PureCycle Technologies Inc. Q1 2023 Earnings Call

Okay.

Good day, and thank you for standing by.

Welcome to the pure cycle technologies first quarter 2023 corporate update.

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Really place director of Investor Relations. Please go ahead.

Thank you Theresa.

Welcome to pure cycle technologies first quarter 2023, corporate update conference call I'm, Charlie place director of Investor Relations for pure cycle and joining me on the call today are Dustin Olson, our Chief Executive Officer, and Larry Soma, Our Chief Financial Officer. This afternoon, we will be highlighting our corporate developments for the first quarter.

And subsequent to quarter end.

Presentation will be going through on this call will also be found under the investor tab of our website at www dot pure cycle Dot com.

Many of the statements made today will be forward looking and are based on management's beliefs and assumptions and information currently available to management at this time.

These statements are subject to known and unknown risks and uncertainties, many of which maybe beyond our control, including those set forth in our safe Harbor provisions for forward looking statements that can be found at the end of our first quarter 2023, corporate update press release and in our quarterly report on Form 10-Q filed this morning as well as in our other reports.

On file with the FCC that provide further detail about the risks related to our business.

Additionally, please note that the company's actual results may differ materially from those anticipated and except as required by law. We undertake no obligation to update any forward looking statements.

Our remarks today May also include preliminary non-GAAP estimates and are subject to risks and uncertainties included among other things changes in connection with quarter end and year end adjustments any variation between pure cycle as actual results and the preliminary financial data set forth herein may be material.

You're welcome to follow along with our slide deck or if joining us by phone you can access it at anytime on pure cycle Dot com.

We're excited to share updates from the previous quarter with you I will now turn it over to Dustin Olson sure cycles, Chief Executive Officer.

Thank you for joining us today for our first quarter 2023, corporate update conference call.

We appreciate your support and look forward to discussing our recent developments.

Our flagship state of the art purification facility in Ireland is certified mechanically complete and has completed the pre startup safety management documentation required for solvent deliveries, which we started yesterday.

We have the initial solve it charged delivery scheduled over the next five days and then expect to circulate solvent early next week.

All of our core operations have been commissioned and are ready for startup. We are on track to begin commercial pellet production using the first post industrial recycle and then post consumer recycled feed in the second quarter, we still expect to be able to complete our startup timeline in order to meet the milestones as outlined in our recent bondholder agreement.

Our goal is to produce between 45 and 75 million pounds of ultra pure recycled resin in 2023.

We have continued to advance preconstruction activities for our Augusta projects since our last call.

Fortunately, we are working towards an agreement with the H E. B a for a plant to begin development activities. Additionally, preparation for module construction is in progress and equipment is beginning to arrive at Gulf spans facilities in Beaumont, Texas are international projects are making progress our European team has initiated preconstruction engines.

During work for the permitting process at our site at the Port of Antwerp.

Our joint venture with SK Geocentric continues to advance the collaborative engineering process for our multiline purification facility in South Korea.

And we continue to make progress with detailed joint venture discussions and site selection efforts with Mitsui in Japan.

Our joint venture team has started the feasibility study process on two locations that have the capacity for the development of two to four purification lines.

We are frequently approached and also actively seek out opportunities to amplify what pure cycles technology means to the global polypropylene recycling marketplace. As you can imagine our primary focus has been on commercializing our first plant in Ireland. This says quite frankly, where all employees have been spending most.

Are there time, having said that we are beginning to spread our message globally through several recent events I was invited to Davos to present on our Proctor and Gamble panel, which highlighted pure cycles technology. Several of our team members are active and national industry associations, such as the plastics industry Association the Institute of SKU.

Wrap recycling industries and the association of plastic Recyclers, where we are often provided speakership opportunities and recently pure cycle Representatives traveled to Washington D. C to participate in domestic plastic recycling tabletop discussions as well as the U S Korea sustainability summit discussions.

While there we also met with numerous members of Congress and other senior policy officials. We expect this participation to increase over the coming years as critical legislation is crafted to govern this emerging industry.

We're proud to have secured an additional $62 million of non dilutive debt financing and are working several other equipment financing packages that we intend to close in the next few months.

The IEA has received our financing plan for one line in Augusta and we are working on closing the land bonds by June 32023.

Turning to slide four.

This project has been a testament to grit determination and a desire to finish as you can imagine there are a number of minor equipment issues when starting up the facility and our team has been managing through all of those challenges. This is normal.

There are teething challenges for all new technologies, we've spoken several times about needing to work through the early startup headaches and this is what were doing while we have encountered some delays over the last two months. We're now excited to move forward, but startup I can tell you personally that the plant just feels different now there's a new energy building within our.

And we are ready to run this facility.

Our pure cycle team and field contractors, who have worked on this project have will this facility to mechanical completion and I'm very proud to say position the facility to reach to receive solvent deliveries three arrived on Monday.

We are currently in the following position.

Completed key pre startup and safety requirements utility plant is operational and in service prep is operational and in service flare systems are operational and in service Extruders are commissioned and ready for startup as a result of all of this solvent is being delivered to the site.

The next step is to make every effort to ensure safe and smooth startup that's focused on long term operational success, we are not going to rush into the next steps I hope you've had an opportunity to watch some of the videos that we posted on to our website on our social media and in the Youtube that showcase our prep purification.

And born digital operations, we intend to continue showcasing our company with these videos all the way through initial pellet production.

Turning to the next slide I'll walk through the next steps of iron since startup process.

This is an updated slide from last quarter's call that shows our progress in achieving the operational milestones for the certification of the origin project.

This is what we call our path to pellets, we closed the first bond milestone by achieving certification that ireton is mechanically complete by June 30th two.

2023 pure cycle, formerly received third party engineering certification just a few days later on April 28 with agreement that the plant was mechanically complete on the 24th of April.

We're currently in the in between stage and between mechanical completion in first pellets during the last call I underestimated the time it would take to transition our first pellets instead of dual tracking activities like we originally planned we purposefully slowed down our process for solvent introduction in order to more.

More effectively facilitate a path to mechanical completion.

This ultimately slowed down our initial forward progress, but also helped us to build a better long term foundation for steady operations.

Given this is our first facility we took extra time preparing the plant through a process called P. S. S. R. R pre startup and safety review this.

This involves final operations checks safety walk downs final equipment commissioning during.

During this process, we spent a significant amount of time testing instrumentation working valves to ensure we are ready to operate this is all now complete.

Yesterday, we cleared another major hurdle and accepted solvent to the site for the first time.

This is a big step and paves the way for commercial operations. The next two weeks will involve the testing of solvent circulation systems commissioning of the remaining equipment, primarily our filter media systems, while the solvent to circulating and then we will introduce feed.

Once feed is introduced we will set levels and then we will make our first pellets, we will notify the market of our success and start ramping up production rates from there.

We remain committed to achieving these milestones in a timeframe as I've just described given where we are today and ramping up the irons in operations.

Moving to slide six.

I wanted to spend a few minutes to highlight the operational progress that we've made on executing the next phase of our growth strategy.

In Augusta, our engineering teams have completed approximately 90% of the ISP all design and have begun work on the OSB all design.

Gulf span our contracting partner has started module preparation for the Augusta construction project at its site in Beaumont, Texas.

We continue to make it we continue to make progress on our international projects. We have initiated engineering work at the port of Antwerp in Belgium to support the permitting process. This activity will set this facility's critical path.

Our joint venture Engineering team in South Korea has advanced plant designs in accordance with the schedule and priorities identified in the J P. A with SK geocentric, our core focus right now is to ensure that the final design meshes seamlessly with the feedstock available to the site.

And finally, our JV a discussions with Mitsui have progress as anticipated and we started feasibility studies on two preferred locations.

All of this appear cycle are fully committed to the company's mission of providing a new solution to global plastic waste our.

Our intent is critically important today, but it's just the beginning of what pure cycle will become I will now turn it over to our CFO , Larry Soma for the financial update Larry.

Thank you Dustin and please turn to slide seven.

We ended the quarter with just under $264 million and total available liquidity, a decrease of $62 2 million from the prior quarter.

As stipulated in the Bondholder agreement, we executed in March we transferred $87 5 million from unrestricted cash to restricted cash for a net of roughly $74 million. Once PCT was reimbursed for the remaining original bond or acquisition.

Our corporate and pre operational employee expenses were $6 $6 million during the first quarter, which was a slight decrease from the prior quarter. Despite additional taxes paid on employee stock vesting.

We used $7 $6 million of cash during the quarter for normal corporate operations, such as insurance professional fees and various other expenses.

Additionally, we continue to make investments in our ironton.

Scott and prep facilities.

The majority of which came from unrestricted assets.

As a consequence and in conjunction with the payments that we made to the bondholders.

Cash and debt securities available for sale decreased from December 31st by $124 1 million.

One positive note is that we are able to execute a $25 million surety bond, which is relevant for our Augusta restricted escrow construction account.

Our agreement with wanted to multiple vendors supplying long lead items for the Augusta purification modules requires us to fund the escrow account with funds to address future costs and the risk of payment to their sub suppliers.

Closing the surety bond allows PCT to recoup some of the cash that had previously been in their restricted escrow construction account.

Subsequently, we were able to progress the Augusta project during the quarter with $15 million of payments from their restricted construction escrow.

$5 million of which was returned to our unrestricted cash balance.

Now, let me comment on our budget for completing the Ironton project.

As noted in our 10-Q filing this morning.

Cycle anticipated as of March 31 that the remaining investments in 2023 to complete the ironton facility could range from $26 million to $51 million.

This range is dependent upon various contract contingencies and their ultimate resolution.

The most important point is that we have already spent or forecasted the need for a total of $51 million, which means that any positive resolution of contract contingencies will be favorable to our future cash forecast.

Please turn to slide eight.

Before I discuss the points on this slide let me provide some details on the financing events that were completed since our call in March.

We are pleased to continue executing on our financing plans with $62 million raised from non dilutive sources.

Our ability to execute additional agreements in term sheets, some of which I'll discuss in a minute enabled us to present, a plan of financing to the EPA related to the completion of at least one purification line and Augusta.

In addition to the plan that we sent them, we informed them of more than $50 million of completed spend on the second purification line.

The information set now has us ready to focus on closing the financial bonds, which will grant tax incentives for PCT to build and operate in Augusta.

We are working diligently to close this land transaction by June 30.

So that we can begin to prepare the land and ready it for their required OSB outwork.

Now I will discuss our cash and capital raise strategy.

In past calls we highlighted our focus on managing our cash uses against available sources.

So this slide is intended to summarize our goals present, the opportunity and depict what has been achieved so far.

Our goals are simple.

Manage the corporate cash burn rate until ironton is operational.

Pursue capital that provides financial flexibility and optionality, while being mindful of our long term capital structure.

And.

Pursue and execute cost effective longer term project financing transactions for our growth projects once technology risk is removed with iron 10 operating.

Near term financing opportunities have been focused on equipment financing shareholder loans and capital outsourcing of non core operations referred to as deep boom, which is the acronym for design build own operate and maintain.

A few relevant examples are the Augusta Augusta central utility plant and the Augusta Prep building, which will house sort and wash lines.

We estimate that we have approximately $125 million of Augusta prep equipment sale leaseback and capital outsourcing opportunities.

Excluding the central utility plant.

Since our last update we closed on a 24 million dollar sale leaseback transaction with CFC leasing, which is secured by the Augusta prep wash equipment.

It's a 36 month lease with a 7% interest rate and flexible end of lease terms.

We also secured a $40 million term loan with an entity controlled by Dan Gibson.

<unk> investment officer of celebrity capital.

<unk> largest shareholder.

The loan matures on December 31, 2025.

Bears.

Interest at a floating rate of stouffer, plus seven 5%.

We are also actively working to close additional sale leaseback transactions of Augusta prep equipment.

We have received proposals and are evaluating next steps.

Now, let's turn to slide nine for a summary of our first quarter achievements.

We continue to execute on both near and long term goals.

As we noted ironton is mechanically complete and certified by the independent construction engineer.

Ironton has completed pre startup process safety management.

And solvent is on site and is prepping for circulation.

We secured 62 million of additional non delivered dilutive capital raises.

The 22 million sale leaseback, I referenced and the $40 million term loan that will keep our Augusta project moving forward and were evaluating other additional proposals that we've received.

We're working to close on the land for the Augusta project by June 30th now that we have submitted a plan to the aea.

We're preparing Augusta modules for construction in Beaumont, Texas.

We have initiated engineering work at the Port of Antwerp, which will set the construction timeline for our Belgium project.

And we were voted one of the best places to work by plastic news for the second year in a row.

We look forward to updating the market with respect to upcoming milestones achieved and completing that start up process of our flagship iron <unk> facility.

And of course, the Augusta financing process as soon as we are able.

Thank you to everyone for joining us on the call today.

At this time, we would like to open up the call to questions.

Operator.

Thank you.

At this time, we will conduct a question and answer session.

As a reminder to ask a question you will need to press Starwood one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

We do ask that you limit yourself to one question and one follow up question.

Please standby, while we compile the Q&A roster.

Yeah.

Our first question comes from Eric Stine of Craig Hallum. Your line is open.

Yes. Good afternoon, it's Aaron's for hall on for Eric Thanks for taking the questions.

Hi, Aaron how are you doing I am doing good. Thank you.

First for me can you just and you kind of talked about.

$45 million to 75 million pounds out of Iron 10 in 2023 can you just talk a little bit about some of the factors that that gets you from the low end to the high end as you think about that.

It really just depends on how quickly we ramp the facility as we get through the next week or two we start circulating solvents and then introduced first feed to the plant we're going to have a pretty good idea of how the plant operates and this is going to sound silly, but we're going to we're going to listen to the plant.

That will tell us.

Where the pinch points are how well, it's operating and how quickly we're going to be able to ramp right. So we have the estimate and our current forecast of.

Kind of a linear ramp rate over the first six to nine months, but but if if.

If all is going well and we feel good about raising rates then we'll do that earlier.

Okay.

Good thanks for that and then maybe just at a high level can you just kind of talk about some of the lessons learned from Ironton as you look to expand into Europe and Asia.

You know anything on kind of a customer's feedstock et cetera.

Yeah, that's a great question Erin so.

I'm going to break this down into the on the project side first and then maybe discuss the commercial side on the project side.

Early decisions around this project and these are circa four years ago, Okay, three four years ago.

There are a lot of unknowns in the recycling market and then there are also a lot of assumptions that we needed to make when building this facility and so some of the early design decisions around what type of feed we would get and how.

How we would operate they were they were more robust than they need to be okay, and so when I look at when our helicopter up a little bit and I see how this plant will operate I see a lot of.

A lot of potential extra capacity in areas and maybe over engineered in some areas and that was done on purpose. I mean, we had we had an expectation that we were going to build this to anticipate anything possible out there. So as we begin to operate this facility, we see how it really.

<unk> operates.

We will have an opportunity to <unk> scope in the future just just based on on that.

From an execution perspective look.

A couple of a couple of big things one.

It's the more that we modularized the better okay everything that we built in Beaumont on the modular design basis, when we brought it to the site that fit perfectly and everything was was was just.

Really really really efficiently done.

Some of the off module work that we did.

This was less efficient it's more costly to build it in the field than it was in Beaumont and also there were just some misses on the on the execution side. So I would say going forward, we're going to work hard to modularized more in the future.

The other thing and this is maybe more general.

You know, it's one thing we have all the three D models, we walked through it virtually to see where things were to see how the.

Look in and fit together, but until you actually see it coming together in the field. There are some obvious things that jumped out at you that you would do different these arent game changing type items, but but it's certainly identifies lots of areas for construction efficiency that we'll be able to shore up like why did we put this val.

Is there why did we put that pipe there, it's all going to work fine.

But some of the decisions around that work.

There'll be improved for future clients.

And.

I can tell you that we have a long list of lessons learned that we're collecting and we're actively incorporating those into Augusta.

Right right that sounds good thanks.

Thanks for the color and best of luck on the scale up yes.

Yes, Thanks a lot.

Okay.

Thank you.

Our next question comes from Hassan Ahmed from Alembic Global Advisors. Your line is open.

Good afternoon, Dustin and Larry.

Being a pre revenue company I guess most of us analysts.

Are valuing you guys, obviously using DCF approach now historically.

Yes.

In the early days you guys would provide us.

With.

Best Guesstimate of where you had thought tonnage or poundage would be outdoor cycle call. It by the end of the decade and I know you guys are sort of actively involved in a variety of expansion plans.

What's happening in Atlanta in Augusta now obviously.

More projects out in Europe , as well as Asia. So so I mean, any thoughts with regards to where that number could be you know in terms of pounds under production by the end of the decade.

Do you guys intend to sort of update one of those sort of all the slides that you used to have.

Yeah. Thank you yeah that's.

That's a good question I think that we've been so focused on ironton right now that we haven't given as much detailed focus on the growth plan per se as we want to get through the iron startup test the technology and find out where the real capacity is on the planet because we we think theirs.

Good potential for incremental capacity at irons in alone.

With respect to the growth plans I think we've been pretty straightforward on our overall plans the timeline with which we will attack those will be different in each in each region, but one area that I think that you can get a good.

Sense from is the.

The availability on each property like for instance, Augusta is big enough to hold eight lines.

Belgium is big enough to hold four lines.

S. K is one in Japan, it's two to four and I think that that simple math across 130 million pounds per per line gets you in the ballpark. The question will be how quickly can we get those capacity numbers and I'm going to reserve that for our future call as we put a tighter.

Pen to paper and we see how the startup goes.

That is how can you super helpful now as a follow up.

Two parts to the question one.

Just on the pricing strategy side I mean, historically you guys talk about maybe a dollar a pound then you took that number up to $1 26, So how should we be thinking from a modeling perspective about pricing and you know are you using it off of sort of market pricing and then a premium so so so one could part.

The pricing strategy and then.

Second part of the question just on what you guys are seeing with regards to feedstock availability as well.

Yeah Yeah.

Yes. Thank you for that so on the pricing strategy side, we have built and nice flexibility in our offtake agreements to <unk>.

Where we have a man and a max at our option and that gives us the ability to show and to secure a sold out plant at <unk>.

At the pricing in our status and our structural contracts, but it also gives us an opportunity to pull back and sell more on spot.

As we see fit.

The reality is that we definitely show a strong premium to Virgin.

And.

And.

The level.

I would say.

Yes.

Similar to the numbers that you've seen and that very much depends on the overall Virgin polypropylene price okay.

Virginia price goes up and down.

The delta to Virgin will probably grow and shrink a bit.

But what we are planning to do is as we generate.

Scale production of Iron then we will be.

Moving a lot of products around the globe into customers' hands. So they can do trialling application development and testing.

And that will really.

Set the appetite for the products and the potential for spot pricing and ultimately that will drive whether or not we go to men's or Max's on the contracts.

With respect to feedstock.

We feel pretty good about feedstock again, our technology is.

<unk> fundamentally different it's a molecular wash okay. So.

It doesn't really matter what form the feedstock comes then we can manage it.

Similarly across all the different forms and so what we see in the market.

Pretty nice ability to purchase feedstock differential to other people.

Okay, we have active discussions really around the world right now.

With different feedstock suppliers.

And we believe that they are excited about us coming online.

Because it gives them another outlet and a less onerous outlet because we can take more contaminants and others can but also they see it as an opportunity for them to grow their market on feedstock as well the reality is that most feedstock aggregators or suppliers.

They are working as hard on polypropylene as they are on other products.

There's a limited out limited.

Offtake potential for them and so as pure cycles technology changes that and truly creates a circular product of high quality polypropylene.

But our product anywhere, it's actually going to draw more feedstock into the market. We're excited to partner with people to grow together over the years and our projects are global projects around the world, It's really giving us the opportunity to see feed and lots of different countries.

And so from a feedstock perspective, we.

The short story is we don't see a problem fulfilling our obligations for origin for sure.

And really any of the plants that we've been talking about.

Very helpful. Thank you so much.

Yes, Thank you Hassan.

Thank you for your question.

Yeah.

Our next question comes from Michael Hoffman with Stifel. Your line is open thank you very much.

Good afternoon too.

Two questions around money.

What is the agreed amount now that you have with the EPA for the line one and how much do you have.

In hand.

And therefore, what's left.

So I'll take this and then I'll pass it to Larry the the line one expected capex is around $400 million.

And we have sufficient.

Sources to satisfy that demand.

Now remember the $400 million can be offset through various financial mechanisms through the D. Booms and we have several different opportunities for the bones that are substantial and they can significantly reduce that number I will pass the question to Larry to answer as well.

Yeah.

Yes, so Michael we've talked about this dozens right around $400 million correct.

The first line at any site with multiple lines will be the most expensive because of infrastructure. So you can expect lines, two and beyond to be less.

Less than 400 significantly probably.

But as we alluded to we wrote a formal letter to the Aea presenting a plan of financing for one line and we showed them.

Either cash spent.

Or committed funds for in excess of the $400 million, we were closer to $500 million of what we presented and we also showed down.

The details behind the 50 million that we've offset also already spent online too.

So we are in a good position there.

And as we've indicated we're working diligently to try to close the land by June 30. So we can begin surface work on the land there.

Okay.

My second question, but.

I mean, I guess I'm, just going to be sort of.

<unk> about this.

What are the details how much do you have left to raise to get to that the minimum of the $400 million.

Truly not opposed to none so it is completely done so so AED.

If we were to call on lets say youre done.

Well there is a process to go through with the EBITDA. They are in the review process right now and then ultimately they'll take at their board for final approval, but yes, we are working with them on the details. So that we can close by the end of June Okay. That's what I went over here and then what is going to be the final spend.

On Ironton versus what we were shown in March.

The numbers have not appreciably changed from what you saw in March.

So a little bit higher but not meaningful it's a little it's a little bit higher a little bit of creep, but really it's on it's on par. Okay. Great. Thank you very much Mike Michael I'd say quickly.

I referenced that as of March 31, we had the range of 25% to 51 left the span.

Remember that was as of March 31.

As of today, we've exhausted all the money in the construction fund.

So the rest will be funded in cash on our balance sheet.

The number left to spend assuming no recovery of contingencies is in the neighborhood of about $25 million and remember half of that is payment upon complete performance completion.

Two are.

To our partner subcontract or so.

The majority of the funds have now been exhausted.

Great. Thank you.

Thank you very much.

Okay.

Okay.

Our next question will be from Noah Kaye with Oppenheimer. Your line is open.

Hey, good afternoon, thanks for taking the questions.

So.

This is Ben.

A huge push to reach mechanical completion and congratulations on that.

My question to you is is one how is the team doing it.

And two.

As you are standing up operations.

What kind of capacity have you put in place.

To do troubleshooting along the way.

I think the steps you laid out for the next several weeks and months makes sense just talk to us about what is that capacity to do rapid response troubleshooting how much of that is internal how much of that is with partners.

So how is the team.

I can tell you that the plant just feels different today Noah when.

When you walk around the facility there is a buzz literally because you hear some equipment running but also partly.

Because everybody is so excited to get going.

No.

It's interesting to watch the plant because you see a transition from a whole bunch of <unk>.

Contractors building the facility to a whole bunch of operators learning to run the facility and so we slipped a bit over the last couple of months.

With the mechanical completion date, but what we gained as a bunch of experience on the operation side.

And people are all over the plant they know the lineups they understand the facility better today than they ever have and they are growing confidence every day and their ability to run the facility. So I'm I'm extremely optimistic about our team I think we have a really good team growing and I think we've done a really good job of building the right training pack.

Is the right operational readiness tasks to get to get going with respect to the how much buffer have rebuilt.

Facility.

This.

This project has always been chasing critical path.

And so we've probably.

Always been on the optimistic side of.

When we thought the plant would finish.

You've always been chasing the critical path. So we could pull the time and then quite frankly, when you look at our ability to close this project relative to other industry standards, we still look pretty good most projects are 12 months behind during the Covid time, and we came in about about six months behind so I feel I feel.

Good about that.

The capacity. This is the 45% to 75, Okay. I mean, there are a couple of unknown unknown factors, we could still on startup have some intent mortality items that we have to push through we've had a few that we've already dealt with and so we could have more.

But but we also could have some upside to our numbers I really believe that we are well positioned to run this facility. Our team is ready they are eager.

And I think that we have more capacity in the plant than what we have on paper and so once we start running it we'll see.

So.

Is there a lot of floats and the schedule that I show on this slide no not really this is where we are right. Now. This is what we think right now things could happen to delay US does this is this is just life.

But I also feel like we can catch up and surpass or exceed our expectations.

Overall production for the year, which is the ultimate indicator for performance.

Yes, and to put a finer point on that and.

This isn't a comment on whether it's better to have internal or outside help.

Running and standing up these operations would just like to better understand is is the team that's in place.

For pure cycle to run the operations.

Is this pretty much all internal folks now did the contractors kind of hand over the keys is there ongoing helped to debottleneck.

That was the last the last part of your question that I skipped that.

That's a good follow up so.

<unk>.

We have repurposed just about every engineer that we have hired for the Augusta project to support Ironton. So we have stepped up internally to refocus on to really drive focus on iron.

Almost all of the contractors are out of the facility.

I think last time, we talked we had I don't know 80 to 100 contractors left on site and we're down.

We're talking about two for this contractor five for this contractor. So we're down to very very low levels now and quite frankly, they're holding over for startup support. So we maintained some of the construction crew to help us with infant mortality items are tuning items.

And we have let's say refocused all of our staff inside pure cycle to support the ironton startup.

In addition to that our core partners like K NPS.

<unk> been a core partner and the technology development. They have all hands on deck right. Now also so there they're in there there are really smart engineering staff that is ready to roll their sleeves up and help they've already done a lot.

And we also have JV partners like SK that have also offered support and so I know I have a phone that I can call to get support quickly if needed okay and they offer that every time I talk to him. So.

I feel good about our own team because we've learned a lot and we are experts. So we know the most about the technology, but I also feel very good about our partners in the industry.

Get help if needed along the way.

Okay, Great I'll leave it there thank you.

Thanks Noah.

And our next question is from Thomas Boyes with TD colleagues.

Alright, thanks for taking my questions.

First I just wanted to ask kind of a follow up on.

A couple of quarters ago, there was some issue with suppliers that just couldnt make good on the agreements and had to be replaced.

Have you gone back to your feedstock supplier base at Arlington, just to confirm availability as you get towards that $45 to $75 million.

You're essentially targeting.

100%, Yes, and also all of the feedstock suppliers that we have engaged for Augusta as well as feedstock suppliers that we've engaged around the world. We have continued to deepen the relationship with them. So they are on the ready to supply as well.

The reality is.

As we begin to operate more polypropylene will come.

And also our suppliers will be willing to sell us more and more over time. They want to know that we're going to take reliably they want to know that we're going to pay reliably and so we are all kind of waiting for the start of this facility and then it will go but but really the work that we have done on Augusta.

And also with our Jv's is really helping to let's say build a safety net around ironton, that's really strong and wide and so even if we had other suppliers that couldnt deliver we have a well of people that we can call on to fill the gap.

And so we are we are very excited about this.

How much feedstock you already have on site at Arlington in advance of startup I know you had given a number I think maybe a quarter or two ago.

$2 million to $3 million of processed flake and agglomerate and on the order of another $2 million or so of feedstock I believe thats unprocessed right now we've.

We've been running the prep facility for quite a while and quite frankly, we've been working through growing pains, there and learning how to operate it better and better every day.

But as an example, one of our silos is completely full and we've been bagging out for the last month, we have a bunch of blue Super sacks.

Setting all over the property, which has got feedstock for purification ready to go.

So I think it's on the order of let's say processed and unprocessed feed on the order of four to 5 million pounds.

That's helpful. And then maybe just as my follow up real quick a housekeeping one husky.

Housekeeping, but just maybe some clarity on the $125 million that you identified related to Augusta prepay is that exclusive of the $22 million that you already raised are inclusive of that amount.

Larry you want that.

Thank you Tom.

Thank you.

Okay.

And our next question comes from Gerry Sweeney of Roth.

Your line is open.

Hey, good afternoon definitely there thanks for taking my call.

Thanks for taking.

Just really just one question for me for you actually.

And it revolves around the project financing opportunity.

<unk> up and running so derisking it so that it becomes more of a.

Opportunity or you get better access to cash.

Capital, but what level of capacity utilization does iron can really have to be at sort of really cross the de risking line that really opens up.

Yes.

Yes, I think Thats a good question I think.

This is this is really a question for investors that are willing to invest in us, but from what we have heard it varies by the investor.

Let's say amount of technical risk that's taken off the table. The moment, we make let's say first pellets. Okay. And then there will be let's say project economic risk taken off the table. Once we show that we can run at rates I think from a from a reliability perspective theres always.

Going to be a question of how reliable tenants facility run and we will have to answer that over time, but I don't that as critical as getting to first pellets and then getting to the light of tests at 100% I think once we hit those two items I think the.

No.

The hurdles are crossed got it and.

The <unk> test is running our internet five consecutive days.

Correct, yes.

Right Jerry its a five day test at a 100%.

And.

And and.

And we haven't scheduled that yet.

Sorry, I didn't mean directly up it got it.

Pardon me not engineered but im assuming five days 24 hours a day seven days a week.

Yes, I'm not sure I get that question. So I just wanted to ask but that's what I feel.

This facility is designed around $24 $703 65.

Got it perfect I appreciate it thanks guys.

Thank you Jerry.

Thank you.

I would now like to turn it back to Dustin Hoffman for closing remarks.

Yeah. Okay. So so thank you very much for joining the call today, we thank you for your continued support.

You know, it's a it's a big step that we crossed actually yesterday, when we took the plant to mechanical completion and solvent.

Ready for solvent getting to ready for solvent is a really big deal and now we're truly in full operations mode and just just running the plant through the paces until we get the first part first pellets, we feel like Ironton is now truly operational we're optimistic about our growth plan, we can't wait to show the world what we can do.

<unk>.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Just one phrase.

Life miserable do you know how many people we're going to get so your operational naphtha.

Okay.

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