture commenced in September 2024, these fair value adjustments did not occur in the comparable prior periods. As far as CapEx is concerned, CapEx decreased to $1.9 million for the quarter, compared to 4.1 in the prior period as the construction of the Calgary Empower facility was completed after Q2, near completion at the end of Q2 as Aiden had mentioned. In fact, the company announced completion of construction during the quarter and received $3.9 million from Emissions Reduction Alberta under Milestone 2 of the Contribution Agreement for this major achievement. Aiden, as mentioned, will speak to operations in a minute. From a working capital perspective, the company exited the quarter with a $1.7 million deficit. $1.5 million of this, however, is represented by two tranches of previously issued convertible debentures due within the next 12 months where the conversion strike price is below the current share price, i.e. in the money. More on that in a minute. In addition, subsequent to the quarter, the company raised $3.6 million in an oversubscribed, non-brokered unit private placement. This replenished the Treasury and provides the bridge to fund the business to the point of operational cash flow. Furthermore, we anticipate further milestone payments under the ERA grant prior to the end of the year to bolster working capital reserves. For the accountant people in the audience, commencing in the second quarter, the company began to account for inventory. This is a new accounting convention for the company and will continue from this point forward as we move to an operational status. The inventory is largely comprised of collecting, sorting, and processing shingles brought to site. Further details can be found in our Q2 2005 financial statements. As touched on previously, it is worthy to mention we have witnessed a consistent stream of both convertible debentures and share purchase warrants exercised over the last number of quarters. During specifically in Q2, $150,000 of convertible debentures were converted during the quarter while $730,000 warrants were exercised during the quarter bringing in another $150,000 into the company's treasury. Subsequent to the quarter, we have continued to see these conversions and have no reason to expect different given the current share price and our expectation of continued share price appreciation as we build out the business. With continued conversions and exercises, we would expect the capital structure to become less complex. With that, I'll turn it over to Aidan for an operational update.

Thanks, Greg. That's great. So let's talk then about kind of our key achievements and short-term objectives. So this is a summary of what I'm going to talk about in a lot more detail in the next few slides. But again... One of the themes here kind of plays to what I kicked off with is this continues to demonstrate our kind of strong track record of delivery. You know, the patent is a really good example of where we have protected the business with a number of patents, both in the US and Canada. And that's obviously really important for the technology and the technology support for the business. In funding, and I've shared this slide before, and we don't have it in this pack, but since I've joined four years ago, we've raised $58 million, and all that $58 million, including the number Greg referenced, 30 million of it is non-dilutive. And you can see from the last quarters, you know, our funding partners, ERA, BDC, et cetera, you know, coming up with the support and long-term partners such as CVW and Tamco obviously there. And now the potential to add EDC as a funding partner for the U.S. So, you know, if you think about those names and you think about the support for this company, you know, these are sophisticated funders who understand good businesses. And so it's great to have them on board. And then the last one, of course, and the most important is that if you look at the output from the facility, and I'll talk about this in a bit more detail is. As a shareholder, you can look at these achievements and recognize that this technology actually works. So remember, we took the asphalt that came out of Delta and with that asphalt, the pilot plant, and with that asphalt, we proved, the R&D proved that you could manufacture shingles. So that was the first step in demonstrating the technology works. And now we have demonstrated it in our first commercial facility. So kind of a huge milestone as we think about where we are in the business. Okay, so let's talk about Calgary. So the deliverables for 2025 were pretty simple. We had four. So number one, build the plant, obviously. Number two, commission the facility, you know, unit by unit and all the way through. Number three, focus on what the product was coming out the back end of the facility. The reason that I can say very comfortably the technology works is the product that's coming out of the back end of this facility, and we'll talk about it in a bit more detail later, but the product coming out of this facility is better than Delta, surpasses our expectations, but that demonstrates that we have a technological solution that is delivering high-quality product. And then the fourth thing was ramp-up production, and I'll talk about that in the planned objectives. Okay, so where are we? So in the PR this morning, we outlined that this facility now has the capability to deliver high-quality asphalt for both manufactured waste and tariff shingles. Independent lab analysis, as we said this morning as well, support that thesis. Now, the delta oil, as I said, the R&D showed that it was circular. This asphalt is significantly better than that oil, and that plus the lab results, we believe that it will perform better for our customers. The major technological development today, of course, that we announced was pellets. So the North Star facility now has the capability to produce two types of product. So firstly, hot oil, of course, for local distribution within a certain radius, and now solid asphalt pellets. Of course, this now has a huge transport potential. At This is one of my added remarks. We have some very interested industry partners on this call. So I'm not going to be providing any details on, you know, our preferred transportation option, et cetera, for the pellets. But clearly, we expect that solid, high-quality asphalt pellets has a wide range of market access options. I will talk a little bit about the quality of the pellets. So it's important that the industry across the kind of recycling industry for shingles, there are pellet solutions. And so people partially separate tiles and make those into pellets. So those are technologies that are developing. Those are technologies that are under review, etc., but they have not pelletized the final product. Our technology does not change the quality of the oil. It literally takes the hot oil that comes out the back end of the facility with the high quality specs that we've seen from our lab results and pelletizes it. So, I mean, this is a bit of a self-indulgent kind of 10,000 foot reflection for me, but this is exactly what I came to North Star to do. My vision when I joined Northstar four years ago was the applicability of this technology right across the continent. So the ability for us to deliver product, you know, city by city. And as we've said, 16.5 million tons, you know, 400 facilities at 40,000 tons a day, you know, 200 facilities at 80,000 tons a day. That was my vision. But now... Now we have the potential from every North Star facility to actually deliver a global commodity. So when I hark back to my former life as a hydrocarbon buyer, originator and trader in my old roles as head of strategic origination for BP and the MD of commodity sales in Goldman, access to this type of global commodity would be outstanding. So it's fantastic to be sitting here with our hands on a potential global commodity. So as you walk away from this call today, that's what I think we've just delivered. So what are we doing next? So I've laid out the objectives for going forward here. So objective number one is obviously to deliver emissions reduction Alberta milestone. So as remembering emissions reduction Alberta kind of four milestones. So number one, engineering, of course done. Number two, construction. As Greg referenced, that was, you know, that was, you know, first half of the year, number three, commissioning, and number four, operations. And the commissioning milestone isn't just a commissioning milestone, i.e. everything works. So the first part of it is, yes, all systems have to be installed, calibrated, and operating. So that's a commissioning milestone. But the second part of that milestone is operational. And that operational target is 80 tons per day coming through the plant, or obviously going in the front end of the plant. So our target is to deliver that by year end. Objective number two, of course, is then to take the facility from that 80 tons a day up to full capacity. And the way I've defined this is the single shift full capacity is, and as you know, capacity designed for the facility is 15 tons an hour, you know, times 10 hours a day. So 150 tons a day. The third objective is to secure feedstock to enable us to move to 24-7 operation. And that's where we can essentially add the night shift and double the production. Again, the objective here is not about spending more capital. This is completely feedstock dependent. So our job is to secure the feedstock. It's not to add any additional capital. And the only thing that we actually need to do is add an extra shift. And then ongoing, I added an ongoing objective here because this is the transition across to the next slide. So we've always talked about continuous improvement and we need to integrate the lessons we've learned from engineering, construction, commissioning and operations. into the design for the next facilities. As you can imagine, this is the first facility. That's a theme that we've talked about all the way through here. This first facility, the learnings are huge, of course, across all of these buckets of engineering, construction, commissioning and operations. And it's really important that we integrate those into the next design in the same way that I've talked about continuous improvement before, which is when we do plant five, plant six needs to be better. And when we do plant 15, plant 16 needs to be better. So the most, the biggest impact we can make in continuous improvement is to take the lessons learned from the first facility for the next two. We think that's going to be pretty sizable. Okay, so then let's talk about the expansion options. So Hamilton, so both expansion options going well. So Hamilton, we're finalizing the specific site layout with Hopa. So as you know, we have the area of land, which has been kind of outline for Hope of Development. And so now what we're doing is given the kind of utility works that are going on, we're actually finalising the exact four acre plot. Because to do that, you need the exact boundaries to be able to kick off the permitting process. We've done the first step of the permitting process. So we have had consultations with the Ontario Ministry to get the first step completed. And that's defined exactly what permits we need. So we now have the list of here's the permits and that can start as soon as we have the boundary defined with HOPA. As we did with Calgary very successfully, we've now identified some federal and provincial funding options. Obviously, non-dilutive, as you remember, the ERA, you know, that we talk about all the time, the seven, over seven million dollars was... was going through the same process, and those have kicked off. Of course, we're not going to provide any more detail as to who we've applied for or for what number, but we have identified a number of funds, and we've also commenced local engagement with Hamilton, both at the city level and at the local level. In US 1, so we now have identified the state, the city, and the preferred location for our facility. The permitting process is now fully understood. So with that state, we have been working with the permitting authority, so we know exactly what to do once we finalize the site. We've also started negotiations on feedstock. So we would expect, of course, to get the Tamco manufactured shingles from their Frederick facility. But of course, we've now kicked off the feedstock negotiations with respect to tariffs. So those have commenced and are ongoing. And the same with the offtake. So Tamco, obviously, the majority offtaker, but we've also discussed offtake with other parties too. And And interestingly, both from the federal level and the provincial level, there are also non-dilutive funding options available for this location, which is great. So let's talk about expansion financing. So, look, the feedback we've often got is, you know, we have a complicated balance sheet and, you know, it's not simple. Like, what are you doing to simplify it, et cetera? And I know that's always good when it's nice and simple. And all of these options, as Greg looks at them, you know, these are complicated. They're more sophisticated and they're not simple. But from the leader... This business, in my perspective, it offers massive flexibility and great optionality. And the other thing is, as you can see from what we've done from an undiluted perspective, I think it also offers massive equity shareholder value because there's a number of pots of funding that we can source that will not have an effect on the equity. So as we think about it, there's kind of two buckets that we look at. So under the asset level, of course, we've just talked about government funding. Of course, project debt. So, you know, EDC is a really good example of the project debt. We have been, there is market interest for project equity at the project level. And of course, we have the, you know, funding partners in CVW with potential royalty options on an asset level. On the corporate level, strategic equity and strategic debt. Now, those will be dependent, of course, on delivery from Calgary. So we have to have a track record of being able to deliver an operating facility, and that's critical. And then the last one is a market raise. So just to be clear, this is a market raise for growth capital. This is all about what does the capital for the new facilities look like? What is the timeline for that facilities look like? What is the capital spend profile look like? And what is the goal seek for all of the categories above before we determine what that market raises? So the only thing that you will see us do as part of this development, and again, we have ruthless focus in Calgary, but we have to continue, of course, the next facility development. So the only thing you'll see from a financing perspective is we will... file an AIF so that we can create a shelf. So that will be done through Q4. And that is so that we have the full range of optionality as you look at this expansion financing to support growth funding. The other thing that I would say with respect to both of these facilities is I've talked externally with strategic funders and both in the equity and the debt level that we've changed our metrics for attractiveness with respect to sites as we move forward here. So originally, when I was talking about market attractiveness and how we looked at it, we looked at it in a matrix of... of tipping fee versus asphalt price. And we looked at all the locations where all the cities where that could be attractive. The third thing that we added, which is almost kind of like a... This is what you need to get onto the page is, can we operate the facility 24-7? So can we operate this facility at an 80,000 ton a year rate? And so the reason that affects both these two facilities is both... can support 80,000 tons. And the permitting process that we are submitting will be for 80,000 tons. So as we think about the other things that we have to do, the only other thing that was missing off the summary slide was we're continuing to develop our portfolio. So we're not stopping at Hamilton and US1. We're continuing to develop a portfolio under the three criteria now of can we run it 24-7? What's the asphalt price? And what is the tipping fee? And the driver for that 24-7 for me is all about the value we add when we add a plant. Look, if you take what we disclosed in our slide deck, a 24-7 operation should, in theory, kick off hand-grenaded math, as I always describe it, $10 million worth of EBITDA for a plant. If you take a reasonable waste-to-value multiple of $10 million, That means that we should be adding, you know, $100 million per facility. Now, when I joined four years ago, I talked about this having the potential to be a billion-dollar company, and now we've got a really clear path to what that looks like. And so developing the portfolio as well as the expansion options and landing both Hamilton and US1 are pretty critical. So in summary, I mean, I'm going to tell you again what I've told you already, of course, but firstly, we have built and commissioned our first commercial facility. And this team is incredibly proud of having done that. And I'm very proud of their delivery and proud of the fact that we can be on this call four years later and say that we've actually done that. I think the second thing we've done is we are now producing high quality asphalt from both the potential feedstocks for this technology. We've added a technology with pelletization that I think offers our facilities the potential to produce a global market commodity. We now have a ruthless focus on facility ramp up. We continue to develop the expansion sites. And we're obviously constructing this flexible financial portfolio to support the company, shareholders and that expansion. And lastly, I said it earlier, you know, in the four years that I've been here, which has been a real honour, we've delivered on every milestone that we talked about. And this is absolutely going to continue as we move from this massive inflection point for North Star to drive the business forward. So, Trenton, that's my spiel. It's over to you for the questions.