Spotlight 🔍 CVW CleanTech Inc.

We explore how CVW CleanTech has established itself as the leading royalty provider in the cleantech sector, leveraging its distinct first-mover advantage.

CVW CleanTech creates the first diversified royalty platform in the massive cleantech market

  • As the world’s first diversified clean technology royalty company, CVW CleanTech provides positive exposure to the US$3.3 trillion cleantech sector, which is growing exponentially.
  • Led by an experienced management team and a world-class Board, which have built some of the world’s largest royalty companies.
  • Executed its first royalty transaction for C$14.0 million, with a robust pipeline of potential deals valued at over C$350 million.
  • Through partnerships with Indigenous communities and support from government, CVW CleanTech can redefine the future of Alberta’s oil sands with its proprietary technology which is a Tier 1 royalty opportunity.

For innovators in the cleantech space, traversing the ‘valley of death’ is often a significant barrier to commercialization of their transformative solutions that can generate substantial economic benefits while supporting a greener planet.

This metaphor represents the critical stage between developing a game-changing technology, and successfully commercializing it – where perceived risks have created a funding gap and stalled progress.

Foresight Canada, a leading non-profit cleantech accelerator, highlights access to capital at the commercialization stage as one of the most significant barriers faced by clean technologies.

“Bridging the ‘valley of death’ is the greatest challenge for cleantech companies.”
- Michael Denham, Executive Vice-President at the National Bank of Canada, in a Globe and Mail article.

It is within this opportunity-rich market that CVW CleanTech Inc. (TSXV: CVW, OTCQX: CVWFF) has emerged as a game changer. As the world’s first diversified clean technology royalty company, CVW CleanTech’s philosophy is to generate royalty revenue by funding commodity-oriented clean technologies at the commercialization and early growth stages. These technologies make up the global cleantech market which is projected to exceed US$3.3 trillion by next year. 

Investors will be familiar with the royalty model which has been successfully deployed in both the mining and oil/gas sectors. CVW CleanTech is focused on adapting this royalty model to clean tech innovations in the hydrocarbon, materials and metals, and agriculture industries. Its ability to provide investors with sector, geography, and technology diversification can generate very attractive risk adjusted returns for shareholders even when compared against other royalty companies.

Making the decision to invest directly into a clean technology company can require significant expertise to evaluate the economics, the technology itself, and the risk of obsolescence. CVW CleanTech has in-house technical and commercial expertise to perform in-depth diligence on potential royalty transactions alongside a wide network in these industries where they utilize 3rd party expertise to assist in their evaluation. Investors benefit significantly given they no longer need to ‘pick winners’ within the dynamic cleantech space.

CVW CleanTech’s royalty financing, unlike equity financing, allows companies to secure a portion of the capital required while minimizing dilution of their ownership and avoiding taking on too much restrictive debt. By offering flexible and effective funding solutions, CVW CleanTech enables technology operators to retain equity upside and decision-making control while advancing project development.

“This approach fills a critical financing gap by supporting the commercialization and/or scale-up of technologies that generate strong economics while contributing to global sustainability initiatives,” said Akshay Dubey, CEO of CVW CleanTech Inc. 

This past September, CVW CleanTech closed its first royalty transaction for C$14 million with Northstar Clean Technologies Inc (“Northstar”). Northstar’s proprietary process takes discarded asphalt shingles, which would otherwise end up in overcrowded landfills, and extracts its valuable components—liquid asphalt, fibre, and aggregate—for reuse. 

Northstar is currently building its first commercial-scale facility in Calgary, Alberta, and recently announced an LOI for a long-term lease in Hamilton, Ontario for the site of its next planned facility.

Further Reading: Northstar's shingle-minded pursuit is turning waste into wealth

The transaction with Northstar will provide CVW CleanTech with recurring royalty revenue from the production at two of Northstar’s commercial facilities. Base-case royalty payments are projected at C$1.8 million per annum, with significant upside to price and volume improvements which could take payments over $4.0m million per annum.

CVW CleanTech holds a sizeable first-mover advantage with this strategy and can select the highest-quality royalty opportunities while establishing industry standards for deal structures and valuations. This positioning allows the company to maximize economics compared to any future entrants, leading to the opportunity for superior returns for shareholders.

“Our focus is on identifying high-quality, substantially de-risked technologies with strong competitive advantages. Through the scaling of our royalty financing platform, we can generate attractive returns for our shareholders while providing exposure to a space that is challenging to invest in directly," said Dubey.

“It is the established royalty companies in the mining and oil and gas sectors who consistently have preferential access to the best assets due to their scale and cost of capital. CVW CleanTech has established itself as the leading royalty provider in the cleantech space. Our investors will benefit significantly from our distinct first-mover advantage.”

CVW CleanTech has a robust royalty opportunity pipeline, with over C$350 million in potential transaction value and more than 30 opportunities currently under evaluation. The company is also advancing its proprietary technology towards commercialization in Alberta’s oil sands.

The company also has a Tier 1 royalty opportunity on its ‘shovel-ready’ Creating Value From Waste™ (“CVW™”) technology that efficiently recovers valuable commodities including bitumen, solvents, critical minerals, and water, from froth treatment tailings generated through oil sands mining. Each stand-alone CVW™ operation can generate between $160M to $260M in after-tax cash flow per year, assuming flat US$60/bbl WTI oil pricing, over 40 years. 

The company’s proprietary technology ties-in nicely with its royalty strategy. From each deployment, CVW CleanTech would most likely leave with a royalty stream expected to produce significant, consistent long-term cash flow back to CVW CleanTech. A single commercial deployment could be transformational for the company and its shareholders.

The company can deploy up to six individual operations across the entire oil sands mining industry from which the company could, on an annual basis, recover 13.2 million barrels of hydrocarbons and produce 1.5 million tonnes per year of critical minerals in titanium and zircon concentrates. Over C$100 million and 20 years have been invested to bring the CVW™ technology to a ready-to-deploy status.

Alberta’s tailings ponds—which are 300 square kilometers in size and are a result of the waste produced by oil sands mining – have deeply impacted the traditional territories of many Indigenous communities. CVW CleanTech has signed a framework agreement with five Indigenous Nations in the Treaty 8 region to deliver substantial economic and environmental benefits through the deployment of its proprietary technology. 

“This partnership aims to create generational wealth for Indigenous communities while advancing reconciliation through meaningful collaboration by providing these communities the opportunity to invest alongside us in the deployment of our technology and allowing them to take an active role in advocating for a technology that improves the environment they live in,” said Dubey, who was part of Alberta’s official delegation to the 29th United Nations Climate Change Conference of the Parties (COP 29) in Baku, Azerbaijan. Dubey also recently spoke at the House of Commons’ Standing Committee on Environment and Sustainable Development.

“Our proprietary technology can generate strong returns for oil sands mining operators, while at the same time reducing methane from their operations by over 90% and site-wide emissions by 5%-10%. When combined with our water management, VOC abatement, and reclamation, CVW™ can make the land more habitable for the neighbouring Indigenous communities by helping restore the region to its natural environment,” he said.


CVW CleanTech Inc.

A Top Pick for Investors

CVW CleanTech emerged as the Top Pick at CEM’s 8th Annual Florida Capital Event, capturing the attention of investors eager to generate strong returns in the sizeable clean technology space. During the event's signature Investor Breakout Exchange, attendees recognized the significant share price upside as the company executes on its strategy. Of particular interest is that the company is led by a management team and a world-class Board with track records of building multiple successful royalty companies. Investors were also impressed by CVW CleanTech’s ability to scale quickly and capitalize on the US$3.3 trillion cleantech market and its robust internal pipeline of potential deals valued at over C$350 million.

Stock Information TSXV: CVW

💰
$125M
Market Cap
🔷
$0.91
Priceš
🏆
$0.87
Picked²
  1. As of market open on Monday December 16, 2024
  2. As of market open on Monday November 18, 2024 after being selected as a Top Pick at the CEM Florida Capital Event*

Following the company’s distinction as the Top Pick at the 8th Annual Florida Capital Event, I caught up with Akshay Dubey, CEO of CVW CleanTech Inc., and Joshua Grant, the company’s CFO for this Spotlight Q&A.


Tell us more about CVW CleanTech’s royalty financing model and the people behind it

“We are providing royalty financing to cleantech companies operating within the broader commodity sectors, who have de-risked their technologies yet face challenges securing efficient and flexible capital to commercialize or scale up operations. By addressing this known funding gap, we can provide investors with strong, long-term returns on significantly de-risked technologies.

Our strategy has been very well received and we have built our pipeline with potential royalty transactions by leveraging our strong, global network. Since we announced the Northstar transaction, we have had an influx of companies and advisors reach out to us directly. We are currently focused on technologies within developed market jurisdictions including North America, Europe, and Australia, to ensure familiarity with the rule of law and stable operating environments.

Our leadership and management have a proven track record of building successful royalty companies and other businesses.”

Dubey brings over 13 years of experience in natural resource investments across industries like oil and gas, mining, agriculture, and timberland. He led BaseCore Metals LP from its inception in 2017 to its US$525 million sale in 2022, focusing on royalty and stream investments in base metals. Previously, as a Principal at Ontario Teachers’ Pension Plan, he structured major investments, including the C$3.3 billion acquisition and creation of the Heritage Royalty platform in the energy space.

Pierre Lassonde acts as a Special Advisor to the company and to its CEO. Lassonde is a pioneer of the royalty financing model in the mining sector and the visionary behind Franco-Nevada—the world’s first gold royalty company and one of the world’s largest royalty businesses. He is also one of CVW CleanTech’s largest shareholders. Darren Morcombe is the company’s Chairman and has built many successful companies. Morcombe manages a successful family office in Switzerland and has many successful investments including being one of the founding shareholders behind Foran Mining.

“Alongside Pierre as our Special Advisor, we have veteran company builders on the Board who all have significant equity ownership positions. We continue to see insider buying and have a strong group of sophisticated and well-respected investors. This has created strong alignment between management, the Board, and shareholders.”

What is attracting investors to CVW CleanTech?

“We are providing investors with underlying commodity exposure in a sustainable manner which is unique relative to the traditional natural resource space while removing some of the largest risk factors including geopolitical and geologic risk. By investing in CVW CleanTech, our shareholders retain exposure to commodities, while also avoiding potential environmental and social concerns associated with traditional upstream oil and gas or mining assets.

By focusing on three key sectors, and the market leading technologies within each sector, we achieve best-in-class diversification. Investing in CVW CleanTech provides shareholders with diversification benefits that cannot be achieved by investing in a single company or technology. Additionally, we spend a significant amount of time performing technical, commercial, and other due diligence on potential royalty counterparties. This provides our investors comfort and avoids them having to ‘pick winners’ in the evolving cleantech market.

Similar to other royalty companies, we provide our investors with positive exposure to inflation as our royalties are based on the counterparty’s revenue. Our investors successfully avoid exposure to cost increases whether through capital overruns or inflation in operating expenditures and provide a lower risk exposure to these technologies. What differentiates CVW CleanTech versus other royalty companies is that we can offer this commodity price upside while staying in low-risk jurisdictions, as opposed to generating our revenue at the mine face or drill-hole. Our strategy offers investors attractive returns as compared to traditional royalty companies.”

What is the size of the opportunity for CVW CleanTech’s proprietary technology?

“Each stand-alone CVW™ operation can generate between $160M to $260M in after-tax cash flow per year assuming flat US$60/bbl WTI oil pricing. Through a potential partnership with an oil sands operator, CVW CleanTech would retain a significant percentage of this via royalty revenue. With the potential deployment at up to six oil sands sites in Alberta, our CVW™ technology represents a significant opportunity for our investors, which has already been bought and paid for.

Over $100 million and 20 years have been invested to advance the CVW™ technology to ready-to-deploy status. We have been engaged with the oil sands operators since our initial piloting phase. Our piloting and technical work has been conducted in collaboration with Tier 1 engineering firms and oil sand operators, who have invested significant time and capital, and view our technology as promising.

Since 2021, we have reprofiled the technology to lower the initial capital requirement from C$1 billion down to about C$400 million. This strategic approach focuses on recovering hydrocarbons and leaves mineral recovery for a future phase of development.

By reducing a proposed project's capital costs and providing a comprehensive financing package which layers-in project finance and government grants, we have significantly enhanced equity returns for the oil sands mining operators while focusing on the aspects of the projects that are most important to the operators. With our enhanced value proposition, the feedback has been much more positive.”

What’s next for CVW CleanTech?

“Looking ahead, CVW CleanTech aims to execute additional royalty deals to continue to diversify its portfolio and establish a robust base of cash flow. The company is confident in its ability to execute on multiple royalty transactions and is targeting 3-4 royalty deals in the next year.

We are also actively engaging in global initiatives, such as participating in COP29, to showcase our technology's potential to reduce oil sands emissions and to explore new technologies for the royalty platform.

I'd say 2025 is a very exciting year for the business. As we advance our core technologies towards commercialization in Canada’s oil sands, we plan to execute additional royalty deals that'll create the diversification within CVW’s portfolio and attract larger institutional investors.”


Our View

  • Proven Royalty Financing Model in a Growing Market: CVW CleanTech is the first mover in the cleantech royalty space. Allowing technology operators to retain equity and decision-making control has proven to be very attractive for these operators. This strategy addresses the significant financing gap in the US$3.3 trillion cleantech market.
  • Deep Pipeline with Opportunity to Scale Quickly: The company has demonstrated its ability to originate and invest in substantially de-risked, high-quality opportunities. With a growing royalty opportunity pipeline of over C$350 and over 30 opportunities under evaluation, CVW CleanTech is well-positioned for expansion of its royalty portfolio.
  • Oil Sands Technology has Game-Changing Economic and Environmental Impact, with Indigenous Support: CVW CleanTech's proprietary technology has the potential to recover significant resources from oil sands tailings while addressing the industry’s environmental challenges. The CVW™ technology aligns with Alberta’s regulatory framework and has the support of government and Indigenous communities. The company has executed on its comprehensive de-risking strategy, making it a top pick for investors’ portfolios.

The Investor Breakout Advantage

Our Investor Breakout Spotlight Features are based on the Top Picks and Outstanding Performers at CEM conferences, which are held seven times a year. These invite-only summits serve as the meeting ground for North America’s most influential investors and industry-leading issuers, who participate in a day-long series of one-on-one meetings.

At the end of each event, after over 1,000 meetings have taken place, investors gather for the Breakout Exchange forum to identify their Top Picks and Outstanding Performers.


Next Stop: Bahamas 

Mark your calendars! 

AlphaNorth Capital Event
January 17 – January 19, 2025

The 11th Annual AlphaNorth Capital Event is your unmissable gateway to groundbreaking investment opportunities in 2025 and beyond. Set against the breathtaking backdrop of the newly renovated Atlantis Resort in Nassau, this event will feature curated one-on-one meetings that give capital market players direct access to insights from cutting-edge companies across critical sectors.

Warm Regards and Happy Investing,
Fabian Dawson

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