Q2 2023 Aqua Metals Inc Earnings Call
Good afternoon, and welcome to the Aqua metals second quarter financial results call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Submit a question via the web at any time by typing them into the ask a question field play.
Note that this conference is being recorded.
It's now my pleasure to turn the conference over to your host Bob Myers, That's N K Investor Relations Bob Please begin.
Thank you operator, and thank you everybody for joining earlier today Aqua metals issued a press release, providing an operational update and discussing financial results for the second quarter ended June 32023.
This release is available in the Investor Relations section on the company's website at Aqua metals dotcom.
Hosting the call today are Steve Cotton, President and Chief Executive Officer, and Judd Merrill Chief Financial Officer.
Before we begin I would like to remind participants that during the call.
It will be making forward looking statements. Please refer to the company's report on Form 10-K filed March nights or Form 10-Q filed today August 9th or summary of the forward looking statements and the risks uncertainties and other factors that could cause actual results to differ materially from those forward looking statements.
Aqua metals cautions investors not to place undue reliance on any forward looking statements.
The company does not undertake and specifically disclaims any obligation to update or revise such statements.
To reflect new circumstances or unanticipated events as they occur except as required by law.
As a reminder, after the formal remarks, we will be taking questions.
Questions will be accepted over the phone from analysts and all other investors consider Macquarie can submit a question.
Using the online webcast portal provided in todays in last week's press releases.
We will take as many questions as we can in our available time slot.
And with that I'd like to turn the call over to Steve Cotton CEO of Aqua metals.
The call's yours.
Thank you Bob and thank you to everyone, who joined US today Aqua metals continues to make significant progress and has recently marked a number of major milestones towards commercialization of our patented Aqua refining recycling technology, we are delivering tangible results across every critical facet of our business and our vision for the future of the company.
It's coming into clearer focus.
In recent months, we've advanced our core recycling technology announced innovative new partnerships secured a multiyear diverse supply of raw materials started thinking our first global licensing deal and raised $25 million and new operating cap.
So each of these milestones that substantial oh and taken all together we are painting, a pocket a picture of what payable lithium battery recycling companies.
And how we plan to grow within and transform the electrification and energy storage industry.
During the second quarter.
That's fully completed commissioning of our state of the art pilot facility and transitioned to a 24 hour by five day a week operation.
We are currently producing high purity available quantities of recycled battery materials and what we believe is the first operational sustainable lithium battery recycling facility in United States.
Our patented and patent pending low carbon technology is now further demonstrated as supposed to readily scalable and cost effective compared to other approaches.
Many companies in this sector are currently building material preprocessing are striding capacity and beginning to make black mask at scale Aqua metals is the first among peers to be taking black box actually recycling.
Critical materials and high value products without using polluting furnaces or train loads at one time these chemicals.
This achievement is the foundation of our future success and is attracting interest from industry leaders and strategic investors around the world you're actively shaping that future by establishing key partnerships why agreements customer relationships across the battery and E value chain to capitalize on our demonstrated.
The operating pilot facility.
And that begins with our own supply materials in the second quarter, we contracted for an additional 3000 tons of lithium battery black math, which is the ground up mixture of valuable metal since then batteries cycle.
This is enough to supply a commercial scale operations and meet customer demand well into 2025.
And we continue to build a diverse array black bass processing partners to ensure a steady supply to fuel our growth and to create deeper partnering opportunities with key suppliers as well.
While metals prices continue to fluctuate each ton of black masses worth roughly $20000 in there. Besides the components. So this confirms supply represents an estimated $60 million in revenue once the recycling.
With our proven capability to produce high purity metals from Black mass next is our growing ecosystem of off takers and customers for the critical minerals, we deliver during the quarter, we announced a first of kind partnership with 6K energy to develop the next generation of sustainable materials for domestic battery manufacturing where exit.
<unk> on a nonrecurring engineering agreement to jointly develop and commercialize our low carbon battery metal conversion process. We are on schedule to complete that work this year.
The company's plan to jointly pilot this conversion technology and tend to see next year.
More importantly, though fixed pay plans to use recycled materials from Aqua metals to seed at 13000 tons per year, plus can manufacturing facility in Jackson, Tennessee, which uses their low carbon in adult plasma technology. We are currently finalizing that long term agreement to supply thousands of tons of high value critical minerals.
Yes, starting in 2025 this is a big deal and central to our commercial growth domestically. What's the Tam is a massive manufacturing facilities. These cathode materials to power millions of electric vehicles, many gigawatt hours per year and the ability to use all recycled content is essential to their operations meeting demand for quest.
Stand alone will represent the lion's share of recycled material that we produce in phase one of our commercial scale facility and will be key revenue driver as we ultimately scale our own Tahoe Reno campus to 10000 tons per year.
But our growth as a company is not limited to recycling facilities rebuilt and will operate ourselves more recently, we announced a new strategic investment in global partnership with South Korea Yoho materials, you'll hold was already established as a leading black mask producer in South Korea and is currently building the nation's largest landmass process.
Facility, South Korea is one of our biggest global markets, but pretty go battery minerals and as home some of the worlds, leading electric vehicle battery companies, who already supplying them with both end of life batteries and manufacturing scrap to convert into black mass.
You'll hold materials has made a $5 million strategic equity investment to help accelerate our commercial class in the U S. Underscoring their confidence in Aqua metals transformative technology and demonstrated results in a pilot scale facility.
That in itself is great news, but in addition, yoho will be our first licensing agreement for our Aqua refining technology for use in their own facilities in South Korea. This is a realization of our strategy for future global expansion and will deliver immense benefits for our company and for all of our shareholders.
We're negotiating final terms and expect the initial licensing agreement to cover up to 100000 tons of material process each year, South Korea at an average value at $20000 a ton that represents a $2 billion market opportunity annually, but the companies will share. It we expect yoho will commence with their first Aqua refinery.
In South Korea in 2020 for 2025, and they plan to do a bad part of their technical team with Aqua metals to accelerate the commissioning of their own facilities.
With their growing partnerships and global EV and battery leaders Navajo is also poised for success and rapid growth.
Beyond the initial license both companies have also agreed to explore together further expansion in Asia and the European Union as those markets continue to build out global battery manufacturing hubs to meet the rapid demand for electrification of the transportation sector.
With our innovative recycling process proven at scale, and then expanding roster of industry, leading customers for our products and our technology.
Escape and our commercial strategy.
Desperately diverse with securing the funding needed for accelerated growth.
In addition to the 5 million dollar investments in Zillow last month, we completed a public offering which raised an additional $20 million in operating capital for the company.
This offering was quickly oversubscribed, demonstrating the confidence expressed by investors in our fundamentals and our strategy for Aqua metals growth going forward.
This capital will be used in part to continue building our first commercial scale facility a five acre recycling campus right here at Tahoe Reno, a short distance from our innovation Center.
Second this capital is also a necessary component of other non dilutive funding sources that Aqua metals is pursuing as we have previously discussed Aqua metals is applying for a loan.
Favorable terms guaranteed by the U S D yet and what are the requirements that these types of loans is necessary capital on hand, which we now have an.
Similarly, many of the grant and loan application programs managed by the department of energy and federal agencies with also have cost share and capital requirements by raising these funds today, we not only get necessary capital for equipment in operations, but we are also able to access larger funding opportunities in the future even.
Including traditional debt financing at.
Our company now has a more robust balance sheet cash position and overall value because of the investments in seed and we're confident this makes aqua metals, an even stronger company going forward.
In short we've made tremendous progress in a short period of time.
With the necessary capital in hand to reach commercial scale, new innovative partnerships that span the globe and a growing list of industry first achievements under our belt. We believe there's no stopping our vision of transforming the critical minerals and battery materials industry.
In the coming months and the remainder of 2023, you can expect aqua metals to continue to make strides, including and not limited to finalizing a multi year supply agreement with <unk> energy for their plus Kim facility.
Signing the first licensing deal with Yoho for Aqua refining technology in South Korea generating initial revenues from sales of recycled materials at our pilot facility, providing updates on department of energy Grant and USDA loans funding applications, and we will continue to advance construction and commissioning of phase one.
And our new commercial scale facility with plans to be operational by mid 2024 and reach our target of 3000 ton per year run rate by the end of 2024.
The future of Aqua metals is a global leader in sustainable battery recycling is coming into clear focus and we expect to finish 2023 as a commercial company selling the valuable battery minerals that we recover.
We are solving difficult challenges and building a truly sustainable energy storage industry that is destined to become as large as oil and gas and ultimately eclipse it as electrification and decarbonization take whole and capitalizing on our unique opportunities to pass our peers before they are even up and running.
I look forward to sharing further updates with you all soon and I'll turn it over to Chief Financial Officer, Judd Merrill to discuss the results for the second quarter.
Thanks, Steve Let me start my comments with our balance sheet as of June 32023, we had total assets of 22 million and working capital of $4 million.
We ended the quarter with total cash of approximately $6 2 million.
On July 21, 2023, we completed a public offering of approximately 18 million shares resulting in $20 million of gross proceeds.
In addition to the capital investment the company entered into an agreement to execute a license agreement with U haul.
Your whole invested $5 million to Aqua metals and that money was received last week cash.
Cash on hand, and cash received from these transactions totaled approximately 30 million of cash available to the company to fortify our balance sheet, enabling the company to find and pursue that for the first phase of development of our 10000 ton per year.
Campus facility.
Also changes on the balance sheet include a reduction in both the lease receivable assets and the building purchase deposit liability.
Both of these went away as we completed the sale of the 2500, Peru asset, which netted approximately $6 million after paying off the 6 million bridge note album.
There are no other significant changes to our balance sheet since our last quarterly report so I'll move to the income statement.
In Q2, we were focused on advancing and executing on our operations and our pilot facility the.
The costs related to operating this facility were approximately $1 5 million for the quarter, Although no revenues recognized during the quarter. We did record monitoring service fees from our development agreement with 6K.
And those fees are recorded in other income.
Research and development costs were consistent compared to the quarter ended June 32022 <unk>.
Included in R&D expenses or costs related to our agreement with <unk>.
General and administrative expenses increased approximately 19% for the quarter ended June 32023, compared to the quarter ended June 32022, this was inline with expectations and guidance.
Noncash charges included in G&A includes stock comp.
Were approximately <unk> 6 million.
For the second quarter 2023, we had an operating loss of $4 9 million compared to an operating loss of 4 million for the same period in 2022, our net loss for the quarter ended June 32023 was $4 8 million or a negative six cents per basic and diluted share.
Compared to a net loss of $3 2 million or and they get four cents per basic and diluted share for the same period in 2022.
Moving to the cash flow statement cash provided by operating activities for the six months ended June 32023 was $5 5 million and includes approximately $12 3 million cash received related to our lease receivable offset by operating expenses.
Net cash used in investing activities for the quarter was $5 5 million. This consisted mainly of $4 3 million utilized towards the purchase of property and equipment.
Net cash used in financing activities was <unk> 8 million for the quarter. This consisted of $2 8 million net proceeds from the sale of Aqua metals shares pursuant to the at the market offering and $2 9 million in proceeds from the loan agreement secured with summit investment after.
That by 6 million used to pay off the note payable as noted in note 11 of our financial statements report.
We have bolstered our balance sheet and manage our operations responsibly.
When we include our cash balance and $25 million from the capital raise in the direct investments Bayou home.
We completed subsequent to quarter end we.
We believe that we have sufficient capital to fund our proposed operating plants.
Through 2024. This would include the commencement of the phase one build out of our recently acquired five acre recycling campus at the trade Center.
And with that.
That concludes my remarks on the financials I will now turn it back over to the moderator for Q&A.
Thank you well now be conducting a question and answer session effective verbally ask a question. Please press star one on your telephone keypad or if you'd like to ask a question via the webcast. Please type it into the ask a question feature on the left side of your screen. One moment. Please while we poll for questions. Our first question today is.
From Sameer Joshi from H C. Wainwright your line is now live.
Hey, Chad Thanks for taking.
All my questions.
You're a little agreement are there any revenue sharing or.
Once the plant is up and running.
So for you hold the licensing agreement.
We'll share in the revenue from that production facility.
So as it scales, we will share with them.
As a percentage of that revenue.
So it's like a royalty kind of payment or exactly yeah in the form of a licensing royalty correct. Okay.
And that of course to the $5 million equity investment they made in the company.
Yeah is there any oh commitment for.
Aqua metals to spend a certain amount to to make sure that Oh you lose.
Does what it says it will do.
So the beauty of this arrangement is that the 5 million that they've invested is earmarked to help us ensure that we continue to quickly build our facility our phase one of our campus environment here are there going to be sending a technical and management folks here to embed.
With us to help us stand that up and effectively put together the plans for the twin that in their facility.
They're gonna have at Aqua refining operations, there, so theres really no capital cost to Aqua metals and in fact, the $5 million investment really helps support what it is that we're doing here. So that's why that deal was attractive to both parties. So that we can both move as quickly as we could and they can spend the capital in South Korea, while we focus our capital spend.
Here in the U S at Tahoe, Reno Industrial Center.
Understood and just another clarification on that.
Uh Huh license for development within a certain region.
<unk> are up to a certain.
Extend like is it up 200000 tons and then beyond that.
It doesn't apply or is it the applicators to South Korea, and maybe issue or what was the.
Yes.
So the tonnage is up to 100000 tons, they're going to start with 8000 tons.
And then go to 24000 tons in that first facility of theirs.
So.
But the 100000 tons as kind of the overall licensing relevant we've agreed to with them, we're gonna be exploring opportunities even beyond South Korea together because some of their partners that are in South Korea have global deployments and global operations being battery cell manufacturers.
And so there are going to potentially be other opportunities, but the licensing arrangement in South Korea.
As for the up to 100000 tons and that would equate by the way to about $2 billion worth of material being processed through the companies would sure.
Right right yes.
On the six key energy front again.
Again similar question is there any comment meant.
Hum.
A certain amount of money.
So on a 6K energy.
Deal to date, what we've agreed to is it 6K energy has been paying Aqua metals are nonrecurring engineering or N E dollars towards our development of disconnect or technology that allows us to take our pure metals and get them into a specialized slurry concentrate for them so that they can.
Floyd that technology in their Jackson, Tennessee, plus camp facility that they recently broke ground on.
And so that is really the money that's exchanged hands. So far 60 energy sending money to Aqua metals to develop that technology that program is on.
On budget and on time, and going very well expected to wrap up by the end of the year and then move forward with a pilot of that connector technology in their facility.
As its next step as well as considering offtake.
Arrangements for what we produce in the campus environment phase, one and beyond out here in Tahoe, Reno as well as considering how we.
Get our process closer to their process in Jackson, Tennessee, and working out what that might look like.
In the longer run so there's no real capital.
Cost dollars for Aqua metals in fact, if anything we're getting getting money.
Understood.
And then just two quick ones or should we expect our initial revenue dollars into.
Two four Q.
And then the second question is what is the expected blow on over the next two quarters.
Around this $5 million range or something else.
Yes, so we.
We believe we will have some small revenues from from the pilot plant you know in this quarter and in the last quarter of this years third and fourth quarter.
The purpose of the pilot plant to get us ready for that deal. The demonstration commercial size 3000 ton facility that will generate a lot better revenues.
And so we've done that and so we're starting to build that out but so we'll see some revenues.
There the bernstein's remain consistent we'd been about them on a cash basis for our base through G&A and operating it's been about 900000 a month.
So we're kind of saying you know budget wise about a million a month or kind of maintaining that cash needs.
Understood. Thanks for taking my questions and congrats on all the progress.
Thank you Samir.
Thank you next question is coming from Colin Rusch from Oppenheimer. Your line is now live.
Thanks, So much guys can you remind us of the Capex plans for the balance of this year and the 'twenty 'twenty four to get to the commercial ramp.
Yeah, I think it's called so that's pilot that that commercial sorry, commercial demonstration facility is going to be a 30 million capex needs.
We started spending a little bit on that already borne some of long lead time equipment and were getting were already in there and doing some of that work getting ready for it but in total between now and in the first part of next year.
It'll be about a $30 million capex spend.
Okay. That's helpful and then with the steps that you're looking at can you give us a sense of how big a facility, we're looking at and kind of what the spread is you know kind of penciling out in a rough way.
You know versus any of the benchmarks that you may be active.
So with what can you just repeat that.
The size of the debt facilities that youre looking at doing in and where you think interest rates checkout on episodic.
Yeah. So so this is the debt facility, we're looking out with them in the U S. D. A guaranteed notes you know.
We're getting very close to applying for that and we think that's probably interest rates below 10 is probably closer to 8%.
On that and that the size of that is $25 million.
And then you know that would be us.
To fund the 30 million Capex.
Okay and then the final one is just you know how far along you are and customer conversations and and starting to qualify any products that might get used in a battery.
So we've definitely been going through ship share of materials to battery manufacturers, we one of our announced battery manufacturer partners as dragonfly energy, which is actually right here in Tahoe Reno developing.
Silicon anode solid state.
Next generation L. P lithium iron phosphate batteries and others that we've shared our materials with and we've gotten great feedback so far on the high purity and high quality that people.
People are seeing from the products that we're producing particularly that lithium in the form of lithium hydroxide. So we've already validated some some great progress on customer receptivity to the materials that were producing which is quite heartening. In fact, we've been told by one partner or is it their lithium hydroxide that we.
It is the purest lithium hydroxide, they've seen even compared to mine the materials.
Alright, thanks, guys.
Thanks Colin.
Thank you I'd like to turn the floor back over to Bob for any web questions.
Yes. Thank you.
A few questions from the webcast.
First why did Aqua metals decided to raise equity capital now.
Okay, great, so well first and foremost our decision to initiate an equity offering for the first time in really four years over four years was made from a position of strength.
Timing aligned seamlessly with our long term strategy and that ensures that aqua metals remains really at the forefront of our advancements as a company and in the industry and this capital injection really empowers us to accelerate the phased development plan of our commercial scale campus. It also strategically.
She sees these eminent growth opportunities and one of the pivotal benefits of this move.
Is the enhancement of our creditworthiness as we continue with the process. The judge was just talking about to apply for government programs, including the USDA loan let alone the grants.
This capital it really serves as a robust financial backstop.
And as we all know that's really a prerequisite that Oh funding departments mandate you need to show that you have money in order to borrow money.
So the confidence level in our financial stability is really now quite bolstered and that sets us up for success in gaining access to these non dilutive types of funding sources.
And I'll add when viewed in conjunction with our recent strategic investments. This equity raise is also a testament to our commitment to really being prudent stewards of our balance sheet and keeping it strong and unlocking the opportunities to have access to these additional financing opportunities, but also just be.
With a strong balance sheet as it talks to our partners and potential partners.
It really has helped.
One more thing I would add is that our recent partnerships.
Combined with our strengthened balance sheet really do create a potent formula.
We're not just optimistic but we're confident that this sets us up on a continued trajectory of success.
Perfect. Thank you next question can you discuss the evolving strategy around both owning and operating a recycling plant.
And the opportunity around licensing agreements and potential jv's, the companys exploring with current and potential partners.
Yeah, absolutely yeah. This is critical to understanding the future of Aqua metals, and how we will grow and evolve in the coming years and the main highlight here is the flexibility of our strategy and our ability to adapt to the rapidly growing and evolving market and capitalize on those kinds of opportunities are.
Our core business is owning and operating our own commercial scale sustainable recycling facilities are there going to be central to our growth.
As evidenced by our 10000 country. Your campus that we're currently developing and building in the Tahoe Reno, Spain, lithium Luke right here in Reno, Nevada.
At the same time, we don't want to be limited to sold ownership so for future Aqua refining campuses and other facilities. We can also develop fees alongside.
<unk> partners are black mask supplier partners or even offtake partners.
<unk> manufactures cell manufacturers and looked at creating joint ventures or even other arrangements. We've previously shared that we are in discussions with 6K energy to jointly develop and operate a pilot.
Our innovative low carbon battery materials conversion process and this structure can work in a number of scenarios, especially in co located facilities with large battery cam or cathode active material pre can pre cathode active material manufacturers.
You know our of course, our exciting announcement with yoho embodies our licensing strategy.
Because with our technology proven out and demonstrated ability to scale the licensing enables us to rapidly and capital efficiently scaled this arc refining technology globally.
And sooner rather than later and there's obviously a distinct financial advantage to licensing arrangements and that creates another revenue stream for Aqua metals in the future. In addition to our own operations and the Aqua metals can support multiple licensing projects simultaneously, yet still keep our core focus, allowing us to expand rapidly in the market.
This was really otherwise inaccessible to us at this time.
And I'll add each of these pathways to future growth is equally viable because our groundbreaking technology and demonstrated success to date.
Has gone very well and so for Aqua metals. It comes down to identifying the right partners to work with and our expanding roster of industry leading partners.
It really reflects our multifaceted growth strategy. So it's not just.
Our singular strategy and it allows us to propagate our technology as quickly as possible. So the right infrastructure gets built.
Other than putting in smelters in our hydro facilities with caisson train loads of toxic chemicals.
Perfect. Thank you and regarding our commercial plant can can you provide an update on the production time line of the new facility at the wall from site.
Sure happy to.
Things are really going great over at our commercial campus and progressing so far on time and on budget.
We recently started this week concrete demolition for some of the internal structures that we're building to put in the mezzanine level to get more.
Square footage out of the facility and we've upgraded the electrical and other systems and even put out a nice new paint job and the outside that looks just like the picture that we put out of what the facility will look like as well as the inside and we also outfitted brand New office space, which is now already housing.
Several of our engineers and project management function to oversee.
The build while they're on the site and equipment is being purchased and moved into the location and that includes our state of the art R&D lab, which already lives in operates on the campus as well we moved that from the innovation Center.
So we would have that.
R&D lab right there.
Campus environment also supporting the innovation Center just down the street.
We also expect that we'll complete the installation and upgrading of the current building really early in 'twenty four and begin commissioning and then introducing black mass input and ramping up the operations at that point in time.
Plan is to ramp to the commercial scale through the second half of 'twenty four which in this building is projected to get to that 3000 tonnes a run rate of black masking processed as we get towards the end of 'twenty, four which is that $60 million a year revenue run rate.
With the with the recent announcement of the successful completion of a pilot I'll also add that we're able to dedicate our senior engineering team.
Our senior operations team to the build out as they've handed over the operations.
The innovation center pilot and they can focus on operating the pilot 24 hours a day seem to be seven days a week from five days a week, while the engineers and our senior operations team.
On the completion of the first commercial pointless.
Great. Thank you and speaking of the pilot plant. There's a few questions around that can you talk a little bit about what we're doing with the material that we produce there beyond some of the comments we made in the prepared remarks.
Yeah, Yeah. So the initial materials that we were producing at the pilot really do have a few purposes and I've already mentioned that we're already using some of the material for our own testing as well as providing to partners, but we're also stockpiling some of the material to help us.
Mission, our commercial skill celerity and that helps to kind of prime the pump over down the street as we.
Bring that equipment online soon.
And there's as I mentioned before significant demand for samples that we're seeing from all of these leading companies across the battery and electric vehicle supply chain.
As the first non smelting or chemical intensive recycler and really the only technology that is currently operating at scale or as an alternative to those we believe that we're the only company who can share representative samples of these recycled materials with these types of manufacturers, which we have been doing and they're obviously in a rush to six.
Cure supplies and critical minerals that are U S. Based but also that are sustainably produced so it's a double whammy and theres been a lot of demand for those high purity samples. So that's what we're spending a lot of the efforts on what that pilot is bringing those folks through getting them samples and working towards building lasting relationships.
You know as we buildup lastly, the supplies in sight, we will sell some of those recovered materials Jud mentioned that earlier in the call today.
And.
We'll make those.
Those materials and sell them and we'll also build up enough supply to justify some of the shipping costs from the pilot because it just lower quantities of production, but still get.
Actual first revenues from the first sales of sustainably recycled materials.
Beginning in this current quarter. So that's the really exciting thing as well for us but this is of course, a pilot scale facility and we expect to generate pilot scale revenues as Jud mentioned in the near term, but our unique ability to deliver these samples to these strategic partners today.
To further develop those relationships gives us a real distinct advantage, we believe in the marketplace. So all the materials that are being produced at our pilot facility are being put to good use anyone can come and see them. If they liked we've had people come through and see with their own two eyes, the metals and the lithium products that we're generating.
We're using the pilot not only get ready for the commercial plant, but to advance those commercial interests and partnerships and generate some additional revenues for the company while we're at it.
Great. Thank you.
Moving on can you provide some granular granularity on the differences between Aqua Metals' technology.
As compared to some of our competitors, who have been afforded much higher valuations.
So aqua refining is very differentiated.
Decarbonize the process, because we generate a tiny fraction of order of magnitude less amount of C. O two and that's because if youre smelting and burning the batteries, you're creating massive quantities of C. O two greenhouse gas and in fact by weight believe it or not more.
Greenhouse gases and black mass process.
The hydro it gets a little bit better.
With the hydro metallurgical processes.
But they still generate nearly tripled the amount and weight of a C. O. Two in the form of C. O. Two gas we capture the carbon and don't create C. O two gas with our process and that carbon can get actually put into a reuse scenario like with cement and things like that but the key portion of that is it doesn't go into the air.
And that's the gas side and the greenhouse gas side equation, we regenerate the chemicals and our process using electricity, that's very unique to aqua metals as compared to the other.
Folks that are out there and what that means is that we don't have to bring in train loads of caustic chemicals on the front end to go through.
Traditional mining processes of leaching.
The den create a backend challenge of a waste stream of sodium sulfate and the sodium sulfate as a as a percentage of the weight of the materials that come in whether it's pyro hydro is very high if not equal to the amount of material that's being process to begin with and our process because we use the electricity as the reagents to do.
Why the process.
Other than chemicals and fire, we regenerate the chemicals that we use we create hero sodium sulfate. So that's advantageous to us.
As a planet and us as a species in multiple species, because we're not wasting the atmosphere, creating a bunch of solid waste streams, but we also have improved economics, because we don't have to spend all that money in all those chemicals, we don't have to buy a bunch of fossil fuels, we don't have to spend.
Millions of dollars in crystallization systems to create sodium sulphate crystals that just get thrown into the.
Landfill or the ocean, let alone the transport costs et cetera, So it's very different approach and.
That is our differentiator and why these other companies have disparate valuations to us is up to the market and we do believe that as we are steadily trotting, along and producing materials that we're going to see a little bit of adjustments and those types of valley.
<unk> it can't be as disparate as it is for a much longer in our opinion.
Great. Thank you and then we have a two part question on partnerships through the partnerships announced to date.
Okay.
Preclude you from doing licensing deals with other companies.
What does the landscape look like for additional partners.
So the landscape is really exciting because we're talking to players.
From every aspect of the ecosystem ranging from a black man suppliers to offtake partners that are making.
Making cathode active materials like a 16 energy to sell manufacturers discussions directly to E. D. Manufacturers that are verticalizing didn't want to have control of those minerals and close their own loop on that so.
We are evaluating each partnership and making sure that we set up our call it our dance card.
So we have the right mix of partnerships. So we're taking the time, while we have the pilot operating and why we're meeting with all of these folks to make sure that we allocate.
The best result of partnering for us and for our shareholders really.
And also ensure that we don't get tied up in any sort of a scenario where we are.
Can't operate one function of our business.
If if we partner to strongly with one particular entity our goal.
Economically an altruistic leads to propagate Aqua refining technology as quickly as possible and get it in the hands of not only our own selves, but in the hands of <unk>.
Partners that can help capitalize and deploy that barge environmentally.
Superior suite of technologies, which by the way is far better for worker safety, because you don't walk into work every day to the housekeeping smelting.
Or with the hot soup or of our chemical suit to do the standard hydro processes and so we want to create those kinds of jobs from our process as well and get the that technology into the hands of others, but yet not constrain ourselves.
Great. Thank you a little bit of an extension what are the prospects for Aqua metals, becoming a contracted recycling provider for the large automobile manufacturers and are we talking to Tesla and other brands.
So.
What was that question is about is kind of like what I would call tolling, so our merchant businesses, where you're buying the black mass feedstock that you're in.
With supply and then processing it your own costume and selling that off take the others.
What what this question is about is our willingness.
Our ability to do tolling arrangements.
And particularly EV manufacturers are certainly may makes sense, because they get that.
Material back.
And that they want to close their look and are looking for some of them are looking for suppliers that can help them do that.
And that's something that we see great opportunity with our existing black mass and even off take a partner such as Ah.
Our 6K energy that together, we can pull that for those EV manufacturers and show that chain of custody.
Of Windows batteries come back they get cleaned and crushed and converted the black mass go to a process. That's about lithium aqua refining process instead of a smelting or a hydro process that makes that environmental mess. They get the benefit of those materials on the on the backend going through a cathode active material.
Material manufacturers, such as a six day energy and then back into their their streams. So we see that type of opportunity and those are the very types of things that we're talking to some of these folks about I can say that each.
Significant major deal that we anticipate doing is going to have its own unique aspects and that goes back to the prior question, where we got to make sure that.
We do one deal we don't constrain ourselves from doing other deals. So they can continue to propagate the technology and not allow us to tie it up.
Thank you a couple more here.
Related to grants and just to clarify for folks.
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Do you expect to be eligible for other sources of government grants through the D O.
And the USDA and maybe we could just provide an update to clarify a few questions.
Yes.
Yeah. So.
Not only expect to be eligible we've read some of the language.
You know that's coming out in some of the thoughts for both the IRA and build back better plan and we believe that we are really very good fits for the D. O E next round.
And we actually believe that that's very very soon that will be seen.
That come out.
To the point, where you know.
Our Chief business Officer, David Mercury and others of our team are spending a significant amount of their time on working on making sure that we are.
Are ready and able to apply for these grants we've hired a consulting firm out of Washington D. C. That's done these grants before brother companies I'm very familiar with the process. They are working for our consulting with us and giving us prepared.
To apply for those grants so we're going to be very very aggressive.
But right now, there's an opportunity there and it hasn't been there before.
And so we're going to take advantage of that and and work to get them to grant it.
In addition to that we did apply for these grants were like in the 50 million plus range. So these are very significant dollar amount.
In addition to that we did apply for a granulated them too.
Process, mainly in or around the lithium side earlier.
Earlier, this year to $5 million in.
And so we're waiting to hear back.
On that one as well so that's an important piece.
But we're also familiar with as we talked about the USDA with programs. They have this mother of programs that we think we're eligible for them. We're also looking at tax credits.
Credits, there's a production credit capital renovation credits that we think we qualify for it with LIFO in 2024, we think that's a good timing on that.
At changes you know, we'll look at what that looks like but those were coming out.
Applied for tax abatements that are specific to the state of Nevada, So we're very spending.
Spending a lot of time trying to make sure that those are things are available to aqua metals as well.
Perfect. Thank you.
It's kind of a new question here, how does your cost of recycling compare to mining and what do you see in the future.
So it's quite interesting because the cost per ton of material produced when you're mining high grade materials, such as black mass is significantly less.
That puts us at a really interesting cost advantageous perspective being able to.
Urban mine.
That high grade or quote unquote of that black mass material.
So that is an advantage that we have over the mining in terms of our cost envelope.
That will obviously vary very much help us.
And in the longer run.
As students of history of.
The battery industry, if you take a lead acid battery today, and I think you bought and analyzed what percentage of that material came out of old batteries was about 90% and in the U S.
80% to 90% globally.
And the rest of it came for mined materials right now in the lithium world, it's zero or close to zero percent of that material is recycled certainly the lithium hasn't been recycled successful yet until we've been doing it really.
And so that gives us a.
Our vision in the future where.
What we want the world to get to is the point, where we've dug this stuff out of here once.
And now we're using it perpetually over and over and over again, and then now you're only mining to feed the growth and then overall, you're reducing the cost.
Kilowatt hour of storage of battery energy storage, because you can continuously recycle and reuse that material.
On a more cost effective basis than mining so it'll take some time for the industry to get there, but recycling is is really the linchpin for us to get from where we are today.
As a society to occur.
Our closed loop battery.
Society, that's infinitely recycling all of these critical minerals.
Perfect. Thank you and I know, we're running out of time, but one quick question here, that's a little different.
Well your clients be able to apply for renewable energy credits for using your products versus other more hazardous or polluting product.
Processes.
So that is really interesting question, we are looking into that.
Tesla for example got paid by the other auto manufacturers for.
Their deal.
They've got subsidies basically from the other manufacturers for some years.
We see opportunities there as we are fully decarbonize than we might have the ability to monetize that.
We haven't confirmed that as of yet, but we're certainly we certainly have our eyes on that opportunity.
I will add one other comment there is that because we are a net zero.
And our approach to get to a net zero capability with.
Getting to that 100% renewable energy, 100% carbon free.
Where that part of the supply chain for all of these players and so by working the materials through an aqua metals process and the partners that we work with are also electrically based and clean on the black mass production than on the cathode active material production.
Together, we can be the scope one eight case the supply chain accrete.
Accretive benefit to EV manufacturers, and so manufacturers et cetera. So that that is a real advantage that we can bring to the table from that perspective.
Thank you we've reached end of our question and answer session I'd like to turn the floor back over to Steve for any further or closing comments.
Well, Thanks again, everyone for your time and attention today, and we are rapidly advancing our operational and commercial initiatives as you've heard today on a global scale and it's really an exciting time for Aqua metals and we look forward to providing continued updates on our continued progress and in the meantime, if anybody has questions.
You can always go to our website and see.
In the media section, we have a blog.
And that has a lot of up to date information and videos and things like that you can also contact us directly as well as of course as F. N K I R. Thanks again everybody.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.