That should be plenty of time. Good afternoon, folks. Let's launch the Sky Quarry Investor webinar for today. We appreciate everybody taking the time to join us. My name is Lloyd MacNeil. I'm a partner at Troutman Pepper, where I am a project finance, energy infrastructure partner, and I will be moderating today's discussion. Before we begin, I'd like to note that the presentation today may contain forward-looking statements. These statements are based on current expectations and involve risks and uncertainties that could lead to results that differ materially from those anticipated. You can see up on the screen, for more information, the disclaimer that we typically have for these webinars. You can read that at your leisure. Now, today, I'm pleased to introduce Marcus Laun.
He's one of the founders of Sky Quarry, and he's an Executive Vice President and a member of the board of directors. Initially, we had hoped that David Sealock, who's the Chairman and CEO, would also be able to join, but he is stuck in some traffic issues and is unable to attend. Marcus is gonna be carrying the water today. In today's session, Marcus would like to cover the following topics: the scale and urgency of the shingle waste crisis, but the opportunity that it presents. Second, Sky Quarry's proprietary technology, and the revenue that they have that turns shingle waste into value. Leveraging regulatory tailwinds to roll out their modular waste-to-energy units on a nationwide basis. Fourth is how California's tightening fuel supply creates a powerful opportunity for their Foreland Refining Corporation refinery. And finally, building momentum.
What are the key milestones that the company is looking forward to, and the case for reevaluation in 2025? Following the presentation, we'll open up the floor for live Q&A. If you have questions, the chat box below is the place to put them, and I will start to look at them as we move through the presentation. With that, I'm happy to kick it over to Marcus Laun to kick things off. Marcus, take it away.
Thank you, Lloyd. Yeah, I'm gonna read some prepared comments around these slides. I think, you know, we have to, you know, kind of divide the presentation a little bit for our new shareholders and people that are new to the story. Plus, you know, we don't want to bore our legacy shareholders to death because a lot of them are on the call and they've, you know, heard, you know, a lot of this before. You know, the real juicy stuff is gonna be at the end today. Please stick around. Sky Quarry was founded to solve a problem created by asphalt shingle waste. Every year, millions of tons of asphalt shingles are torn off roofs and sent straight to landfills.
The opportunity exists around recycling that waste, recovering a potential 20-22 million barrels of oil and all the other material that's in a shingle is recyclable. We estimate it's a $4.4 billion market opportunity. What makes us different is that we're not just a recycling company. We're building a fully integrated energy platform. We will collect the waste, extract the oil, recover the valuable materials like aggregate, sand, fiberglass, refine that output, and sell the end products, turning a massive environmental problem into a scalable, sustainable business with real economic upside. Next slide. When you look at Sky Quarry, there are a few key reasons we believe it's an attractive investment right now. First, you know, we have revenue. We're not a concept. We're operating and generating sales today. Second, our business model is scalable. Leveraging our modular technology, we can expand regionally quickly and cost-effectively.
Third, we already own two major facilities, including a refinery that gives us downstream capabilities that our competitors do not have. Finally, we are riding powerful tailwinds. Landfill regulations are tightening, fuel supply chains are shifting in our current operating region, and demand for sustainable domestic energy solutions is accelerating. Slide seven. The process starts at the source: roofing tear-offs. These shingles are typically discarded and sent to landfills after a roofing job. With Sky Quarry, that waste will take a different path. First, tear-offs will be collected and delivered to one of our modular processing facilities. There, we will sort the materials, separating the sand and the granules to be sold locally, and prepare the rest for extraction. Here is what is important from a business standpoint. We will be generating revenue from day one.
Roofing contractors and waste haulers will pay us tipping fees to drop off the material, which means we will be paid before we even start processing. The bitumen and limestone-rich content will be ground up, compressed into briquettes, and shipped to our facility in PR Spring. That's where our proprietary technology will go to work extracting the hydrocarbons from the waste. From there, the recovered oil will be sent to our Foreland Refining Corporation refinery in Nevada, where it will be blended, refined, and made market-ready. This is how we will turn landfill-bound waste into fuel, construction materials, and multiple revenue streams, all within a closed-loop sustainable system. Slide eight. One of our biggest strengths is that we're fully integrated from waste collection to refined fuel. That gives us control, efficiency, and stronger operating margins than most competitors.
We will start upstream with our modular ASR units engineered to be scalable and cost-effective. Each front-end processing unit is designed to process up to 100,000 tons of shingle waste annually, generating revenue from both tipping fees and byproduct sales. Our first unit is expected to be deployed this year. In the midstream, our PR Spring extraction facility in Utah is where we will extract oil from both asphalt shingles and traditional hydrocarbon-rich sands. The site is currently being retrofitted with commissioning expected this year. Downstream, we own the Foreland Refining Corporation refinery in Nevada, the only operational crude oil refinery in the state. It has already processed nearly 500,000 barrels of oil per year in the past and will soon play a key role in refining our sustainably produced oil. Together, these assets form a vertically integrated platform from waste collection to fuel production.
We will have control over every step of the process, which means we can capture more value, move faster, and scale smarter. Next slide. As we explained earlier, our business model is designed to generate revenue before we even process a ton of material. That's because we get paid to take the waste. Roofing contractors, waste haulers, and landfill operators will pay us a tipping fee, typically between $45 and $150 per ton, just to take their used shingles. Because most of the products we recover, like oil, aggregates, and other industrial materials, have real market value, nearly everything we produce will contribute to our profit line. Slide 10. We're operating at the intersection of three major market forces, and we believe all of them are moving in our favor. First, the regulatory environment is changing fast. Cities and states across the U.S.
are setting aggressive targets to divert construction and demolition waste from landfills. In places like Austin and Seattle, diversion mandates are already at 50-80%. In California, it can be as high as 75%. Second, regional market shifts are creating supply pressure, especially in the fuel space. Phillips 66 is shutting down its Los Angeles refinery by the end of 2025, and in California, ABX2-1 legislation is adding even more strain to the system. What that means is, you know, California is adding regulation layers to the refiners in California, making it more and more difficult for them to operate. In some cases, they're just, you know, packing up and shutting down.
That creates a big opportunity for us in Nevada to take that oil and refine it or sell into that market or actually take the oil that would traditionally come into Nevada from California and supplant it with our own. It is a big opportunity. Third, there is increasing demand for sustainable fuels. The market for low carbon and renewable fuel is expected to triple over the next 20 years. You know, we are very confident that the waste shingle material will be a very low-cost feedstock to make sustainable fuel. All of this adds up to one thing. Sky Quarry is aligned with where the market is going, not just in terms of policy, but in terms of infrastructure, economics, and long-term demand. Slide 11.
I wanted to do a bit of a deeper dive on what's happening in the western states in California because it's extremely important to our Nevada refinery. California's refining capacity is shrinking. New regulations are making it harder to operate, and refinery closures are accelerating, including a major Phillips 66 facility set to shut down later this year, which supplies nearly 8% of the state's capacity. In looming import tariffs and growing reliance on overseas crude, the western fuel market is facing real volatility. A few people know that California imports about 60% of the oil that is used in California every day. That tariff implication is significant. Meanwhile, Nevada's demand is rising fast, driven by population growth and a booming mining sector, especially lithium.
These operations rely on massive volumes of diesel and fuel to keep trucks, processing plants, and remote infrastructure running. This is where our refinery comes in. We have a capacity of 5,000 barrels a day in our Nevada refinery, and we're already seeing interest from fuel distributors and end users looking to secure long-term local supply. As production ramps up at our Utah facility, we'll begin blending in recycled heavy crude, increasing output while enhancing sustainability. You know, the oil producers in Utah and Nevada are also increasing production, and we're the natural home for that material. So, you know, we wanna make local products for the local market. Slide 12. As part of our national expansion strategy, we're building a network of modular facilities in key markets across the country.
These units are designed for rapid deployment and scalability, enabling us to expand quickly in high-opportunity regions. By locating them close to both the waste source and the end markets, we can reduce logistics costs while generating revenue from day one through tipping fees and byproduct sales. To support this rollout, we've secured exploratory partnerships to ensure steady feedstock supply. Our LOI with Southwind RAS could provide access to over 1.2 million tons of recyclable shingles annually, while our letter of intent with RB Residential Roofing is expected to supply a consistent stream of post-consumer shingles from across the U.S. These aren't just partnerships. They're launchpads, giving us the ability to scale quickly and confidently with supply and market access already in place. This is a replicable low CapEx model designed to expand region by region.
Our goal is to deploy 10 modular units by 2030, each one turning local waste into local value and together creating a national platform for sustainable growth. Slide 13. Recent milestones. Over the past few months, we've made meaningful progress across all areas of the business, setting the stage for growth. A major milestone was the completion of our 2024 CapEx program at PR Spring. At the same time, we completed major refurbishments at our Foreland Refinery in Nevada, which is now preparing to ramp up to a capacity of 5,000 barrels a day. These upgrades will enhance our ability to process both traditional and recycled feedstocks, strengthening our fully integrated platform. We've also advanced our national expansion strategy by securing long-term feedstock sources. Our first modular facility, ASR facility, is already 80% complete and is on track for launch in 2025, with two additional modules in development.
We believe these milestones reflect our continued execution and will set the stage for growth, revenue generation, and broader market reach in the year ahead. Slide 14. As we look ahead to 2025, we believe Sky Quarry is well-positioned to accelerate on all fronts. From a market standpoint, refinery economics are trending in our favor. Refined product profitability is improving, and demand for regionally produced fuel is rising, especially in the western U.S., where supply constraints are tightening. This creates a favorable environment for our Foreland Refinery and supports premium pricing. At the same time, we've been strengthening our balance sheet. Debt balances are declining, giving us greater flexibility to reinvest in operations and scale efficiently. Operationally, we're executing. Asset upgrades at PR Spring are nearly complete, with commissioning planned for Q3 of this year.
This puts us in position to fully activate our integrated production model and begin generating meaningful revenue. Altogether, we're incredibly proud of the progress we've made and excited about where we're headed in 2025. It's shaping up to be a defining year, one where all the hard work we've put into building and strengthening the business will start generating the kind of growth and traction we've been working toward. On behalf of the entire Sky Quarry team, thank you for taking the time to be here and for your continued interest and support. We're truly grateful to have you on this journey with us. That brings us to a couple of final points I wanna make that aren't part of the presentation, and we'll open it up for questions. Before we do, thank you again.
I know the natural question, you know, that I've been getting from investors is, you know, the broader market, what's happening with the stock? Let's acknowledge that the broader IPO market has been challenging for years, and mostly due to factors beyond our control. Many newly listed companies, not just ours, have seen their share prices decline. I would say at this point, you know, the real market trading for us has been some selling pressure and selling, more sellers than buyers, as they used to say. That said, we're actively working to turn that around. We're increasing visibility and making sure more people understand what we're doing and why it matters. We've seen the stock respond positively to small amounts of buying interest lately, which leads me to believe that we're on an uptrend.
With a couple of strong updates in recent weeks, there's a sign that the selling pressure is easing and interest is building. We believe our shares are undervalued, especially given the $140 million in assets that we've built and the progress we're making. Recreating what we've built would cost about $150 million, and I believe we're nearing a turning point, and we're committed to making sure the market begins to see what we see. I've personally bought more shares because I believe in the long-term value of what we're building, and I think others will too as we keep executing. If you're holding shares and wondering what to do, I'd encourage you to look beyond the short-term price swings. The current stock price doesn't reflect what Sky Quarry is worth, not in my opinion and not based on the fundamentals.
You know, one transaction that I'd like to, to have, you know, investors take a look at would be the QXO, the QXO transaction with Beacon. Beacon Roofing, it is about a 12% market share, 12-15% market share in the roofing industry in the United States. It's a, it's a public, public company, and it was recently acquired by QXO. QXO, the leader of QXO, you know, has a track record of rolling up and consolidating and making industries more efficient. He's done it in equipment rental, he's done it in storage, he's done it in waste, and now he's doing it in the roofing industry. If, you know, we layered the Sky Quarry model into what Beacon has as a platform, it would reflect about $500 million in potential revenues based on the waste stream that Beacon touches every year.
What is interesting is that Beacon is currently buying carbon credits to offset its carbon footprint, and if they aligned with us, you know, we as a partner could end up generating the carbon credits that they would need to offset, you know, what they're doing in the marketplace. It is a, the industry five years from now is gonna look a lot different than it does today with players like QXO and Beacon consolidating and doing a roll-up. There's a lot of interest in the roofing industry, and we intend to help change it to be a more sustainable industry. Now, we'll take over some questions.
Thanks, Marcus. A couple of questions that have come in.
One, first one, what is the incentive for the roofing contractors to pay the tipping fees to Sky Quarry rather than just to put the shingles into a landfill?
There's a, there's a couple of 'em. First of all, roofers and builders, you know, we have a lot of 'em actually as shareholders. They, they see the value of that material, and they just think it's a shame to throw that material out. Most people don't know that construction demolition waste is about double municipal solid waste in the United States. It's a big problem. The EPA wants to divert that waste from landfills as much as possible because a lot of it is recyclable. What's happening in municipalities is in order to pull building permits, you have to prove that you're recycling a certain amount of the waste that you create.
We intend to have a lower price and better logistical solution for a roofer because our transfer stations will be closer than a landfill. We intend to undercut the pricing of landfilling cost so that there's a financial incentive, and then there's also a business incentive in that you're not gonna be able to get building permits if you landfill all your waste. You're gonna have to demonstrate that you're recycling part of it to actually just stay in business. The tide has turned, and, you know, the enforcement's gonna come behind it. Everybody's very positive and, you know, in speaking with companies like Beacon, you know, they want a sustainable solution because there's a lot of pressure on these big shingle companies to have a partially post-consumer recycled product.
The shingle companies themselves are investing, you know, tens of millions of dollars in that effort.
Marcus, you mentioned the proprietary technology. Can you expand on that a bit? Are there patents, trade secrets, other protections that are part of the process?
Yeah, we have patent protection on some of our IP. The rest of the IP we hold is trade secret, and then there's also, you know, just good old-fashioned know-how. So it's, yeah, but if you look at the picture behind me, you know, that's really our advantage is the fact that, you know, we have a $50 million facility, you know, ready to go, or almost ready to go, and nobody else does that.
That facility, if we actually put 100% shingle material through that plant, it would have the capacity to recycle 10% of the nation's waste today.
You mentioned that facility at the PR Spring, I assume. Is the middle stage not yet operational? That's sort of the question that one of the investors has asked about. The follow-up question is, what do you expect to have working out, sort of end-to-end, fully closed system that you'll be able to demonstrate works?
No, like I said, we want to complete the retrofitting and have it, you know, commissioning this year.
Yeah, we, you know, the holdup to some extent is financing, and, you know, we're in discussions with, you know, funders every day, but, you know, we wanna take the right kind of money and people that fundamentally believe in the company. That's why we're not just gonna take money that isn't right for a good fit for people with a long-term view on what we're trying to achieve.
Can you talk a bit about the current debt, plans to reduce it?
Yeah, the ideal situation for us is to replace, you know, the current debt with lower cost debt that is, you know, a pure fixed income product. So just a coupon and, you know, kind of a five-year maturity.
That is, you know, really what we're in the market looking for. Yeah, we do have, as far as I'm concerned, we have a pretty good track record as far as paying that debt down. You know, the lines of credit that we had over the past year, we've been able to pay down about 40% of them over the past 12 months. Considering, you know, we've had, I would say, difficult marketing conditions or operating conditions, the ability to pay down $4 million in debt, I think, was pretty solid. We are, you know, whittling away at it. Our lenders are supportive, and we are going to, you know, refinance in an attractive way and move the company forward.
Can you talk a bit more about the, the LOIs you mentioned in the presentation and expectations to turn those into binding agreements?
Yeah, we're, you know, we're pushing the LOIs forward, a pace with, you know, completing the equipment that we want to put in place. It's really just a matter of identifying, you know, the best relationship. We want to have a couple of different places for our equipment to go. You know, ultimately, the people that we have the LOIs with are more aggressive about moving forward than we can be just because we're solving big problems for some of these participants where some of these players have stockpiles of shingles that they're trying to get rid of that they've been collecting for years.
We're providing a pretty big solution to this problem.
Can you talk a bit about some of the larger shareholders? A couple of questions here about, you know, JPMorgan, for instance. Are they, are they or people like them still invested in Sky Quarry?
Yeah, JPMorgan hasn't sold a share and, you know, is still, you know, supportive of what we're doing and believes in the business model. We are actually, you know, in the process of having ongoing discussions with other significant institutions. You know, we believe that they will start entering the market, you know, now or in the future.
You know, often, you know, when you deal with a large institution, they don't move that quickly, but once you, you know, kind of have them, you know, sold in, you know, they start nibbling away at the stock and, and building a position, and, you know, they won't necessarily tell you about it until they become significant.
Mm-hmm. Can you talk a bit about Sky Quarry's financing and capital strategy, over the next, say, 12 to 18 months? What sorts of, of funding might Sky Quarry try to access, in the, in the, in, in that time period?
You know, we put out a press release as far as our European efforts, and that is really where a lot of my focus is as far as capital raising.
The reason for that is the Europeans have, they have a ton of money, first of all, but they've been focused on sustainability for, I would say, a lot longer than we have. It's also more of a factor in, in their investment decision-making than traditional, you know, U.S.-based institutions. We're targeting a European investor base for the fixed income, you know, financing, refinancing that we're looking at, because, you know, there's about 4,000 institutions that have a mandate to look at sustainability when making an investment decision. We, we, you know, play a factor in that because there, there's a limited number of companies that, that have, you know, a real sustainability component. The assets that those institutions manage is about $2.7 trillion.
We actually have an analyst in Europe, you know, connecting with those institutions on a daily basis, and we're building up a database of those institutions to market to as we move forward. We like European investors because they're patient, they get comfortable with the technology, and the interest rates are lower over there compared to here. We can actually raise money at a lower cost of capital as well. It's a win-win.
In terms of the modular facilities, any sort of details about that? A couple of folks have asked, for instance, are you thinking of Ontario or other Canadian provinces, other parts of the south, the south, the southeast? Maybe, Marcus, can you just sort of talk about what sort of, how you're gonna roll out, if you know anything about that yet?
Yeah, we don't wanna give away too many ideas, but we're gonna focus on the U.S. as far as our shingle recycling rollout, just because it's always easier, you know, to build those relationships kind of close to home. And, you know, obviously, you know, the U.S. market is 10 times the size of the Canadian market. You know, just California, Texas, Florida, the southern states, New England, where you have real concentration, you have a lot of historical, not historical homes, but legacy homes that are generating, you know, this waste. You know, you're looking at places like Texas where you now have hurricanes rolling through and ripping all the roofs off, and you have hailstorms in Denver, and you have, you know, in Phoenix, you end up with the sunshine just burning up these shingles every year.
There is a lot of opportunity just in, in kind of the southern swath of the U.S. that is, you know, focusing on, you know, markets that are, you know, relatively densely populated. You have a lot of these single-family homes, suburban sprawl, because that is where you are really going to generate the shingles. And just going from there.
Marcus, with the stock price currently below a dollar, any concerns about delisting risk from NASDAQ? If so, how do you plan to address it?
Yeah, obviously we want to get the stock back above a dollar. You know, NASDAQ does give you a pretty good window as far as making that happen. I think, you know, from our perspective, we are lifting up, you know, an investor relations campaign and an outreach to a broader shareholder base.
You know, a lot of our shareholders from the crowdfunding side are not necessarily public market participants. They kind of just, you know, bought a bunch of shares privately. We need to step up our outreach to public market participants to get the shares higher. You know, this webinar is part of that effort.
A question here, or maybe partially statement here. Let me just read it to you. In 2025, it says, Sky Quarry plans to open its flagship extraction facility, which has the potential to produce up to 2,000 barrels of oil per day. Can you let us know what is the status of that facility and are we extracting 2,000 barrels of oil per day?
No, we're, you know, we're still in the process of completing the retrofitting on the PR Spring facility.
The intent and expectation is that we will have it operational this year, but it's not operational yet.
Let me scroll down through here. Let's see. Marcus, is there any similarity, I guess, or opportunity, I suppose, to take advantage of regulatory incentives that are available for, you know, renewable fuels? You know, the, whatever the low carbon fuel standard in California, for instance, some other states have similar processes or incentives. Is the fuel eligible for any financial incentive?
Yeah, we believe that, you know, there will be tax benefits accruing based on, you know, making a low carbon fuel.
You know, what, what's really, you know, invigorating for us is actually, we are in position, you know, we, we recently got an estimate from a potential provider, showing that, the, the potential carbon credits that we could generate off of reducing the carbon intensity of our fuel could, could be over $100 million in value over the next 10 years. There are big opportunities, you know, on both, you know, government programs, energy programs, you know, carbon reduction. It's, it's, you know, there's a lot of different things we can touch. You know, we just, you know, we're a small team, so we have to block and tackle every day and then, and then, you know, grab those opportunities as they come along. You know, we've already gotten inquiries from, you know, companies as big as Union Pacific, you know, looking for sustainable fuel.
Regardless of what the government mandates or what the tax incentives are, you know, a lot of big companies have made significant promises to shareholders as far as reducing their carbon intensity over the next, you know, 10 years and going on to 2050. You know, we believe that using shingles as a feedstock for fuel is going to be, you know, the lowest way that you can make a sustainable fuel and not have a big carbon footprint. You know, I think there's a big disconnect between what people think is sustainable and what people think, people equate sustainability with no carbon footprint. The irony is, you know, most of the sustainable fuel has a huge carbon footprint. They're making massive investments in jumping through amazing technological hoops to try and reduce the carbon intensity of biofuel.
To use, you know, waste asphalt shingles as a feedstock for fuel is an amazing solution. You know, as we said earlier, it's a multi-billion dollar opportunity.
A lot less carbon intensity than, you know, generating biofuels from pyrolysis or some other procedure.
Absolutely.
What are your thoughts about the current regulatory environment in D.C. in particular, federally, and the implications that it might have for the Sky Quarry business?
I think everything ends up being a benefit for us because, you know, we are a local operator, so we're creating local jobs. You know, in our region, you know, you're gonna see more drilling.
In a market like California, where they're importing 60% of their oil, that oil's gonna get slapped with a tariff potentially and just improve or increase the local demand for, you know, locally sourced oil as well as locally refined oil. You know, we're, you know, fingers crossed, you know, we think, you know, all of these things are a wind at our back. You know, the other benefit on the regulatory side is, you know, as, you know, kind of regulations, you know, fall away on kind of the construct and build side, it's gonna make identifying and building, you know, our regional facilities easier. We'll be able to accelerate the rollout timelines, you know, because permitting will hopefully be streamlined, you know, et cetera, et cetera.
Is the permitting environment fairly onerous?
I mean, still probably state by state or local by local, but, you know, what has been so far the experience on the permitting side for the modular facilities?
You know, we haven't identified specific locations, but in our discussions, I would say the regulators are very supportive. You know, they understand, you know, the problems that we're trying to solve and how it benefits everybody that you're, you know, reducing dependence on landfills, you're not throwing away valuable resources, you're creating jobs, you're reducing the carbon intensity, because a lot of this waste ends up moving, you know, hundreds of miles and sometimes thousands of miles.
You know, to talk about moving waste and carbon footprint, you know, we met with Union Pacific and, you know, one of their biggest products that they move is garbage. And, you know, people don't realize it because, you know, they only see what's happening down at the end of their driveway and, you know, a truck comes and picks it up and it disappears. But, you know, there's a lot of infrastructure and a lot of energy consumed just to handle this waste stream.
Mm-hmm. Let's talk about that a little bit. How do you plan to get the briquettes, I guess, to the processing facilities? Is that all gonna be pretty much by rail? What does that picture look like?
Yeah, I would say, you know, ideally we're gonna use rail as much as possible because on a per mile basis, it's the cheapest. You know, our facility is, you know, within, you know, I would say operating distance from, you know, kind of Union Pacific and Burlington Northern lines. You know, we see that as the logical approach. Logistically, Utah is not ideal, you know, for the shingle side, but, you know, over time, you know, we, that's why we wanna build regional facilities that are gonna, you know, take up a lot of that demand and, you know, create a very efficient, you know, collection capacity. One question here from, from perhaps one of your, one of your roofers who's also a shareholder.
How can the shareholders get involved with the company to begin to collect shingles on the local side?
I think, you know, they should reach out to us and, you know, we have a database of potential partners that we're in discussions with and we basically light up those relationships as we start targeting a certain market and, you know, would love to make that connection.
Mm-hmm. Is there some scalability or flexibility for the process that you have, Marcus, for instance, to re-recycle asphalt, road asphalt or other products that have a hydrocarbon component to it?
Road asphalt is already pretty widely recycled.
And, you know, so there's, you know, that we're, we're not interested in that necessarily just because it's already been done and it's, it's already par for the course. You know, if you look at road asphalt, the, the, the beauty of the oil that we make is ideal for, you know, kind of rejuvenating recycled road asphalt because all they really do when they rebuild a road is they grind up the old asphalt, they lift it off the road, they, they take up, you know, say 2 inches and then they just put it into a machine and mix it with, with fresh asphalt oil to, to rejuvenate it and add some chemicals and polymers and, and that's, that's your new paving asphalt. So they actually have a process where they can lift it, rejuvenate it and put it back down in one swoop.
You know, that is a mature business. We're just trying to, you know, use obviously similar techniques of rejuvenation to create a circular, circular economy around the shingle side. You know, I mentioned the Beacon merger. Beacon has, you know, over 500 locations across the country distributing shingles. You know, a tie up with them would mean that, if we created a circular economy around that, we would get, you know, 2 million tons a year from the Beacon locations, could process that material and, you know, a good percentage of waste asphalt shingles can actually be used to make new ones. I think as this recycled shingle opportunity matures, I think that percentage will get higher and higher.
A couple of questions here just on sort of the gross profit, EBITDA, the, let me just try and find one here. Gross profit expected to be negative in 2025. Is that, is that true? When do you think will the company all start to have positive, positive net revenue?
I, I can't, you know, make any projections on this call just because of, my lawyers would have a field day. But, you know, our intent is to get to cashflow positive and profitability, you know, very quickly. And having, you know, the PR Spring facility up and running, you know, does that, you know.
We are looking, you know, for that refinancing, additional capital to increase production in Nevada, just on the refining side, but then supplementing, you know, that operation there with, you know, oil coming in from Utah is going to be, you know, the big inflection point for our finances. You know, that being said, you know, I have not really talked about, you know, the California opportunity, but Nevada imports 150,000 barrels a day. With the declining production capacity in California, you know, we think that suppliers are going to be less and less willing to sell product into Nevada, especially because part of the new California regulations require refineries to hold two weeks' worth of inventory at all times.
That increase in working capital and the increase in inventory that the California refineries have to manage reduces their willingness to sell product into California, into Nevada. We are already seeing major industrial fuel users in Nevada coming to us and looking for, you know, long-term supply contracts because they think that there's gonna be a spike in pricing and a spike in demand just because the supply from California is gonna dry up. We think that we're well positioned to benefit from a higher gross margin in Nevada as well as much more demand for product.
Marcus, some of the other LOIs that Sky Quarry has recently signed up, what do they look like in terms of the details? Are they for feedstock deals?
What, what, how do you see those turning into agreements?
Yeah, you know, ultimately, I can't really speak to that because it reflects ultimately non-public information at this point. We have to disclose it, you know, through an AK and a public filing. You know, everything that we're doing on the LOI side or the business development side is really about, you know, laying the groundwork for creating that circular economy around the shingles or increasing, you know, our potential supply. It's working with waste companies as far as feedstock potential, partnerships on growth or, you know, building relationships that ultimately end up being customer relationships where we're supplying material to the shingle industry as the first layer of creating that circularity around these products.
For the modular facilities, what's the approximate lead times for getting them up and running?
I think it would depend on the market, but I think from our perspective, you know, we've been kicking around, you know, kind of an 18-month number as long as the permitting process was pretty, pretty simple. The idea behind the modular facility is to actually engineer them so they're cookie cutter and can be replicated easily. I think once you get the first one done and get the kinks out of it, I think the follow-ons, you know, come much more quickly.
I think as we demonstrate, you know, that we can handle this material and make money at it, I think a lot of municipalities will come to us and kind of roll out the red carpet and say, we want one because it'll, you know, generate revenue, generate taxes, generate, you know, create jobs and reduce, you know, dependence on landfills and reduce carbon footprint. It is a beneficial opportunity.
There is no like long lead equipment that you need to procure from, from like a third party, who, you know, might, there might be like, you know, like a transformer where you got a four-year wait period or something like that. This is all just manufactured, sounds like a little equipment
that's used in other, I don't know, you guys, can everybody hear me?
You lost you for a bit, Marcus.
Okay.
Back on now.
Okay. Where was I? Now, the intent is to use effectively off-the-shelf kind of manipulation equipment as far as the physical property. Oh, I'm back. Yeah. The intent is to keep that design simple and use nothing custom. That way we can shorten up the lead times and reduce the cost of duplication.
In terms of the process, Marcus, what types of waste does Sky Quarry itself generate? And how do you plan to dispose of it?
The shingles are 100% recyclable. There's no waste.
Excellent. Yeah. Okay. Coming to the end of some questions.
Can you speak, I don't know if this is, if this is something that you can comment on, but, maybe just generally, but, you know, the, the, the broader shingle manufacturers like Owens Corning or whoever else is, is, are the, the folks that are, that are, involved in making the shingles, are, are they, folks you have, relationships with or, you know, is there, is there a, is there a plan to use their, any of their products in the manufacturing process?
The shingle makers are very interested in what we're doing and, and, you know, I think, you know, the time for those disc, you know, we, we've had discussions with numerous shingle manufacturers and, and, you know, they really want to see PR Spring up and running to see, to see how we do it.
That's, I would say, the kickoff point for everything that they wanna do. We have those relationships, we know who they are, we know they're watching, and, you know, they'll be in touch.
Mm-hmm. Mm-hmm. Are the facilities that you'll have, including PR Spring once it's up and running, are they large users of energy?
Yes, they do use a bunch of energy, and, you know, the intent is to use, yeah, obviously sustainable energy if we can, but, you know, ultimately, the energy that we use gets calculated into the energy that is conserved, right?
The carbon credit calculation is, you know, what is the energy use and what is the carbon footprint of a barrel of traditional oil coming from, you know, the oil that, you know, a large chunk of the oil that California buys every day is coming from Saudi Arabia. Think about the carbon footprint that barrel of oil has compared to, you know, us, you know, using chemicals and using some grinders to harvest a barrel of oil out of a ton of shingles. It's a bunch of energy, but it's a lot less energy than shipping a barrel of oil from the Middle East.
Right. A couple of questions again, but I think you've indicated that the PR Spring facility commissioning in Q3, did you say?
Ideally, you know, that's the goal.
You know, we're doing work on it every day. It's getting closer and closer. You know, we wanna, you know, we're kind of itching to turn it on. We're getting closer.
What's the job creation impact for the business, Marcus?
Each facility will probably be, you know, kind of that 30 or 40, you know, person job creation. You know, there's, but you know, beyond, you know, the job creation at the facility itself, our intent is to create a national network where, you know, we're actually providing the service or, you know, have franchisees that go to curbside and collect the shingles as a dedicated feedstock.
Having our own dumpsters or having our own collection boxes or super sacks or whatever we determine will be the right way to do it, and that infrastructure, that network of collection that we intend to stand up, you know, will be a footprint of a company, you know, similar to 1-800-GOT-JUNK or something like that. It will be a national network of collection brokers or agents or jobbers or however you want to call it, franchisees that bring us that dedicated waste stream. We have modeled that and that would create thousands of jobs.
Let me just go back to the commissioning a bit, Marcus. Once the project, or once PR Spring is commissioned, it is not a long time period to get to COD from there, right?
Like that, that's commissioning and commercial operation are pretty close in time to each other.
Yeah. Yeah. Now all commissioning is, is we start slow and then just build up. So, you know, the oil that we create during commissioning, you know, will go to the refinery and then be sold. So it just, you know, it starts as a trickle and then builds up. And yeah, as a reminder, you know, that facility is designed to extract 2,000 barrels a day.
Okay. Marcus, I, I've sort of run to the end of some questions here and we're kind of bumping up on the hour. Any final thoughts from you? Otherwise I think we can probably wrap up.
Listen, I think I've covered a lot and I appreciate everybody hanging on to the end. You know, I talk to investors every day and, you know, they kind of look at the chart and they think that they're not seeing what's happening at the company because they look at the stock chart and, you know, the stock doesn't reflect what's happening at the company. You know, I am more excited about where we are with the company today than I ever have been because we're that much closer to the day where, you know, we fulfilled the commitment that we made to our shareholders. You know, I take that very seriously. You know, we're really excited.
You know, we have revenues, we have a big shareholder base, we have a NASDAQ listing, we have a ton of assets and, you know, we're right around the corner from lighting everything up and demonstrating, you know, what we've been promising. I find that, you know, very exciting. Obviously, you know, to watch the stock, you know, move around and fly around every day is distracting, you know, but ultimately, you know, the value is there and our business model is there and, you know, all the trends in the industry that I, you know, highlighted on this call are wind at our back. It is really just a matter of, you know, keeping on marching until we get to where we're going.
Yeah. Yeah. 2025 will be an important year.
Yep.
Thanks very much, Marcus. Great to talk to you. Thanks for filling in the investors and the latest, and we'll give you all back four minutes. All right. Thank you, everybody.