NU E Power Corp. (NUE) Earnings Call Transcript & Summary

And so we changed completely now. We were discussing gold in Mali and RDC. And here we are with our first time presenting here at the IIF, Broderick Gunning, the CEO of NU E Power, which I don't think you guys are doing gold in Africa. Am I right?

No, no. May be a good time in the world to be doing that, but no, we're not. We're an energy company.

All right. So Broderick, do you have a presentation ready for us?

I do. I'll just open it up here one moment.

All right. So now we see your go sledge. Perfect, all right. So now the way it works about 25 minutes presentation, then we do 5 minutes Q&A, and that's it. So the floor is all yours.

Great. Pleasure to be here. Thank you, everybody, for taking the time. Just a bit of an introduction on myself. I've spent the past 11 years in energy, originally in Bitcoin mining that kind of led me into kind of the early data center space, semiconductors. I lived in Asia for quite some time, and that took me into both electric vehicle infrastructure and battery storage which has led me to NU E. We took over NU E last November, which was primarily a renewable energy developer primarily operating in the solar space. And we've taken over -- it's officially been, I think, 11 months as our press release came out this morning. And we've been just trying to build our business and scale. Very exciting time globally outside of I'd say gold and silver, energy seems to be a very hot topic everywhere in respect to AI demand and general population growth. But very excited to kind of share the story today and a little bit about what we're doing. If you think about us, if you look at what real estate developers do, real estate developers primarily develop based on square footage, we developed based on kilowatt hours or megawatt hours and really, that starts with us securing land in many jurisdictions around the world. We've started here in Canada and have a few projects in Southeast Asia. Typically, from us, it's kind of scaling our land sites through zoning, permitting servicing and then getting to a point where we actually know how much power we can deliver. I'm sure if any of you have invested in AI or the power business over the past little while, a lot of people talk about when can you deliver power seems to be the name of the game today and projects being shut down in different parts of the world because they can't deliver power until 2030, 2032, et cetera. People are trying to deliver AI in a very short period of time. We're not an AI company, but we do deliver power to some AI companies. And I would say that those groups, in particular, today are the ones that have I would say, the biggest checkbooks and the most demanding as for when they can deliver power. We like to sit in this kind of 2- or 3-year window of securing site, running it through our process and then delivering power within that window and then essentially selling equity or taking in partners to kind of advance our projects. We're agnostic in respect to who we develop for. One of the things that we get asked a lot is what jurisdictions we operate in and what generation technology we look at, we look at them all. Over the past little while, we've seen a big emergence in nuclear fuel cells in particular, but we even get asked to develop coal in some markets. I'd say the lion's share of what we're doing today is around natural gas, solar and battery storage. Although nuclear seems to be a very hot topic, and we're looking at that for some of the sites that we're developing at the moment, all the while everything heads towards a grid connection and that path to develop -- to deliver power in the shortest period of time possible. What we've identified as a gap in the market is the fact that we try to secure sites at the lowest cost possible and then run them through our process over the kind of the 2- to 3-year window where we're deploying as little capital as possible, thus increasing value of our assets exponentially over a period of time where we're essentially being able to deliver capital back to our investors and essentially recapitalize it to other projects as we go through the process. There's 3 ways that we build a project and create value. I'd say the one thing is in a 2- or 3-year window is essentially selling that to a large-scale infrastructure developer. Some of the developers that we're talking to today have a 10-year horizon on their capital and they're looking to essentially get a fixed IRR of kind of 9%, 10%, 11% and they like to buy these large-scale infrastructure projects with the typical ROI over that kind of 8- to 10-year period of time. The second way that we will generate revenues kind of sell down kind of throughout the process. We get a permit, we get rezoned, we get an offtake tenant to buy our power, we'll kind of sell equity throughout that process. And thirdly, which is what is being, I would say, commonly asked by a lot of investors is great you're developing these projects, but what are you going to keep in the project long term? And we're typically looking at kind of keeping up 5% to 10%, 5% to 15% of equity in a project as they get to construction and operation. What we like about the latter model is the fact that we can generate revenue long term, typically power projects last 15 to 25 years. So once a project is built, the cash flow splits out by selling kilowatt hours over a very, very long period of time. And we like that model. And investors have been asking, great, you can develop a project at a certain point but what can the long-term revenue aspect be from taking on these particular investors and off-takers. As I think I mentioned at the top of the call, I took over NU E November 2025. We cleared house at that point. We built a new board. We've built a new team. A.J. Kiani, our VP of Development, is the only member of the team that has been with us since the infancy when NU E went public back in 2024. John Windsor, our Chief Operating Officer, we had him join the company in September of this year. John comes from Emira from Algonquin and from Northland, a gentleman who was built and deployed over 3,200 megawatts of projects over his career. The one thing that we set out to do as a company as we took over was to kind of build an institutional grade company and to head towards building a very large-scale power company. And by bringing John in September has been really helpful. It's one thing for me to be a crazy optimistic entrepreneur, but we wanted to kind of bring calmness and confidence to our investor base, followed by our CFO, John Meekison, who joined me earlier this year in February, and then our 3 board members, Eugene, Bold and Peter Espig. Peter Espig, in particular, joined our Board in August. Peter was formerly Goldman Sachs Japan, spent a lot of time working in Southeast Asia and as CEO of Nikola Mining, who listed on NASDAQ earlier this year. So we've got a very strong small team of players who have success in the energy sector, both in Canada and in Southeast Asia, and we're very excited about the future that we're building here. At the moment, in particular, we have 613.94 megawatts of portfolio capacity. We have some of that operating presently in Alberta, which is Lethbridge One. This has been operating since end of 2024. That site makes about $0.5 million a year at the moment. Lethbridge Two and some of the other projects that we have are getting close to getting construction ready, some of them later in 2027 and some later in 2028. There's kind of a very interesting dynamic in the power markets today, a mix of solar, battery storage, renewable clean energy and then getting into kind of gas, which seems to be a very hot topic today as per delivering firm power to these data centers. We tend to focus on kind of this hybrid model batteries, solar and then kind of mixing that in with gas. But the lion's share of our portfolio today is in solar and battery storage in -- primarily in the Canadian provinces. We do have one project there referenced here, which is in Regina, which is Saskatchewan, the central part of Canada, which we're working through what the generation source will look like there, primarily that project will be a gas project just because we're talking to a number of off-takers in the data center space. So very excited as to what this project may look like, and we'll start to make some announcements to the market over the coming weeks as to what will be happening here. Through our travels in Southeast Asia, we took a project on in Mongolia last year, which our plan was to build a solar and battery storage facility, but we were confronted by the energy regulator in Mongolia to actually build a coal power plant. We're in the middle of our environmental and feasibility there in Mongolia at the moment. And we may look at even considering that as a nuclear plant just because I would say, as a company for us, we prefer to look forward, not to go backwards in respect to what we believe as coal. So we'll update the market as to what we see progressing here. But you can kind of see the megawatt size that we have and this kind of 1,112 gross megawatts between our portfolio which, from our perspective, puts us in a very significant position of power in terms of when we look at comparables in the U.S. who have similar power capacity to us. They're trading typically in the kind of the high $500 million to kind of multibillion market cap. So for us, it's really just to continue to get our story out and get our projects operating online and then getting a large scale offtakers to take on our projects. Just to cover a few details on the projects that we do have and just to give a bit more images on the projects that we have in these markets, Lethbridge One as I mentioned earlier, has been operating since December 2024, spending about $0.5 million a year in revenue, and this is 8.75 megawatt AC operating capacity at this site. We have a 25% working interest in this project. with a JV partner that we have out of the U.K. Our present -- power purchase agreement is with Lethbridge Electric Utility in Alberta. The lion's share of our assets in Alberta is 503.5 megawatts, split in between 3 assets, Lethbridge Two, 12.5; Lethbridge Three, 155; and Hanna Solar, which is 336 megawatts. These 2 projects here, in particular, are very, very large-scale projects. When we look at large-scale solar assets in the world, these are some of the largest projects that you would see. We have seen multi-gigawatt projects occurring in the Middle East, but these types of projects are quite large. So we're very excited as we go through the development process and get these towards a path of going online over the next coming years. I just want to talk a little bit about Saskatchewan, in particular, this is a market -- I'm actually in Regina Saskatchean today, I've been here all week, that we've been spending a lot of time in. We're spending time in this market because of the fact of the government and how progressive they are in looking forward towards energy development. There was a data center announced here roughly about 3.5 months ago by [ Bell Canada ] with a 1,200-megawatt required power load, and they were announced at the Canadian Sovereign Energy Conference in Toronto a few weeks back of a $52 billion investment here in Regina. The project I had mentioned here earlier, this Saskatchewan site here in Regina, is located just next to this Bell data center. So we're kind of seeing the selection process of the sites we put together being positioned by very, very large offtakes and very, very large investment developments like this Bell Canada project. There have also been announcements here recently around very large nuclear deployments and other such mining development build-outs. So as we go through the next few months, you'll start to see more announcements around what we're doing here in Saskatchewan and why we're spending time in these provinces. But really, I think what it comes down to is this demand of power from both the mining sector and also the data center side. I always tell people that we're an energy developer, so we tend to follow heavy power users, and we try to build these power plants and run them through the process to provide power to these very large power users like what we're seeing here with this $52 billion investment for this Regina Bell data center. Just then furthermore of this project and the site that we have here is 29.44 acres. We officially put our letter of intent to acquire the site in August. And we've put some capital down. We're just going through our terms and conditions on that project and hoping to enter a definitive agreement here sometime in the next, I would say, few weeks here and then going through rezoning and getting this project ready for utility interconnection in 2027 and 2028. But again, I think for us, over the past 11 months, we've done a lot of work to clean up the business but also to get our projects to a point where they're getting to an aspect of monetization, increasing their value and finding very large offtakers to buy the power that we're developing. And just to give a high level of Darkhan and Mongolia, I tend to get hassled a lot by the market as to why we're in Mongolia in particular and what did we see in this market. One of our board members is Mongolian, and he's been very helpful both politically and from a business perspective in that market, which is why we've been able to secure this asset. But for us, when we're selecting assets in these markets around the world is all about power delivery, increased value and who's going to buy the power. And again, the great thing in this market is because we're so aligned with the energy regulator and I would say, in-market politics, we've been able to kind of move this project through our development process, and we're getting very close either deciding whether we're going to go forward and permit a coal project or whether we're going to look at further expansion of a nuclear project I'm hoping on the latter, but we're still working through the municipal and regulatory frameworks in that market. This is a very large project. What I can say about Mongolia and one of the reasons we looked at this market is there's 2 large coal plants in the region. They've been operating over 50 years now, and anybody who knows anything about coal power plants, you come to the 50-year cycle, you need to be shutting them down and putting in a new plant. So the demand is there. The demand is there by the energy regulator. The demand is there by the local utility and these contracts in place here are typically done in U.S. dollars. So we have a very strong offtake in the horizon of putting this project forward. And just to give a bit of context, for this year as a company, we did our initial capital raise in January of this year, which we closed at $1.8 million and then we closed another $3.86 million in August of this year, upsized originally from $3 million. I think we're -- today, we're somewhere in that kind of $0.13 or $0.14 range. Our financing was done at $0.15. And you can see that we're very undervalued as a company trading at this kind of $12.8 million market cap standpoint. I think for us, over the next coming weeks and months, is to try to head towards the $25 million in market cap. We've got warrants at the $0.25 range, and we've got warrants in the $0.35 range. So we are aggressively trying to put out some good stories and show stable growth and monetization through our projects so we can see this grow. As I mentioned earlier, when we look at comparable companies in the U.S. market, they're trading in the hundreds of millions, if not billions of market cap size based on the power that we have. So we're optimistic as to what we see as the future for our company, and we're operating in a very, I would say, a hungry power market. And from a share standpoint, we've got about 91.1 million shares outstanding. I'd say that kind of wraps up the presentation today. I certainly love to take any questions that anybody may have. But we're very excited about the future of this company. And over the past 11 months, we've done a lot to get to this point. We're about to unveil our next 12-month plan at the end of November and look forward to executing and further monetizing what we put together as a company. Thank you.

All right. Thank you very much for the presentation, Broderick. So we're going to go into a few questions. So first off, you said that you're basically following the big end users, and this is obviously, if you are building an energy project, you do need a user. You cannot build it wherever you want. In the big project announced in Regina, you guys said that you're very much near that project and so on. So how do you guys end up selecting where you are going to do the next project? I remember the time, for example, when we were doing and looking into the real estate of lithium production, not the mining, but the lithium production or the data center, you need the water. You need this, you need that. So that was the same thing for the battery at the time. And I was discussing with real estate agents that are specialized into those industrial complex. And you realize that there's not that many places around the world that can have big data centers. There's not many places that can do that. So is this through the same kind of process that you are limiting some zones, some geographical areas and so on and then going in and doing those LOIs?

Yes. I would say that's a good description. I mean we're I'd say this -- the power issue is globally right now, which is very interesting. But we have a very antiquated power grid. So what we're trying to do is make an analysis as to where we're seeing population growth or an estimate of where we would see a communications hub being built, whether that's fiber, a data center, even something like satellite or, in some cases, space centers, et cetera, as you're seeing more ground stations get built. So we do a very comprehensive analysis. We also are quite involved politically in certain markets that we operate in, both in Mongolia, Southeast Asia and here in Canada. We have a number of kind of on-ground consultants and lobbies firms that we work with to kind of be thinking ahead as to where the market is going. So I'd say that we tend to take a very calculated bet as to where we're going in when this Bell data center was announced earlier this year, we were ecstatic because it's almost right beside the property that we've been developing. So I think that we've built a very good sense as to this through our experience of developing other such energy projects on the infrastructure side and also on the battery storage side and then kind of recognizing where we see potential data centers being built. And again, we're always careful as to not going too much in the data center box because it's a very hot topic. We want to be careful. We develop power first if that checks the box for data center grid and if it checks the box for a manufacturer or utility or community, that's fine. But we're looking kind of future and where we see things going. But the fact of the matter remains the infrastructure and the power grid globally is not conducive to what is demanded today by power users as a whole.

That is great. And then from there, does that obviously help you to negotiate better deals as your first comer as your earlier than maybe announcement of project because, obviously, everyone that now wants land next to those places will be the high price, high royalties and then it will crush economy?

Exactly. Yes, that's 100% correct. And as I said, I would say a lot of our time today is dealing with ministers and and politicians and local communities to kind of look at where things are going. So we get that insight. Because as I said earlier, our model is to get in at the lowest cost possible and to get that project monetized at the highest value possible so that we can see that upside from the assets that we're developing.

And then, for example, in the [indiscernible] finishing maybe the -- sorry for that. So you're finishing [indiscernible] so the thing is that then with this LOI and everything happening, we are looking to more of a gas electricity, solar panel and so on. So where -- how do you divide the electricity output in the source?

Okay. So I would say that the big thing today for us is -- and I'm sure other energy developers will tell you the same thing is don't go to the utility and ask them to give you power. What is becoming a major point is bring your own power. So for us, the big topic today is gas and combining gas with solar and battery storage. And really, it's about kind of this behind the meter, bring your own power solution. And that's really what we're developing in all of our projects as that kind of bring your own power idea, I think a lot of groups have bought assets and tried to develop land and then asked the utility to give them electricity and it just doesn't exist. So I think as you see this industry grow and why you're seeing certain markets look at coal and even planned nuclear is because the demand for power just doesn't exist, and it has to be created behind the meter, and that's -- this kind of bring your own power scenario.