Mr. Ryan Jackson reports

CIELO ANNOUNCES UP TO CAD $5 MILLION FINANCING, TERMINATION OF PRIOR PROPOSED FINANCING AND AGREEMENT FOR SALE OF PROPERTY, AND PROVIDES OPERATIONAL UPDATE

Cielo Waste Solutions Corp. has arranged a proposed financing, provided an update on a previously disclosed proposed financing, signed a purchase and sale agreement for its property in Fort Saskatchewan, Alta., which upon completion, will eliminate the company's $11-million mortgage loan, and provided an operational update.

Financing

Up to $5-million mortgage loan

The company has entered into a loan commitment letter with First Choice Financial Inc. (FCF) as lender, for a mortgage loan of up to an aggregate principal amount of $5-million. The company will initially receive a principal amount of $2-million, which is anticipated to be completed prior to the end of this week. The mortgage loan is subject to the approval of the TSX Venture Exchange.

The mortgage loan will bear simple interest of 7.5 per cent per annum and FCF will withhold $150,000 as an interest reserve to satisfy the first 12 months of interest payments. In addition, FCF will be entitled to receive a financing fee of 3.5 per cent per advance ($70,000 for the first advance of $2-million). No securities will be issued in connection with the mortgage loan and no other fees or commissions will be payable.

The mortgage loan will be secured against the company's property in Aldersyde, Alta., including a site-specific general security agreement against the assets on the property. The proceeds of the mortgage loan will be used for general working capital.

The mortgage loan will have a term of 24 months from the closing date with respect to each advance (each a closing date), however, at any point following the 12-month anniversary of a closing date, in the event that FCF is dissatisfied following an evaluation of Cielo's financial condition, business and technological progress, FCF may require the company to repay the mortgage loan, in whole or in part, within 90 days of the notice from FCF to the company that such repayment is required. Cielo will have the right to repay the mortgage loan at any time, without penalty. In addition, once the structure and financing terms for the company's first commercial facility have been determined, Cielo may make a proposal to FCF to exchange the principal portion of the mortgage loan for participation in the first commercial facility, which FCF will be entitled to accept or reject. Management believes that this will result in minimizing the dilutive impact to Cielo while unlocking potential value for third parties, such as FCF, that may be interested in participating directly in the first commercial facility financing.

Vikas Sharma, chief executive officer of FCF, commented: "We appreciate the actions of management over the last year to strengthen Cielo's overall position and move the company further along the path to commercialization. We believe in Cielo's long-term plans, and that this credit facility and our purchase of the real estate help position Cielo to reach its upcoming milestones, including railway tie testing. We are pleased with the recent EPA [Alberta Environment and Protected Areas] resubmission and are hopeful for a positive response and quick turnaround. We have been long time supporters of Cielo and look forward to strengthening our relationship even further going forward."

Termination of Crestmont financing

Further to the company's news releases dated April 10, 2023, and May 1, 2023, regarding a debt financing to be completed with Crestmont Investments LLC, despite continued efforts to finalize the terms and complete the proposed financing, and notwithstanding that Cielo and Crestmont have formed a professional relationship that Cielo anticipates to continue in the long term, the parties have agreed to terminate the binding letter of intent. Management believes that the terms of the proposed mortgage loan with FCF are more favourable to the company, and that Crestmont's preference and strength is in the facilitation of larger financing transactions and, as such, the parties are continuing discussions with regard to the full financing of the company's first commercial facility rather than bridge financing for the company's research and development facility, and working capital.

David Beach, principal of Crestmont, commented: "After an exhaustive due-diligence period with Cielo, Crestmont has come to appreciate that Cielo's project pipeline is very compelling. It is with a deep understanding of Cielo's future project finance needs, as well as Crestmont's desire to be involved in a more substantial way, that we turn our attention to the larger project financing that Cielo requires."

Proposed sale of land

The company has entered into a purchase and sale agreement with FCF, as purchaser, for the sale of the company's property in Fort Saskatchewan, Alta. (the FS property).

The purchase price for the FS property is $13-million, subject to the terms of the note (as defined below), to be paid as follows:

• FCF previously provided a mortgage loan of $11-million (the existing mortgage loan) to the company, which was secured in part by the FS property. On completion of the sale, the existing mortgage will be repaid in full;
• The remaining $2-million will be paid by way of a promissory note from FCF in favour of Cielo, whereby FCF will be required to use commercially reasonable best efforts to enter into a purchase and sale agreement for the sale of the FS property on or before Sept. 30, 2024. Should FCF be unable to do so, the purchase price will be reduced by $2-million.

The sale is subject to certain conditions, including the approval of the exchange, and the waiver of the right of first refusal held by the tenant of the FS property. The lease between Cielo and the tenant was also amended to provide for an additional 19 acres to be leased by the tenant. Other than customary fees, such as Realtor commissions, no third party finder fees are payable with respect to the sale.

The closing of the sale is anticipated to occur on or before July 31, 2023. The mortgage loan and the sale are not conditional upon each other or otherwise connected.

Operational update

The company continues to work toward securing permit approval from Alberta Environment and Protected Areas to begin railway tie testing, as previously disclosed. The company's amended application is under review with the EPA and, once approval is granted, testing will commence.

Ryan Jackson, CEO of Cielo, commented: "These last several months we have been focused on achieving a number of initiatives for Cielo, including the commissioning of the R&D facility, and our continuing efforts to secure a permit to commence railway tie testing. With this loan from FCF and the sale of the land, we believe we will have the resources we need at this time to continue to move forward with our commercialization plan."

About Cielo Waste Solutions Corp.

Cielo Waste Solutions was incorporated under the Business Corporations Act (British Columbia) on Feb. 2, 2011. The company's strategic intent is to become a leading waste-to-fuel company using economically sustainable technology while minimizing the environmental impact. Cielo has a patented process that can convert waste feedstocks, including organic material and wood derivative waste, to fuel. Having demonstrated its ability to produce diesel and naphtha from waste, Cielo's business model is to construct additional processing facilities. Cielo's objective is to generate value by converting waste to fuel, while fuelling the sustainable energy transition.

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