Overview

Hempalta Corp. (TSXV:HEMP) is engaged in processing industrial hemp at scale to produce a range of consumer and commercial products. Its proprietary processing technology, HempTrain, is capable of converting industrial hemp into high-volume, high-grade products. The company’s product range includes animal bedding, garden mulch and construction products such as hempcrete – a biocomposite material for construction and insulation made of hemp hurds and lime. Industrial hemp is highly versatile and can be grown in a variety of climates and soil conditions.

Perhaps the most important characteristic of industrial hemp is its ability to capture carbon dioxide in the atmosphere. One hectare of a hemp crop can absorb 10 to 22 tons of CO2 and is believed to be more efficient at carbon sequestration than forests. HEMPALTA is leveraging this hemp attribute as a new revenue stream and an opportunity to participate in the fast-growing carbon market, enabled by its acquisition of a controlling interest in UK-based Hemp Carbon Standard (HCS).

HEMPALTA owns 50.1 percent of HCS, which uses a science-based quantification methodology designed to measure carbon removal from industrial hemp accurately. The strategic investment in HCS – and through partnerships with industrial hemp farmers – positions HEMPALTA to become a leading carbon credit generator. The sale of these hemp-derived carbon credits offers a new revenue stream for HEMPALTA, in addition to its B2C and B2B hemp products. The carbon credit market is currently the largest opportunity for HEMPALTA. The global voluntary carbon market is projected to reach $2.68 trillion by 2028 at a CAGR of 18.23 percent. HEMPALTA anticipates realizing the first full cycle of carbon credit revenue by the first quarter of 2025.

The other key revenue stream for the company is from the sale of hemp products. Here again, the opportunity is large, with the global industrial hemp market projected to reach $16.75 billion by 2030. The company plans to introduce new products and expand its existing capacity to capitalize on this growing opportunity. Its plant expansion initiatives are focused on boosting capacity to effectively meet the increasing market demand. The change in the US Residential Building Code, approving the use of hemp-lime (Hempcrete), is a major tailwind. Hempcrete can now be used in one and two-family dwellings and townhouses in 49 of 50 US states. The company intends to focus on this product in its near-term strategy.

The company is led by seasoned and tested industry veterans with significant experience scaling businesses. The CEO, Darren Bondar, has a proven track record of scaling businesses and exiting them. He founded and built Canada’s largest recreational cannabis store network, Spiritleaf, and sold it for $131 million.

Company Highlights

• HEMPALTA is an agricultural technology company processing industrial hemp at scale. Industrial hemp is known for its sustainability, given its ability to absorb carbon dioxide (CO2) twice as efficiently as forests.
• HEMPALTA employs a proprietary processing technology called HempTrain to process industrial hemp to produce a range of high-value, environmentally friendly consumer and commercial products. These include biocomposite building materials, food preservation pads, pet litter, animal bedding and gardening products.
• The company’s consumer products are currently sold and distributed in over 150 stores and through e-commerce platforms in Canada and the U.S., with the goal of reaching more than 1,500 retail channels.
• In addition to industrial hemp products, HEMPALTA also offers carbon credits. The global voluntary carbon market is projected to reach $2.68 trillion by 2028, presenting a large opportunity for the company.
• The company owns a controlling interest (50.1 percent) of Hemp Carbon Standard (HCS), which is driving HEMPALTA’s venture into the carbon credits market. HCS uses a science-based quantification methodology designed to measure carbon removal from industrial hemp accurately.
• The industrial hemp industry is projected to experience growth as consumers and companies seek environmental and sustainable products. The global industrial hemp market is expected to reach $16.75 billion by 2030.

Key Segments

Carbon Credits

HEMPALTA is providing carbon credit solutions utilizing the carbon-negative nature of industrial hemp agriculture. The company partners with farmers to grow industrial hemp, which can absorb between 10 to 22 tons of CO2 per hectare. The ability of industrial hemp to absorb CO2 allows for the creation and sale of carbon credits on the voluntary market. Carbon credits can be purchased by companies looking to offset their emissions. This creates a revenue stream for HEMPALTA.

Once the farmers harvest hemp, the amount of CO2 absorbed by the crop is measured and verified using HCS’s technology. This step is crucial to accurately quantifying the carbon sequestration and determining the corresponding carbon credits.

HEMPALTA owns a controlling interest (50.1 percent) in HCS, which is a major advantage as it allows HEMPALTA to measure, report and verify the carbon credits. HCS is the only company in the world that can scientifically quantify and measure CO2 removal for hemp. HCS’s technology allows accurate measurement of CO2 sequestration in the biomass of the industrial hemp and related soil. HCS’s reporting ensures transparency and accuracy, thereby providing a solid basis for corporate buyers to make carbon credit purchases. The company estimates its partnership with HCS could result in over 1 million acres being measured, reported and verified for the creation of carbon credits that can be sold on the voluntary carbon credit market.

Industrial Hemp Products

HEMPALTA uses state-of-the-art processing technology, called the HempTrain, to produce a range of high-value, environmentally friendly consumer and commercial products using industrial hemp. These include biocomposite building materials, food preservation pads, pet litter, animal bedding and gardening products. These products are currently sold and distributed via offline and online channels. The products are present in more than 150 retail stores in Canada and the US, along with major e-commerce platforms. The goal is to reach over 1,500 retail channels.

Management Team

Darren Bondar – President and CEO

Darren Bondar previously founded and served as president and CEO of Inner Spirit Holdings, the first cannabis retail company listed on the Canadian Securities Exchange. Under his leadership, Inner Spirit expanded significantly until its acquisition by Sundial Growers in July 2021. Prior to that, he was the president and CEO of Watch It! and Comfortable Image, consumer retail and franchising businesses. Bondar holds a Master of Business Administration degree from the University of Alberta and a Bachelor of Arts degree from Western University. He has completed the financing, governance and compliance for public companies course at Simon Fraser University.

Candace Ryan – Chief Financial Officer

Candace Ryan brings over 15 years of experience in accounting, payroll, human resources, financial planning, and financial reporting and analysis. Previously, she served as financial controller for Spiritleaf, a subsidiary of Inner Spirit Holdings, listed on the Canadian Securities Exchange.

Adrian Stokes – Director

Adrian Stokes has over two decades of experience in financial services. He currently leads ADL Private Office in Monaco, a private family office for the majority partner of Fullbrook Thorpe Investments LLP. Previously, he held various roles at Barclays Wealth & Investment Management. He holds a double major in business from Greenwich Business School in London.

Craig Steinberg – Director

Craig Steinberg has been a director of HEMPALTA since August 2021. He is a practicing lawyer with Steinberg Law and is the designated mortgage broker for Fortius Mortgage Corporation. From August 2017 until July 2021, Steinberg served as a director of Inner Spirit Holdings which was listed on the Canadian Securities Exchange.

Dan Balaban – Director

Dan Balaban is the executive chair and CEO of Greengate Power Corporation, a Canadian renewable energy company. Before joining Greengate, Balaban co-founded and served as president and CEO of Roughneck.ca, which provides software solutions for the oil and gas industry. Earlier in his career, he worked as a management consultant at top-tier firms, including EY and PwC.

Liam Russell Wilson – Director

Liam Russell Wilson is the vice-president of business development with Prairie Merchant Corporation, a private investment company that focuses on real estate, energy, agriculture and sports franchises. He sits on the board of Indiva and continues to actively manage a portfolio of cannabis-related investments. Wilson holds a Master of Business degree from Queensland University of Technology.

Michael Ginevsky – Corporate Secretary

Michael Ginevsrky is a partner at DS Lawyers Canada LLP, where he focuses primarily on capital markets, mergers and acquisitions, corporate governance, and securities regulatory compliance. Ginevsky received a Bachelor of Commerce degree from the University of British Columbia and Juris Doctor from the University of Alberta. He was previously corporate secretary of Inner Spirit Holdings, a cannabis retailer listed on the CSE.

“Trump likes to keep the opposition, domestic or foreign, on edge. His unpredictability is his weapon of choice. Looking at some of his administration picks and the potential clash with the Federal Reserve, I suspect taking a hard view on sentiment for 2025 is not a wise game for now,” he said via email.

Barrett suggested that investors hold some money on the sidelines until they can determine how Trump’s presidency begins and whether his return lives up to his pre-election promises, especially regarding conflicts overseas.

Geopolitical pressures in play for gold

Trump’s return to the White House is just one of the geopolitical situations that could affect gold in 2025.

In 2024, ongoing conflicts in the Middle East and Eastern Europe influenced the price of gold, most notably when Russian President Vladimir Putin floated the possibility of a nuclear escalation in November.

Tiggre noted that flareups tend to drive gold, but the effects are usually temporary and revert back to trend.

“Fortunately, that trend is currently upward. I suppose that if Trump could actually end the war in Ukraine in a day, there might be a bit less safe-haven demand, but I don’t believe he can,’ he explained.

‘So even if gold retreats after each successive scare, there’s no real downside for gold here.’

However, Tiggre added that if one of the conflicts in Gaza, Ukraine or even Taiwan were to escalate into a direct military conflict between major world powers, it would likely send gold “screaming” upward.

Central banks still a key driver for gold

The last few years have been characterized by strong central bank buying of gold.

Asia, the Middle East and some Eastern European countries are leading the way. Although not all countries report their purchases, the ones that do are carefully tracked by the World Gold Council.

Although there appeared to be a slowdown in central bank buying in the middle of the year, Joe Cavatoni, senior market strategist, Americas, at the World Gold Council, said it rebounded strongly at the end of 2024.

‘In October, we saw a rebound in central bank buying, with 60 metric tons of net purchases; this was the highest monthly amount reported year-to-date, at a time when the gold price was still making gains,” he said.

Looking forward to 2025, Cavatoni said he expects central banks to still be a major driver for the price of gold even though the metal is priced near all-time highs. “This continued interest reaffirms gold’s role as a strategic asset that goes beyond the price to manage risks and diversify reserves,” he said.

“The growing share of India and the Middle East in global GDP has an additional impact on the demand for gold, especially given the increasing use of gold as a reserve in these areas,” she said.

The scale of central bank purchases has provided gold with a critical support structure, and has also fueled speculation that the precious metal may be used to back an alternative reserve currency to the US dollar.

Barrett suggested this trend has been ongoing for the past 15 years.

He said central banks have been net buyers of gold since 2010 at about 7,000 metric tons. As the ultimate buy-and-hold participant, their activity has not only removed significant supply from the market, but has also contributed to current market conditions, which have made gold attractive to a wide audience.

Gold M&A activity lagging despite price strength

Tiggre expressed surprise at the lack of deals in the gold space given current high prices.

“The larger players simply have not made enough discoveries. If they don’t want to mine themselves out of existence, they’re going to have to buy more of the companies that have done the work,” he said.

Kandoshko echoed this sentiment, saying mergers are a means for larger companies to access exploration projects, expand reserves and optimize costs. She believes 2024’s higher prices could pave the way for deals in 2025.

Barrett believes mergers haven’t happened for a myriad of reasons, chiefly that the price of gold hasn’t reached the level to overcome the economic factors that have driven industry costs over the last several years.

“I suspect the main reason is the massive rise in production costs and higher interest rates … labor, energy and raw materials have all risen significantly,” he said. The implication is that higher returns have yet to be realized — gold miners still haven’t overcome higher operating costs due to today’s economic situation.

Investor takeaway

Central banks are expected to continue supporting the gold price in 2025; however, with Trump entering office, his policies could pull gold in different directions. It may be hard for investors to know what to do.

Cavatoni suggested that a strong US economy and lower deficit under Trump would push the dollar higher, leading to investors seeking to add riskier assets to their portfolios. “If this is what develops as a reaction to Trump’s mandate, it would be supportive to gold allocations as a safe haven,” he said.

For her part, Khandoshko sees gold maintaining its upward momentum, saying she sees the metal increasing to US$2,800 in the next six months and rising to US$3,000 at some point during the new year.

Although reluctant to make a prediction, Tiggre also believes gold will trend higher in 2025.

“How much higher? It is hard to say, but a real all-time-high of just under US$3,500 is less than 35 percent higher than where we are today. That seems doable,” he said.

If gold continues moving up, it could give gold companies the boost they need and could create new opportunities for investors who have been taking a wait-and-see approach.

Maybe more than ever, 2025 is bringing political and economic uncertainty that could see strategies compete between pursuing riskier equities or adding more exposure to gold through bullion or gold-backed products.

The smart play may be to not jump into 2025 headfirst and instead take some time to see how key situations develop through the first part of the year.

When will mining stocks catch up to metals prices?

Kicking off the discussion, Rule, who is the proprietor at Rule Investment Media, asked the panelists if the discrepancy between metals prices and the performance of mining stocks will end — and if so, when and why.

Nick Hodge, publisher at Digest Publishing, was first to weigh in, saying, “Yes, it will.’

As for when, Hodge anticipates more balance in mining shares once “the everything bubble ends.”

He explained that many assets, including tech stocks like the Magnificent 7, are overvalued, causing many of these assets to outperform the S&P/TSX Venture Composite Index (INDEXTSI:JX).

“I think once you get a — I don’t want to say crash — once you get a sort of reckoning, a popping of the everything bubble, everything sort of resets,’ Hodge told the audience.

Lawrence Lepard, managing director Equity Management Associates, suggested the disjointment between metals prices and stock performances is the result of skepticism about current gold and silver projections.

“You look at Bloomberg, you look at the projections — everyone thinks gold is going back to US$2,000 (per ounce), they don’t think this move is real,” he said. “We all know it’s going to US$3,000 to US$5,000 and that has to change.”

Gold has sat firmly above the US$2,000 level since February, setting a record of US$2,788.54 in October.

For Lepard, the cynical view that gold will retreat is affecting sentiment. Additionally, concerns about rising all-in sustaining costs squeezing miners’ margins is adding to the uncertainty.

In terms of a time frame, Lepard echoed Hodge’s position that a major reset is close.

“We’re very close to this everything bubble bursting. I think they’re going to probably try and pop the bubble to screw (Donald) Trump. I would expect that in the next six months, things are going to change dramatically in this area.’

Gold Newsletter editor Brien Lundin thinks there is a different underlying factor contributing to the imbalance.

“There is a discrepancy, but it’s more perception than reality,” said Lundin, who also hosts the New Orleans Investment Conference. “If you look at the ratios, the mining stocks, at least judged by the major indexes, have generally outperformed gold, just not as much as we would have expected given the movement in metals.”

He then pointed to the large gold purchases central banks have made in 2024.

“That move in the metals, though, was instigated by central banks buying hand over fist for the first couple of months of the move,” said Lundin. “And central banks don’t buy mining stocks.”

According to data from the World Gold Council, by the end of Q3, global central banks had purchased 694 metric tons of gold since the start of the year. Leading the buying were India, Turkey and Poland.

Next in line to answer Rule’s query was Jennifer Shaigec, principal at Sandpiper Trading.

She reiterated Hodge’s “everything bubble bursting” as a catalyst for mining stocks to move.

“Given all the insider sales we’ve seen from people like (Jeff) Bezos, and Warren Buffet sitting on a big pile of cash, that tells me it’s probably imminent,” she told the conference crowd.

“I think there’s just a lot of disbelief right now that this move in gold is real … even the base metals (like) copper went up and went back down,” Shaigec added. “There’s so much uncertainty on a geopolitical basis that it’s going to take some of that to kind of settle in. And I think that could be a little while yet.”

For Shaigec, President-elect Trump’s inauguration is “going to answer a lot of questions for people,” and will likely serve as the tipping point for some of the aforementioned activity.

Lobo Tiggre, CEO of IndependentSpeculator.com,argued that gold stocks are already moving, but “with a caveat.” While there was an expectation that they would move at US$2,500 gold, that’s not what happened.

“I think what it took was actually US$2,800 (gold), and that was so far above what anybody thought at the time,” he said, noting that the VanEck Gold Miners ETF (ARCA:GDX) is a poor performance indicator.

“The GDX, it’s an ETF, it’s defined by size, not quality,” said Tiggre. “(Because) it has some high performers, some low performers, the average number is not real. It’s not going to tell you what’s going on.”

He continued, “(At) US$2800, you started to see the higher-quality stuff, not just the big producers, but even the juniors — if there is such a thing as a high-quality junior — they really responded. We started seeing hockey sticks.”

Tiggre went on to highlight that for stock pickers, the momentum may already be underway, with the market experiencing a correction phase that’s part of a recurring cycle. The expectation is that these patterns of rise and correction will persist, signaling that while some of the movement has happened, further gains are likely ahead.

Bull market trajectory and top investment themes

Rule then turned to what trajectory a bull market in precious or industrial metals will take.

Overall, the panelists agreed that the traditional progression — where metals prices move first, followed by major producers and down the chain to juniors — will still play out, but perhaps with deviations.

Hodge noted that human nature hasn’t changed, so the psychology of investors gravitating to the biggest names first may still hold true. However, he said the rise of ‘meme stocks’ in mining could disrupt the normal trajectory.

Shaigec pointed out that the majors have been paying down debt and accumulating cash, which could lead to more acquisitions of promising development projects. This could light the junior sector on fire.

For their part, Lundin and Lepard both suggested that silver stocks may jump ahead of the typical order, outperforming as investors start to recognize that the white metal is in a true bull market.

Tiggre took a slightly contrarian view, arguing that the discrepancy between metals prices and mining equities has already been addressed for higher-quality companies.

Moderator Rule also asked the panelists for their favorite commodity to express in the equities market.

Tiggre underscored the “pre-production sweet spot” as his favourite investment thesis.

“It’s developers,” he said. “But like real developers — you have a construction decision, you have the money, you have the permits. You’re going to build a mine.”

Shaigec highlighted two themes, the first being the exciting opportunities that may emerge from drill plays, particularly as new discoveries have declined by 80 percent over the past 15 years.

This depletion of reserves is likely to drive major mining companies to seek fresh resources urgently, creating a significant push for exploration and reserve replacement efforts.

She then spoke about jurisdiction, pointing to the “incredible value to be found in Peru.”

“There’s a lot of really exciting projects that have strong management teams in Peru. So that’s kind of my favorite theme right now, I’m pretty heavily invested in that country,” said Shaigec.

Taking a more macro view, Lundin spoke about the growing relevance of optionality plays in mining.

“Basically, you buy cheap resources when they’re out of favor in the ground and the metals prices aren’t enough to justify their development. So you’re gaining leverage on a rise in metals prices,” he said.

“(The hope is) that metals prices will rise enough that those ounces in the ground suddenly become economic and therefore very valuable — much more valuable than they were.”

Lepard’s favorite investment thesis is picking companies with strong corporate governance.

“My one thing would be good management,” said Lepard. “This industry is a very tough industry, and there are a million ways to lose money. I found them all. I really have.”

Lastly, Hodge drove home the importance of share structure. “Structure allows you to weather the storm. No matter what the theme is, no matter what the commodity is, the share structure really matters,” he said.

He also suggested that integration of technology could underpin a strong investment thesis.

Hodge explained that the mining industry is rapidly using advanced technology to adapt to new demands and regulations. Innovations like Ceibo’s “clean copper” technology, already adopted by Glencore (LSE:GLEN,OTC Pink:GLCNF), and advances from companies like Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) are reshaping the sector.

“You know, there’s going to be battery passports required to be able to track all this stuff. I think that’s really going to have to be one of the components of how you look at these mining companies,” said Hodge.

Stock picks from Hodge, Lepard, Lundin and Shaigec

To end the discussion, Rule asked the panelists for a favor.

“I’m a highly competitive person, and I really want this panel to be what everybody thinks is the most important product at the New Orleans Investment Conference,” he said. ‘In order for that to happen, we’ve got to give these folks a gift.”

Rule then asked the participants to provide some stock picks for the audience.

For Hodge, Mexico-focused silver company Kingsmen Resources (TSXV:KNG,OTCQB:KNGRF) has a share structure that he likes. He also mentioned Canadian lithium junior Q2 Metals (TSXV:QTWO), noting the company is on “a pretty robust lithium discovery’ that may rival that of Patriot Battery Metals (TSX:PMET,OTCQX:PMETF).

Lepard kept it brief and started with Avino Silver & Gold Mines (TSX:ASM,NYSEAMERICAN:ASM), which he “loves.” He then referenced Banyan Gold’s (TSXV:BYN,OTCQB:BYAGF) “huge optionality” and “big deposit.”

Lundin praised the technical team at Relevant Gold (TSXV:RGC,OTCQB:RGCCF), noting that company has “high potential” due to its large percentage of an Abitibi-style district in Wyoming.

He also likes the drill results that Delta Resources (TSXV:DLTA,OTC Pink:DTARF) has been releasing.

Shaigec’s stock picks reflected her Peru-focused investment thesis.

“The first one is CopperEX (TSXV:CUEX),” she said. “One of the things I love about that story is it probably has the largest number of all stars on a team that I have seen assembled under one company name.”

Shaigec selected Coppernico Metals (TSX:COPR,OTCQB:CPPMF) as her second pick. Not only is she impressed by the company’s Sombrero project in Peru, but she also highlighted that several majors have invested in the company.

“(Coppernico) was just listed in August. And just prior to their listing, it was announced that Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK) is a strategic shareholder. They own 9.9 percent of the company, and Newmont (TSX:NGT,NYSE:NEM) owns over 6 percent,’ she said.