Klimat X Developments Inc. announced it has finalized binding commercial terms with a Fortune 100 (the "Buyer") company to pre-purchase carbon credits from the Company's Sierra Leone Rewilding Project. The pre-purchase agreement will cover the remaining capital costs of the first 5,000 ha of native species planting, with 1,000-1,200 ha of planting anticipated to be completed by the end of the 2023 season and with the PDD to be validated in 2023. The first of three USD 500,000 payments for 2023 to Klimat X is scheduled for transfer within four weeks.

Under the pre-purchase financing structure, USD 2.5 million of investment is repaid in tons of carbon credits issued at a pre-agreed price by the project. The initial project area will generate an IRR of up to 20% based on current modelling assumptions and pricing scenarios. The Buyer has the option to purchase the balance of the 75-80% of the carbon credits from the first 5,000 ha of planting at small discount to a mutually agreed carbon index price that reflects the scale and volume of high-quality reforestation projects in the market.

The Buyer has a time limited Right of First Offer to pre-purchase credits from the remaining 20,000 ha within the project area. The Company has committed to produce and validate the credits under the highest standards of the Verra protocol, including their Climate, Community, Biodiversity standards (CCB). The Company is committed to equitable revenue sharing arrangements with local smallholders and a transparent Free Prior and Informed Consent process monitored by Namati, an independent third party non-governmental organization.

Project implementation will restore degraded forest land owned by smallholders, providing income from carbon markets and providing employment to thousands of seasonal workers in a region with high unemployment and incomes below the poverty line. The first 5,000 ha is anticipated to produce 1.6-1.9m tonnes of carbon credits during the first 30 years, and over the full lifespan and scale-up of the project, it has the potential to produce up to 15m tonnes of credits from 25,000 ha. Independent carbon market forecasts for restoration projects of this type indicate pricing of USD20-30/ton as demand grows for high quality credits.

The IMF states that prices as high as USD 75 per tonne are needed by 2030 when considering regulatory and voluntary markets. Recent research continues to indicate rapid growth in the size of the carbon market, with Boston Consulting Group predicting five-fold growth by 2030. The project is the first of its kind in Sierra Leone and a model for carbon finance and social development across the region.

This major commercial milestone for Klimat X proves the Company's investment thesis that large-scale jurisdictional projects can be developed and pre-sold to wholesale buyers seeking to meet their Net Zero obligations. The milestone demonstrates that the company can use its equity to de-risk projects to the stage draft PDD stage where the execution risk can be shared with the world's largest corporate clients. The commercial agreements have been submitted for final signature by both parties and the first three payments to Klimat X of USD 500,000 are scheduled for the balance of 2023.

Approximately 400ha were planted in 2022 and planting of a further 800-1,000ha is already underway.