Q1 2020 Earnings Call
Thursday
Thursday Thursday Thursday
Good day, and welcome to the aqua Metals first quarter 2020 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference bridge by pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions to ask a question. You may press * then one on your telephone keypad to withdraw your question, please press * then two, please note this event is being recorded. I would now like to turn the conference over to Glen Axelrod investor relations office, please go ahead.
Thank you operator. Welcome to Aqua Metals first quarter 2020 conference call earlier today Aqua Metals release financial results for the quarter ended March 31st, 2020. It relieved available on the investors section of the company's website at ww.w joining us for today's call from management and see cotton president and CEO as well as judging the company's Chief Financial Officer during today's call management will be making forward-looking statements. Please refer to the company's quarterly report on form 10-q filed today April 30th for the summer the forward-looking statements and the risk uncertainties and other factors could cause actual results to differ materially from those forward-looking statements. Alkali metals cautions investors not to place undue Reliance on any forward-looking statement. The company does not Undertake and specifically disclaims any obligation to update or revise that statements to reflect new circumstances or unanticipated Avengers.
As the occur except as required by law. And with that said I'd like to turn the call over to Steve cotton CEO of Apple metal Steve, please go ahead. Thanks Glenn. Good afternoon. Everyone. Well, despite the constraints on Aqua metals and all businesses in the face of covid-19 global pandemic. I'm happy to report that all Aqua Metals employees are safe and we are operating our company utilizing a collaborative Technologies quite effectively. We like most businesses are dealing with unexpected constraints that began in late q1 in regards to the physical aspects of our operation assuming the state of Nevada allows us to return to the refinery in May the expected net impact is a slight delay and deployment of our first v125 electrolyzer. We expect to begin operating the first v125 electrolyzer within six weeks after we were able to return to the facility albeit later than we had originally targeted.
Despite the devastating fire.
On November 29th, covid-19 and our current uncertain Economic Times management has worked diligently to continue to implement our business plan in order to achieve future success for our shareholders money. I would like to spend a couple of minutes to highlight a few of the specific foundational items. Aqua Metals is already accomplished that will be the underpinnings for our go-forward cap of the light equipment and Licensing Strasburg. First one hundred eighty million dollars has been invested to date to commercialize Aqua refining we have already successfully demonstrated that are operating finery brand 24 hours a day 7 days a week and with our electrolyzer was running smoothly for a month at a time which consistently produced 35,000 ultrapure and cleanly manufacture Dinges. These soldiers fighting gets were shipped to our partner clarius the world's largest battery manufacturer who then made production runs of batteries with Opera find LED metal. Therefore, we believe that we will not need to build off.
Soredemo plant and duplicate what is already been proven. In fact, if we had chosen to rebuild the plan today, we may have been in a position to raise New Capital while dealing with the business challenged covid-19 environment the fact that we do not need to and were able to cut down on the burn rate significantly pre covid-19.
Despite the setback to the fire and in the face of covid-19. We believe that we have a plan for successfully securing the cash position of the company. We project that our cash balance will continue to grow between insurance proceeds and smart asset disposition. Thus we believe that we will have well over a year of Runway to fund our continued efforts to get off re-finding deployed to our first revenue-producing customer location. We expect this will be a major value inflection point for our shareholders for as judge will describe in more detail. We have vastly reduced our plans to further reduce our cash burn rate to further extend our runway on our path to customer revenues and self-reliance.
Lastly we have put into motion our efforts to pay for the valuable learning from our operations of the Opera refinery in the past to build a better more efficient higher throughput and cheaper electrolyzer with improved conversion cost per ton of lead produce. We believe that these key incremental and not fundamental improvements will further improve the electric visors reliability throughput cost to deploy and co-operate we believe this will illustrate the dock refining is a robust compelling offering for the marketplace and customers to consider as we anticipate beginning the upgrading of the twenty-plus billion dollars off LED recycling industry as a result in the near future. The industry badly needs to become Greener cleaner and more sustainable and aqua Metals has the potential to truly impact the energy storage box to improve battery performance in life that are Ultra Pure occupying base metals and provide. This is why our employees shareholders partners and potential licensing Partners have shown tremendous historical a dog.
about our company
And these fundamentals have not changed previously our Communications mentioned what an equipment supply and Licensing package would mean for aqua Metals. But at this time I want to take the opportunity to walk everyone through our proposed Revenue point.
We expect it to start with engagement in meaningful discussions with existing operators in the marketplace, which we've already accomplished with Clary other partners and several other qualified candidates that currently operates battery recycling facilities The Next Step would be a sales proposal coupled with the base technical package. Once the prospect agrees with the proposal and Technical package. We would expect to move on to a paid for engineering package similar to architectural plans where portion of the revenues could be recognized this engineering package would be the first revenues. We record for our licensing business potential range up to significantly over 1 million dollars depending of course on the size and scope of the application.
Once the engineering package is accepted. The next step would be to move forward with an equipment supply and Licensing and services agreement disagreement provides specific cost breakdowns engineering Furnishing installing and commissioning of the aqua Metals provided equipment and third-party equipment from Aqua metal supplier Partners such as the Kiln and for cutting system, we expect revenues for equipment supposed to potentially range for Millions to tens of millions of dollars and was healthy margins the total value of which is of course dependent upon the size of the deployment. Once the equipment arrives on site we would expect there to be Services element to install commission witness tests and gain customer acceptance.
These Services could add an additional source of healthy margin Revenue.
Once the Opera finding solution is up and running we expect a collective running royalty per ton of Aubrey find lead produced by that operation. The expected royalty would be based upon the inherent value between process and economic and marketing benefits plus the premium value of the Ultra Pure operator find let itself which is already commanded up to a 10% premium over standard wage. The metals exchange pricing for millions of dollars of lead sold from our own awkward Refinery for a modest 15,000 tonnes a year awkward refining facility. We can expect to see over $1,000 of running royalty per year. It's important to note that a large deployment of Opera fighting into an existing facility could exceed a hundred thousand tonnes a year of production. I would also like to point out that due to the modular nature of our technology or technology is compatible with smaller deployments that are below 15,000 tons per year.
Day 2 of production and Beyond could yield additional value-added to other customer Revenue opportunities potential additional revenue streams could include Services maintenance contracts typical office equipment suppliers future Hardware upgrades to improve throughput cost to operate product quality Purity capacity expansions unwarranted Parts and Equipment replacement off over time that are all opportunities for additional Revenue in supporting our customers in the long run.
when we modeled
Flying goals of achieving our first license edl expected by 2021 with additional expected licensees ramping up at a 1/2 per year clip for the coming few years. You'll see a significant opportunity to grow our top line revenue profitability in cash generation, which should contribute greatly to Future shareholder value.
In addition to a licensed equipment supply model. There are other scenarios of monetizing our Technologies, which we are also pursuing inclusive of Master licensing by a country or even a geography wage and this was always our long-term plan. We already built a significant multi opportunity funnel of potential licensees in the latter half of 2019 pre-fire. We have seen a significant acceleration in interest from these in new potential licensees and possible new strategic relationships after announcing R accelerated strategy earlier this year lastly. I also want to point out this management team has a proven track record of gritty lean entrepreneurial success is throughout our careers that we draw from and with the support of our board and partners and shareholders wage speaking another successful outcome for aqua Metals by drawing from our successes to date coupled with our sheer determination to see through our vision of commercializing our Innovative market and wage.
Planet changing of refining technology. I'll now hand it over to judge to review our q1 financials. Go ahead gud.
Thank you Steve as of March 31st, 2020 cash and working capital balances were 6.4 million and 11.5 million respectively which includes the 99 million insurance proceeds receivable actual expected Insurance collections are anticipated to be higher.
Our March 25th 2020. We entered into a memorandum of agreement with bear attacks in regards to our loan. We have agreed on the allocation of insurance proceeds with chrome allocated to bear attacks to be used to pay off all amount outstanding under the loan, which is approximately 8.7 million as of the date of this report inclusive of approximately $500,000 prepayment penalty. Netted against a $1000000 CD collateral.
As of March 31st 2020 the company had received a total of $10 insurance payments as a result of the fire damage to five million was received in December 2019. And the remaining seven point five million was was received in q1 of twenty-twenty. As I stated previously. We have recorded Insurance receivable of nine point nine million dollars in lying with Gaines County regulations, which limits the amount of insurance receivable or we can recognize on our books. We believe that the replacement value of the equipment and the plant lost or damaged and the fire it could be home much is $37 and that's excluding any business Interruption cost recovery.
2019 was the result of fire. We wrote off approximately 22.4 million fixed assets that were damaged no assets were written off in q1 of twenty-twenty assets on our life as of March 31st 2020 that were not affected by the fire totaled approximately 38 million in books value including the battery breaker the melting kettles the Kiln filter presses mixing and storage tanks water recovery system and the building infrastructure and the land.
As of March 31st 2020 bear attacks has received 2.75 million of insurance proceeds from our insurance carriers, which has been set aside in an escrow account to be used to pay off the note. This 2.75 million is recognized as other assets on our balance sheet upon receiving the remaining insurance proceeds. The loan will be paid off. We anticipate that this will be completed over the next three to six months.
Revenue from the 3 months ended March 31st, 2020 decreased approximately 96% compared to the three months ended March 31st, 2019.
This decrease is due to the fire that took place and subsequently shut down during the first quarter twenty-twenty. The plant will not be in production during twenty-twenty except for limited testing of our improved electrolyzer product sales during the first quarter of 2019 consisted of high-purity LED from Iraq or refining process as well as glad bullion, let it compound and plastic surgeon pasta product sales includes Material supplies and related costs salaries and benefits Consulting and outside Services cost depreciation and amortization costs Insurance off travel and overhead costs cost of product sales decreased approximately 69% for the 3 months ended March 31st, 2020 is compared to the 3 months ended March thirty first, June nineteen cost of product sales were lower in 2020 due to the suspension of production through the fire.
General and administrative expenses decreased by approximately 41% for the three months ended March 31st, 2020 compared to the 3 months ended March 31st, 2019 off the most significant drivers of these increases were non-cash expenses related to the suspension of operations maintenance and management activities associated with the the only agreement. We also have reduced other General administrative expenses such as payroll and services expense. We expect to decrease general administrative expenses during the year as we accelerate our moved the capital light strategy.
For the three months ended March 31st, 2019. We had a 1 million dollars of non-cash expense related to the only agreement.
But three months ended March 31st, 2020 the company had a net loss of 4.4 million or a negative seven cents per diluted share that's compared to a net loss of eleven point seven million in a negative $0.27 per diluted share for three months ended March 31st, 2019.
Cash flows used in operating activities for the three months ended March 31st, 2020 and 2019 was 4.3 million and 6.3 million respectively would include it in cash out flow from operations was approximately 2.3 million for outstanding payables and for General working capital purposes.
Our monthly cash burn rate which includes monthly plan expenses in corporate overhead during the quarter was approximately $800,000 per month as compared to approximately two million dollars per month in the prior-year. This decrease was the result of significant action taking after the November 2019 fire event. We anticipate that cash birth rate will continue decreasing as we move forward in 2020, which will help us to improve our cash Runway net cash provided by investing activities for the 3 months ended March 13th, 2020 with 3.1 million and consisted primarily a 4.7 million insurance proceeds offset by 1.6 million purchases of property plant and equipment.
As a March 31st 2020 we had collected a total of $10 insurance proceeds and it just assumed just this week the insurance carrier confirmed the intention make payment of additional two point five million. This completes all payments for insurance Laird number two as we discussed in our March Thirty, press release. We've already asleep pursuing payment for the third layer of insurance and have been communicating with the fourth layer. We have submitted detailed business claims including invoices quotes assessing a drawing the pictures to the insurance provider which represents a significant portion of our insurance claims for equipment and building damage.
We will continue to provide additional details and supporting documents in the coming weeks. They're also submitting business Interruption claims that we anticipate will be several millions of dollars. We expect to see additional payments in the coming months and will update you as proceeds are received.
We believe we are in a position of strength with respect to meeting the company's future forward goals. We intend to seek funds primarily from insurance proceeds and from the cell of accomplishment that is not required for accelerating capitalized strategies. In addition. We have submitted loan applications for funding through the fda's payroll Protection Program.
We are hopeful to receive payment and will report the results of our applications in the near future based on these expectations and our current strategy. We do not anticipate any need to seek other sources of income in the near-term future if that'll turn it back to see for closing remarks.
Thanks Judd in conclusion. We believe that our accelerated shift to a Capital Equipment Supply Services a knock refining licensing model has put Aqua Metals in a position of strength during these uncertain times with the promising outcome based on the production levels of the Opera Refinery pre-fire. We feel we have dearest the technology execution portion of the investment. And while we execute on Thursday electrolyzer is and our partnership licensee discussions. The opportunity for returns for aqua Metals is significant as compared to our past years of capital heavy efforts, which fortunately put us into our current position of strength. I'll now turn it over to the operator to facilitate the Q&A session.
We will now begin the question-and-answer.
To ask a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys off to withdraw your question, please press * then two.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Colin Rush of Oppenheimer, please go ahead. Thanks so much guys, you know, it's you're talking with these thoughts and uh, like opportunities. Are you looking at opportunities or outside of the LED recycling Market? We know that you certainly have had another, uh set of opportunities from different materials that you could recycle the process. Can we get a sense of whether that's an option or not at this point would be potential customers.
Sure calling. So we do receive inquiries for things that aren't requiring batteries lead acid batteries as feedstock and a couple of them have been interesting and there may be related and taking a lead molecule based mining product and putting it through our process. But for the most part, uh, all the prospective licensees and targets that we are going for is lead acid batteries of the feedstock.
Right and then when you look at the the the 1.5 process, do you have all the components on hand to build those those tools? Is there any way justify change risk, or how can you hang out with get comfortable with uh communication efforts or continuity efforts with all the components you need to to prove out those components? Yeah. Yeah fortunately calling we have the materials on site and we pre covid-19 locked down were able to even get a fair bit of the the infrastructure to support the first electrolyze that would be putting in within weeks after our return and don't foresee any parts supply chain problems or some additional updates to those electrolytes as will make throughout the process as we roll in another electrolyzer to through the rest of the remainder of the year and thus far we haven't seen any dead.
Supply chain issues with those items either and everything seems to be dependent more upon are getting back into the facility and running them.
Okay, that's that's a problem. And then finally, you know, you're working with some representation related to the insurance companies and appreciate the detail in terms of your progress at this point, you know relative to your expectations. You know, where are you and and are you still engaged with with that person to help us celebrate this process on the the Insurance Recovery?
I called this is Judd. We've we've hired Greenspan and they're still working with us and represent us. There are Public Adjusters and they're assisting us and the insurance Collections and off. You know, it's a it's a process and we always wanted to go as fast as possible. But I think I think it's going as as good as it could and and can and and we've made progress and I've delivered a lot of information to them and they have to go through that and and I know they're looking at it and and the carriers are actually done a pretty good job of getting through a lot of that information. That's why you know, we get these progress page and so we continued down that path and it seems to be working and then we'll you know, get additional payments and and keep giving them additional details. So I think you know from our perspective we're moving along and as expected,
Perfect. Thanks a lot.
The next question comes from David Cannon of k w m please go ahead. Hi guys. A lot of my questions have been answered already just through US release and and not through Colin, but just so I understand correctly the outlook on additional cash proceeds. So we've collected $8 million so far. There's $27 million remaining under the insurance and that excludes business Interruption, correct?
Yeah, so so the way that it worked out is we've we've internally identified up to about $37 million. It's just property and business or property and equipment and and the plants and clean up at expenses. We've submitted to the insurance carrier all almost all you know, plus thirty million dollars as detailed and so there's additional information that we have to get to them. And so that's you know, that is what they're going through now and then and then we submitted some preliminary estimates on the the business Interruption. We don't have a lot of detail that we can share yet on that but that's kind of the next month space as well that will be submitted for them.
Okay, so about $27 million and insurance proceeds that we estimate we can collect we don't know what the bi is going to be and then there are some acetone disposals. Can you just take me through that when you say asset disposals, um, assuming potentially the plant and property and then is is there any equipment them as well? And if you could give me a total number on what that is just a ballpark. Sure Dave Steve here. So on the asset disposition side, we don't need for example, a lot of the chiller systems that we had that were fortunately spared cuz they were outside of the building for the Opry finding area and weren't affected by the fire. So that's a standard three piece of equipment as an example and there's other assets like that throughout the plant that we won't need as we progress forward fortunately will be able to run the electrolyzer is off of the significant supply of birth.
Paid for free broken batteries and digested Opry finding concentrate. So, um, there's other equipment that we won't necessarily need any time soon. As we run. The electric box is off of that concentrate don't have to run other parts of the plant. And so that plant equipment could be worth billions of additional dollars and uh in some and then there's the ultimate the uh, as we've transitioned towards the capital light model with the licensees running on refining and production facilities. We won't need the full size off refinery plant after we prove out the V12 Thursday. So that opens up opportunities later in the year and into next year for considering the appropriate asset disposition of of land plant and building or Sub sub parts of that depending upon how how we ultimately decide to do that. So that that's basically when you add it all up tens of millions of dollars of opportunity for us.
to harvest that cash and put it back into the capital light business on top of the
collections on top of our cash position
Okay. Okay. And then I see you made quite a bit of progress in reducing the burn rate and q1 now with what God has let's say at the halfway point or exiting the year Judd what will be the burn rate on an annualized basis? If you will like a a year-end I run rate once we get into the second half of the Year. Let's say
Yeah, so the guidance that we've been given is that we were currently at about $800,000 a month and we're doing some things to try to get that down. We haven't given guidance and kind of where the the year but we expect there's some things that are kind of contingent on on helping that if if there's some costs related to just keeping the plants kind of up and running and then and not some other things that you know, as we progressed throughout the year and we decide kind of where these things fit into kind of the the go forward strategy may actually help reduce some of the costs. And so we having a guidance is kind of where we think we'll end up but we're doing some things to try to get that burn rate down and and being proactive about it.
Okay, so in the back half of the year will we be at a lower burn rate than we were in the first half. Is that a safe assumption? Yeah, I think that's true. And that's what we're we're expecting internally and and what we're working towards.
Okay. So right now we're at we're at a burn run rate of about 9 and 1/2 million annualized is it possible to get that to about six million a year once we get in the back half of the year or is that a little bit too aggressive?
Well, I think it's I think it's you know, it's I think it's doable but you know, there's some work to do and and obviously we want to try to get it low as we can because we want to focus primarily just on the the licensing opportunities. And so again, we haven't given each specific guidance other than 800,000 but I think as I move into you know the summertime and to the Q3 will be able to you know, give give everybody updates. Okay. I mean, unfortunately part of the Legacy or the history of the company has been because we were in a very capital-intensive business which obviously were turning the page on going to licensing and capital light, but there was this, you know constant need to raise capital. Is it safe to say that going forward? Yep.
We are that are capital needs are going to be sufficient or do you think that uh sometime this year? We're going to need to, you know, go out and raise Capital again.
Davis is Steve. I definitely say the latter. We have a significant Runway. No matter how we model it between the insurance Collections and the asset dispositions with the transition a capital light and ultimately over time when we don't have to mount the the the big aircraft carrier of the plants that we we won't need any longer that will the be a significant impact of reducing the burden became just minimum costs associated with that like electrical and gas and and security and and all those kinds of things. So we'll see likely a a reduction in Burn rate with a significant step function reduction. Once we get to the first licensee and can operate by assembling modules at a out of a smaller space with office space and assembly space. I'll make note that we did assemble all 16 models for ourselves when we were still in Alameda, California and about a 5,000 square-foot area. So it doesn't take much space and so the the the future looks very positive.
Terms of the fixed overhead associated with facilities in the long run, but we do need the plant to continue the uh, the electrolyzer work to get the product into a licensable for months and uh, but while we're doing that we still think we can reduce the burns. Janet was mentioning.
Okay, great. And then as far as the licensing, I'm sorry to monopolize here. But there was a lot of information, you know, I was kind of surprised that already. You know, that that there is a pipeline if you will that caught me off-guard, you know, which is great. But could you take me through what the pipeline looks like? What kind of Interest are you getting from? What kind of entities at this point, you know any color on how many bags and also you gave a breakdown earlier in the call about the different components of this licensing strategy that will generate revenue. For example equipment. I missed part of it, you know, I was multitasking so my apologies, but if you can just go through there's an equipment component what would be dead?
The margins there. Uh, I'm assuming there are some Professional Services or engineering that would generate revenue and then and then also based on the size of the plaque, you know, you you gave you know, you talked about a small plan a large Plant what the potential is for royalty. So if you could just you know go through that again, I'd appreciate that sure. So in terms of the the sales funnel and engagements that we have with prospective licensees and partners that will help us achieve licensees through those Partnerships has grown known and its nature and we've seen the sales funnel grow from our own efforts prior to leading up to the fire event where we were already engaged with several players across the globe ranging asia-pacific Market to North America, of course Claire EOS and also some European opportunities in South America and opportunities, and we are talking to various life.
these about projects ranging from Aqua Fitness, which is uh
Deploying Aqua finding it their existing facility to either expand the production or capacity, you know capacity as the production or to improve the emissions standards and the quality of the life. We've talked to a couple that are doing Greenfield builds of battery recycling facilities in the asia-pacific region that would design on refining right into a a net new-build which is very interesting fact, we talked to potential license e about uh, processing the dust that comes out of the bag houses or the uh, the flu system came back houses that is tens of tons per day and a significant size plant that is another application to rock responding to an existing facility. So there's there's multiple applications on the table that I mentioned earlier on a mining one. So there's there's a lot out there and we've seen a significant picked up since we've announced our acceleration of the towards the licensing strategy that we've seen a lot of inbound inquiries in Abuja.
Into the engagement that we already had and then answer your other question on the the licensing just to boil it down. Its it starts with a the first Revenue starts with the engineering package and that package has the design services for the customer to accept that in order to equipment off of just like you'd hire an architect to design a building. So there's a significant fee associated with them which is high-margin Services Revenue. Once the customer agrees. We build out that bill of materials and detail and they procure the equipment and we provide the equipment not only from Aqua Metals but also offer our supplier partners and get revenue from that as well as Services revenue. And then once they equipment is commissioned and witnessed test the tested and operating we would seek mm to recover a a recurring royalty which we believe we can get a significant running royalty because of the premium value that's already in market then paid for by the largest battery company in the world.
For the Opry find lead as a premium over the London metal exchange rate and the other value adds of the environmental in the green and the performance capability. So that running royalty. We believe we can capture significant recurring revenue. And then that's just the beginning of the relationship with the client just as any equipment supplier into an industrial plant that day too is the beginning of the relationship and then there's physical product upgrade warranty equipment and services associated with that. So it's the beginning of a journey of Revenue and uh value that we offer to those customers. So I hope that boiled that down for you. Yeah. I mean, could you the only thing on clear on and I don't know if this is even if you could even disclosed this but let's say, you know, you were deploying modules, Let's say just start to mazels at a place, you know out of facility. What do you think that equipment would sell for and what kind of gross profit would you get?
It's all really custom and dependent upon.
Each customer facility. So I'm a little bit reticent to state in actual number other than any significant deployment is going to get into the seven figures in terms of value of the equipment package. And then as I mentioned on the earlier on the call, there's facilities that you know, our facility was fifteen thousand tonnes a year of of Aquafina lead capacity, which is a very modest I'd call it a small size facility. There's larger ones that could go up to a hundred thousand tonnes, which would be well deep into the seven figures and um in equipment and then there might be some that want to try a smaller set up it at least initially or a particular specific application and those might be a smaller number and in the single-digit, uh Millions, but it's it's
Going to be significant Revenue no matter how you slice it and it depends upon the size of the client.
Okay, great. Good luck guys. Thanks. The next question comes from Charles Bellows of white pine Capital, please go ahead.
Mister Bellows your line is open, please go ahead with your question.
Sorry, I was on mute. Go ahead. Yes, sir. Okay, Steve. Let's go to the pipeline again. And and I'm trying to get things squared away. You said that how many modules do you need up and running and for how long before you're going to get a bath an indication from a licensee that they are willing to go?
So the the is the simultaneous effort of us getting the aakhri finding electrolyzer into a a license productized version. A lot of that was already accomplished that we were about to turn all 16 of them on with those upgrades before the fire event happened. And then we're making a couple of other improvements and we feel it's important to the summer run those and uh and improved and get some data in by Fall so we can continue the conversation with realistic numbers around throughput and and all those things from the updated units and cost factors cuz we are waging a significant cost reduction to improve that value proposition on the Catholic side. So then unfortunately, oh go ahead so you're saying that it will befall you're planning to head to up and running but it will be into or through the third quarter before you have the base data that you need to really go to the club.
People well, but in the meantime, we're talking to the licensees about the application and the size of the application and what what it would look like to uh, put the augury fighting in talking conversion costs giving him the Baseline numbers that we already have from operating our modules in production that are very compelling to begin with and then sharing with them that hey the product the final version of the product is going to have these additional enhancements. So, you know, they're likely going to want to see those numbers before they pull the trigger on the equipment supply side, but we can certainly get into the engineering package discussion before the end of the year as were talking and engaging with these various, uh clients. It's just that the final version of product is going to have some tweaks which all favorable for everybody.
Yeah, you got to get them to say. Yes, the other question I had in.
Here is the clarius. We still jci and all part of that. They had a an exclusive with you if they took off is that now gone? So Clarion? Yeah, so clear else has the first-mover advantage through June of 2021 by contract. And uh, so we're still of course talking to Claire else regularly. In fact, they have board observation and instill a significant shareholder in the company and uh are involved with a lot of things that we work on so they may still be the first mover but we're keeping our options open for whoever else is out there in the marketplace and making sure that we're responding to the inquiries because they're coming in and it would be bad form to not engage with credible inquiries that are coming in and it'll be up to Aqua Metals ultimately to decide now by by the very sake of the calendar by getting the modules wage.
Their final shippable condition as we Round the Corner into twenty Twenty-One. It's not that much time between then and June of 2021 for us to make the ultimate decision as to the best path forward with the first licensee site and that maybe clarius it may be different licensee. It may be one of clarion's as partners because if you go look through the contract that we filed when we agreed with Clara's off point development agreement and includes North America China and Europe and includes themselves as well as their top two supplier partners that are LED recyclers that they could introduce us to which they've been dead and we've we've engaged and talked to so, uh, it will determine ultimately which which one is the best fit and we'll pick the make the right decision for aqua metals and obviously the shareholders
So as I if I'm hearing you correctly the way it looks is you will not have something really a mountable until maybe the fourth quarter or into the first part of 2020 on a a licensee who has said go.
In terms of life and see that signed up and shipping equipment. It will take months for us to get there. You you are correct in that now there's other types of our business development Partnerships things like that that we're working on that are that are quite interesting that aren't licensees but there are Partnerships that would help facilitate getting us into the market with licensees wage and have a synergistic partnership value that we're working on as well. So there's there's that side of it and then the actual physical deployment of the equipment. I would expect it. You would see that not happen until 2021.
Okay, cuz I I just I just maybe you can give me an answer why has you know Clarion assets seen the other the whole system working. They both said they had I theoretically identified a site. Why aren't they moving at all at least and clubs where else isn't said no and uh and all that. So, you know, we continue to talk with them and share with them what it is that we're doing with these updated versions of the electrolyzer is the key part of our contract with clarius was that there were metrics performance metrics that were specific to the old plan which was built out the refinery to the full 16 modules and then Capital heavy expanded to the 32,000 needed to get the 16 modules for them to feel comfortable putting it into a very large facility as a finished product. We're still talking with them about. Hey, you know, we've we've accomplished pretty much all the other things off.
Running at 24 x 7 like um, generating 2.4 / 22.5 tonnes of lead per day per module.
On a consistent basis with a consistent quality that they bought all of and all those things and so those discussions continue but it's either a rework of those joint development agreement with metrics with them or another licensee will go in. First of which might be one of their partners that they that they would be more comfortable with having go first because it's a more appropriate site from with the best possible offer or um, uh, they they would work with us on another first-mover and in that scenario. They may agree to go to a second mover position. It all depends upon how negotiations play up. That's about the most I can say at this point. Okay? Thank you. I appreciate it. Absolutely. Good question.
This concludes our question-and-answer session. I would like to turn the conference back over to Steve cotton chief executive officer for any closing remarks. Okay. Well, thank you operator. Thanks everybody near your time today, and we do appreciate the continued support from our shareholders as well as our partners as we work towards these go forward plans. We will continue to update everybody in the coming weeks and months as we depart in operate our go-to-market version 125 Electra leiser's we're really looking forward to getting back into the plant and getting that going and in the meantime, we'll also keep you up-to-date as we Harvest cash insurance proceeds, and as appropriate the timely asset disposition and will report on our continued commercial progress with our existing and are developing Partners. Thanks everybody, and have a great day and stay home.
The conference has now concluded thank you for attending today's presentation. You may now disconnect.
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