Carbon Streaming : Financial Statements (642KB)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

INTRODUCTION

This management's discussion and analysis ("MD&A") is management's assessment of the significant activities of Carbon Streaming Corporation ("Carbon Streaming" or the "Company") and analyzes the financial results for the three months ended March 31, 2024. This MD&A should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements for the three months ended March 31, 2024, the related notes thereto (the "Interim Financial Statements") and the Company's audited consolidated financial statements for the year ended December 31, 2023 and the related notes thereto (the "Annual Financial Statements"), which are available for viewing on www.sedarplus.ca. The effective date of this MD&A is May 15, 2024.

Financial information in this document is expressed in United States dollars ("$" or "US$"), unless otherwise indicated, and is prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). Tabular amounts are expressed in thousands of US$, unless otherwise indicated.

The Company's common shares ("Common Shares") are listed on Cboe Canada (formerly the Neo Exchange) under the symbol "NETZ", common share purchase warrants, exercisable at Canadian dollars ("C$")7.50 until March 2, 2026 (the "March 2026 Warrants") are listed on Cboe Canada under the symbol "NETZ.WT" and the warrants that expire in September 2026 are listed on Cboe Canada under the symbol "NETZ.WT.B". The Common Shares are also listed on the Frankfurt Stock Exchange under the symbol "M2Q" and trade on the OTCQB Markets under the symbol "OFSTF".

Management is responsible for the preparation and integrity of the Company's Interim Financial Statements, including the maintenance of appropriate information systems, procedures, and internal controls. Management is also responsible for ensuring that information disclosed externally, including that within the Company's Interim Financial Statements and MD&A, is complete and reliable.

This MD&A contains forward-looking statements that involve risks and uncertainties. Although such information is considered to be accurate, actual results may differ materially from those anticipated in the statements made. See the "Advisories" section of this MD&A for further information. Additional information on the Company is available for viewing on SEDAR+ at www.sedarplus.ca.

Management's Discussion and Analysis | Page 2

CARBON STREAMING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2024
(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)
INDEX
INTRODUCTION	2
INDEX	3
DESCRIPTION OF BUSINESS	4
COMPANY HIGHLIGHTS	5
PORTFOLIO HIGHLIGHTS	6
CARBON CREDIT STREAMING AND ROYALTY AGREEMENTS	8
OVERVIEW OF CARBON CREDIT STREAMING AND ROYALTY AGREEMENTS	11
INVESTMENT IN ASSOCIATE AND EARLY DEPOSIT INTEREST	16
PREFERRED SHARES	16
CARBON MARKETS AND PRICING	17
STRATEGY AND OUTLOOK	18
SUMMARY OF FINANCIAL RESULTS	22
LIQUIDITY AND CASH FLOW	27
SHARE CAPITAL	28
COMMITMENTS	28
OFF-BALANCE SHEET ARRANGEMENTS	30
FINANCIAL INSTRUMENT FAIR VALUE AND RISK FACTORS	30
KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGMENTS	31
PERFORMANCE MEASURES	32
NON-IFRS MEASURES	33
RISKS AND UNCERTAINTIES	34
DISCLOSURE OF INTERNAL CONTROLS	35
ADVISORIES	36
ADDITIONAL INFORMATION	37

Management's Discussion and Analysis | Page 3

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

DESCRIPTION OF BUSINESS

Carbon Streaming Corporation is a carbon credit streaming and royalty company focused on creating shareholder value primarily through the acquisition and sale of carbon credits. We provide capital to carbon projects globally, primarily by entering into or acquiring streaming, royalty or other similar arrangements for the purchase of carbon credits from the underlying project and then generating cash flow from the sale of these carbon credits. Through these financing arrangements, our strategic interests are aligned with our project partners, so we are able to source high-integrity projects that advance global climate action and additional United Nations Sustainable Development Goals. This helps position us as a trusted source for buyers seeking high-quality carbon credits. Our aim is to accelerate a net-zero future by making an impact with our capital and facilitating immediate climate action.

The Company currently has carbon credit streams and royalties related to over 20 projects around the world, including high-integrity removal and avoidance projects from nature-based, agricultural, engineered and community-based methodologies. See the "Overview of Carbon Credit Streaming and Royalty Agreements" section of this MD&A for details of the Company's streams / royalties in each project. The Company focuses on projects that have a positive impact on the environment, local communities, and biodiversity ("Co-Benefits"), in addition to their carbon reduction or removal potential.

The Company executes on its strategy by:

1. entering into or acquiring streaming, royalty or royalty-like arrangements with project developers/operators, non-governmental organizations, non-profit organizations, companies, individuals or governments to purchase carbon credits generated by their project(s) or asset(s);
2. acquiring or investing, in the form of equity, debt or other forms of investment, in carbon credits or entities, assets or properties involved in the origination, generation, monitoring, or management of carbon credits or related businesses; and
3. marketing and selling carbon credits to maximize value for all of our stakeholders and deliver long- term cash flow to project partners, the projects and local communities.

Management's Discussion and Analysis | Page 4

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

COMPANY HIGHLIGHTS

Three months	Three months
ended March 31,	ended March 31,
2024	2023

Carbon credit streaming agreements
Revaluation of carbon credit streaming and royalty agreements	$	(33,136)	$	711
Settlements from carbon credit streaming and royalty		406		4
agreements1

Purchased carbon credits

Revenue from sale of purchased carbon credits

Number of purchased carbon credits sold (carbon credits)2 Average realized price per purchased carbon credit sold ($/carbon credit)

Cost per purchased carbon credit sold ($/carbon credit)

$	488	$	21
	93,772		2,496
	5.20		8.46
	4.26		5.00

Other financial highlights
Other operating expenses	3,709	3,405
Operating loss	(36,756)	(2,685)
Net loss	(35,771)	(972)
Loss per share (Basic and Diluted) ($/share)	(0.75)	(0.02)
Adjusted net loss3	(1,596)	(2,864)
Adjusted net loss per share (Basic and Diluted) ($/share)3	(0.03)	(0.06)
Statement of financial position
Cash4	49,008	65,756
Carbon credit streaming and royalty agreements4	26,980	86,246
Total assets4	81,596	155,927
Non-current liabilities4	1,059	2,380

1. Relates to the net cash proceeds generated from the Company's carbon credit streaming and royalty agreements.
2. The Company holds an inventory of carbon credits, which were acquired separate and apart from carbon credits delivered under the Company's carbon credit streaming agreements.
3. "Adjusted net loss", including per share amounts, is a non-IFRS financial performance measure that is used in this MD&A. This measure does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For more information about this measure, why it is used by the Company, and a reconciliation to the most directly comparable measure under IFRS, see the "Non-IFRS Measures" section of this MD&A.
4. Cash, carbon credit streaming and royalty agreements, total assets and non-current liabilities are presented as at the relevant tabular reporting date.

Three months ended March 31, 2024

• Ended the quarter with $49.0 million in cash and no corporate debt.
• Continued the previously-announced ongoing corporate restructuring plan focused on cash flow optimization, including reducing operating expenses and reviewing existing streams and royalties, which resulted in a non-recurring restructuring charge of $1.4 million for the three months ended March 31, 2024. As a result of ongoing restructuring activities, including personnel reductions, ongoing operating expenses have continued to decrease when compared to the prior-year period.

Management's Discussion and Analysis | Page 5

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

The Company will continue to target opportunities for cash flow optimization in the coming quarters.

• Continued the ongoing review of the Company's existing assets in order to optimize portfolio economics in light of evolving voluntary carbon market conditions, resulting in amendments to the terms of the Community Carbon Stream subsequent to quarter end (See "Portfolio Highlights" below).
• Recognized a loss on revaluation of carbon credit streaming and royalty agreements of $33.1 million for the three months ended March 31, 2024, respectively (gain of $0.7 million for the three months ended March 31, 2023). The current period loss on revaluation was primarily related to the write-down of the value of the Rimba Raya Stream to $nil. Please refer to the "Summary of Financial Results", "Portfolio Highlights" and the "Indonesia Update" section of this MD&A.
• Revenue from the sale of purchased carbon credits was $488 thousand for the three months ended March 31, 2024 (three months ended March 31, 2023 - $21 thousand). Revenue from the sale of purchased carbon credits relates to the sale of the Company's carbon credits that were acquired separately and apart from the Company's carbon credit streaming and royalty agreements.
• Sold 93,772 purchased carbon credits for the three months ended March 31, 2024 (three months ended March 31, 2023 - sold 2,496 purchased carbon credits).
• Generated $406 thousand in settlements from carbon credit streaming and royalty agreements for the three months ended March 31, 2024 (three months ended March 31, 2023 - $4 thousand).
• Recognized net loss of $35.8 million for the three months ended March 31, 2024 (three months ended March 31, 2023 - net loss of $1 million).
• Adjusted net loss was $1.6 million for the three months ended March 31, 2024 (three months ended March 31, 2023 - adjusted net loss of $2.9 million). Please see the "Non-IFRS Measures" section of this MD&A for further information.
• During the three months ended March 31, 2024, paid $400 thousand in upfront deposits for carbon credit streaming and royalty agreements (three months ended March 31, 2023 - $1.5 million).

PORTFOLIO HIGHLIGHTS

The Company continues to support its existing streams and royalties through project development, and the marketing and selling of carbon credits. Key developments in the projects under the Company's stream and royalty agreements include:

New investments, portfolio restructuring and other significant updates

Rimba Raya Stream:On April 26, 2024, the Company announced that it was informed that PT Rimba Raya Conservation ("PT Rimba"), the local concession holder for the Rimba Raya project ("Rimba Raya"), had its Forest Utilization Business License (the "Concession License") revoked by the Indonesian Government's Ministry of Environment and Forestry (the "MOEF"). The Company has confirmed that PT Rimba filed a claim challenging the revocation, and a ruling from the State Administrative Court of Jakarta

Management's Discussion and Analysis | Page 6

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

is currently anticipated during June 2024 (which ruling is subject to potential appeal by the parties). Carbon Streaming is currently assessing the ongoing situation and is engaged with our partners and local advisors. At the present time, the Company is evaluating all legal avenues to protect its investment in Rimba Raya and to strictly enforce its legal and contractual rights under the Rimba Raya Stream. Please refer to the "Indonesia Update" section of this MD&A for more information.

Baccala Ranch Reforestation Stream: On February 9, 2024, the Company entered into a carbon credit streaming agreement with Mast Reforestation SPV I, LLC ("Mast") for a post-wildfire reforestation project in Tehama and Plumas Counties, California, USA (the "Baccala Ranch Reforestation Stream"). Under the terms of the Baccala Ranch Reforestation Stream, Mast will deliver 100% of the forecast mitigation units ("FMUs") (referred to herein as carbon credits) created by the project to the Company, which are expected to be issued in 2026. The Company will make additional upfront deposit payments of up to $1.6 million as the Baccala Ranch Reforestation project achieves site preparation, planting, and issuance milestones.

Community Carbon Stream:On May 8, 2024, the Company amended the terms of the Community Carbon Stream, as defined herein, resulting in, among other things, revising the Company's economic interest to provide for a tiered streaming structure which is adjusted as certain return on invested capital thresholds are achieved, adjusting the portfolio composition and milestone payments to focus on the five strongest projects, three cookstove and two water purification projects. Pursuant to this amendment, the term of the stream will end December 31, 2040, unless the project is able to deploy cookstoves and water purification devices ahead of the projected schedule. Additionally, Community Carbon announced that it secured a historic letter of authorization from the Government of Tanzania for its Tanzania cookstove project (VCS 2676), representing Tanzania's first-ever carbon credits authorized for corresponding adjustments under Article 6 of the Paris Agreement.

Key portfolio milestones

Nalgonda Rice Farming Stream:In April 2024, CoreCarbonX, as defined herein, has engaged CarbonFarming Technology SAS ("CarbonFarm") to conduct a pilot program applying satellite and artificial intelligence-backed monitoring, reporting, and verification technology ("MRV Solution") for the two crop seasons in 2024. The MRV Solution is expected to: detect a large range of farming practices and quantify emissions with high accuracy; simplify operations providing an efficient and cost-effective means of collecting 'near-real-time' data at scale, enabling close monitoring of project progress; and increase the marketability and the value of carbon credits issued.

Enfield Biochar Stream:In early April 2024, Standard Biocarbon, as defined herein, reached a critical project milestone with the first biochar production from their newly constructed biochar facility in Enfield, Maine. The Enfield Biochar project continues to scale toward full operating capacity while collecting operating data that will form the basis for a facility audit and official registration with the Puro.earth carbon credit standard.

Management's Discussion and Analysis | Page 7

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

CARBON CREDIT STREAMING AND ROYALTY AGREEMENTS

A summary of the key terms of the Company's streams and royalties as at March 31, 2024 are set forth below. See "Overview of Carbon Credit Streaming and Royalty Agreements" section of this MD&A for additional information on the Company's carbon credit streaming or royalty agreement for each project.

Project Information

Stream/ Royalty Information

Stream / Royalty

Expected

Stream Funding

Expected

Expected Year

Status (Upfront

Initial

of First Credit

Credit

Project

Total

Partner

Registry /

Deposit

Crediting

Delivery to

Stream / Royalty

Location

Activity Type

Issuance

Start

Upfront

Credit Type

amount

Period of

the Company

Status

(6)

Over Project

Year

(2)

Deposit

(3)

Stream or

(5)

Life

(1)

paid) (%)

Royalty (4)

Streams

Rimba Raya

Central Kalimantan,

Avoidance /

InfiniteEARTH Limited

Reduction

SRN

$26.3

Borneo,

REDD+

174 million

2009

100%

50 years(8)

_ (9)

Suspended(9)

and PT Infinite Earth

(SPE - GRK)

(7)

Indonesia

(AFOLU)

million

Nusantara

Magdalena Bay Blue

Avoidance /

Reduction

Carbon

Magdalena Bay,

Verra

To be developed

$7.8

Fundación MarVivo

(VCU)

Baja California Sur,

as REDD+

25 million

2020

30.7%

30 years

2025

Development

Mexico,

(Planned)

million

México

(AFOLU /

MarVivo Corporation

Blue Carbon)

Cerrado Biome

Avoidance /

Reduction

Verra

$0.5

ERA Cerrado Assessoria e

Cerrado, Brazil

REDD+

(VCU)

13 million

2017

74.4%

30 years

2023

Delivering

million

Proyectos Ambientais Ltd.

(AFOLU / ACoGS)

Waverly Biochar

Removal /

Puro.earth

Virginia, United

Sequestration

0.262 million

2023

$2.95

74.6%

25 years

2024

Development

Waverly RB SPE LLC(10)

(CORC)

States

Biochar

million

Sustainable Community

Avoidance /

Quebec, Canada

Reduction

Verra

$20

(2 Projects)

Energy Efficiency

100 million

2010

20%

10 years(11)

2024

Pre-Delivery

Ontario, Canada

(VCU)

million

Will Solutions Inc.

/ Waste Diversion

/ Transport

Community Carbon

Uganda

Avoidance /

Gold

Reduction

Standard

(5 Projects) (12)

Mozambique

Cookstove /

(VER) /

$20

Community Carbon and

Tanzania

50 million

2020

55.9%

15 years (14)

2023

Delivering

Malawi

Water

Verra

million

UpEnergy Group

purification(12)

(VCU)(13)

Nalgonda Rice Farming

Avoidance /

Reduction

Verra

Core CarbonX Pte. Ltd.

Telangana State,

$2.44

Agriculture Land

2.7 million

2022

79.9%

7 years

_ (15)

Development

and Core CarbonX

(VCU)

India

Management

million

Solutions Private Limited

(AFOLU)

Enfield Biochar

Maine, United

Removal /

Puro.earth

$1.3

Standard Biocarbon(10)

Sequestration

(CORC)

0.9 million

2023

76.9%

30 years

2024

Development

States

Biochar

million

Sheep Creek

Removal /

Reforestation

Montana, United

CAR

$3.53

Sequestration

0.285 million

2022

39.1%

2 years

2025(16)

Development

Mast Reforestation SPV I,

States

Reforestation

(FMUs)

million

LLC

Feather River

Removal /

CAR

Reforestation

California, United

$0.7

Sequestration

0.05 million

2022

38.9%

1 year

2025(16)

Development

Mast Reforestation SPV I,

States

million

LLC

Reforestation

(FMUs)

Baccala Ranch

Reforestation

California, United

Removal /

CAR

$1.6

Sequestration

0.09 million

2024

0.0%

1 year

2026(16)

Development

Mast Reforestation SPV I,

States

Reforestation

(FMUs)

million

LLC(17)

Royal

ties

Bonobo Peace Forest

The Democratic

Avoidance /

Verra

N/A

N/A

$2.3

100%

30 years

N/A

Development

(2 Projects)

Republic of Congo

Reduction

(VCU)

million

Management's Discussion and Analysis | Page 8

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

Project Information

Stream/ Royalty Information

Stream / Royalty

Expected

Stream Funding

Expected

Expected Year

Status (Upfront

Initial

of First Credit

Credit

Project

Total

Partner

Registry /

Deposit

Crediting

Delivery to

Stream / Royalty

Location

Activity Type

Issuance

Start

Upfront

Credit Type

amount

Period of

the Company

Status

(6)

Over Project

Year

(2)

Deposit

(3)

Stream or

(5)

Life

(1)

paid) (%)

Royalty (4)

Bonobo Conservation

REDD+

Initiative

(AFOLU)

Amazon Portfolio

Avoidance /

(4 Projects)

Brazil

Reduction

Verra

N/A

N/A

$3.0

100%

30 years

N/A

Pre-Delivery

Future Carbon

REDD

(VCU)

million

International LLC

(AFOLU)

Notes:

1. Expected Credit Issuance Over Project Life refers to the number of expected carbon credits to be issued as specified in the project documents submitted to the relevant standard body. The share of carbon credits from each project to be delivered to the Company under each stream / royalty agreement varies based on the specific contractual terms. The Company receives royalty payments and not carbon credits under its royalty agreements.
2. Project Start Year refers to the year in which project activities that generate emission reductions or removals begin or are expected to begin. In most cases, the Project Start Year occurs before the year in which credits are first delivered to the Company.
3. Total upfront deposit amounts assume all milestones will be realized and all installments paid in full. Management's assumptions and actual payments made under any streaming / royalty agreement may differ, as payments are subject to conditions which may or may not be met. Please refer to the "Commitments" section of this MD&A for further information.
4. The term of a streaming / royalty agreement commences on the effective date of the agreement. The initial crediting period of the stream / royalty typically commences upon delivery of first credits to the Company and can be extended should the project(s) continue to issue carbon credits beyond the current or expected crediting period of the project.
5. The Expected Year of First Credit Delivery to the Company refers to the year in which the Company expects to receive its first delivery of carbon credits under the terms of each carbon credit streaming agreement. See the "Overview of Carbon Credit Streaming and Royalty Agreements" section of this MD&A.
6. The Company classifies its streams and royalties in five categories with reference to the stage of each project ranging from development of projects to delivery of carbon credits to the Company. See the "Project Streaming Agreement Classification Criteria" section of this MD&A.
7. Only includes cash amounts paid under the Rimba Raya Stream. Excludes the dollar value of share consideration granted under the SAA (as defined herein).
8. Under the SRN (as defined herein) registry, the Rimba Raya project is expected to have a project lifetime until 2073.
9. Given that the Rimba Raya project has had its Forest Utilization Business License (the "Concession License") revoked by the Indonesian Government's Ministry of Environment and Forestry (the "MOEF"), the Rimba Raya Stream status has been classified as "Suspended". Please refer to the "Overview of Carbon Credit Streaming and Royalty Agreements" and the "Strategy and Outlook" sections of this MD&A for further information.
10. The Company will also receive a revenue royalty based on the value of biochar sold by the project partner. See the "Overview of Carbon Streaming and Royalty Agreements" section of this MD&A.
11. The Company has the option to extend the stream for additional consideration of $0.45 per VCU delivered adjusted for inflation based on the Canadian Consumer Price Index.
12. On May 8, 2024, the Community Carbon Stream was amended which included an adjustment to the portfolio resulting in five projects, three of which are cookstove projects and two of which are water purification projects. Please refer to the "Overview of Carbon Credit Streaming and Royalty Agreements" section of this MD&A for further information.
13. One of the cookstove projects is registered under Verra. The remaining four projects are registered under Gold Standard [NTD: update for discontinued].
14. As a result of the amendment to the Community Carbon Stream, the term of the stream will end December 31, 2040, unless the project is able to deploy cookstoves and water purification devices ahead of the projected schedule.
15. First issuance of carbon credits is currently expected in 2024 but may be delayed due to Verra's review of the current project methodology. See the "Overview of Carbon Streaming and Royalty Agreements" section of this MD&A.
16. The methodology applied under Climate Action Reserve's ("CAR") Climate Forward program is specifically intended for forward financing. FMUs for each project or project area are issued in one tranche following 'confirmation', which occurs approximately one year after planting to ensure seedling survival beyond the highest mortality period. FMUs can be retired to mitigate future anticipated emissions and may also be converted to standard Climate Action Reserve tonnes with ex-post monitoring and verification.
17. Completion of the Baccala Ranch Reforestation Stream transaction remains subject to the satisfaction of certain outstanding customary conditions of closing, and such closing is currently anticipated to occur in mid-2024.

Management's Discussion and Analysis | Page 9

CARBON STREAMING CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS ENDED MARCH 31, 2024

(Tabular amounts expressed in thousands of United States dollars, unless otherwise indicated)

Project Streaming Agreement Classification Criteria

Management has developed five distinct categories corresponding to the status of each of its stream / royalty agreements for additional context to better evaluate the Company's portfolio. In classifying each of its streams / royalties, management considers, among other things, the following criteria: (i) whether the project is actively delivering carbon credits to the Company under the stream; (ii) the significance of any outstanding milestones, regulatory or otherwise, that need to be met prior to carbon credits being delivered to the Company under the stream; (iii) the status of the underlying project under its applicable standard body (for example, for the projects under Verra (Verified Carbon Standard ("VCS")), whether the project is under development or fully registered); and (iv) management's internal projections and judgement regarding project viability, proximity to completion, and overall risk profile of delivery. The classification for each stream / royalty within these categories is a matter of professional judgment and each classification for each stream / royalty is revisited at the end of each reporting period.

Delivering

For a stream / royalty to be categorized as "Delivering", the Company has received carbon credits under the stream (or royalty payments under the royalty) and must remain actively receiving such credits/ payments through the customary cycle of the agreement. This also means that the underlying project(s) has been fully registered by the applicable standard and has produced carbon credits and delivered them to the Company under the terms of the agreement. As a result, a stream / royalty categorized as "Delivering" is expected to generate revenue and operating cash flow to the Company in the near-term.

Pre-Delivery

This category is intended to identify the streams / royalties that have not yet delivered any carbon credits (or royalty payments) to the Company, but all development activities for the underlying project are substantially complete and the third-party audit has been scheduled or the third-party audit is in progress or is complete. In most cases, management views the delivery of carbon credits for streams (or royalty payments for royalties) categorized as "Pre-Delivery" to be probable given the progress of the underlying project and is only further subject to standard body timelines to realize carbon credit issuance. Management views first delivery of carbon credits to be probable within the next 12 months as of the reporting date.

Development

This category is intended for streams / royalties that have not yet delivered any carbon credits (or royalty payments) to the Company and are at an earlier stage of project development than the projects in the "Pre-Delivery" category. A stream / royalty on a project that has not yet completed the milestones listed in the above category will be classified as "Development". The ability for these streams / royalties to ultimately deliver carbon credits or royalty payments is contingent on project execution, regulatory approval and completion of the initial third-party audit in accordance with the standard body, resulting in a higher risk asset.

Management's Discussion and Analysis | Page 10