Base Carbon Inc. (BCBN) Earnings Call Transcript & Summary

In non-speaking roles on the phone. I appreciate everybody joining us and making time for this call this afternoon. I know it's a busy day for everybody with year-end financials for many companies out there. It's 3:02 Eastern right now. I'm going to give it 2 more minutes for people to join our call, and then we'll begin very shortly. Okay. That's been about 2 minutes. We've had a couple of stragglers come in, so I'm glad we waited. So again, thank you for everybody joining. We will have some prepared comments, and then we'll open it up to Q&A. I'll remind everybody that you can raise your hand and -- but mostly, I think we'd appreciate you putting comments into the chat, and we will do our best to address all of the comments. If there is more comments in a limited time, we're happy to take things offline with people as you know. Sara, I'll ask you to flip forward to the next slide. As our lawyers point out to us, the -- we will make forward-looking statements and forward-looking disclosure in here. So if you can speed read, please read this, but be aware there will be forward-looking statements. And next slide, please, Sara. Thank you. And just flip on to the next one. Great. So in terms of spending our time together today, I think it's important to talk about the enterprise and where we're at today. But I think it's also important to understand where we've come from and where we've come from in a short amount of time. We'll drill down and talk about the projects. We'll talk about the financials and dissect and give some flavor and color around understanding our financials, especially knowing that as a carbon company, as a business that is in a perceived novel asset class for public markets, this is a mining company where people look at 1 million of them and understand the financials. So we'll really try to give you some understanding and flavor around how to understand our financials and the success of the business and what's on our balance sheet and what's flowing through our income statement and our cash flow statement. And then we'll spend some time talking about where we're going. We have -- we strongly believe we have a great platform, not just in what we've built to date, but from this point in time of what we're going to be able to do going forward, especially with what the market is presenting to us. So we're really excited about the success that we've had. We're really excited about the numbers that we'll walk you guys through and the hard work that the team and our project partners and everybody involved in this company has brought forward. And we're equally excited about the opportunity set in front of this company and its shareholders and all of its stakeholders. To frame where we're at, as I said, I think it's important to think about where we've been, and in a short amount of time. 2022 was really a year of pun intended, of planting, but it was a year of putting seeds into the soil of underwriting projects, of diligencing what was available to us and having a real thesis. It was a year of expected returns. Last year or the year -- yes, the financial last year, 2023 was a year sort of tending to our crops. We had underwritten our 3 transactions. Obviously, we put India on during the year, but we had spent a lot of time underwriting it up to our signing of that transaction announcement in August of 2023. It was a year of proactive management of this portfolio. And 2024 is the year where we really started to begin to see the fruits of our labor. The LOA that received in Rwanda in our project there, the substantial and significant cash flows within the Vietnam Household Devices project, the full planting within -- yes, which we'll talk about all of those in detail in our time together today. But it's a transition for us of what led us to this point in time and to led us to having this platform was one of detailed diligence thesis-driven underwriting and capital allocation to now where we've been of asset management, portfolio management and the beginnings of the monetization of the first iteration of this portfolio. The -- I will say as well from there, and I think it's an important point is as people consider our results and just consider this business as a whole, we use a lot of language talking about capital allocation, portfolio allocation. Some of that's just because of me because that's the world I come from, and it's the way that I think. But this is an operating business and operating requires an incredible amount of care and an incredible amount of diligence. It's the old if it's -- if it can be measured, it can be managed. And we spend a lot of time measuring. We spend a lot of time with our project partners. We spend a lot of time measuring thrice and cutting once, notwithstanding we've written our checks, portfolio management is especially in operating businesses, the part that people miss. And we spend -- we don't want to make that mistake, and we spend an incredible time -- amount of time that way. So a big kudos to the team and to the individuals that are doing that and have done that on our behalf. When you look at the results, in fiscal 2024. I think that the euphemism is the proofs in the pudding. You don't need me to sit here and tell you, look at this, look at that, you have to interpret this. I think you can look at really simple line items in our financials to understand the value that we've generated and the success that we've had in this business, not just on an absolute and stand-alone basis, but when you think about it in context to virtually -- and in my humble opinion, the junior market business that's out there, most -- I shouldn't say any, most junior market businesses that are out there in Canadian junior capital markets who are largely consumers of capital as opposed to generators of capital. Within the year, we generated $16.4 million of net cash provided by operating activities. That's a pretty nice chunk of change. And everybody knows this because most folks here follow our company in gross detail. But when we talk about dollars, unless it's otherwise noted, these are all U.S. dollars. So keep that in mind as we sit here at CAD 1.43, CAD 1.44, U.S. dollar, Canadian dollar. Cash balance is robust. We have a cash position as of year-end of $14.8 million. That's about CAD 0.20 per share. As of the time I jumped on to this call, we were sitting at $0.38, $0.39 in that range, bid-ask. That is effectively over 50% of our share value in cash. And we've generated during the year an inventory of 1.7 million Article 6 authorized carbon credits. Those are generated from our Rwanda project. Our balance sheet that we have not sold those, our balance sheet value, our audited balance sheet value of those is $25 million, which is $0.33 per basic share. To put that in context, those credits plus our cash position represent CAD 0.53 on a share price, again, that's in the high 30s as of the time of this call. We think that there's -- that's incredible value, and it's no value for the going concern within our business. Within the projects themselves, each project has operated, has executed and in some cases, has -- on our base case and in some cases, has hit some of our upside case as well. You're going to hear from me -- you're going to hear this at the risk of using another euphemism. The -- you'll hear this a couple of times in the call. But for us, there's a duration overlay to each of these. And the idea that our upside case has been hit in certain parts of the project, upside cases for us are based in duration. And we're in the -- still in the early innings of each of these projects. We're well through the early innings of the risk. Each of the projects has been significantly derisked as evidenced by the production in Rwanda in Vietnam, the material monetization in Vietnam. We have made a small effectively test trade as people know, in Rwanda, and we'll talk about the credits on our balance sheet, and we'll talk about where we're at in India. But for us, the optionality is inherently long dated, and we think about how we extend the time value or the fate of that optionality. In our Rwanda project, as we talked about, we generated 1.7 million Article 6 authorized carbon credits during the year. We've talked about that USD 25 million value that's sitting on our balance sheet. That letter of authorization received from the Governor of Rwanda on our project that represents the first Article 6 tag on the Verra Registry. That's a really, really important thing for us. In the Vietnam project, the -- it's steady. It's steady. there's predictability. We continued our monetization of the carbon credits to our project offtaker Citigroup. We monetized approximately $28 million of credits in 2024. And to put that in context, on the life of that project, we've generated just over $34 million on the life of the project. We committed $20.8 million in total dollars to that project. So our cash-on-cash return through the first 2 years of the project has been 60%. And a big part of our underwriting there, the Citibank offtake, the value of the initial Phase 1 of our credits was always a key component of our underwriting in the base case. The thing that we're very excited about are the duality of optionality that's embedded in that project, which is our option to purchase credits a right but not an obligation at very attractive prices in Phase 2 and the option to expand that project to a set number of devices, which we enjoy -- again, we enjoy duration on. We like both of those options. It was a key part of our underwriting, and it's not being recognized or really understood or valued. And then in our India afforestation reforestation and revegetation project, otherwise known as ARR, we completed during the year the planting of 6.5 million trees, and we're on track in that project for first carbon issuances in 2025 in this year. To put that in context, we announced that transaction in August of 2023. So in the 14 months since then, we've completed the planting on the 14 million trees. That's like a tree every 10 seconds, round numbers. That's -- to us, it speaks to the quality of our project partners. It speaks to the oversight that we bring and it speaks to the difference between -- again, as I said before, the difference between operating and simply allocating capital. Both are difficult. Operating just requires a lot of time and energy, and it requires a lot of diligence and care. And again, I do think that the proof is within the pudding of what we've been able to do. There's a lot to discuss on the overall market. There's a lot to discuss on monetizations. There's a lot to discuss on the growth and how we grow this business forward. We have not forgotten about growth anywhere from that. We wanted to and have needed to land the plane and in so many words on our portfolio, which we have done. And for us, those are all front and center. But I think before we jump into those, I think I'm going to pass it over to Wes to give an overview of our financial results and to give some color and understanding around those. Wes?

Thanks, Michael. Hello, everyone. I just wanted to reiterate Michael's initial comments and thank everybody for their time and attendance on today's call. We wanted to take a little bit of time to walk everybody through an overview of our year-end financial results, which are highlighted in the summary table on your screen as there continue to be a number of questions around our financial statements. This table as well as the detailed analysis of these financial results can also be found in our year-end MD&A filing, which was filed yesterday evening, beginning on Page 5. And alongside the MD&A, we also filed our annual information form for 2024 and year-end financial statements, which I'd encourage all attendees to read if you haven't done so already. So beginning with the balance sheet at the bottom of the table shown as of December 31, year-end 2024, we finished with USD 112 million. Again, all of the financial metric references in my commentary here in U.S. dollars, which is our functional currency. So $112 million in total assets on the balance sheet and $9 million of outstanding liabilities, which are primarily related to noncurrent income tax liabilities tied to anticipated future carbon credit production and profits at a prevailing 9% corporate tax rate applicable to our 100% owned operating and investing subsidiary down in Barbados being BCCPC. We finished the year with $103 million in shareholders' equity which on a per share basis is roughly CAD 1.35 at current FX rates and utilizing a denominator of 108.5 million shares outstanding as of March 31, 2025. During fiscal year 2024, as Michael alluded to earlier, we continued to deliver meaningful volumes into the contractual offtake with Citigroup for our Vietnam project, leading to just over $28 million in carbon credit sales throughout the year. I'll note that we view ongoing credit monetizations to be normal course for the business, which will now be reflected in our quarterly continuous disclosure filings. But I did want to highlight that in Q4 2024, we delivered and monetized 4.5 million cookstove credits to Citigroup, which were not press released on a stand-alone basis. This is included in that $28 million top line figure. And as noted in our subsequent events that have been listed in our FS and MD&A, we've also delivered an additional 270,000 water purifier credits in Q1 of this year, subsequent to year-end. Backing out operating expenses, our 2024 credit sales led to an operating income of USD 20.3 million and total cash flow from operations of $16.4 million, which you can find on our statement of cash flows in the year-end filing. Now despite generating significant positive cash flow during the year, Base Carbon reported a net loss of $28.9 million for year ended 2024 under IFRS reporting standards. This result was largely driven by a $45 million unrealized loss shown primarily related to fair value adjustments of our carbon credit project investments. These adjustments are noncash and reflect changes in valuation assumptions at the portfolio level for our production projects such as carbon credit volumes, price forecasts, project time lines and discount rates. Now I want to provide a little bit more context on this unrealized loss. As the projects in our portfolio are under the development stage, i.e., preproduction of credits, pre-first production of credits, the balance sheet carrying value is generally reflected as the capital deployed into the project to date. Looking at the notes to our financial statements, you can see that as at year-end 2024, we deployed $6.1 million in capital into the India ARR project, a preproduction project, and that $6.1 million is the current carrying value of that project. For Rwanda in Vietnam, given these projects are currently both in production now with Rwanda being brought online in 2024, the balance sheet carrying value is based on a DCF model, discounted cash flow model, utilizing certain assumptions, again, around carbon credit generation, pricing and discount rates. Now adjustments to the assumptions underpinning the DCF can certainly impact carrying value and a big driver of the unrealized loss that we're seeing in 2024 has certainly been driven by an anticipated reduction in future carbon credit generation associated with a methodological update to VM0050, the new household device methodology launched by Verra and/or announced by Verra in I think it was October of 2024. A detailed disclosure on the assumptions underpinning our project valuations is available in Note 8 of the year-end financial statements. I'd encourage everybody to read those, including the efforts to conform to the new methodology for both of those projects. But I want to highlight 2 key assumptions in particular that underpin those balance sheet carrying values. For Rwanda, the price forecast is currently $1,860, which is a blend of 2 market-based data points, one being the ICE CP1 CORSIA Phase 1 futures contract price as at December 31, which side note has limited liquidity, and we do not believe is necessarily a good proxy for the market. And two, utilizing the recent clearing prices, actual trades we've seen at the IATA auctions. I'm going to confuse this acronym given the acronym soup that surrounds this industry, but it's the international Aviation Transportation Association, sort of one of the administrative governing bodies for the CORSIA program. But in Q4, we saw in IATA auction clear credits, remembered to be over 0.5 million credits to a group of airlines where you saw participation from 32 global carriers with 11 of them contracting credits from the only CORSIA eligible project that exists today being a Guyana jurisdictional RED project on the Arch Trees registry. And that auction cleared at a price of $21.70 in Q4 last year. In March, just a couple of weeks ago, we saw IATA successfully close a second auction with participation from a similar size group with repeating names repeating carriers. And that auction cleared at a price of $22.50. This was like 1.5 weeks ago. IATA plans to hold these auctions on a quarterly basis with the initiative of building market liquidity and fostering and establishing sort of pricing benchmarks for these CORSIA line credits. I'd encourage attendees here to have a look at Page 4 of the MD&A under the section 2024 carbon credit inventory, where we provide a link to a recent MSCI industry report, which we believe is the sort of gold standard in this marketplace, which -- that report highlights the supply-demand fundamentals, program requirements and their pricing forecast for this CORSIA marketplace. I'll note that as management, we are optimistic about what lies ahead as the evident structural short/lack of supply continues to play out. However, for the purposes -- tying this back to the forecast through the asset carrying value, project carrying value on our balance sheet for the purposes of our Rwanda project and the accounting valuation, that $18.60 blended price forecast is held flat over the life of the project and the future cash flows are also being discounted at a rate of 15% compounded year-over-year. Now to put that in context from a discounting standpoint, $1 received 4 years from now is worth $0.254 today in that accounting valuation. Now given this backdrop on the nature of our unrealized gains and losses due to movement in our project carrying values period-to-period, for the year-end 2024, we've introduced a new non-IFRS performance metric in our financial reporting being adjusted comprehensive income or loss, which is highlighted in the red box shown. We believe this metric provides a more accurate reflection of underlying operational performance as it removes quarter-over-quarter unrealized variability in our project carrying values, which are driven by key assumption revisions. For year-end 2024, we reported USD 18.15 million in adjusted comprehensive income, which translates into USD 0.16 per share using our weighted average share count as of reporting. And this compares to a $6.2 million adjusted comprehensive loss in 2023, $24.4 million increase year-over-year. And again, I would encourage attendees to have a look at our recent MD&A filing. I think this is on Page 19, we include a reconciliation of this adjusted comprehensive loss performance metric to IFRS reporting standards. Michael, I'm going to flip it back over to you to move on to our outlook section.

Thank you. And Sara, if you can flip to the next page. Thanks. So the -- as I said at the onset, I want to talk about monetization, lots of questions on CORSIA. So we'll talk about CORSIA here. It's a key discussion to have. It is not the only discussion to have, to be crystal clear, but it is a key discussion to have. I want to talk about growth and growth is bifurcated between the organic expansion opportunities and options that exist within our portfolio. As we said, when we underwrote this book and we underwrote this portfolio, we solved for base case returns and predictability of base case returns, but also from building in as much long-dated low theta optionality as we could within each project. Some of that's market-driven, some of it is contractual. We'll talk about that. And then there's novel market-based growth. We're in a much better position as a company, and we're in a much better position relative to what the market looks like to grow acquisitively and through capital allocation to the marketplace outside of our current enterprise and current book, where we stand today than we did 12 months ago. And then we can talk about the topic on everybody's hand. I glanced at some of the questions when Wes was speaking around what are you doing around the share capital? We can talk about that. We've been very clear about that. Our thesis has not changed. Our commitment and our dedication has not changed that way, so we can talk about that. The monetization strategy, as I said, it's important to understand where you've come from to understand where you're at and understand where you're going. On Vietnam, we've committed $20.8 million to this project. We have no more capital commitments, full stop. We've generated as of year-end, $34.4 million, which is over a 60% cash-on-cash return in that project in a bit over 2 years, 2/3 year to that point in time. We've announced as well that subsequent to year-end, we had a further monetization -- a further issuance and monetization to our fixed price project offtaker Citibank, and we expect another monetization over the next bit here. Within that project, the main thing we think about as we move forward from this point in time is we've gotten payback, we've gotten return and where is the optionality in that project? And then how do we monetize that. We are discussing with our project partner, SIPCO, who are wonderful operators in Vietnam. With that said, I shouldn't just single them out like legitimately, each of our project developers and project partners are incredible operators. It was a key thing that we underwrote in our process, and we said no to a lot of projects that looked really, really good because the operators for a number of different reasons didn't fully pass muster. And we're very, very glad with the suite of operators that we have, and we're very, very glad that we -- with how this market has evolved in turn that we stayed to our -- we stuck to our guns and we focused on the quality of the project developers. But anyways, back on Vietnam, the 2 main value drivers in that project going forward are our expansion option and our ability to buy credits. We've announced that we have a right but not the obligation to buy credits at $5. That option is so incredibly valuable. I don't need to tell people on this home the value of optionality. And I'm not just talking about throwing it into a Black-Scholes model. We can all do that and we can value that. And by the way, we've done that work. But -- and the numbers are insanely big if you start doing that work, but optionality itself has inherent value. Low theta optionality has even more option value. That option within our book, just solely the $5 purchase option, whether it be under the current methodology the -- and/or the new methodology, which is the tieback to CORSIA if and hopefully when we do have a letter of authorization, a corresponding adjustment from the government of Vietnam. We are still hopeful and very prospective about that. The -- that is the tieback for us being incredibly in the money there. And so very much like we'll talk about in Rwanda, there is a duality between do we sell credits in the broader market? Do we sell them into the non-double counted market if and when in an instance in Vietnam, we have an LOA. Do we sell them into the CORSIA market? We like the fact that there's multiple places that we can sell. We spend a lot of time and energy thinking and talking about CORSIA because it is the closest thing to a price on a screen that we can see, but we do believe that there would be a robust and meaningful retail market that could be sized to the sizing within our portfolio, and we're spending time exploring that with certain counterparties in the marketplace. On Rwanda, again, where have we been? We spent $8.8 million on that project. We've generated our first 1.7 million credits. They sit on our balance sheet. Those credits as we've talked about, have a balance sheet accounted value of $25 million. Those credits, we've heard comments from certain shareholders of why aren't you selling credits? Can you not sell the credits? I want to be really clear about something. There is a -- and I think it's a good question if you're not -- by the way, it's not a -- we're frustrated by those comments. I think it's actually a really good comment if you're not in our business every day. But I want to give you some color of how we think about this because this is what we think about from the time we get up to the time we go to bed every day. There's a difference between waiting and doing nothing. And within our business, we're incredibly well capitalized. We've talked about the cash sitting on our balance sheet. We have $14.6 million sitting on our balance sheet as of year-end. We have capital allocation opportunities, whether it be continued share repurchases, the stuff we'll talk about in the portfolio expansions, the strategic growth that are novel and marketplace based, but we are well capitalized to achieve those ends, and that's without accessing any project level financing. It doesn't make sense to us to go out and hit a bid in the marketplace on something where we see the market as fundamentally structurally short, whether it be the non-double counted market or the CORSIA market simply to put a price up and say, hey, look, we did something and have a press release. The -- for us, there is incredible value. And I'm not talking about waiting years and sitting on credits and trying to be the portfolio manager for you guys and shareholders over these credits. But the bids that we see right now on our credits are largely for intermediaries. We're creating our demand in the retail market. And within the CORSIA market as Wes will get into some of the details of the CORSIA market. Within the CORSIA market, there's effectively a game theory going on. You have a bunch of airlines that are purchasers of credits. The people that buy the credits, our strong belief is they're not going to get paid a lot more money in their job or get a lot more senior or whatever the case may be by buying credits cheap, but they could get -- they could lose their job if they bought credits too expensive or too early or bore risks that they believed would be the unknowable unknown risks. So there's a version of purchaser-based index hugging that is going on amongst the purchasers. But the beauty is that CORSIA goes compliance on January 1, 2027. There's a period of time thereafter that people have the ability to purchase credits for that compliance period. But there is very much a game of musical chair game theory that's happening right now. And as Wes talked about, we don't believe that the ICP1 contract is a great contract for a number of reasons, and the price is not that great because it's not a super deep and robust price. We do believe the IATA prices are more reflective of where retirements are now. But relative to supply and demand, we believe there to be an incredible amount of upside in those prices and not for waiting years, but for waiting months. And so for us in not needing that capital, it doesn't necessarily make a lot of sense to go hit a bid. If we had a huge use of capital, and we saw a high level of certainty of execution on that, certainly, we would go take a lesser price than our expected price to be able to get accretion elsewhere. But just to repatriate capital to the balance sheet to have it sit there, especially in an enterprise where we're not getting valued for a lot of the cash and the value that's sitting on our balance sheet. To us, that seems like a fool's errand in the short term. In the medium term, we are spending an incredible amount of time on our strategies of how and where we monetize those credits and not just a singular strategy, but the -- effectively the REIT option of what is our preference 1, 2, 3 and having those opportunities stack up against one another as well as on a timing basis, so we can have the best return back for our shareholders in our enterprise. Finally, within India, this is our youngest project, as we talked about. We announced this in August of 2023, and we are fully planted. We've been very open and clear on these calls with anybody that will listen is that our strategy was always that we would have a much stronger hand on monetizing those credits and/or monetizing that project. Think about it on the project side, think about it more so like in the junior extractive resource world, somebody that gets an asset to a certain point in time and then flips it to a producer. The -- that's a very reasonable and possible outcome for us on this project. Our view has always been that our hand is much, much stronger, having planted the trees and being able to go with a fully planted and derisked project at that point in time. We still expect registration and validation of this project in 2025 within this year as well as first issuance of carbon credits, which will be a verification, of course, within this calendar year. We think that those both further strengthen our hand, but we are beginning to have the conversations with some very well-capitalized counterparties that are interested in either the credits on an offtake basis or in the project. Those conversations are not just with one counterparty. There's more than one, put it that way. And again, it sort of splits between we would like a long-term fixed price offtake with a very, very good credit quality, AA+ credits on the other side or counterparties that say, we really want to own this project, and let's talk about how we own this project. I will remind everybody that within that project, we do have an expansion option, and we view that expansion option as very valuable as well, and that is part of -- it fits within the portfolio expansion section and discussion, but it also if we're thinking about monetizing the project, that is something we think about a lot and the valuation thereof in those discussions. With that, why don't -- I want to say one more thing. The -- at the end of the day, as I said before, we have cash. We don't need to go chase the market. The sort of shocky, but there's the old -- in business, you can do things that have quality, you can do things that have price, you can do things that have speed, pick 2. For us, going and hitting a bid in the short term, we are solving for speed. So we are inherently trading off either price or quality and quality on the sale, I would determine really is the credit quality of the counterparty, the reliability thereof, especially if you have a forward aspect to it. And so for us, we will trade off speed in terms of maximizing price and maximizing credit quality if we're doing things out the curve with somebody. So I think that, that's just a really important precept for everybody to think about when we think about monetization. I'm going to pause there. I'm going to let Wes talk about CORSIA, and then we can talk about portfolio expansions.

Thanks, Michael. I just wanted to add one thing on your India commentary within the press release last night or I guess, early this morning, we highlighted a couple of reputable and live RFPs that are currently in the marketplace, one being the Symbiosis Coalition, a group comprised of Salesforce, Meta, Google and Microsoft, who have announced their intentions dating back to May of last year to go out and scale a fund to procure $20 million ARR credits, afforestation, reforestation credits. and as well as the watershed projects. We provided links for ease to shareholders within that document. There is a market shaping up. And without question, on the NBS side, nature-based removal side, there is a very strong un-abating appetite for sequestration credits from high-quality projects. On the CORSIA front, this is something we sort of debated amongst the Board and management for quite some time around how much disclosure and emphasis we wanted to include in our year-end filings as well as this call. And I just want to be very clear about something. CORSIA is potentially one pathway to monetization of our Rwanda inventories and future credit production as well as with an LOA in country, our Vietnamese credits in the future. CORSIA, there's definitely been some developments in 2024, one being the announcement by ICAO, the sort of governing body for that compliance scheme in November last year where they released final sort of program eligibility requirements. And the 3 biggest sort of requirements for that program would be one, the credits are coming from an approved program, the program being the registry. And during that announcement, they announced Verra was included, which is great. That's the home of both our Rwanda, Vietnam and soon to be India project registration. The second would be meeting the vintage requirements. So for CORSIA Phase 1 applicable for the years 2024 to 2026, they have to be -- you have to be delivering vintages 2021 or newer, the year the carbon activity was delivered or performed. And all of the credits currently sitting in our inventory from Rwanda and certainly on a go-forward basis would meet that vintage requirement. Three, they're coming from an approved methodology, the actual abatement or reduction activity being performed to generate and justify the carbon credits. And the big development in the fall was the fact that they have excluded the old household device methodological standard being VMR0006 under Verra from the CORSIA Phase I program. So you'll see lots of disclosure in our -- all of our filings, AIF, financial statements, MD&A around the fact that we have elected working in tandem or alongside our project development partners in Rwanda in Vietnam to begin the work to conform to the new methodological standard, which requires certainly a bunch of effort to reconduct field work, kitchen performance tests as well as engaging consultants to sort of adopt the new formulas and methodological standard, and that gets submitted to the registry for review and comment and eventually approval. So that work is underway for both projects, and that has led to, obviously, the adjustment in our credit generation forecast in our DCF carrying values. But with that methodological update, we believe these credits would be program-eligible. And I'd point you to DelAgua, our in-country development partner in Rwanda, their website, they announced a press release around the sort of key steps and timing expectations around conforming to VM50 (sic) [ VM0050 ], the new methodological standard, which they anticipate to complete by year-end -- by quarter end September 2025. So this is certainly in the near term as we sit today here in April, 5 months out. This should be approved and the option remains available to us. It's not an obligation. We can tag along their methodological update efforts to remeasure and requantify our inventories and conform to the new methodological standard. So with that VM50 upgrade with the vintage requirements and coming from an approved program, -- and then eventually, which I think is a process, I should mention, there's a fourth step would be insurance sort of guaranteeing the corresponding adjustment where we have that LOA in Rwanda, and we do believe the first batch of credits issued in April of last year, the $700,000 we received from the first issuance have actually been correspondingly adjusted as per the government's NDC update. Any credits that haven't effectively been correspondingly adjusted where you just have that guarantee from a government under an LOA, we may require -- be required to procure insurance sort of providing protections that, that LOA is delivered and respected. That would be that sort of fourth check box being the core program requirements for CORSIA Phase 1. So we are of the view that later this year, these credits are confirmed eligible, available for sale. And as I discussed in the preamble in the financial overview, there's currently only one project as we stand today eligible for CORSIA, which is the Guyana ART/TREES project. The market is structurally short. Our sort of cast of the net and market feedback amongst our network is, I believe, people and corporates are create basically placing a great deal of emphasis that our project in particular, as well as one other are part of the first slate of new project to be CORSIA aligned and eligible for Phase 1. So we're cautiously optimistic that later this year, our sort of phone is ringing off the hook with monetization opportunities. But again, CORSIA is one program. And we continue to evaluate opportunities to vend these out on an Article 6 authorized basis just with the non-double counting risk sort of addressed for the buyer, which is one of the key concerns in the marketplace today. I'll touch on strategic growth. You kind of highlighted organic portfolio expansion opportunities, Michael. So on the strategic growth side, again, in our filings last night, we highlighted that our internal corporate development team evaluates roughly 50 inbounds and project opportunity referrals on an annual basis, which is a pretty significant clip, 1 per week on average. Some of the softness that we've experienced over the last 18 to 24 months in this marketplace has seen a lot of developers dealing with significant liquidity constraints. And I'd broadly say that the opportunity set in front of us and the ability to structure better deals for lower capital deployments and where there's generally limited or no goodwill, we're having to take on and fund via cash or equity cost of capital. The marketplace has improved for those with a strong balance sheet and the willingness and ability to grow. Specifically on the biochar side, we've expressed the desire since inception to continue to diversify our portfolio into other methodologies, other jurisdictions and assets that are complementary, but different from a duration standpoint. And certainly, some of the focus as of late has been scaling a portfolio, adding to the portfolio, a suite of or a series of assets that would be considered in our view, environmental industrials where you've got a commercial product with a defined marketplace for monetization that would sort of underpin the opportunity and the carbon credits being generated alongside that industrial process would be upside for our sort of base case returns. And thus, biochar has been a significant focus for our shareholders or for our team internally. Over the last 1.5 years, we have engaged third-party consultants. We have attended many of the preeminent sort of biochar conferences globally, been building the knowledge base and skill set of the team internally, but also picking the tires on a handful of opportunities in North America to back platforms and teams, but also to do this on a sort of stand-alone asset basis. So we've disclosed in our filings that we've been working on a North American mature biochar opportunity, have not provided any time lines around execution of that. Next transaction, but that is certainly the focus, and we're hopeful that we can be in a position to announce something in the near term. And there's one opportunity in particular, where we have effectively exclusivity over it and are excited to be able to sort of televise that to our shareholders. And when you see the type of transaction we've structured and the potential sort of portfolio diversification benefits and returns available.

And I would just add to that a couple of things. I just want to be clear about a couple of things, and thank you for that, Wes. We're not moving away from carbon. We really like carbon. When we developed this business, carbon was the place where we saw the highest level of expected return, the highest ability for us to deploy our skill set of underwriting of capital allocation and -- but we needed very specific thesis. What we've seen in the carbon market is people who took an approach of all acorns will grow to the moon or going and buying the most levered thing in the world, their businesses aren't particularly good right now if they still have a business overall. And I'm not talking about public, just across carbon markets in general. This has been a theme. So measuring thrice and cutting once has done us very well, but we like carbon. We've used the words. This is cyclical. It is cyclical like many commodities, even though it's not commoditized yet, we talk about that all the time. But that cyclicality is to be taken advantage of if you have duration of capital. What we've seen one of the cardinal sins of finance that many, many, many counterparties in carbon, whether they be developers or financiers have done, is that they mismatch their assets and their liabilities. It is a tale as old as time within the history of finance. It will happen again. And we like sitting on the other side of that and taking advantage of that for the benefit of our shareholders. There's been comments of, hey, you guys didn't do anything last year. I would argue against that. There's -- as I said before, there's a difference between waiting and doing nothing. And we've prepared ourselves. We prepared ourselves for -- when I worked with Ned, he had a great term, which was the fat pitch. We've waited for the fat pitch and the fat pitch is here. And we're well capitalized. We're well experienced. We're well diligent to take advantage of it. So I want to make sure people here don't mistake not having a bunch of PRs in the marketplace over the prior year as a lack of commitment on the team, a lack of commitment of the company on behalf of this market. It is us being thoughtful, focusing inwards and landing the plane on our portfolio, as we've talked about in this call and preparing ourselves with our cash balance and the resources that we have to appropriately tackle the opportunities, but at a really, really attractive cost and in a position where we can really drive terms with where this market has gone. It is opportunistic, but it is appropriately and transparently opportunistic. The final thing, and we can go over from past 4:00 if investors want to hang out with us while we go through the questions, we'll try to answer as much as we can, is the -- we've used the NCIB. We've used it aggressively. We now -- we've talked about the amount of shares in our financials that we've purchased during the year. I think we've purchased nearly or even over now 20 million shares. I'll just for the purpose of approximately 20 million shares back. We are highly committed to that, not because we don't have different uses of capital, but we, again, love the optionality embedded in there. All of the growth, all of the balance sheet assets, all of the going concern. It's not just a linear relationship. There's a convexity of that. And we, as owners ourselves, and we as a company, very much like that. There's going to be a lot of questions around what does complementary market mechanisms deliver risk-adjusted shareholder accretion and capital returns mean. It means that we are -- the NCIB, you're limited. You're limited to 10% of your float in a 12-month period. We will -- I saw some of the comments on the billboards. We will renew our NCIB come June, full stop. But at these -- there's -- on one hand, it's really, really good for us as shareholders and the company that at some point in time, our shares won't trade here. And hopefully, sooner rather than later, that's up to all you guys. The -- if I was a YouTube video, this is where I say, go smash the subscribe button. The -- sorry, joking aside, the -- when we think about that, we have a short period of time. And when you look at what this company will be as time approaches infinity to go and get this accretion for our shareholders, and we are well capitalized to do that. So we are exploring lots of other market mechanisms that are available to us under the regulatory regime that are tried and true with counterparties in the marketplace or just on our own under the regulatory regime that allow us to drive that accretion. So I think that, that's -- we've got to be -- there's nothing directly coming next week in the works. We've got to be careful what we say on all of this stuff, but we are spending a lot of time and we have spent a lot of time over the last 3 or 4 months, understanding the tools available to us and to be able to be in a position again to make the best capital allocation decision on a risk-adjusted basis for our shareholder base. So with that said, I think that, that is the end of our prepared comments. I know there's a lot of questions within the chat here. And I think that what we're going to do is just sort of pull questions and answer them. Does that make sense, Wes?

Yes.

Cool. Why you don't you -- I'll take the first one.

Yes, I can leave here. And look, on the previous section, I sort of fumbled through some of my commentary as I was trying to address the Q&A live in my delivery. There's a number here that are pretty common around buybacks and NCIBs, which I think you've addressed. The -- I'll start with question #2 here, which is, does the conflict between Rwanda and the DRC affect your Article 6 LOA? So somebody that's been to the project in Q4 last year and a father of 3 young children, certainly safety of travel and visiting households was a consideration. I generally say that the provinces we've distributed our stopes to and the communities that we are servicing reside far enough away from the DRC border that it's relatively safe. And when you look at Rwanda from a rule of law standpoint, I think our opinion is that it is certainly one of the best jurisdictions to operate with a fair degree of risk aversion and stability at the government level that when we evaluate it against other opportunities in the global South, certainly in sub-Saharan Africa. So no, I don't think it impacts or has -- there's a risk there tied to our LOA with the government. We have strong ties by our development partner to the authorities that would oversee that LOA and the implementation of the corresponding adjustment. The -- I'm going to hit the next one, too, which is, in particular, the Abaxx ownership. So Abaxx, as we sit today, owns 19.4 million shares, which is roughly 17.4% of our reported 108.5 million shares as of March 31, 2025. Certainly, should Abaxx have any working capital issues that would be a concern for shareholders that they'd be vending out their position? No. We have a strong relationship with Abaxx given that we effectively incubated base on their balance sheet 4 years ago and spun this out of Abaxx and share the same sort of founder group. But as it relates to their working capital, we're assured over and over that there is no need to vend off any of their base shares. They're long term riding alongside us, believe in the value we've delivered to shareholders to date and the prospectivity of our business going forward. And as a sidenote, many of you are aware that Abaxx disclosed a tranche of their convertible debenture offering last week. I think it was $23 million in capital raise for that offering. Part of the security package for that. I don't have the specific details of that, but part of the security package for that debenture offering would be their Base Carbon shares. So I believe the lion's share of their Base Carbon stock is escrowed alongside that 3-year instrument. So no, I'm not concerned about Abaxx vending out any shares. I haven't been historically or we haven't been historically and certainly not on a go-forward basis.

One other thing I would just address within that question, there was a part of the question said, at what stage do you use $10 million of the cash balance to buy back 1/3 of the company's shares. I don't believe -- you have to -- it's one thing to sit there and say, hey, at $0.38, you have this cash, we can do the math and all valuation math is at the margin, right? But if you actually went out and there's a supply and demand curve of virtually everything in the world. And if you went out and polled shareholders, we have shareholders that are so price insensitive for a number of different reasons that as long as we keep delivering, we're good. We call them on year-end financials and they say, that's great. You guys are delivering next. So I don't believe that there are -- if you think about using -- buy back 1/3 of the company's shares at 108 million shares outstanding, whatever that is, 35 million shares, give or take. The -- I don't believe that there's that to buy at these prices. I really don't. I could be wrong, but I just don't believe that. And I think there'd be going out and doing something at market, there'd be a lot of time and energy. And I think that the -- you buy some shares, but I don't think that there's executability there. And that is an informed comment. We spend a lot of time thinking about -- and obviously, we service -- and I hope people here think we service our shareholders very well. We know the sizing of our largest shareholders. We just talked about Abaxx's sizing. You guys can go to our presentations, and I would urge you to go to SEDAR to look at the holdings of all of the insiders. Again, like when people look at share positions, you need to go to SEDAR or SEDAR+ now to understand the shareholdings that are fully disclosed of all of the insiders of this business. The insiders and management own a lot of the stock. There's some very concentrated holders that -- one of whom we've announced in our decks over and over again. There's a couple of other very concentrated holders that are very sticky, very price-insensitive shareholders. So again, when you start to think about the margin of what even possibly could be available in terms of shares, it starts getting pretty skinny. So it's part of the exercise for us when we talk about other market-based tools that are available to us. That is, for us, a key consideration is, hey, what is the actual certainty of execution? So next question, Wes, do you want to drive -- go ahead.

Sure, yes. I think there's only a couple more that we haven't addressed [indiscernible] focus on environmental industrials. We've talked about the NCIB and the buyback. I'm going to address the U.S. uplisting. Look, we continue to evaluate all options available to us to drive value for our shareholders. As a former banker, I've certainly had a number of mandates tied to dual listing Canadian companies. To look at a NASDAQ or as you'd do dual listing, there are certain requirements from an asset base, which we would satisfy. The big one would be share price. We'd have to roll back our shares in order to meet the minimum share price requirements of the NASDAQ in particular. Generally, a share consolidation has been a value destroyer has never lead to like an increase in the pro forma market cap. That could potentially be offset with a valuation bump looking at a dual listing down in the U.S. But there is one precedent or proxy that we continue to monitor, which would be [indiscernible] haven't had a great deal of success joining forces with the SPAC in pursuing listing south of the border. We will continue to evaluate it. But the inherent cost liability and just the fact that we are still a $40 million, $50 million market cap business and certainly, our efforts to expand our shareholder base south of the border, marketing to family offices and sort of small cap investors and funds, you name it, like I don't think at this point in time, it makes a lot of sense for us, but it's not to say that it's not something we would consider in the future. I'm going to let you as a passionate U.S. politics enthusiast, Michael, handle the U.S. administration and political environment.

Yes. Like frankly, I think that notwithstanding that there is a tieback to regulatory regime. The regulatory regime that we really tie back to is CORSIA. I think that -- so the question specifically is how does the political environment in the U.S. impact the demand for credits, if at all? I think that, that begs a question of like what is one's view of what the political environment in the U.S. is. And I think there's a value judgment embedded in there, and that's just not our role as a public company to be commenting on that. With that said, I think that there's a couple of things that are important to point out. There's definitely like a chicken little aspect when the current U.S. administration pulled out of the Paris Agreement. Yet if you go back to the First Trump administration, they pulled out of the Paris Agreement. It's -- I'm not really sure why people were like super confused or freaked out or the sky didn't fall when the first administration pulled out. There's -- and I think that the -- whatever people's views of the politics of the current administration are amazing in the middle, terrible and anywhere in between. I think that what this administration has shown is that they are -- there's a level of commerciality and mercantileeness, again, whether people like it or don't like it, that they've exhibited. And I think that they're relative to environmental markets, I think that there is at a level on an international level, a deal. I don't know what that deal is. It's certainly above my pay grade, probably above my experience and desires and intellect. So that's for much smarter and cooler people than me to figure out. But I do think that there is a deal there. I think that if you look at the gentleman that the administration put in charge of the EPA, Lee Zeldin, I think that there's a experience base there. So I'm not -- I'm really not messaging an expectation. I'm not messaging a political view by any stretch of the imagination. But I do think that what we see in environmental markets of people worrying, I think, is really a worry around things that are perceived to be unknowable unknowns. And I think that it's just a general fear as opposed to looking back because you do have a precedent of what this administration did in their first go around, whatever it is, 4 years ago to a day and day [ 157 ] or whatever of the first administration. So I think that's basically the most I really want to say on the political side for right now. I'm just looking at the questions. There was one final question on would we consider a small dividend just to give the credibility of the financial strength of the market. I think it's a good question because people think about, hey, you're cheap, what do you do? I think that people don't invest in junior market businesses to get a -- junior market businesses are about a multiple of money return, generally speaking, because of the equity cost of capital because of the liquidity risk that are born because of the size risks that are borne by an investor. And I say that as having invested lots and lots of money through professional portfolios in similar-sized companies. There's a risk premia of getting small that you have to overcome. And I think that all else being equal, when we sit here, a dividend is -- and this just goes back to some buffetisms. Dividends are taxed more poorly than share buybacks. The dividends -- investors that want to hang around don't have a choice. They don't enjoy that accretion. In fact, it's harmed because things that are -- cash that's in the business that can go after those multiple of money expected returns at the choice of the investor is sort of taken away from them when a dividend is paid. So I don't think with the tools that are available to us, certainly the NCIB, which we've messaged, I will message again, our firm intention. I'd be shocked if we don't renew our NCIB come June. So the even if the share price quadruples some great number from here, we're still going to renew the NCIB. We like the optionality embedded in it. Whether we purchase under it or not, that's a different question. But at these prices, we will not only renew it, but we will be buyers of our stock, full stop, all else being equal. The second thing is the other -- we've talked about sort of the other tools, but I just don't think that dividends in companies like this necessarily make a ton of sense because you're -- again, you're taking away choice, you're taking away sort of tax benefit, you're taking away that ability for expected return, especially when you're buying back shares. That is the mechanism by which we return value to shareholders. And it's based on choice. And I think that choice is inherently valuable. The final thing I'd say is that if we ever did think about a dividend policy, I think we need to be a little bit bigger as a company. And to me, that dividend policy is sort of your ticket, your sort of entry into the club into a lot of the small dividend funds that are looking for alpha outside of just the regular way index of dividend-paying stocks and especially with the uncorrelated nature of our asset class and business. I think that, that would be a really interesting strategy. It's something -- we don't spend a lot of time thinking about it, but that's definitely in the playbook. But I just don't think we're there yet in terms of size and scope of business. And we like the expected returns in front of us, both in terms of the portfolio expansions we've talked about, both in terms of the novel things. We spent a lot of time in messaging talking about biochar here as well as just simply, again, purchasing our shares. We're somewhat constrained by the regulatory environment. But whatever shares we can buy at these prices, we're buyers.

I don't think a dividend is whether it be a regular way dividend on a quarterly basis or a special dividend will make us eligible for inclusion in some of the indices given the fact that we are listed on the CBOE Canada Exchange versus the TSX or TSX...

Agreed. There's a couple of steps embedded in there, 100%.

It's not going to lead to a bunch of index buying. And without question, the point you made around the buffetism considerations is hard stop, hands down, the most tax-efficient return of capital and you look at the performance of these entities with significant activity under an NCIB in comparison to some of the big dividend players, they've all outperformed is the most tax-efficient return of capital for our shareholders, and we believe will lead to long-term price appreciation.

I think that, that is it on the questions. As everybody knows, you guys can -- we have the Investor Relations e-mail. Many of you have our personal e-mails. If you have questions, reach out to us. We're really grateful for everybody being here and spending their time. Time is just the same as capital. So we are very grateful for those of you that are shareholders for being shareholders and for the support, but we're also very grateful for everybody's time here this afternoon. If you have any questions, reach out. And if not, have a wonderful day, and welcome to Q2. Have a great day, guys.

Thanks, everyone.