ABOUT GREEN STAR ROYALTIES
In October 2021, Star Royalties created a separate corporate entity, Green Star Royalties, to accelerate the growth of its pure-green portfolio beyond its 80/20 allocation framework. Green Star Royalties positions the company to be carbon negative by 2023, through its existing and future carbon offset projects whose sequestration benefits more than offset the company’s direct CO2 emissions from corporate activities and attributable CO2 emissions sourced from its gold equivalent ounces.
Green Star Royalties Highlights and Investment Rationale
- 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: Green Star Royalties’ 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: The Company’s 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 Blue Source LLC, 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.
Origination and Cash Flow Focus
The creation of Green Star Royalties is intended to lower Star Royalties’ cost of capital. This would allow the company to capitalize on its strong relationships, first-mover advantage, and several opportunities already in its green pipeline.
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 management’s decades of experience with 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.
STRATEGIC INVESTMENT BY AGNICO EAGLE MINES
In March 2022, Star Royalties announced a strategic investment by Agnico Eagle Mines Limited into Green Star Royalties via a non-brokered private placement. As a result, Green Star Royalties is currently 61.9%-owned by Star Royalties, 35%-owned by Agnico Eagle, and 3.1%-owned by Management.
Agnico Eagle is a senior Canadian gold mining company and is recognized globally for its leading environmental, social and governance (ESG) practices. It is strongly aligned with the Star Royalties’ values and philosophy on sustainability, making it an excellent strategic investor in Green Star Royalties Ltd. The strategic investment by Agnico Eagle has provided Green Star Royalties with a cornerstone shareholder, a significant recognition of value and a pathway to rapidly grow Green Star Royalties’ critical mass.
Star Royalties anticipates that Agnico Eagle’s strategic involvement will lead to an acceleration in Green Star Royalties’ growth trajectory and will allow Green Star Royalties to originate, fund and participate in additional, larger green opportunities. A more scalable build-out of the green investment strategy would allow Green Star Royalties to leverage its strong relationships and first-mover advantage to become the partner of choice in originating green and carbon offset credit royalties, as well as attract capital from both generalist and ESG-focused investors.
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 Bluesource 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 offset credits that will reward the adoption of regenerative agriculture practices by North American farmers.
Green Star Royalties and Bluesource expect the expanded program to start generating credits for the 2023 growing season. At current regenerative agriculture carbon credit prices, the enlarged program is expected to generate on average over 560,000 premium carbon offset 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.
CARBON OFFSET CREDITS
The Paris Agreement was adopted by 196 nations and entered into force in 2016 with the purpose of reducing global greenhouse gas (“GHG”) emissions. Specifically, 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. In order to achieve these levels, many governments have meaningfully increased their commitment in recent years to reducing GHG emissions, with over 100 countries and thousands of corporations having since committed to significantly reducing GHG emissions by 2030 and being carbon-neutral by 2050. For instance, the Government of Canada announced in December 2020 an updated climate plan to raise the federal carbon price from the current C$50/tonne carbon dioxide equivalent, (“CO2e”), to C$170/tonne CO2e by 2030 via progressive annual C$15/tonne CO2e increments starting in 2023.
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.