Northstar Announces Project Economics For Its Calgary Scale Up Facility Based On Front-end Engineering Design

Rhea-AI Summary

Northstar Clean Technologies Inc. has announced favorable economic prospects for its Calgary Empower Facility, projecting $7.6 million in potential annual revenue and $4.0 million in EBITDA per facility. The facility aims to process 34,200 tonnes of asphalt shingles annually, achieving a 65% gross margin. Key operational metrics include processing 15 tonnes per hour and 150 tonnes daily. The analysis suggests significant upside opportunities and highlights the facility's impact on landfill diversion, emphasizing the company's commitment to sustainability.

Positive

• $7.6 million in potential annual revenue per facility.
• $4.0 million in potential annual EBITDA per facility.
• Projected 65% gross margin indicates strong profitability.
• Ability to divert 30,000 to 50,000 tonnes of asphalt shingles from landfills.

Negative

• Initial capital expenditure of $11.7 million may present financial strain.
• Carbon credit revenue is currently projected at nil.
• Revenue model assumes only 85% feedstock from landfill diversion.

Highlights

• $7.6 Million in Potential Annual Revenue Per Facility ⁽¹⁾
• $4.9 Million in Potential Annual Gross Profit Per Facility (65% Gross Margin) ⁽¹⁾
• $4.0 Million in Potential Annual EBITDA ⁽²⁾ Per Facility (52% EBITDA⁽²⁾ Margin) ⁽¹⁾
• Excludes Any Potential Carbon Credit Revenue or Sustainability "Green" Premium
• Numerous Potential Upside Opportunities Have Been Identified

VANCOUVER, BC, April 1, 2022 /PRNewswire/ - Northstar Clean Technologies Inc. (TSXV: ROOF) (OTCQB: ROOOF) ("Northstar" or the "Company") is pleased to announce the results from its internal management-prepared economic analysis for its planned expanded-capacity asphalt shingle reprocessing scale up facility in Calgary, Alberta ("Calgary Empower Facility"). As part of the recently released independent front-end engineering design ("FEED") study prepared by BBA Engineering Ltd. which provided a pre-feasibility level capital estimate for the planned Calgary Empower Facility, the Company completed a detailed internal financial analysis of the planned Calgary Empower Facility. The Company sensitized a broad range of both operational and financial assumptions to ultimately arrive on a conservative base case, which is provided here, as well as identify certain variables to provide potential upside. The results and major assumptions are provided below. All currencies quoted within this press release are in Canadian dollars.

Mr. Aidan Mills, President & CEO and Director of Northstar stated, "For a sustainable, environmental, social and governance-focused business to succeed, we believe it needs the following: Step 1) a technology that works; Step 2) the ability to scale up that technology; and Step 3) a clear and profitable commercialization strategy. Our steady state production of specification products at our Empower Pilot Facility in Delta, B.C. demonstrates Step 1 and we believe our announcement of the successful completion of our FEED study means we are on a clear pathway to Step 2. Our detailed analysis of the potential financial returns for our facilities, described below, hopes to convey to stakeholders that Step 3 is achievable."

Mr. Mills continued, "While these results are exciting for our Company, we believe a clear pathway to further upside may be available. Our internal financial analysis underpins the triple bottom-line potential of our technology, creating potential profit while benefiting our stakeholders, including shareholders, employees and the communities where we operate, and creating a positive impact on the environment. In the City of Calgary, we have the ability to not only divert approximately 30,000 to 50,000 tonnes of asphalt shingles per facility from the municipal landfill, but also potentially deliver an approximate annual EBITDA⁽²⁾ of $4 Million. Not only can we help provide major municipalities across Canada and the United States with a unique circular economy and modular solution for reprocessing single-use asphalt shingles, but we hope that we can increase shareholder value and provide additional benefits to our various stakeholders."

Key Operational Assumptions:

• Total Hourly Processing Tonnage: 15 tonnes per hour
• Total Daily Processing Tonnage: 150 tonnes per day
• Total Annual Processing Tonnage: 34,200 tonnes per year
• Operational Assumptions:
• 10 hours per day (1 shift)
• 20 days per month (5 days per week)
• 95% operational capacity (maximum)
• 95% yield for liquid asphalt, fiber and aggregate

• Asphalt Shingle Product Composition:
• 25% liquid asphalt
• 25% fiber
• 50% aggregate

Key Financial Metrics:

Category	Metric ($/tonne)	Notes:
Revenue	$222 / tonne	Average revenue generated by Tipping Fees, Asphalt, Fiber and Aggregate sales
COGS	$79 / tonne
		Utilities: $33 / tonne
		Staff & Labour: $30 / tonne
		Other: $16 / tonne
Gross Profit	$143 / tonne
Facility Operating Overhead	$27 / tonne	Includes lease, salaried staff and plant operating overheads
EBITDA(2)	$116 / tonne

Key Additional Financial Considerations

• Initial Capex: $11.7 million (based on FEED study)
• Carbon Credit Revenue: Nil

Management's View on Potential Upside of Project Economics:

1. Conservative Liquid Asphalt Price: As of February 2022, the average market price of the Edmonton "Rack Rate" over the last four years since January 2018 is $715 per tonne. The Company therefore believes that its pricing assumptions are conservative relative to market prices. In addition, the current Company pricing assumptions do not include a potential impact of either locational or quality differential for Northstar's liquid asphalt.
   
   
2. Potential 'Green Premium' Excluded From Pricing: The Company's liquid asphalt price does not factor in any potential green premium. The Company believes its liquid asphalt product has the potential to be North America's lowest carbon footprint asphalt and therefore could potentially command a premium to market prices.
   
   
3. Operational Upside: The planned scale up facility is assumed to run 10 hours per day and 5 days a week. As a first step, the Company believes an extension of working days will allow facility operation of 24-28 days per month. In addition, on steady state operation of the first scale up facility, the Company will determine the operational potential to extend working hours each day beyond 10 hours of production. Both these elements, in turn, would potentially increase processing tonnage and further enhance project economics.
   
   
4. Carbon Credit Revenue Excluded from Revenue Model: Carbon credits are not factored into the Company's revenue model. The Company assumes 0% of carbon credits are sold throughout the life of the project. Given the previously released results of the Company's independent life cycle assessment for the Empower Pilot Facility, the Company believes that it has the lowest carbon footprint of any asphalt in North America. The Company is currently undertaking a review of the range of potential carbon monetization options for the Company's facilities.
   
   
5. Conservative Municipal Landfill Tipping Fee Revenue: The Company's revenue model assumes that the Company receives only 85% of its feedstock from landfill diversion, with the remaining 15% generating no tipping fee revenue. The model also assumes that the tipping fee pricing it receives will be at a discount to municipal landfill tipping fees and that tipping fees remain flat through term of the economics. Ultimately, the Company believes in time that it may be able to obtain revenue on all feedstock, decrease the discount on tipping fees and that overall tipping fees will be under pressure to increase, especially when diversion alternatives are available for hydrocarbon-based products.
   
   
6. Conservative Operating Assumptions: The Company's revenue model factors a facility capacity of 95%, includes a 2-week shutdown period (excluded from the capacity figures) and a 95% yield per product. The performance objectives for each facility will be to improve on availability (capacity) and product yield, with measurement systems included in the recent FEED study design to ensure transparency of that performance.

For more information of the FEED study, please see the Company's news release dated March 31, 2022 filed under its profile on SEDAR.

Notes:

(1)

Based on anticipated first full operational year.

(2)

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a Non-GAAP financial measure and refers to earnings determined in accordance with IFRS, before depreciation and amortization, interest expense (finance costs) and income tax expense. EBITDA should not be construed as alternatives to net income/loss determined in accordance with International Financial Reporting Standards ("IFRS"). EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company believes that EBITDA is a meaningful financial metric as it measures cash generated from operations which the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives.

About Northstar
Northstar Clean Technologies Inc. is a Vancouver-based clean technology company focused on the sustainable recovery and reprocessing of asphalt shingles. Northstar has developed a proprietary design process for taking discarded asphalt shingles, otherwise destined for already over-crowded landfills, and extracting the liquid asphalt, aggregate and fiber for usage in new hot mix asphalt, construction products and other industrial applications. Focused on the circular economy, Northstar plans to reprocess used or defective asphalt shingle waste back into its three primary components for reuse/resale in the circular economy. As an emerging innovator in sustainable processing, Northstar's mission is to be the leader in the recovery and reprocessing of asphalt shingles in North America, extracting the recovered components from asphalt shingles that would otherwise be sent to landfill.

For further information about Northstar, please visit www.northstarcleantech.com.

On Behalf of the Board of Directors,
Aidan Mills
President & CEO, Director

Cautionary Statement on Forward-Looking Information

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release. The TSXV has neither approved nor disapproved the contents of this press release.

This press release contains forward–looking information within the meaning of applicable securities legislation, which forward–looking information reflects the Company's current expectations regarding future events. Forward-looking statements are often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions. Forward-looking statements in this press release include, but are not limited to, statements regarding: the steps necessary for an environmental, social and governance-focused business to succeed; any anticipated upside from the Company's management-prepared economic analysis and, in connection therewith, the Company's ability increase shareholder value and provide additional benefits to our various stakeholders; the Company's various pricing assumptions, processing tonnage quotes, operation hours, tax incentives or carbon credits, and other operation assumptions noted under the heading "Management's View on Potential Upside of Project Economics", as well as any other general statements regarding the perceived benefits of the Calgary Empower Facility and Northstar's technology. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company as well as those risks and uncertainties which are more fully described under the heading "Risk Factors" in the final prospectus of the Company dated June 18, 2021 and in the Company's annual and quarterly management's discussion and analysis and other filings with the Canadian securities regulatory authorities under the Company's profile on SEDAR. The novel strain of coronavirus, COVID-19, also poses new risks that are currently indescribable and immeasurable. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. The Company does not undertake any obligation to update such forward–looking information whether because of new information, future events or otherwise, except as expressly required by applicable law.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. The Company does not intend, and does not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law.

This news release also contains future-oriented financial information and financial outlook information (collectively, "FOFI") about the Company's expected revenues, cash flow, gross margins, and EBITDA⁽²⁾ following the start of operations at its Calgary Empower Facility, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set out in the above paragraphs. The actual financial results of the Company accordingly may vary from the amounts set out herein and such variation may be material. Northstar and its management believe that the FOFI quotes herein has been prepared on a reasonable basis, reflecting management's best estimates and judgments. However, because this information is subjective and subject to numerous risks, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, the Company undertakes no obligation to update such FOFI. FOFI contained in this news release was made as of the date hereof and was provided for the purpose of providing further information about Northstar's anticipated future business operations following the start of operations at its Calgary Empower Facility. Readers are cautioned that the FOFI contained in this news release should not be used for purposes other than for which it is disclosed herein.

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SOURCE Northstar Clean Technologies Inc.

FAQ

What are the projected revenues from Northstar's Calgary facility?

Northstar anticipates potential annual revenue of $7.6 million per facility from the Calgary Empower Facility.

What is the expected EBITDA from the Calgary Empower Facility?

The expected annual EBITDA for the Calgary Empower Facility is projected at $4.0 million.

What are the key financial metrics for Northstar's facility?

Key metrics include a gross margin of 65% and COGS of $79 per tonne, leading to a gross profit of $143 per tonne.

How much asphalt shingle waste will Northstar's facility divert from landfills?

The facility is expected to divert approximately 30,000 to 50,000 tonnes of asphalt shingles from landfills annually.

What is the initial capital expenditure for the Calgary Empower Facility?

The initial capex for the facility is estimated at $11.7 million.