Mr. Justin Cochrane reports

CARBON STREAMING PROVIDES CORPORATE UPDATE AND ANNOUNCES NEW REMOVALS STREAMING AGREEMENT WITH MAST REFORESTATION

Carbon Streaming Corp. has provided a corporate update and entered into a streaming agreement with Mast Reforestation SPV I LLC for the Baccala Ranch project in California, United States. The Baccala Ranch reforestation stream is the third stream under its previously announced project pipeline streaming agreement with Mast, to advance its pipeline of postwildfire reforestation projects in the Western U.S.

Baccala Ranch reforestation stream

The Baccala Ranch reforestation project, located in Tehama and Plumas counties, California, U.S., is expected to restore 523 acres at the Baccala Ranch property that was severely burned by the Dixie Fire in 2021. The company will receive 100 per cent of the carbon credits generated by the Baccala Ranch reforestation project, which are expected to be independently confirmed by a Climate Action Reserve-approved confirmation body.

The Baccala Ranch reforestation project is expected to remove a total of approximately 91,500 tonnes carbon dioxide equivalent and generate an equivalent number of carbon credits. First carbon credit issuance is expected in 2026.

Under the terms of the Baccala Ranch reforestation stream, the company will make an initial upfront deposit of $320,000 (U.S.) on closing, with additional milestone payments of up to $1.28-million (U.S.) as the Baccala Ranch reforestation project achieves site preparation, planting and issuance milestones. Carbon Streaming will also make continuing delivery payments to Mast for each carbon credit sold under the Baccala Ranch reforestation stream, which will increase according to a tiered streaming structure dependent on return on invested capital thresholds. Closing of the Baccala Ranch reforestation stream is subject to customary conditions with closing expected to occur in mid-2024.

Proceeds from the Baccala Ranch reforestation stream are expected to be used for on-the-ground project implementation activities, including site preparation and planting. Baccala Ranch is significant for its high conservation value and notable intersection with the Pacific Crest trail, providing habitat for local fauna, including black bears, mule deer and bald eagles. Reforestation of Baccala Ranch will also reduce sedimentation, improve water quality and enhance hydrologic function of the Lake Almanor watershed.

Sheep Creek reforestation project update

The Sheep Creek reforestation project has been revised to include an additional section of the Sheep Creek Ranch, increasing the carbon credit generation expected under the Sheep Creek reforestation stream from approximately 225,000 carbon credits to approximately 285,000 carbon credits. The project has also secured a grant, enabling Carbon Streaming to reduce its upfront capital commitment to the project by $250,000 (U.S.). The company has entered into an amendment to its Sheep Creek reforestation streaming agreement to reflect these updates.

Indonesian regulatory updates

Following the issuance in 2022 of Regulation No. 21 of 2022 -- the Indonesian carbon regulation, in 2023, the Ministry of Environment & Forestry (MOEF) issued MOEF Regulation No. 7 of 2023 on carbon trading procedure in forestry sector -- which serves as a sectoral carbon trading regulation for the forestry sector; and MOEF Decree No. 1027 of 2023 on carbon trading road map for forestry sector. Although these regulations have been issued, carbon trading activities in the forestry sector have not yet commenced and there continues to be no indication as to when such trading activities will begin.

Verra updates

On Jan. 23, 2024, as part of continuing modernization of its methodologies, Verra announced that it had inactivated VM0004 Methodology for Avoided Planned Land Use Conversion in Peat Swamp Forests, v2.0. Verra confirmed that projects validated under VM0004 may continue to use it until their next baseline reassessment or crediting period renewal, whichever is the earliest.

Verra further reported that it anticipates releasing revised modules for avoided planned deforestation activities in peatlands under the VM0007 REDD+ methodology framework (REDD+MF) by the end of Q1 2024, and is aiming to complete a new stand-alone methodology for tropical peatlands by the end of 2024.

The VM0004 carbon credit methodology has historically been used at the Rimba Raya project for carbon credit validation and verification. As previously announced, the Rimba Raya project was validated under Reg 21 and with the government-operated carbon registry, Sistem Registri Nasional Pengendalian Perubahan Iklim (SRN). In December, 2022, Rimba Raya received validation under the SRN using an adaptation of the World Bank BioCarbon Fund's Initiative for Sustainable Landscapes Emission Reduction Program Requirements Version 2.0_2021.

The company believes that Verra's routine inactivation of the methodology currently has no implications for the Rimba Raya project. Carbon Streaming is working with its partners to monitor any impacts that may arise in the future. The company also understands that Verra and the SRN, through its joint task force, are continuing to advance discussions on the development of a mutual recognition agreement (MRA) that would allow for SRN carbon credits to be validated and verified using Verra methodologies and for such carbon credits to be issued and tracked by both the SRN and Verra. The timeline for agreeing on and implementing any potential MRA is unknown at this time.

For a comprehensive discussion of additional risks, assumptions and uncertainties that could impact the Rimba Raya project and the company's Rimba Raya stream, including, without limitation, other Indonesian regulatory developments, investors are urged to review the section of the company's annual information form dated as of March 28, 2023, entitled "Risk Factors," a copy of which is available on SEDAR+.

Nalgonda rice farming project update

Carbon Streaming has also entered into a second amendment to the Nalgonda rice farming streaming agreement with Core CarbonX Pte. Ltd. and its service provider, Core CarbonX Solutions Pvt. Ltd. The amendment provides, among other things, that Core CarbonX use a portion of the second instalment to finance prepayments to farmers and provides that Core CarbonX will implement alternate wetting and drying (AWD) in rice fields covering 62,000 hectares (an increase from the previous scope covering 55,000 ha). The project is completing registration under Verra and has been selected by the standard to participate in its remote sensing analysis pilot.

About Carbon Streaming Corp.

Carbon Streaming aims to accelerate a net-zero future. It pioneered the use of streaming transactions, a proven and flexible financing model, to scale high-integrity carbon credit projects to advance global climate action and additional United Nations Sustainable Development Goals. This approach aligns the company's strategic interests with those of project partners to create long-term relationships built on a shared commitment to sustainability and accountability and positions it as a trusted source for buyers seeking high-quality carbon credits.

The company's focus is on projects that have a positive impact on the environment, local communities and biodiversity, in addition to their carbon reduction or removal potential. The company has carbon credit streams and royalties related to over 20 projects around the world, including high-integrity removal, reduction and avoidance projects from nature-based, agricultural, engineered and community-based methodologies.

We seek Safe Harbor.