(TheNewswire)
Toronto, ON - TheNewswire - August 23,2023 - Star RoyaltiesLtd. (“ StarRoyalties ”, or the “ Company ”) (TSXV:STRR ) ( OTC:STRFF) is pleased to report its financial results for thequarter ended June 30, 2023. All amounts are in U.S. dollars, unlessotherwise indicated.
Q2 2023 Corporate and PortfolioHighlights
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Quarterly revenues of $188,033, representing a 31%decline over the previous quarter due to timing and lower volume ofmineral sands sales at Keysbrook.
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Quarterly net loss of $1,048,574 was negativelyimpacted by the recognition of a $418,800 equity loss from the GreenStar Royalties Ltd. joint venture ( Green Star ”),driven primarily by foreign currency translation.
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Green Star’s flagship regenerative agriculture carbonfarming program continues to grow from inbound farmer interest and isapproaching its official listing under Verra’sMethodology for Improved Agricultural Land Management, v2.0(VM0042).
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MOBISMART Mobile Off-Grid Power Storage Inc.( MOBISMART ”) continues to expand sales volumes and customerpipeline.
Alex Pernin, Chief Executive Officer of Star Royalties, commented:“During the second quarter of 2023, our team worked diligently toposition both Star Royalties and Green Star for upcoming success. Webelieve that these efforts should translate to shareholder valueacross the coming months. Management continued to refine GreenStar’s premium pipeline of opportunities, while also working closelywith individual management teams across our investment portfolio tofurther de-risk their respective assets. Keysbrook performed in-linewith internal expectations, despite the timing-related lower shipmentvolumes, and Copperstone’s Preliminary Economic Assessmentdemonstrated robust economics that we view as not reflected in thatasset’s valuation. As Green Star’s flagship regenerativeagriculture program continues to approach official listing under theVerra Registry, we look forward to several relevant catalysts over thecoming months. Lastly but importantly, we continue to activelyevaluate capital raising opportunities in order to be well positionedto begin transacting on Green Star’s expanded pipeline of carboninvestments.”
Summary of Q2 2023 FinancialResults
For complete details, please refer to the CondensedInterim Consolidated Financial Statements andassociated Management Discussion and Analysis for the three and sixmonths ended June 30, 2023, available on SEDAR+ at sedarplus.c a or on the Company’s website at starroyalties.com .
Significant Portfolio Updates
Keysbrook Mine
In the second quarter of 2023, royalty revenues fromKeysbrook were $135,232, which werelower compared to the prior-year quarter due totiming and lower volume of mineral sands sales in the period,reflecting the variability inherent in bulk-shipped products. Theoverall outlook for 2023 remains in-line with the operator’sprovided budget.
Elk Gold Mine
Gold Mountain Mining Corp. (“ Gold Mountain ”)(TSX: GMTN, OTCQB: GMTNF, FRA: 5XFA) continued ore mining operationsand deliveries to New Gold Inc. (TSX, NYSE American: NGD) during thesecond quarter. The second quarter royalty payment from the Elk GoldMine declined slightly to $52,801, compared to $54,959 in the previousquarter, due to lower shipments of ore by Gold Mountain. For itsquarter ended April 30, 2023, Gold Mountain reported total sales of1,798 ounces of gold and generated total revenue of C$4.2 million fromthe Elk Gold Mine.
In May, Gold Mountain reported that it had made itsfinal C$3 million property payment to Sandbox Royalties Corp., therebydischarging all obligations owed relating to its purchase of the ElkGold Mine, as well as entering into a C$3.3million silver royalty on the Elk Gold Mine to enhance its financialposition. In addition, Gold Mountain reported several changes to itsmanagement team during the period, including the appointment of RonWoo, a founder of Gold Mountain, as Chief Executive Officer, and SimonBucket as Chief Financial Officer.
Copperstone Gold Project
In June, Sabre Gold Mines Corp. (“ Sabre Gold ”) (TSX:SGLD, OTCQB:SGLDF) announced a Preliminary Economic Assessment(“ PEA ”) on the Copperstone Gold Project. Results of the economicanalysis in the technical report (filed in August), show an after-taxIRR of 50.5% at the base case ($1,800/oz gold) and initial capital of$36 million. The PEA supports a high-grade gold underground miningoperation to recover and sell 228,283 ounces gold over 5.7 years ofoperation with an all-in sustaining cost of $1,286/oz gold. The PEAmine plan prioritizes high-grade portions of the resource in earlyyears to result in a payback period of less than two years, whilegenerating nearly $90 million in after-tax cumulative undiscountedcash flow.
Following Sabre Gold’s PEA announcement, StarRoyalties announced reaching an agreement with Sabre Gold to foregothe third $6 million tranche of Star Royalties’ stream investment asoriginally contemplated, with a corresponding one-third decrease inits originally proposed gold entitlement under the stream. This isanticipated to provide Sabre Gold with greater flexibility to includeother forms of financing in its construction capital to bring theCopperstone Gold Project to production.
Green Star Joint Venture (61.9% interest)
During the second quarter of 2023, Green Star continuedto focus on evaluating capital raising opportunities, primarilythrough private markets, as well as on enhancing the depth and qualityof its advanced-stage investment pipeline of premium, North American,nature-based environmental solutions. These opportunities includepotential investments in regenerative agriculture, improved forestmanagement, reforestation, livestock enteric methane reduction,grasslands, biochar, and other category types. Green Star is wellpositioned to transact on several of these projects upon completion ofan eventual capital raise.
Voluntary Carbon Market Update
The first half of 2023 has been eventful in thedevelopment and publication of much-anticipated guidance gearedtowards providing clarity and certainty for the voluntary carbonmarket.
The Integrity Council for the Voluntary Carbon Market(“ ICVCM ”), an independent governance bodyfocused on the supply side of the voluntary carbon market, released its Core Carbon Principles (“ CCP’s ”) and theProgram-Level Assessment Framework and Assessment Procedure. TheCCP’s are a global benchmark for identifying high-integrity carboncredits through rigorous thresholds on disclosure and sustainabledevelopment. The CCP’s are comprised of ten key principles aroundgovernance, emissions impact and sustainable development. TheProgram-Level Assessment Framework then leverages the CCP’s toestablish the requirements for carbon-crediting programs, such asVerra. This assessment framework is alsointended to introduce a “CPP-approved”label, which is intended to provide market participants with confidence regarding whichcarbon credits meet the highest benchmark of integrity to guide buyers in their carbon creditpurchase strategy.
In June, The Voluntary Carbon Markets IntegrityInitiative (“ VCMI ”) , an independentgovernance body focused on the demand side of the voluntary carbonmarket, released the VCMI Claims Code ofPractice. While the ICVCM CCP’s relate to the supply of carboncredits, the VCMI Claims Code of Practice relate to the demand forcarbon credits. The Claims Code of Practice provides the rulebook formaking credible claims on the use of carbon credits against acompany’s net-zero target. The purpose of the Claims Code ofPractice is to provide clear guidance to entities on when voluntaryuse of carbon credits should be a part of their emissions reductionobjectives and to provide clarity on the associated claims thoserespective entities can make regarding the use of those carboncredits.
Additionally, other consultations are currently beingcarried out by organizations such as the Science-Based TargetsInitiative, a partnership between CarbonDisclosure Project, the United Nations Global Compact, World ResourcesInstitute, and the World Wide Fund for Nature .Through its participation in the International Emissions TradingAssociation and several consultation processes, Green Star willcontinue to monitor and contribute to the development and evolution ofguidance frameworks for the voluntary carbon markets.
Regenerative Agriculture Carbon Farming Program
Green Star’s flagship regenerative agricultureCarbonNOW® farming program is a partnership with Anew Climate LLC(“ Anew ”) and Locus Agricultural Solutions® (“ Locus AG ”). During the first half of 2023, CarbonNOWcontinued to enroll farmers into the program, with current enrollmentexceeding 300,000 acres. In addition to these enrolled acres, Locus AGand Anew are progressing through a meaningful pipeline of interestedfarmers with a target of participating in the Spring 2024 enrollment.Locus AG anticipates enrollment to accelerate going forward and hasestablished a network of over 40 dealers and distributors to expandits probiotic fertilizer sales across multiple states. At present, thelargest enrollment of acres has been from Kansas, Colorado, andOklahoma, followed by Illinois, Iowa, Indiana, Idaho, Kentucky, andNebraska.
The CarbonNOW program is currently being listed underVerra’s Methodology for Improved Agricultural Land Management, v2.0(VM0042), with official listing anticipated in the next several weeks. A 30-day public consultation period will commence immediately afterlisting, and third-party audit site visits, as well as validation andverification efforts are expected to occur over the coming months,with anticipated completion and first offset issuance in late Spring2024.
Green Star continues to expect to generate cash flowequivalent to well over 400,000 attributable carbon credits per yearat the program’s full scope of 1.32 million acres.
MOBISMART
Green Star owns a 2.5% gross revenue royalty onMOBISMART, a private operating company that specializes in mobilesolar power and fuel cell generation systems with integrated batterystorage and diesel displacement capabilities. In early 2023, MOBISMARTtransitioned from research and development to commercialization, andbecame Green Star’s first cash flowing asset.
During the current period, MOBISMART recorded itslargest quarterly revenue to date of C$517,000 as it continued to pushinto the telecommunications and Lidar sectors, with several additionalmulti-unit orders booked during the quarter. In addition, MOBISMART ismaking progress in the construction sector, with ongoing efforts toinitiate several pilot programs with key industry participants todemonstrate the superior ROI of its mobile solar power and fuel cellgeneration systems over diesel generators. MOBISMART anticipates aroll out of its systems at numerous sites across Canada to occur upona successful completion of these pilot programs.
CONTACT INFORMATION
For more information, please visit our website at starroyalties.com orcontact:
Alex Pernin, P.Geo.
Chief Executive Officer and Director
apernin@starroyalties.com
+1 647 494 5001
Dmitry Kushnir, CFA
Vice President, InvestorRelations
dkushnir@starroyalties.com
+1 647 494 5088
About Star Royalties Ltd.
Star Royalties Ltd. is a precious metals and carboncredit royalty and streaming company. The Company innovated theworld’s first carbon credit royalties in forestry and regenerativeagriculture through its majority-owned, pure-green joint venture,Green Star Royalties Ltd., and offers investors exposure to preciousmetals and carbon credit prices. The Company’s objective is toprovide wealth creation by originating accretive transactions withsuperior alignment to both counterparties and shareholders.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this news release may constitute"forward-looking statements", including those regardingfuture market conditions for metals, minerals and carbon offsetcredits. Forward-looking statements are statements that address ordiscuss activities, events or developments that the Company or GreenStar expects or anticipates may occur in the future. When used in thisnews release, words such as "estimates","expects", "plans", "anticipates","will", "believes", "intends""should", "could", "may" and othersimilar terminology are intended to identify such forward-lookingstatements. Forward-looking statements are made based upon certainassumptions and other important factors that, if untrue, could causethe actual results, performances or achievements of Star Royalties andGreen Star to be materially different from future results,performances or achievements expressed or implied by such statements.Forward-looking statements should not be read as a guarantee of futureperformance or results and will not necessarily be an accurateindication of whether or not such results will be achieved.
A number of factors could cause actual results,performances or achievements to differ materially from suchforward-looking statements, including, without limitation, changes inbusiness plans and strategies, market and capital finance conditions,ongoing market disruptions caused by the Ukraine and Russian conflict,metal and mineral commodity price volatility, discrepancies betweenactual and estimated production and test results, mineral reserves andresources and metallurgical recoveries, mining operation anddevelopment risks relating to the parties which produce the metals andminerals Star Royalties will purchase or from which it will receiveroyalty payments, carbon pricing and carbon tax legislation andregulations, risks inherent to the development of the ESG-relatedinvestments and the creation, marketability and sale of carbon offsetcredits by the parties, the potential value of mandatory and voluntarycarbon markets and carbon offset credits, including carbon offsets,risks inherent to royalty companies, title and permitting matters,operation and development risks relating to the parties which develop,market and sell the carbon offset credits from which Green Star willreceive royalty payments, changes in crop yields and resultingfinancial margins regulatory restrictions, activities by governmentalauthorities (including changes in taxation), currency fluctuations,the global, federal and provincial social and economic climate inparticular with respect to addressing and reducing global warming,natural disasters and global pandemics, dilution, risk inherent to anycapital financing transactions, risks inherent to a possible GreenStar go-public transaction, the nature of the governance rightsbetween Star Royalties and Agnico Eagle Mines Limited in the operationand management of Green Star and competition.
These risks, as well as others, could cause actualresults and events to vary significantly. Accordingly, readers shouldexercise caution in relying upon forward-looking statements and theCompany undertakes no obligation to publicly revise them to reflectsubsequent events or circumstances, except as required by law.
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