Q1 2022 Li-Cycle Holdings Corp Earnings Call
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Good day My name is Leo and I will be your conference operator today at.
At this time I would like to welcome everyone to the first quarter 2022 lifecycle holdings earnings call and webcast.
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Now I'll turn the call over to and I'll ask me head of Investor Relations. Please go ahead.
Thank you Linda good morning, and thank you everyone for joining us today for lifecycle for review of our first quarter 2022 results ended January 31.
We will start today with formal remarks from Tim Johnson co founder and executive Chairman.
Jake co chair.
Founder, President and Chief Executive Officer, and Debbie Simpson, Chief Financial Officer will then follow with a Q&A session.
Out of this call lifecycle issued a press release and presentation.
Can be found on the Investor Relations section of our website.
That investors don't lifecycle dot com.
On this call management will be making statements based on current expectations plans estimates and assumptions, which are subject to significant risks and uncertainties.
Actual results could differ materially from our forward looking statements.
If any of our key assumptions are incorrect, including because of factors discussed in today's press release. During this conference call and then our past reports and filings with the U S Securities and Exchange Commission and the Ontario Securities Commission in Canada.
These documents can be found on our website at investors that lifecycle dot com.
We do not undertake any duty to update any forward looking statements, whether written or oral made.
Made during this call are from time to time to reflect new information future events or otherwise except as required.
With that I'm pleased to turn the call at the time.
Thank you Darla and good morning.
We're excited to provide you with the review of our first quarter results and an update on the continued progress we have made on our sports and hub network.
I will begin the call by covering key operational and commercial developments.
Debbie will then review our financial performance and balance sheet position.
We will also discuss our competitive positioning and economic value proposition.
Beginning on slide three.
The recent developments in three key areas I'll cover these briefly and then in more detail later.
On the commercial front, we continue to grow our battery supply customer base recently, adding two new emerging electric vehicle manufacturers.
In addition, we are making progress on the strategic multi year commercial partnership with LG, Chem and LG energy solution.
We anticipate the completion of these agreements by the end of April .
On the operational level, we made significant progress on our spoken hub network.
We received the air permit approval for our Rochester Hub project from the New York State Department of Environmental Conservation, which is the critical path item for proceeding with the next phase of construction.
This permitting milestone was received with strong support from local and state authorities.
Validation of the net positive environmental footprint and economic value, we bring to the community.
This allows us to push ahead for targeted commissioning in 2023.
Also we are nearing completion of the Arizona sparked inline with our scheduled timing for early 2022.
The Arizona Spark is a first of a card on multiple fronts, which I'll discuss in more detail shortly.
On the financial front.
The Ontario, and New York Sports delivered higher year on year Black mass production, which resulted in higher revenues.
We also continued to maintain a strong balance sheet with more than $550 million in cash.
This will be augmented further by the LG investment, but we expect to close in late April .
Turning to slide four let me take you through the status of our spoke build outs and black mass production targets in more detail.
We have several key competitive advantages that are integral to our strategy.
With that patent protected module sparked technology builds and our spark fabrication facilities, we have the capability to rapidly deploy new plants in lockstep with our customers accelerating growth.
The small physical and environmental footprint of these plans allow us to efficiently co located with partners like Altium to provide onsite recycling solutions will support multiple customers through regional merchant facilities.
The Arizona Spark nearing completion represents the next level and our innovation and spark design with regards to scale and <unk>.
This capability.
This template was developed in response to growing demand.
When operational it will have an annual processing capacity of 10000 tons of lithium ion batteries.
The plant is a first of its cod capable of processing full electric vehicle battery packs, making it safer and more labor efficient.
Next in line is the Alabama sport, which has the same design as the Arizona Spark and is due to be online in our third quarter of 2022.
When both Arizona and Alabama Sparks are operational we will have a total processing capacity of 30000 tons up from 10000 tons.
We continue to target black mass production for the fiscal year in the range of six and a half to seven and a half thousand tonnes.
As we noted in our previous quarterly call. This step up will be evident in the second half of this fiscal year driven by the expected timing of these two new facilities.
Turning to slide five for an update on the Rochester hub.
As I commented earlier, we're excited to share with you that we have obtained the air permit from the New York State Department of Environmental Conservation.
This was a significant milestone, allowing us to move to the next phase of construction with the installation of permanent infrastructure.
The issuance of the air permit follows the approval by the town of Greece of a negative declaration of environmental impact under the state Environmental and quality Review Act in November 2021.
Achieved in 14 months both of these approvals endorsed the sustainable nature of our operation and the positive environmental approach to our process.
The hub is the first major facility of its kind in North America and demonstrates a substantial community and regulatory support for all our environmentally advance spoken hub technologies.
We view the support is a significant competitive advantage as we continue to grow our network.
I would also note that the patented protected hub process utilize a standard equipment. It is based on proven technology validated through a pilot facility and incorporated into the final design of the Rochester hub.
We previously said that hatches on engineering and procurement contract for the Rochester hub.
Recently, we have selected Mastec industrial as our general contractor for the project.
We are finalizing contract sales for completion in the coming months.
As you May also recall, we have firmed up timing and pricing for the majority of the long lead equipment.
We are well underway with procuring this equipment, which will continue into the next quarter.
Finally, we have continued to make progress with the addition of commercial partners, including the partnership with LG, Chem and LG LNG solution.
In December 2021, we announced that LG energy solution and lifecycle intend to participate on recycling nickel bearing batteries scrap.
In addition last cycle will supply L. G with a total of 20000 tonnes of nickel from the Rochester hub over a 10 year period beginning in 2023.
In conjunction with completing these agreements LG intends to make a combined $50 million equity investment in life cycle at a price of $11 32 per share.
We expect to conclude these commercial agreements by the end of April .
That concludes my formal remarks, Debbie will now review our financials.
Thank you, Tim and good morning, everyone.
If I could turn your attention to slide six let me first review results for the first quarter ended January 31 2022.
Revenue for the quarter increased by 277% to $3 $8 million compared to 1 million in the same quarter last year.
Driven by increases in product sales and market prices.
The increase in volume is primarily related to the quantities of batteries and battery Scott Kozak spoke.
Adjusted EBITDA loss was $16 $9 million compared to two 7 million for the same period last year.
This was largely driven by higher staffing and met with development costs related to the growth and expansion of the business.
<unk> in North America.
Higher personnel costs, Arthur operational corporate commercial and engineering resources.
As well as professional fees and administrative costs in support of a public company, which we did not have any competitive Pete.
I would note that while year over year revenue significantly higher.
Our revenue for the quarter is lower than the previous quarter.
This decrease is largely timing related due to scheduled maintenance at one of our production facilities.
Driving this shift of blockbuster sales from the first quarter into the second question.
We would expect that the remaining quarters of fiscal 2022 will show sequentially, increasing black mass production with corresponding revenue increases.
This ongoing upward trend is supported by the shift in order fulfillment into the second quarter and increasing production from the Arizona, Alabama stocks in the second half of the fiscal year.
Moving to slide seven I will cover a few highlights on the balance sheet.
Lifecycle ended the first quarter with more than $550 million of cash on hand.
This strong balance sheet position is expected to fund a large majority of the capital needed for the Rochester hub.
<unk> spokesman development.
Operating needs of the business through 2022 .
To further strengthen our balance sheet optimize our capital structure and provides future flexibility.
Uhm multiple capital sources that are available to us.
These include debt financing alternatives, such as traditional corporate get project financing government related funding and funding from potential strategic partners.
With that let me turn this over to Ajay.
Thanks Debbie.
Our business model and value proposition and close with future key milestones.
I'll begin with slide eight.
Total addressable market or Tam for battery recycling material and our strategic focus regions.
It is protect projected that by 2025, North American Tam will grow to be more than 420000 tons of lithium ion battery coolant and.
In Europe will be more than 300000 tons of lithium ion battery equivalent available for recycling.
This is largely attributable to surging demand for electric vehicles, which is driving incumbent and emerging electric vehicle Oems.
Their demand for battery materials with increased Giga factory investments.
More recently, we have seen a supply and demand imbalance for these critical battery materials driving pricing to all time highs, particularly for nickel and lithium.
Turning to slide nine I'll review, how lifecycle spoke and hub network fits in the battery materials supply chain.
First in North America.
With our announced pipeline of projects in operation and development, we are leading the market in terms of lithium ion battery recycling capacity.
When our Rochester hub is operational we expect to also be a leading domestic source.
Battery materials.
Let me explain how.
As you can take here mining is the primary source of battery materials to supply cell and auto Oems.
Most of this mine supply is resourced from outside of North America and Europe .
We will collect and device batteries and manufacturing scrap from a variety of sources within these markets.
Then we will recycle piece materials through our spokes to convert them into black ops.
Intermediate material, which contains valuable metal content.
From there we will process the block mass produced our spokes to our hub.
Resulting in finished battery grade specialty materials that can be sold as a domestic source of supply.
And an alternative to mind sources.
Hence the core of our strategy.
<unk> spoken to have that work is designed to be a key domestic source of critical battery materials to the supply chain Luke.
We call this the urban mining solution.
In addition to serving as a domestic supplier we had another key advantage relative to primary sources.
That is the expedited timing at which we can supply the market.
Our speed to market as a function of two key strengths.
One the net positive environmental impact of our processing technology.
And two our innovative and scalable construction approach.
This reduces time to market by at least half our sustainable.
Materials relative to mining.
Turning to slide 10, simply put our strategic and competitive advantage is two fold.
First we plan it is in prison or spoken have technologies.
We've rapidly expanded our commercial network with leading global battery participants.
On the technology front, we believe that our IP protected processing technology for both the spokesman hub is disrupting conventional primary sources, such as mining and pyro processing.
On the commercial front, we continued to expand and diversify our portfolio of customers.
With respect to the battery materials intake and offtake.
On the intake side, we continue to grow our customer supply sources for them.
Many agnostic battery Chemistries and recycling all types of lithium ion batteries.
We have flexibility to process different types of battery materials at the same time.
On the Opex side, 100% of the production from our spokes.
And specialty battery materials from our feature hubs are committed attracts us.
As such we mitigated our exposure on end product sales.
Over time as it comes.
Online, we will look to direct our black mass production from the spokes directly to our hub.
Turning to slides 11, and 12 for economic value proposition.
First slide 11 depicts our integrated spoken hub model, which is uniquely positioned to unlock significant economic value for battery materials collected from various suppliers.
Let me describe the steps and how we capture increasing value.
We received input battery materials from suppliers.
Either processed by us for a fee or purchased at a discount to metal value due to the form of the materials.
Our spokes processes battery materials into black mass.
And intermediate material, which is sold at index pricing patient with nickel and cobalt content.
Thereby earns a margin spread relative to the input cost of battery materials.
Once the Rochester hub is operational we will process, it's black mass into refined specialty materials, including lithium carbonate nickel sulphate and cobalt sulfate.
The specialty materials can be sold at a premium to referenced metal index pricing due to the battery grade forums.
For reference in the first quarter, we achieved an average black matte selling price of approximately $3800 a ton.
Once the hub is operational we would expect to realize approximately three to five times more value.
On a per ton of Blackpatch basis.
Through the sale of the specialty materials as compared to selling black mask to third parties.
Slide 12 provides more specifics on the Rochester have projected volumes and pricing dynamics.
Once operational the Rochester humble not only play a significant role in providing a domestic source of critical battery materials and will also be a meaningful value driver for lifecycle and our shareholders.
I'll elaborate on that point.
Pricing for our key battery materials and products will be driven by the hub production volumes.
At an agreed upon premium.
To metal index pricing with some flexibility to capture upside from <unk>.
Well supply and demand dynamics.
As you can see on the slide we provide our expected annual production output equivalent fees for nickel sulphate.
<unk> sulfate and lithium carbonate.
For further reference in terms of pricing mechanics for battery grade and products, we provide the metal volume equivalent fees for nickel and cobalt.
Based on the relevant chemical company fees.
Hello. This is the slide we show recent historical market pricing for nickel cobalt and lithium carbonate.
In the cases of nickel and cobalt, while we track the <unk> price as an underlying reference point.
We typically expect to earn premium pricing to this.
Based on the battery grade form of these <unk> products.
In summary.
Not only do we earn a premium spread.
But if underlying reference prices are increasing.
Retained commercial flexibility to capture some of the upside in the <unk>.
Underlying index pricing.
Moving to slide 13.
This summarizes our current pipeline of spoken have projects and the expected timeline through 2023.
Earlier, we covered the two spokes in operation and the Arizona in Alabama folks coming online in 2022.
We have three additional spokes and development.
One is the Ohio spoke which will be co located with ultra in cells battery Mega factory.
The highest spoke will have an annual processing capacity of approximately 15000 tons.
It is expected to be operational in early 2023.
Two is our Norway spoke.
Which is an initial launch into Europe .
This is planned to be through a joint venture with <unk>, a leading the second life storage business and more batteries, which is building a battery cell manufacturing plant with an annual capacity more than 40 gigawatt hours.
Nor are we spoke is expected to come online by early 2023 with an annual processing capacity of 10000 tons.
And three is our spoke in Germany with an annual processing capacity of 10000 tons.
Would you expect to come online in 2023.
Finally, as we reviewed in detail earlier, we are on track for commissioning our Rochester hard in 2023.
Bringing this all together by the end of 2023, we expect to have a total of 65000 tons of lithium ion batteries spoke processing capacity between North America and Europe .
For the first time in North America capable of processing 35000 tonnes, a black box annually.
On the capital cost side, we estimate up to $10 million.
The development of each of these remaining spoke projects.
And approximately $485 million for the Rochester hub with an accuracy of plus or minus 15%.
As Debbie noted our current cash balance can fund the large majority of this pipeline of projects and the operating needs of the business for approximately the next two years.
We are proactively evaluating a number of financing alternatives that are available to us to further strengthen our balance sheet position.
Optimize our capital structure and provide future flexibility.
Over the course of 2022 and frankly, three we will continue to provide updates on the development of our portfolio.
Turning to slide 14.
I'd like to reiterate our key management objectives for 2022.
Health safety environment and quality remains core to lifecycle is culture.
<unk> and operating disciplines.
We remain focused on delivering on our black mass production target of 6500 to 7500 tonnes in fiscal year 2022.
We will continue our execution on the Rochester hub project for commissioning in 2023.
And finally, we expect to maintain and enhance our balance sheet position with financial flexibility for future growth and pursue a disciplined approach to managing operating expenses as we build our path to future profitability.
This concludes our formal remarks, and we look forward to your questions.
At this time, if you would like to ask a question. Please press star one on your telephone keypad, if you wish to remove yourself from the queue. You may do so by pressing the pound key.
We remind you to please pickup your handset for optimal sound quality.
We will take our first question from P. J <unk> of Citi.
Yes, good morning, Tim and Jay.
Good morning P J.
Volatility in lithium nickel prices.
So the big spikes we saw.
Generally not good for any business.
So what happened to black mask pricing, let's say last six months, but really.
Interested in last quarter, how did it black mask pricing change.
Have you seen any changes in the battery cost that you procured.
Thank you J J and I can start and then Tim and David can add on as needed.
So.
Let me start with the Black box and I'll work my way backwards to the peak.
In short.
Yes, actually our black box pricing is based on a formula and it tracks with the index of nickel and cobalt.
So that is the case as time goes on that we are going to benefit from potential upside.
Flip side of that is on the input side is also the protection to the downside.
So in terms of the feed.
We from a commercial perspective at a high level.
And we're not always paying for battery materials, but when we do.
It's based on a fixed and a variable discount.
And that again allows us to benefit from the upside while protecting the downside.
Okay.
With that.
And in the future.
We drove your spokes will feed the Rochester hub because some of these spokes.
Got it quite far like for example that is Donna spoke from Rochester. So can you just talk about how do you see that integration.
All this has played out.
Yes, no problem P. J I can answer that one so from our perspective. It is a true network effects. So we expect that all of our sports facilities will feed our Rochester hub. How we look at this is that when you compare the cost of battery materials versus the cost.
Or price or Black math, you end up having a much higher value products as being black mass, that's easier and safer and therefore, a lower cost of transport. So that one of the key benefits of the business model is we're able to turn those.
Potentially volatile materials on the inbound side.
Into an easily transportable and as you can see in the deck.
We average price at around $3500 per tonne.
For the quarter are high value intermediate product that is shipped in bulk bags like most.
Concentrates that you've seen around the world.
Directly to the facility in Rochester, One thing I will add is that.
One of the reasons why we chose the Rochester location has because of its service ability by infrastructure. So we do have direct rail.
And.
In road transport with just coming off the highway.
In Rochester, which does allow us to optimize our logistics costs and just one clarification, Peter I apologize I said $3500 for the quarter. It was actually $4800 per ton of black box.
But the same sentiment applause to high value easily transportable into meter.
Great. Thank you I'll pass along.
Thank you J P. J. Thank you.
We will take our next question from Brian Dobson of shot and capital markets.
Hi, good morning, Thanks, so much for taking my question.
You mentioned that there was a maintenance maintenance issue at one of your spokes that shifted with the sale of black.
<unk> can you give us a little bit more color on that what was the what was the revenue impact.
Yes, no problem.
I can address that one Ron So let me first of all so the issue there was the availability of space.
We do have consumables that we use through the process.
Unfortunately, we didn't have it available when we need it which meant that.
We were forced to run the significantly lower processing capacity for the Kingston operation.
For almost a month.
So you can think of it as effectively having.
Almost losing a months of crude processing capacity.
Through the Kingston operation.
We've addressed that on our side in terms of we understand that the world has changed in the World has changed I think forever and how we.
Manage spares and inventory as we've been able to address that so that we won't have this issue again, but.
It was it was definitely a significant impact that we had to deal within the in the last quarter.
And I would just add to that is such a here as you think about on a go forward basis.
I understand obviously, where folks are trying to think as we talked about the incremental subsequent spokes.
Translate in what it speaks to the go forward, but I would just say that it really simply put as you think about this year I would just.
We encourage you to listen to Debbie's remarks that we're talking about the Alabama, Arizona folks coming in primarily in terms of ramp up in the back half of the year.
Just as you think about how to model this year in terms of the guidance.
<unk> guidance, we stuck with obviously in terms of the black mass production.
Okay excellent that's very helpful. Thanks very much.
Okay. Thank you.
Thank you Sir.
We will take our next question from George January Curse of Baird.
Hi, Good morning, Tim and Jay and welcome Debbie Nice to have you aboard.
Hey, Jordan.
Yes.
Just a very quick question first on your permanent you mentioned.
That you were issued a negative declaration of environmental impact from the town of Greece, New York sounds like a wonderful place.
If you could share what that.
That's what that was like and what exactly they went through did they go through your future operations and determine.
Okay.
The negative declaration or was it just based on the Buildout of the hub.
No. That's a great question. So the negative declaration is a process and we say it was issued by the tonic rates because they were.
Municipality or the party that was ultimately responsible for facilitating the program, but it did have inputs and reviewed by.
Well over a dozen different agencies.
Within the states and broader and what they're looking at as they're looking at the environmental community.
Economic impact of not just the construction, but the long term operational the facility.
So theyre looking at what sort of levels of air emissions water emissions that are also looking at so what will happen during construction.
So what else et cetera, and if you go on it's a very detailed process.
And having done that and going through that and have all the agencies review this and come back and said that they are going to see that we will have a meaningful impact and getting that negative declaration.
It was a major milestone that allowed us to move forward with our air permit application.
Which was a process thats administrated administrated by.
The New York State Department of Environmental Conservation.
And ultimately we were able to receive that permit.
Earlier this month.
Well, congratulations and one more just as we approach the hub in 2023 can you share broadly additional learnings.
Additional insights in terms of the future operation.
So sorry, I'm not sure I quite understand the question can you please repeat.
Sure, meaning that you've had another three months now to plan out the hub and I'm curious as to any additional insights.
The operational changes you've had made or how.
How comfortable you feel with getting that up and running by 2023.
Yes, so I mean, we continue to remain on track for commissioning in 2023.
We havent lots of anything that's.
Materially changes our view in that regard the.
The process is essentially locked out and where we are and what we call. The detailed design engineering and procurement phase.
Started basic earthworks on on slots and that's continuing to move forward. So from that perspective, no nothing that would change our view.
Thank you.
Quite welcome.
We will take our next question from Robin Fiedler of BMO.
Hey, good morning, everyone and congrats on the permit.
So with volumes ramping and the lag benefit from higher commodity prices offset by you know.
Presumably costs continuing to grow as well.
All of those those who puts and takes that you expect the quarterly cash burn to get better or worse across the year.
Yes, I can maybe start and then Debbie can add on that and thanks for the question Robyn. So I think at a high level as you folks think about going forward of course for <unk>.
We're growing at.
We bring on additional assets.
And we're also scaling head count to support the network.
But we have a good base today, that's going to be also benefiting our future build out as well and there will also be of course, the revenue benefit from those incremental assets of course submission forget maybe Debbie lentz at that time.
No I would just echo with adhesive.
Our Q1.
I think the way I would characterize it is you could probably expect in line.
SG&A, yes, we continue to build out.
But then you then as Andy said and we're going to have revenue come on as the kitchen.
You need to know that.
Okay. Thanks.
Just a question on spoke operating rates excuse me.
What is the ability for you too.
One is spoke maybe above its capacity for specific quarter, I guess I'm trying to figure out is with the Kingston plant running below four this last quarter with the maintenance can you catch up so to speak because with your maintained full year black mass production I would have thought that you would need Rochester and kicks Kingston running.
Pretty close to a 100% capacity so maybe the offset is just Arizona, Alabama.
Having a stronger ramp than I would've thought so maybe you can just unpack a little bit more on what gives you conviction you can still meet this.
Full year volume guidance.
No problem. So let me I'm going to answer your question and reversal saw with Arizona, Alabama.
<unk>.
RJ and Debbie we're stating earlier that we do expect the <unk>.
Production to be heavily weighted towards the back end of the year.
They will make a significant change in terms of the operational capacity of the network of spark facilities here in North America, one of the other benefits that.
We don't often get a chance to talk about so I'll take the opportunity now is that our sports will also this is the first time that we've been able to.
Rollouts our full pack.
Processing capacity and what that basically means is that we will now have.
A assortment of sports with.
Capabilities that are stronger in regards to larger format.
Batteries, and we'll be able to modify how we feed these plants to be optimized for the style of plant that it is.
And Thats, a very technical answer Roland, but the incentives as to say that as we increase the number of <unk> facilities.
Optimization of these assets that are existing assets will also improve.
And so I do believe that as.
As we said we're still targeting the same.
Annual production of Black mass.
Just going to be heavily weighted towards the back end of the year, so despite having a lower than expected production quarter.
Haven't changed our guidance for full year.
And maybe just sneaking in a follow up on that so.
The output from Kingston is there like loss production now.
Or I guess part of what Youre doing like shifting some of your feedstock.
To the other plants.
To maintain like that.
That same volume like I guess, there was their output destruction that Casey for the full year basically.
Yes, so as I think I understand where you're coming from and so correct me if I'm wrong, but.
So for Kingston as we bring on the other facilities, we will optimize what we send to what plan so keeping in mind near Kingston today processes material from all over North America, not just from let's say, the Ontario Basin.
And so what we will do is we will prioritize sending larger format material for example to Arizona in Alabama as those facilities are better situated to handle it at a higher throughput rate.
Kingston is.
We also talked about scheduled maintenance.
The benefits of that is.
Increase uptime less maintenance, because we're actually using the facility.
What it was truly designed to do rather than pushing it to process.
Logical amendments hurdle.
That's helpful. Thank you.
No problem.
We'll take our next question from Dan Ives of Wedbush.
Yes. Thanks.
Just with the rising cost of across the board and obviously <unk>.
With the build out in Rochester.
Can you just talk about from a guidance perspective, or just internally, how you're thinking about the variables there like what's what's the need your thing decade.
Maybe go wrong or go right when you're thinking about sort of forecasting with the cost structure over the next six to 12 months.
Yes, no problem.
And good morning.
When it comes to the hub in Rochester, So one of the things that we've been very conscious of is the.
The high volatility in pricing and Thats, we referred to a long lead procurement and we've been very aggressive.
Aggressive in targeting long lead procurement packages early on and.
So on the back of the DFS, we've placed the majority of our long lead packages, which is locked in the pricing for those.
Of course, we will continue to be volatile, so I'm not going to say that it's completely not but.
Those have been largely locked in and.
And at this time.
Continuing to move forward with construction with Hudson and Mastec and we still feel that the project is tracking within that plus minus 15% range that would be targeted on the back of the DFS.
Great Thanks, great job with build out.
Thank you Sir.
And we will take our next question from Evan Silverberg of Morgan Stanley .
Good morning, guys, even silverberg on for Adam Jonas.
Just combining a few different thoughts you guys have thrown out there you said I believe you said that there is enough cash on hand to fund the business for close to two years. So I mean, if we're looking at the big chunk of cash here is going to be.
The hub so.
I mean is that really going to are we thinking operationally that's more in the back half of 'twenty versus the front half of 'twenty. Three if you really think you could.
Keep that cash balance for close to two years.
Yes, maybe I'll start and then I'll turn it over to Debbie, Yes, I think probably you're thinking.
And how about the timeframe and the right way of course, there is a lot of puts and takes right. This capital Theres, our opex component and Theres also the revenue benefit from the additional spokes to bring them online, but also we're selling black mass and of course, given the broader environment, which is favorable for us from a supply demand perspective for those materials in there.
Associated material pricing that factors into block mass that's of course favorable because a few puts and takes I would say there but that it can add to that yeah.
Hi, Good morning, So if you look at the combination of <unk>.
In terms of Q1 with you.
If youre looking to serve today, a little bit of math, if you think of that pretty much indication.
Comments earlier right with regards to our run rate I think Thats really helpful. And then if you look at our needs on the capital side.
Okay.
Jeff Shannon lease versus buy folks and under development for the next couple of years.
All of that together.
I think when you get to is we've got the large majority of the Capex.
That situation.
Looking at the sort of timeframe that we can manage.
Number of sources available to us that we can execute on so when they're looking.
First short medium and long term return to chunk this up a little bit more sort of approaching it from a basis of.
As we execute additional projects, we've got opportunity to execute additional.
Financing so what we're trying to do is match.
Matt.
Our balance sheet.
Financing alternatives, they're open to us as we grow the business in a modular way in the same way that were approaching the growth of the business.
I see that we're financing plan hand in hand, with Newports key everything that could go through the basin.
Thank you for that one follow up if you don't mind.
While not perfect math here, if we were to take the black mass produced in the first quarter and kind of imply with the lithium ion battery equivalent.
Into the spokeswoman via pricing.
Third variable you kind of get like a low 70% conversion rate, which would make sense given that right now a lot of the input is feed scraps. So as we're kind of looking at the back.
The rest of the year.
Youre looking at your supply do we think that conversion rate kind of holds or do you see maybe the larger format.
Items coming into the spokes, which would then reduce that conversion rate.
Yes, and I'd say at a high level using something in the range of and I think we actually happened in the deck as a footnote on one of the pages, but it's roughly speaking you can use a ratio of.
Three five tons of black mast six five tons of black mass, maybe a little bit more this is approximate for every ton of input and I would just say obviously quite variable as you are getting at I would just say that's why we'd like to focus people on the intermediate product production number because of feed can be quite variable.
Thank you.
And once again to ask a question. Please press star one on your telephone keypad, one moment, while we queue.
And we will take a follow up from Brian Dobson of shut and capital markets.
Alright, thanks, so much for taking my follow up.
So we see the licensing for the Rochester facility in New York is debating rigorous jurisdiction to receive such licensing I suppose were there any were there any key.
Key takeaways or learnings from that process that you think could accelerate future licensing processes for hub facilities.
Yeah, that's a great question.
I would say that.
Youll have to take my hat off to my team our team.
They did an excellent job in terms of managing the communication.
Making sure that all the key stakeholders well educated in the process well in advance.
All of us going through the formal application process.
Think that points.
Just from.
Direct technical point.
It's just really important and that's how we approach all big activities.
And then going forward.
I think.
A key aspect of how we operate and you combine that with now.
Technologically advanced process.
It's easy for people to understand what we're doing and why we're doing it.
Easy to see the minimal impact that we're able to have with source of communication and just to add a little bit on <unk> points or from a bigger picture and I touched on this my remarks is really want to emphasize this because thats.
It just speaks to our importance as lifecycle.
What we just did on the Rochester hub.
You would not be able to do that I think everybody knows on a primary mine and refinery.
You would take 510 years, maybe never depending.
Depending on the locale and various complexities involved.
And your backdrop that we're the market that is short.
Of these critical materials.
So our speed to market I talked about this my remarks is really want to emphasize this is way faster.
Then any primary source.
And we're entering a period, where the winners of this space in terms of broader EV arguments will be driven by their critical material access.
And we will be as I parse there and we try to break down pretty simply.
12, a natural beneficiary of that so it sounds quite technical when we talked about the permanent but that's the real big picture importance of it and I would just sort of overlay one final point on that and that is in relation to traditional.
Recycling approaches and the lack of sustainability and what I'm, referring to there is high temperature processing and the large amount of air emissions in solid waste that is generated from those processes.
We've deliberately gone away from that and that is a key advantage.
For us to be able.
To address this and ultimately address the needs of domestic supply here in North America.
Thank you that's very helpful.
We will take a follow up from Robin Fiedler of BMO.
Okay. Thanks.
Just wondering how important you expected feedstock from all teams, Ohio plant is this year to meet production guidance.
Sense of that.
That plant, maybe ramped slower than expected what that impact could be.
Thanks.
Yes, maybe starting with Tim can add on I think yes look at a high level I think there are timing is it's public it's out there it's not sharing anything here.
Known but they are certainly in the ramp up phase this year and I think again, it's public that it's really more through next year.
They are into that more rapid pace in earnest.
That's a commentary at a high level I would just add to that is that.
Like any plants, there is a commissioning and ramp up phase associated with bringing these assets online and we take that into consideration in our own forecast.
We make our estimates.
Understood. Thanks.
We'll take a follow up from P. J <unk> of Citi.
Yes.
One on your some of your key partners.
Just talk about what was the delay with LG and as Ges contract should we read anything into that and also a question on Coke engineered solutions. Okay. Yes that was your partner in <unk>.
Building some other stuff.
Can you just provide some update on that thank you.
Yes, I can start a P J concerned with LG and Tim can take Ks, So yes sure.
I was just reading a more time without <unk>. There is numerous agreements numerous parties involved with.
We filed the amended subscription agreement Youll see the only thing that's changed is the <unk> date and Cipla.
Is it below that.
And then in relation to Kirk and our partnership with card.
We continue to work with cards they are in fact.
The lead on the build out for our Norway facility.
So we're utilizing that engineering team to convert.
Designed to meet the European standards as well as managing the.
The construction logistics.
And logistics support rather.
For that facility.
We're very happy with our partnership with cards have been a great partner.
Great. Thank you.
And this does conclude our question and answer session I'd be happy to turn the call over to Tim Johnston for closing comments.
Thank you very much so briefly closing with a recap we continue to execute on our spoken hub network growth objectives.
Obtained all key environmental permits for our Rochester hub to maintain on track commissioning in 2023, and we expect full operating Sparks in 2022, and seven operating sports in 2020 right.
As spoken hub model is leading in North America with IP protected technology, and environmental net positive solution and speed to market. It is helping us solve the domestic shortage of battery materials.
We are well funded for our current portfolio of projects with cash on hand, and plans to future funding options.
Last cycle is positioned to capture significant economic value with tightening battery material supply and demand dynamics that are driving pricing for battery materials to all time highs.
And at 22 2022 performance objectives are directly tied to key value drivers for shareholders.
We appreciate your time and interest in lifecycle and look forward to continuing to update you regarding our exciting growth prospects.
This concludes today's lifecycle holdings first quarter 2022 earnings call and webcast. Please disconnect. Your lines at this time and have a wonderful day.
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