Northstar Clean Technologies Inc. (ROOF) Earnings Call Transcript & Summary

So welcome, everybody, to the Northstar Clean Technologies Q3 results and investor update. I'm joined here by Carson Sedun, our Director of Corporate Development; Rosemary Pritchard, our CFO; and the Kin Communications team, and we thank them again for setting this all up for us. So listen, look, we've been doing this for a few quarters. Now the plan is, as always, to do a couple of things. So firstly, we'll cover the Q3 results, and I'll hand that over to Rosemary in a minute to do that. We'll do a bit of an update on the business, and then we'll do a Q&A. [Operator Instructions] Yes. So that's the steps. As always, we've got forward-looking statements for a bit of admin. And I'll now hand it over to Rosemary for the financial summary. Thank you, Aidan.

So starting with the balance sheet. As you can see, we ended the quarter with just over $1.2 million in cash. We also still have minimal debt with total assets of $7.1 million. We only have debt of $2.8 million, so still looking pretty good. One item to bring to your attention that I discussed in the last quarter, we had a few hundred thousand dollars of GST receivable that I had mentioned was in audit. And we have spoken to the auditors and being held up due to some new legislation that was coming into place, all to do with cryptocurrency businesses, which was what Northstar was before it merged with Empower. So in speaking with them and some other professionals, it has been determined that it's very unlikely due to this new legislation, that we will be able to get reimbursed for these GST input tax credits. And as a result, we did do $130,000 write-off in this quarter for those GST returns. On a positive note, after the Q3 was done, we did receive -- they did release 80,000 of GST for periods that followed cryptocurrency periods. We also have another $28,000 that should be coming in as well. So we are collecting what we can. We had deposits on the balance sheet of about $466,000. This is all related to the Delta pilot plant lease. And a small deposit for Metro Vancouver for the collection license and for BC Hydro. We did property, plant and equipment purchases of $654,000, which was actually $754,000, but we did receive $100,000 grant from Alberta Innovates, which offset part of those purchases. The equity-based compensation payable that result due with the cash settled PSUs and RSUs that have been issued and are being amortized over the vesting period. Loans payable, a small amount of loans we do have on the book was the capitalization of an equipment loan lease liabilities, net investment in sublease and right-of-use assets. These are all to do with the capitalization of leases and subleases under the IFRS rules. Next slide, please. On the income statement, we are comparing here Q3 of 2022 with Q3 of 2021. Just to remind people that Q3 of 2021 is kind of just right after we went public. So this is kind of when we just started to spend money on R&D and marketing activities and towards the end of the quarter when we started hiring the executive team. So in this quarter, our R&D was $446,000 compared to $160,000 last year, which makes sense, as I said, we were only just ramping up last year. Our G&A expenses were approximately $1.43 million, of which $1.01 million were cash related items. Just to note on the G&A that this year, we did have a very -- a cost focus for the year and reduced our G&A across different sectors in an effort to preserve cash flow. So you will see that some costs are lower due to that. So our marketing costs, $92,000 compared to $531,000 last year. This is all to do with IR costs and publication costs required for being public and some other various marketing activities. Consulting fees, $62,000 compared to $139,000 in the prior year, mostly related to government relations and HR work. These were higher in the prior year as there were still some costs associated with the capital raised and going public and with the extra hiring costs. Depreciation, $284,000 compared to $115,000 in the prior year. Just a reminder that this year, we started depreciating the Delta pilot facility equipment. So we would expect this year to be higher. Sessional fees, $70,000 compared to $92,000 in the prior year. Last year had some additional remaining legal fees due to going public. So some cost savings there. Share-based compensation, $133,000. This is the noncash items relating to stock options, PSUs and RSUs. And then the wages $479,000 compared to $96,000. This increase, again, last year at the end of Q3, they just started to hire the executive team. And in Q3 of this year, we had a full team for the full quarter. We also have a full plant staff at the Delta pilot facility as well. On the other items, just a few notes here. We did receive a small amount of $2,800 from a PST rebate on equipment. This is a rebate program offered by the provincial government. We have a second PST rebate under review and are hoping to receive another 26,000 for that. There's a loss on tax receivable, that $130,000 relates to the GST write-off that I talked about earlier. And the income tax recovery, the $41,000 that we received due to a shred refund. We actually have another $78,000 coming. These 2 cash amounts that we are getting all relate to shred claims from -- before July 2021, before we were a public company, we did receive shred credits after, but they come in the form of tax credits rather than cash after July 2021. Next slide, please. On the statement of cash flows, the comparative period here is the 9 months ending September. Total cash used in the 9-month period was $4.7 million. This was made up of $4 million of cash-related operating and R&D expenses. As just discussed, major categories being R&D, marketing, consulting, professional fees, rent and utilities and wages. The purchase of $772,000 of property, plant and equipment, again, offset by the $100,000 grant from Alberta Innovates. Lease payments made were $419,000 and loan repayments for the equipment loan we made $62,000. And then there is the equity subscriptions received. That was the $500,000 of equity of shares purchased by renewable U. And on the next slide, please. And then on the equity. Compared to last year, we increased from 106.1 million to 107.3 million shares. Again, this is due to the 1.25 million shares that were sold to renewable U. And our equity value did decrease over the 6 months, mainly due to the operating loss, but was offset by the increase in the reserves for share-based compensation and an increase in equity from the renewal use -- renewable U rate. And that is it from my side. Back to you Aidan.

Thanks, Rosemary. Okay. So let's go through the corporate and operations update. I mean, obviously, we had an investor call not so long ago to step through the detail of the McAsphalt off-take agreement and also the Renewable U funding. I mean as you saw from the PR that we released last Friday, it's probably worth talking about Renewable U, just straight away. As you saw, the -- we did not receive the payment that was due under that agreement at the end of October. We, therefore, did not execute the binding agreements on the 15th of November, which was the original target date, but the work has continued. So we have a couple of turns of the documents have gone back and forth for Calgary. And those are the 3 key documents. So that is the -- that's the U.S.A., the operating agreement and the setup of the partnership. And so those documents have gone back and forth between the 2 sets of layers, and I would say, are very close to being executable. And so now, we are just awaiting the funding. And so we continue to work with Renewable U on that. And kind of that's what we said in the PR and that's where we're at today. The other thing, obviously, we talked about in that meeting was the off-take agreement for Calgary with McAsphalt. We have now the binding agreements that are under -- that are with the lawyers for review from McAsphalt, so that's ongoing, and that's well on track. The other things that we talked about -- happened in Q3, I mean, the 2 things that are important from a delta perspective, of course, are that we received the brokering license. So that essentially enables us to bring trucks of shingles on to the site for processing. And I think you saw last week, we had the first truck from Westcon did arrive on site. And so that's obviously very important from a revenue stream perspective because that is when we get paid the tipping fee for the trucks received. And so the receipt of the brokering license was the first part of that and then engagement with the local suppliers to bring in shingles is the next thing that's ongoing. And then on the off-take side, we obviously had the purchase order from Delta. Again, I'll talk a little bit about customers in a minute, but that was the 80-ton purchase order with a major international slot risk manufacturer. And that is due for a pickup in the next couple of weeks here. And that is a customer who had done testing. Had tested the asphalt, thought it worked well with their manufacturing process. And so this 80 tonnes is actually for them to manufacture the flat roof systems for advanced testing. So that's exactly what we are seeing in terms of the benefit of customers having taken asphalt -- delta for testing. Q4 subsequent to Q3, we obviously -- we announced the renewable U deal, we announced the McAsphalt off-take agreement. And then as you saw last week, we announced the patent issue from the U.S. patent office. So a little bit more context around that. So we filed a patent in early March. And for those of you who know our process, essentially, and you can see from our slide decks, we have kind of 3 steps in the process. So we have aggregate separation, fiber separation on the back end is kind of like the asphalt processing unit. So we filed that along with a pattern for the asphalt that comes out of the process. The U.S. Patent Office came back to us and said, "Well, look, this is very, very broad. Can you please file a patent individually and for -- and we started with the front end of the process. And then 8 weeks ago, we got the patent -- or about 8 weeks ago, we got the patent approval back. So the patent office had no follow-up with respect to the lawyers. They had -- we had no engineering talking -- review with them. We had no questions that came back. They literally granted the patents straight away. So for me, that kind of says 2 things. I mean this is the U.S. patent office, of course, right? So they do a global search and anybody who's done anything with respect to this technology. And it kind of shows that nobody is doing that, in my opinion. And so I think from the value, from a company perspective, can people bypass patents and jump them and try to improve them and do lots of techniques to get run patents, they can, but you need to have a patent in place for that to happen. So what we've done consequently is we've now filed the follow-on patents with the U.S. patent office. And so those are relatively straight forward because they basically follow on from a patent that's crafted. So that was the recommendation of the patent office or the patent players. So from then patents granted and then the next 2 are follow-on. We've also filed a patent in Canada. Just exactly same pattern, but in Canadian jurisdiction. And we'll be looking at the global patent treaty to either in December or early in January to file there too. So from a value and protection perspective, we think this is absolutely huge and have it granted so quickly as -- was pretty unbelievable. Obviously, in the PR, we're very matter of fact about the grant, but I think it's a hugely successful outcome. And then the last one, and I'll talk a little bit about that kind of leads me into what we've achieved this year. As you saw, the onset this morning for the first U.S. plant, and it's the letter of intent signed with a major industrial customer for our first U.S. facilities. And so let's actually kind of jump into what we think about we've delivered this year. So if you step back and you go up to 10,000 feet and you think about this company as we came into this year, we had commissioned and tested some of the units in Delta, but we didn't have front-to-back production. So we didn't have shingles going in the front end and asphalt coming at the back end. We had no secure customers and the sectors that we want. So as we think about the sectors that we want, that's the paving sector, the flat roof sector and the shingle sector. And now as we leave 2022, that's in place. We have an off-take agreement or we have a purchase order coming out of Delta with a flat roof manufacturer. We have a paver in Calgary and a number of the discussions with the shingle manufacturers are ongoing for Toronto, for example, now we have another major industrial customer in the U.S. with offtake. Now the Toronto agreements are being discussed. The U.S. agreement is a letter of intent. So those are all emerging. But the most important thing about that is we've been producing asphalt out of the facility from Q1, and it's being tested again and again and again and again by these multibillion-dollar companies, and we're moving towards contract execution with them. I mean Colas in Calgary is obviously the one that's further stone. I would encourage everybody to go back and read that PR and read what raw inverts the McAsphalt President said about our Asphalt. I mean, as you think about the pressure that all of these companies in these sectors are under from an ESG perspective, this is exactly the kind of product that they want. And so that's why when we think about these sectors and we think about these customer agreements, that's why I believe we're in such a huge part of strength coming out of the year with that in place. if you think about Delta, Delta is in steady-state production with volumes that are strong. And that's because we've been operating the facility. We want to -- we're going to build a scale-up facility in Calgary, and we have a year's worth of operation under our belt at Delta, derisking feedback from customers, feedback from manufacturers, sampling ongoing with constant feedback coming back to us at the plant about what's happening with the product and how we're producing and operations. I mean, the plant is now moving towards debottlenecking and efficiency and it's moving away from kind of getting operations started and commissioned and flow-through. So we're getting to a point now whereby the derisking of Calgary has been really, really successful. And now we move into kind of -- and the likely next step for Delta as a number of you that have been on site tours, now we have -- we have the manufacturer shingles about kind of 2 to 3 tons of manufacturer shingles sitting on site. And the next thing now is we've commissioned and operated this plan on paper-based fiber, and now we're going to switch it over to fiberglass. As you think about fiberglass, the majority of the processing in the U.S. will be of fiberglass shingles and Canada stopped making paper singles in the '80s. So what we'll see is, we'll see the amount of process volume of paper going down and the amount of process volume of fiberglass going up. We think fiberglass will have higher efficiency. And so that's the next probably 2 to 3 months that we will do at Delta. And that will also enable us as we're kind of feeding into the detailed design for Calgary to have a clear idea of how the process runs with the fiberglass, which is going to be obviously a key feedstock for us as more rooms will be fiberglass as we move through time. But I mean, the Delta facility we now can say it has proven technology. And with the patent, of course, that really secures the technology from a protection perspective. In Calgary, we have a site secured. So lease negotiations are almost complete on that. We did a FEED study in Q1 and the engineering out of that set into our life cycle analysis, that's completed. And we've got a pretty good view that, that has a 60% lower carbon footprint than the base case. So we have a very strong -- we've got a strong location, strong site, good engineering and now ready to move to the next step. I mean -- and with respect to funding, we had Alberta Innovates, we said we had $200,000 for engineering that came from Alberta innovates, hopefully more to talk about with respect to non-dilutive government funding over the next months. And we had $0.75 million from Renewable U. So although the payment in October didn't come, we still have had Renewable U invest $0.75 million in the business with $0.40 per share. So that was another funding source. And obviously, it's clear to us that the funding is going to be key for building the Calgary facility, and we have a number of options that we're continuing to work on for that. So look, I think as we think about moving forward, I think it has been a really successful year if you think about our customers, if you think about our patent, if you think about Calgary and if you think about where we are in Delta, we have the delivery of the purchase order to the Flatout customer out of Delta in Q4. We're continuing the discussions with Renewable U. We're moving the McAsphalt, as I said, definitive agreements. And we're hoping in the next month or so here to announce where we are on diluted funding. Commercial production in Q1 in Delta and detailed designs for Calgary and as we go into next year. And so -- as you think about the business, I mean, ultimately, this is a manufacturing business. It's a manufacturing process with ESG upside. I mean that's what we've always said in $4 million worth of EBITDA we put out in -- in Q1 when we discussed the performance of the -- or the estimated performance of the business. That didn't include any sustainability benefit. It didn't include any CO2 kind of CO2 trading benefit. And so this is a manufacturing business that is in the right sector and has the ESG upside. The fundamentals of this business continue to improve. We're diverting -- the Calgary facility will divert 40,000 tonnes away from Calgary landfill. Every facility that we build is targeted for 40,000 tonnes and diversion is critical for a number of these municipalities, especially the ones in clean cities. We think tipping fees are under pressure to rise. We do not see shingles going into landfill getting any cheaper. We see that going up. On the back end, we've got asphalt coming at the back end. And obviously, we've got supportive oil prices at this present time, but if you think about the fundamentals that are going on to reposition refineries to be green refineries, the thing that drops off the bottom of that is asphalt. So we think supply-demand balances, asphalt is also under pressure there. And so a number of the customers that are talking to us are talking to us, of course, about the ESG footprint we have, but they're also talking just about the supply for the business. So look, I continue to think we've had a very strong year in terms of performance as we outlined and with the fundamentals and what we expect to deliver in 2023. I think that will continue. So Carson, I think, over to you. I think as always, our Kin, Carson and you've got the info at northstarcleantech.com as potential context for any follow-up. And as always, it's great to have investors on these calls and asking questions. But any other -- any additional follow-up any of the investors want to do more than happy to chat.

A couple of questions come in here. [Operator Instructions] I guess, question one, what's been the key lesson learned from Delta this year? And what are the top operational priorities for Delta next year?

So I think -- I mean it's almost like when you really learn about the operation of your facility when you're operating it? I mean I know that sounds very ironic and a bit corny. But until you commission a facility and run it front to back day in and day out, it's really tough to get operational feedback on how have you designed it, how is it working? How are the pumps transferring? How is the back end of operator unit working? I honestly think it's just cumulative and improvement by improvement by improvement. And so I think that's been the critical thing. And I think the learnings are probably, I don't know, 100 -- a spreadsheet of 100 lines long. Because nobody has ever built one of these before. It's not like we have a refinery running in the U.K., and we're building a refinery in Canada, and we're copying it, and we still learn as we switch this on. And look, does Calgary have scale-up risks, of course, it does. Will it be kind of the same thing? Well, of course, it will. And we've got a 3 to 6 months -- 3 months commissioning period built in for Calgary. And will we use it? Yes, we will. But it's the -- but I think we have proven that the technology works. We have proven that we can put asphalt shingles into the front end of this facility and we get aggregate and fiber and asphalt at the back end. And 80 tonnes of that asphalt is going into advanced testing being picked up and a weaker shows time. We've been sanding the asphalt out to all the customers for -- as you know, for testing. And people like Colas are coming back and saying, Colas, McAsphalt are coming back and saying, we have so much faith in your technology, we'll do a 5-year off-take agreement for 10,000 tonnes a year out of Calgary and will help you with the engineering, and we'll continue to provide you feedback from R&D. So the proof of that contract to me is absolutely huge. I think for next year, for Delta, I think there's 2 key things to do. So the first key thing to do is to run the manufacturers' shingles and -- which are 100% fiberglass, no paper such that we can send aggregate samples, fiberglass samples and asphalt samples to all customers. All the customers want pure fiberglass, pure aggregate from fiberglass tiles in the asphalt [indiscernible], basically because, as I said earlier, the North American 10-year time over 99% -- 99% of fiberglass. The manufacturers, the shingle manufacturers that we're talking to also want us to run those so that they understand when they send us their off-cuts which could be in a 40,000-tonne facility in Calgary, those off-cuts could be 5,000 tonnes a year. So it could be that my kind of 10% to 20% of our feedstock depending on where we're located and depending where the shingle manufacturers are. So it could be an important feedstock. And so people really want to -- the customers really want to understand what is the circularity of the fiberglass look like, what is the circularity of the asphalt look like -- not the asphalt, sorry, what is the circularity of the aggregate look like. Everybody knows that they can use asphalt that comes off it, but especially for aggregate and for fiber that testing. And then we need to get the plant up to the 50 to 75 tonnes. We will like to -- I expect that to be a Q1 shutdown. And as we come out of Q1, I expect to be at -- that's what I expect the capacity to be at. So I think fiberglass first and then the shutdown for the capacity debottlenecking second. Sorry, takes a bit of a long answer, but quite a lot to do next year or 2.

Yes. No worries. Can you touch on the LOI signed this morning and what that means for our U.S. expansion plans? And then -- and also does that take away from Toronto development?

So the way that I see the development is, of course, would be the work we talked about at Delta then Calgary to be built and essentially to be built by this time next year. And then I think we would follow that closely with Toronto. Look, to be perfectly honest with you, the discussions in Toronto are going so well with a number of different customers who are obviously kind of anchored in the Ontario region that, that could either be one or potentially even 2 facilities. And I think the Pacific Northwest could either follow in parallel or slightly after. So we could be in a position whereby 2023 is the year to deliver Calgary, and 2024 is the year to deliver Toronto 1 and/or Toronto 2 or Pacific Northwest. So I think the earliest we will see Pacific Northwest is by the end of 2024. But look, it's really important. The U.S. market is really important. I mean, as you know, that's where the rollout and the scale-up of the business is focused as well. So we have some decisions to make on timing. The LOI is with a major offtake customer, and it's for all the products. So it's for asphalt, it's for fiberglass and it's for sand. I mean, of course, as the PR says we need to make sure that we're meeting the specification and what we'll see coming out of Calgary, we'll be able to support that same and delta as we do work. And this customer has been helping us all the way through with feedback on here's what we need for the aggregate feedback and here what we need for the fiberglass5 and feedback on here is what we need from the asphalt. So it's been a clear discussion around specification, but this is for one or more facility. So with this customer, we can not only do our first U.S. plant but potentially follow-ons as well. And my expectancy is that we would probably secure the binding off-take agreement by the middle of next year. Now I can't say if that's kind of like June or September or whatever, but certainly, that will laid on exactly worthy -- exactly the U.S. location, exactly which plant on the customer side it will deliver to and the specifications and the pricing for everything. So a bit like the binding term sheet that we did for McAsphalt, a similar sort of agreement or maybe even like full definitive agreements by the middle of next year. And that will lay out the detailed time line for the U.S. facilities.

Okay. A question on the patents. What's the plan for the follow-on continuation patents? And when do you expect an update to the market?

They've already been filed. So as soon as we were granted the U.S. patent before -- so when you get granted a patent, you have to then pay the patent office and then it takes them a lot while to process it and whatever. So as we were doing that process in parallel, we filed the follow-ons. Likely, they will probably take a little longer. So I'm -- but we're hoping kind of by the middle to end of next year, I would think. I suspect they will not be anywhere near as fast as the patents that we got.

Okay. Thank you. A question on Calgary. What's the status of the lease on Calgary, is the chosen Calgary plant to just land or an existing structure and what needs to happen to develop the site.

So the site has been selected, the final leases -- the final lease, if not, I mean, it's due to be executed pretty soon. I'm thinking like in the next few weeks. So the lawyers have been going back and forth in the lease agreement. It's a bare -- it's just, I think, nearly 4-acre site near the landfill and it's open land. There's no building on it, and so we are likely to put the building -- sorry, the facilities inside like a kind of a from tented structure building. And was that anything else on the -- did I miss anything on that question?

No. No, that's good. What are the next steps on advancing the McAsphalt deal?

I mean, essentially just the definitive agreement. So we have the first definitive agreement was prepared by McAsphalt. Our lawyers are going through it now, and that's essentially it. So it's essentially taking the binding term sheet and converting it into a definitive agreement, I mean weeks away in terms of getting that secured. So I mean, if you saw the binding term sheet, now we had to obviously redact pricing or whatever. Pricing has been agreed, terms have been agreed, nomination procedures. So nomination procedures are being agreed at a high level, but the definitive agreement will say, okay, we need to ring them on the 20th of every month and give them the outline for production for the next month and they need to tell us what's happening with trucking. And so it's really just the formalization, the agreement formalization of what's in the term sheet. We have absolutely no expectancy for terms to change, and we've chatted about that and Colas and McAsphalt are in exactly the same place. The terms, especially the commercial terms are fully agreed.

Okay. Another question on the U.S., thoughts on expansion outside of the Pacific Northwest.

Look, again, the way that we think about strategy of the U.S. is kind of twofold. So number one, as we engage with this customer set, where are they located with their plans, number one? And number two, what is the attractiveness of a market. So as we think about -- so let's step back and think about kind of like what Phase I looks like. We always said Phase I look like Calgary, Toronto and Pacific Northwest. And so we have -- maybe we have Toronto, but certainly, that's what we said Phase I look like. So Phase 2 is always about rolling out through the U.S. And so as we look at market attractiveness, we used a grid that has a tipping fee versus asphalt price. So as you know from our commercial model, roughly 30% to 35% of our value comes from the tipping fee revenue and about 60% from the asphalt and then fiberglass and I would together about 5 roughly, roughly. And that's what we kind of -- when we've been kind of doing our presentations and talking about where the value lies. So the 2 critical determinants into value are what's the asphalt price versus what's a tipping fee. And so we have our top 10 U.S. facilities for Phase 2 already outlined. We have that overlaid with customers. And so for example, this LOI this morning was all about as we look through the locations of that customer and we look through the markets that are attractive, where the van diagrams intersect, and they do. They do for all of our customers, whether that's a Colas customer, whether that's our flat roof customer, whether it's a shingle customer, whether it's a major industrial customer, I mean any of that, we have markets that are really attractive. And I think we can easily point to the first 10 that we would do in Phase II. So that's the first thing. The second thing is, look, we -- there are going to be markets that are unattractive where the asphalt price is low and the tipping fee is low. For those markets, what we would likely do is we may license the technology. So what we would do, what licensing the technology looks like is we think that we probably need to have built 3 to 5 facilities before we do that. So we can easily -- we've got full process improvement from Plant 1 to Plant 5, by the time you get to 5 plants, you're in a position where by like, okay, so here's the modular system that you're going to get. A licensee would be using BBA engineering, a licensee would be feeding all of the plant information back to BBA so that they're included in the performance improvements. And the license would be getting all the performance improvements we're doing in plant 15 and plant 20 and plant 25, et cetera, et cetera. So we think the attractive markets where we have overlap with our customers are pretty no-brainers. And then markets, which are less attractive either if a customer is there or not, then we think we will be able to access that market with licensing. Look, in 2020 -- so think about the 2 fundamentals that I didn't mention earlier but that are huge. In 2020 -- so this year, 2022, Irma, the American Roofing Manufacturers Association came out and said that they want to divert away from landfill 50% of shingles by 2035 and 100% of shingles by 2050. So they want no shingles going into landfill by 2050. And in 2021, the estimated figure is that 1 million shingles were grind up and -- 1 million tonnes of shingles will grind up [indiscernible] U.S. and 14.85 million to nearly 15 million tonnes went into landfill. And I think each one of our plants does 40,000 tonnes. So that is a spectacular number of plants. And we will not be the only technology. We will -- we are not the only -- we will not be the only solution for solving that 15 million tonnes, but that's the target. So 50% of those by 2035 and 100% of it by 2050. And today, it's 15 million tonnes, which is a spectacular amount of shingles going into landfill.

Okay. What do you feel is the biggest risk to the business today?

Look, I honestly think that we've always said that scale up, so I think 2 things. So we've always said that we believe that we've derisked the technology such that Calgary is a manageable, well-managed process and manageable step, but it's a risk. There is no doubt whenever you scale up it's a risk. I think when we build Calgary and we optimize it and every single facility after that will be 40,000 tonnes, and it's the same. I think the technology risk is done. So I think when you take these steps in ESG businesses, you need to take the first step and that's can you prove your technology and then you take the -- and that's the biggest step. That's the toughest step, and then you take the next step, which is the derisking step to scale it up. I think then you're in a bit of a flat path. And then at that point in time, it's literally speed of deployment. So I think the risk -- the biggest risk to manage in 2023 is to scale up and building Calgary. I think from 2024 on, it's having the organization in place that can roll out 3 to 4 facilities a year and do patenting at the same time. Now that's a bit of a build an organization that can do that risk, I think -- but honestly, I think we've taken the biggest step. I mean we've always said 3 key things for an ESG business. Number one, do you have a technology that works? Number two, do you have a plan to scale it up? And number three, can you rule it out? Like we -- this year, we have proven #1. We have a technology that works. 2023, we proved that we can scale it up, and we have a clear plan on how to do that. And then 2024, we just roll it out and managing the risk of that look -- that will be the biggest risk moving the business forward. So I think those are probably the 2 biggest risks I see.

Okay. Thank you. That's all the time we have for today, so we'll wrap it up there.

Excellent. Well, listen, thanks all for that, as always, thanks, Kin, for helping us and to thank investors for attending. And I think we've had -- look, I think we've got a great year in 2022, and I look forward to our Q1 call in '23.