December 4, 2024
Northstar Clean Technologies (TSX.V: ROOF | OTC: ROOOF) provided the following notes and highlights after this week’s webinar.
All dollar amounts are in $CAD unless otherwise noted.
I am 100% independent and receive no compensation from this company. However, I want to keep readers involved as Northstar is the only company in my 40-plus years in the securities industry on both the buy-side and sell-side that I have encountered and invested in that truly emulates what I call a Warren Buffett-type investment. I have repeatedly praised this investment and called it a “no-brainer”—something I have never done elsewhere.
3Q2024 Financial Highlights (3 and 9 months ended Sept 30, 2024)
- Cash on the Balance Sheet was $15.5 million as of Sept 30, 2024 – a significant portion represents funds to complete the Calgary facility. Calgary is the Company’s first commercial production unit and prototype of what I believe will be hundreds built across North America in the next 20 years.
- Tipping fees of $475,383 were generated in 2024 through Q3. This represents 9 months of shingle collection exclusively in Calgary. From tipping fees, which are charges to customers to dispose of waste shingles at the processing facility, the Company generated a gross profit of $130,093 for a total gross profit margin of around 27%.
- The quarterly burn rate is around $1.15 million based on cash used in operating activities for the nine months ended September 30.
Webinar Replay and Site Videos
Nov 2, 2024 Webinar Replay: (Hyperlink – YouTube)
Northstar has posted videos of the Calgary site’s progress towards fully operating the facility. If you live outside the Calgary region and are interested in seeing progress at the site, I encourage you to watch the brief (2-minute) videos below.
- ROOF Construction Update Episode 1: (Hyperlink – YouTube)
- ROOF Construction Update Episode 2: (Hyperlink – YouTube)
Nov 2, 2024 Webinar Replay: (Hyperlink – YouTube)
Recent Key Announcements
- This major announcement defines Northstar’s Canadian expansion plans, with a strong partner in HOPA (the Hamilton-Oshawa Port Authority).
- Hamilton can provide significant local feedstock.
- The Hamilton site will be able to service the Greater Toronto Area, one of North America’s largest metropolitan regions (2750 sq. miles) with a population of over seven million.
- The next steps include securing an off-taker (customer), shingle supply, and government engagement (grants process).
- Northstar hired Greg Phaneuf as CFO and VP of Corporate Development and Lynda Paanen as Corporate Controller. Greg and Lynda are two strong new additions to the Northstar team who will be instrumental in guiding the Company through its coming stages of growth.
- Mr. Phaneuf has been involved in or led equity, debt, and credit financings over $2 billion and equally involved in or led corporate acquisitions and divestitures above $7.5 billion, inclusive of a $390 million acquisition of an industrial conglomerate during his tenure as VP Corporate Development for a large Alberta-based construction and industrial conglomerate.
- A seasoned CPA with over 20 years of experience, Ms. Paananen has demonstrated expertise in compliance reporting, financial governance, and multi-segment operating accounting. Most recently, she served as Director of Finance at MEG Energy Corp., where she operationalized complex capital market strategies, enhanced risk management frameworks, and implemented process improvements to support organizational growth.
- In September, Northstar inked a first-of-its-kind (to the best of their knowledge) deal with CVW CleanTech (TSXV: CVW | OTC: CVWFF) for $14M in funding through a five-year, 10%, second secured convertible debenture convertible into revenue royalties on two (future) Northstar facilities.
- This funding agreement fulfills (in principle) the equity component of financing Northstar’s next two sites.
- As a reminder, Northstar plans to finance its future expansion sites in three parts, much the same way that they financed Calgary: (1) Project debt, (2) government grants, and (3) equity (which CVW fulfills for the next two sites).
- All of Calgary’s funding was already in place when this deal was announced, so the CVW agreement has no retroactive impact on Calgary’s economics or site development.
- Northstar began drawing down funds from their BDC loan facility in September. This funding is specifically earmarked for Calgary site development.
- Since drawing down the funds for Calgary, Northstar has completed all the structural work required for the site.
Personal Note
As investors can see, Northstar is an early-stage company with big plans. Management, led by CEO Aidan Mills, has an outstanding pedigree. He has made financially prudent anti-dilutive decisions through planning-stages (and will continue doing so). These involve long-term customer in-take and off-take agreements and government incentives for its environmental clean-up activities. The technology was developed at a Vancouver, BC, site and is patented. After Toronto is planned, the next site will be in Maryland, the first of many across the US.
For patient investors, Northstar has all the attributes of a long-term growth stock in the making. I anticipate outstanding ROA, ROE, ROI, Profit Margins, and EPS Growth for the next generation.
The stock has started to move into a growth cycle but is closely held and thinly traded. This is not a stock for active traders, so investors would be unwise to chase the price. There will be many weeks soon when the broad market encounters extreme negative volatility. That will be the time to enter buy orders because Northstar is a developing, viable company free of the capital raise pressures and day trader escapades of exchange-traded markets. But in a major bear market, forced selling will always happen, and that is the time to buy. Besides, this is a stock that should trade with a negative beta.
As I always caution readers, consider buying only the securities that meet your investment goals and risk profile.
