Green Star Royalties

Green Star Royalties Ltd. is a joint venture between Star Royalties Ltd. (TSXV: STRR, OTCQX: STRFF), Agnico Eagle Mines Limited (TSX, NYSE: AEM) and Cenovus Energy Inc. (NYSE, TSX: CVE) that funds premium, North American, nature-based climate solutions through carbon credit royalties and streams. Green Star invests in cash flowing and near-cash flowing opportunities in both the voluntary and compliance carbon markets. Green Star innovated the world’s first carbon credit royalties in forestry and regenerative agriculture. The company's goal is to provide shareholders with exposure to rising carbon credit prices and it aims to create wealth by structuring creative investments that prioritize stakeholder alignment, strong corporate governance, and environmental stewardship to ensure a sustainable future

Green Star is supported by strategic investments by two senior Canadian natural resources and ESG leaders – Agnico Eagle Mines (March 2022) and Cenovus Energy (December 2023). The Company is currently owned 46% by Star Royalties, 26% by Agnico Eagle Mines, 26% by Cenovus Energy, and 2% by management. The strategic investments by Agnico Eagle Mines and Cenovus Energy have provided Green Star with two cornerstone shareholders, validation of its business model and investment pipeline, expanded Board and Technical Committee expertise, significant recognition of value, and a pathway to continue Green Star Royalties’ rapid growth.

Highlights and Investment Rationale

Near-term cash flow in Tier 1 jurisdictions: Green Star Royalties expects to generate carbon credits starting in 2024, ramping up to over 570,000 carbon credits per year from 2026 onwards. Its focus is purely on North American projects, with a goal of minimizing geopolitical risk and favouring established, credible market mechanisms.
Exposure to carbon credit pricing: Green Star's strategy is to provide shareholders with exposure to rising carbon credit pricing and to generate superior returns through the origination of carbon credit royalties and streams.
Originating carbon offsets: Focused on funding new carbon offset projects in biosequestration (regenerative agriculture & improved forest management), renewable energies (solar & wind), as well as other green technology investments.

Capturing green value: The combination of rapid growth in global ESG fund assets (Bloomberg forecasts ~US$53 trillion in assets under management by 2025) and limited ESG investment opportunities to allocate these funds to has the potential to create strong valuation premiums for ESG-focused companies, such as Green Star Royalties.
Best-in-class partnerships: Green Star Royalties enjoys a strong working partnership with Anew Climate, North America’s leading carbon offset developer and marketer, as well as expanding relationships with numerous Canadian Indigenous communities and First Nations. In early 2022, Green Star Royalties announced a strategic investment by Agnico Eagle Mines, a senior Canadian gold mining company and a globally-recognized leader in ESG practices, followed by an equal strategic investment by Cenovus Energy, a senior Canadian-based global energy company, in December 2023.
First-mover and strong pipeline: Green Star Royalties pioneered both the first forest carbon credit royalty investment as well as the first regenerative agriculture carbon credit royalty investment, and is pursuing a pipeline of cash flowing and near-cash flowing carbon credit opportunities in both the voluntary and compliance carbon markets.
Respected team: Green Star Royalties leverages the experience of Star Royalties’ management team, as well as its internal industry-leading carbon expertise. Its Board and Technical Committees will review new investment opportunities and will have equal representation from Star Royalties, Agnico Eagle Mines and Cenovus Energy.
Strong governance and superior alignment: Green Star Royalties is managed with top-quartile corporate governance principles under a diverse board, with two appointees each from Star Royalties, Agnico Eagle Mines and Cenovus Energy. Green Star's core operating philosophy is to structure innovative transactions that are well aligned with the interests of all stakeholders.

Carbon Negative Gold: Green Star Royalties’ portfolio is expected to begin generating carbon offset credits in 2023, ramping up to over 570,000 carbon offset credits per annum from 2025 onwards. By progressively expanding its net negative CO₂ balance with further green investments, Star Royalties will offer investors exposure to precious metals and carbon offset credits with an increasingly negative carbon footprint.
Exposure to carbon credit pricing: Our strategy is to provide shareholders with exposure to rising carbon credit pricing and to generate superior returns through the origination of green royalties and streams.
Originating carbon offsets: Our focus will be on funding new carbon credit projects in biosequestration (improved forest management and regenerative agriculture), renewable energies (solar, wind), as well as other cleantech investments.
Capturing green value: The combination of rapid growth in global ESG fund assets (Bloomberg forecasts ~US$53 trillion in assets under management by 2025) and limited ESG investment opportunities to allocate these funds to has the potential to create strong valuation premiums for ESG-focused companies, such as Star Royalties and Green Star Royalties.

Essential relationships: Green Star Royalties inherits a working partnership with Anew Climate LLC,(formerly Bluesource), North America’s leading carbon offset developer and marketer and existing relationships with numerous Canadian Indigenous communities and First Nations. In addition, in early 2022, Green Star Royalties announced a strategic investment by Agnico Eagle Mines Limited, a senior Canadian gold mining company and a globally recognized leader in environmental, social and governance (ESG) practices (see more below).
First-mover and strong pipeline: Star Royalties pioneered the first forest carbon credit royalty investment and is pursuing a pipeline of additional cash flowing and near-cash flowing green opportunities in both the compliance and voluntary carbon markets with a priority on North American investments.
Respected team: Star Royalties will leverage the expertise of its existing management to incubate Green Star Royalties with additional guidance from a diverse panel of green experts on its Technical Committee. The Technical Committee will review new investment opportunities and will have equal representation from Star Royalties and Agnico Eagle.
Superior alignment: Green Star Royalties will be managed with top-quartile corporate governance principles under a diverse board, with two appointees each from Star Royalties and Agnico Eagle Mines.

Investment Approach

Originating and Cash Flow Focus

Pioneered the first carbon credit royalty in 2020 and advancing multiple new carbon credit opportunities
Will generate more than 560,000 carbon offset credits per annum from existing regenerative agriculture royalty
Will generate more than 11,000 carbon offset credits per annum from two existing forest royalties
Focused on originating premium carbon offset projects in both voluntary and compliance carbon markets
Prioritizing North American, nature-based investments that will result in premium carbon credits
Leveraging strong partnerships with project developers, capital providers and Indigenous groups

Green Star Royalties aims to provide shareholders with exposure to an anticipated dramatic rise in carbon credit pricing required to reach global greenhouse gas emission reduction targets by 2030, as outlined in the Paris Agreement. By pioneering innovative royalty structures based on our management team’s decades of experience in the mining royalty sector, Green Star Royalties is well positioned to fund new carbon offset projects into existence. The potential returns currently seen in the green sector are instrumental in Star Royalties’ objectives to simultaneously realize goodwill and good returns with intelligent, mutually beneficial, ESG-centred transactions.

Carbon Credits

The Paris Agreement reaffirms the goal to limit global temperature increase to below 2°C above pre-industrial levels, with a secondary aggressive target of limiting that increase to 1.5°C. Many governments and thousands of corporations having since committed to significantly reducing greenhouse gas emissions by 2030 and being carbon neutral by 2050.

Carbon offsets are generated from any activity that either prevents or reduces carbon emissions (such as renewable energies or methane capture technology) or improves carbon sequestration (such as regenerative agriculture or reforestation and conservation of forested lands or direct carbon capture technology).

Carbon offset credits are effectively a measurable net benefit from an activity versus the status quo. Their units are measured in tonnes of CO₂e, meaning one carbon offset credit is equal to one tonne of CO₂e emission reduction.

Portfolio

Rapidly growing portfolio of carbon credit royalties in both compliance and voluntary carbon markets
Existing royalty portfolio of nature-based projects to generate ~570,000 CC/year
Focus on North American investments with cash-flow visibility

Fourfold Expansion of Regenerative Agriculture Program

In April 2022, Green Star Royalties announced a fourfold expansion of the CarbonNOW® carbon farming program that will further enable the Anew Climate and Locus Agricultural Solutions® (“Locus AG”) partnership to incentivize regenerative agriculture practices on 1.32 million acres of farmland. This program, funded by Green Star Royalties and originally announced in December 2021, will create premium, verified carbon credits that will reward the adoption of regenerative agriculture practices by North American farmers.

Green Star Royalties and Anew Climate expect the expanded program to start generating credits in 2023 from regenerative agriculture practices undertaken during the 2022 growing season. At current regenerative agriculture carbon credit prices, the enlarged program is expected to generate on average over 560,000 premium carbon credits per annum attributable to Green Star Royalties, which will be available for sale in the voluntary carbon marketplace.

The expansion of the project reflects Green Star Royalties’ first-mover advantage in a novel and highly scalable business model, with further opportunities to fund significantly larger projects across the North American farming industry.

Strategic Investments by Agnico Eagle Mines and Cenovus Energy

Founded originally by Star Royalties in late 2021, our Company has had two strategic investors become capital partners and potential co-investors in future opportunities. Agnico Eagle Mines made a strategic investment into Green Star Royalties in March 2022, followed by Cenovus Energy in December 2023. Our Company is currently owned 46% by Star Royalties, 26% each by Agnico Eagle Mines and Cenovus Energy, and 2% by management. These strategic investments have provided us with two cornerstone shareholders, a significant recognition of value and a pathway to continue Green Star Royalties’ rapid growth.

Agnico Eagle Mines is a senior Canadian gold mining company and is recognized globally for its leading ESG practices. Cenovus Energy is an integrated Canadian-based global energy company, focused on managing its assets in a safe, innovative and cost-efficient manner, while integrating ESG considerations into its business plans.Both Agnico Eagle Mines and Cenovus Energy are strongly aligned with our values and philosophy on sustainability, making them excellent strategic long-term shareholders.

We anticipate that strategic involvement of our cornerstone shareholders and their participation on the Board and Technical Committees will lead to an acceleration in our growth trajectory and will allow the Company to originate, fund and participate in additional, larger carbon offset opportunities. A more scalable build-out of the carbon credit investment strategy will allow us to leverage our strong relationships and first-mover advantage to become the partner of choice in originating carbon credit and other green royalties, as well as attract capital from both generalist and ESG-focused investors.