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 is expected to generate approximately 5,500 carbon offset credits per annum starting in 2023. By progressively expanding its net negative CO2 balance with further green investments, Star Royalties will offer investors gold exposure 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, geothermal, biomass), biofuels, 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 North America’s leading carbon offset developer and marketer and existing relationships with numerous Canadian Indigenous communities and First Nations.
  • 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 Advisory Committee.
  • Superior alignment: Green Star Royalties will be managed with the same top-quartile corporate governance principles under a diverse and majority-independent board, as is with Star Royalties.

INVESTMENT APPROACH

Origination and Cash Flow Focus

  • Pioneered first CC royalty in 2020 and advancing new green royalties
  • Generation of ~5,500 CC per annum from 2 existing forest CC royalty projects
  • Originate premium CC projects in both compliance and voluntary carbon markets
  • Value creation through origination – EMS Royalty acquired at C$10/t CC vs. C$40/t current CC pricing
  • Prioritize North American investments
 

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.

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$40/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 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.