Q4 2023 Aqua Metals Inc Earnings Call
Good afternoon, and welcome to the Aqua metals fourth quarter financial results Conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
You may be placed in the question queue at any time by pressing star one on your telephone keypad or you can submit a question via the web at any time by typing them into the ask a question field on your telephone keep on it.
At this time, all participants are in listen only mode.
Please note. This conference is being recorded I'll now turn the call over to our host Bob Myers with F. N K R. R.
Please go ahead.
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 fourth quarter and full year ended December 31 2023.
This release is available in the Investor Relations section on the company's website at Aqua metals Dot com.
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 management will be making forward looking statements.
Please refer to the company's report on Form 10-K filed today March 27 for a 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 can submit a question using the online webcast portal provided in todays in earlier press releases we.
We will take as many questions as we can in our available time slot.
To start the call we will show a brief video that highlights our progress for that.
Does that have dialed in you will be able to hear the narration and replays will be available on the website.
He will lead the call from there.
[music].
Battery manufacturer.
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Thank you Bob and thank you to everyone, who joined US today. This was an important year for Aqua metals as we successfully transition from proof of concept to initiating commercialization and we enter 2020 for advancing our commercial activities.
First our pilot plant now has over a full year of operations and learnings and is currently operating 24 hours a day and five days a week.
Tyler, it's been producing nickel cobalt lithium hydroxide lithium carbonate and other valuable materials that we've been using to validate our capabilities and for providing representative materials shipment to an expanding list of existing and potential customers and partners. Unlike other moon shot approaches with cost.
And runs and delays our commitment to pilot has served to derisk, our process capitalization and projected operating costs for our commercial sized Sierra arc facility. This year. Our campus is located right here in Tahoe, Reno Industrial center and phase one of the our skills our production.
The pilot to 3000 metric tons of Black mass processing, which is an engineering best practice 30 X increase over our pilot production.
Importantly development of the fear of arc remains on time and under budget Judd.
Judd will speak more on the budgeting side, but our ability to upsell existing building design build emission equipped and calibrate our state of the art commercial scale facility in a short time frame with prudent spending is a testament to the hard work and accuracy with which we planned the growth strategy.
But the company.
We continue to add key personnel to manage the facility and to expand our industry presence simultaneously, we have secured our input feedstock supply of black mass. We expect phase one of this year arc at its full nameplate capacity to generate approximately 30000 average EV battery packs worth of critical bad.
Reed minerals on an annual basis or roughly $30 million of revenues at today's metal prices because of the inherent economic advantages of arc refining, including full recovery of all valuable minerals. The elimination of one time use chemical purchases and expensive waste streams, we believe that even at today's low.
Metal prices phase one of the art still has favorable economics.
With input feedstock established we also now have a clear line of sight to our processing capabilities with the commissioning beginning this summer at the Sierra arc.
For our output we have just finalized our first key uptake agreement announced yesterday with 6K energy.
This is our first Mark key offtake agreement.
Supply agreement with 6K establishes a first of its kind sustainable circular supply chain for minerals essential for manufacturing lithium ion batteries beginning in 2020 for Aqua metals will supply 6K energy was sustainably recycled critical minerals ramping up to provide up to 30% of the nickel.
Lithium carbonate needed for six case plus camp facility.
This is a pivotal collaboration for both companies and the industry as we together define industry standards for low cost low carbon domestically produced materials.
With our input processing and output solidified we believe that we are moving towards significant revenues and cash flow, while revolutionizing the lithium ion industry rich.
Risk mitigation is also key to our strategy others attempted to ramp production to rapidly requiring massive capital commitments and challenging deadline without systematically scaling and Derisking technology along the way. In contrast, we are moving methodically proving our technology step by step advancing in it.
<unk> approach to reasonable, but still meaningful production levels and building our partner ecosystem.
As we look towards the next phases of our growth we are pursuing a variety of funding options, including non dilutive government grants debt as well as traditional financing.
We will however continue to move methodically recognizing that this industry is still maturing.
As we have said before our strategy is also based on self sustainability.
Flexibility is also a big part of our strategy and based on multiple revenue streams, starting with build own operate.
But then adding licensing joint venture co location and other structures all of which we can consider given that our IP is all developed in house.
With our unique technology and engineering design, our commercial plans are expected to require less than half of the capex per ton as compared to traditional hydro metallurgical players along with an operating cost per ton advantage due to low chemical usage and a lack of waste streams like sodium sulphate, which are unique process.
Eliminates.
This efficiency and our measured approach gives us significant optionality and serves as a durable competitive advantage. In fact, we believe that the inherent environmental and economic challenges at both Cairo and standard hydro effectively disqualify those processes as a viable long term solutions for the industry.
And then if ironman where commodity prices have shifted this serves us well as part of a nascent industry. We are facing some of the typical ebbs and flows in a rapidly evolving industry.
Expanding our partner ecosystem is a critical component of our commercialization strategy and we have made significant progress in this area beyond our just announced supply agreement with 6K energy we continue to make progress on our partnership as we expect to complete by April the 6K energy funded.
Element agreement for a specialized nitration process as you may recall that in October we signed a multipart memorandum of understanding that this is the basis for our collaboration that is expected to extend for many years to come.
We have taken significant steps towards a common vision of deploying the titration process as well as the new or adjacent to their plus Cam one facility in Jackson, Tennessee.
Our partnership with Yoho continues to progress you'll have the first black mass production facility build out is nearly completed and operations will commence pending environmental approvals.
Discussions are ongoing as we negotiate our first licensing agreement, we worked with dragonfly energy to supply them with what we believe is the first sustainably recycled lithium hydroxide, which they then use to produce and successfully cycle lithium ion cells with their unique dry deposition solid state technologies.
We believe that this is the first time sustainably recycled batteries minerals have actually been tested a new batteries.
As dragonfly energy successfully builds their production capacity, we expect them to be a buyer of our lithium products right here in Tahoe Reno, Nevada.
Turning our attention now to overall industry dynamics I would like to make a comment on where we see the industry going.
Might some recent negative headlines the energy transition is alive and well as evidenced by 30% year over year close and North American E sales. Despite some bumps in that growth curve and the deployment of over one terawatt hour of battery production capacity in the U S by the decades, and which is literally two.
200 ex the capacity of just 2020, just a few short years ago.
This represents hundreds of billions of dollars being invested in just a decade to build one of the country's largest industries from the ground up these new giga factories will ramp scrap production rapidly with driving the need for a sustainable recycling to close the loop and to help qualify domestically produced E.
<unk> for the Irish tax incentives as evidenced in our meetings and discussions with several Giga factory operators and auto manufacturers, we see an enormous opportunity to be a market maker and assist them and closing the loop stay tuned.
We also strongly believe that the word recycled to be mistaken the conflated with the word sustainable competing.
Technology has produced two X to seven ex the weight of the batteries to be recycled greenhouse gases and one extra two X the weight of the batteries and sodium sulfate waste streams destined for landfill or even oceans in.
In addition to environmental impacts Aqua refining allows for safe clean jobs, our employees do not have to wear smelting hop suits are uncomfortable chemical suits.
So in summary, we believe that these partnerships strategic investments and achievements serve as powerful validation for our technology, our strategy and our growing position in the marketplace I look forward to sharing further updates with all of you soon and for now I'll turn it over to our Chief Financial Officer, Judd Merrill to discuss the results.
For the year ended 2023.
Okay.
Thanks, Steve Our 10-K report is finishing up some final reviews with the auditors as we made a switch from one audit firm Armellino, who is no longer doing public accounting.
Company audits to four of US the top 10 accounting firm with extensive public company experience.
These final reviews will be completed shortly we expect to file the 10-K on time before the April 1st deadline.
Since the 10-K, it hasnt been filed yet I'm not able to share as many financial metrics on today's call as I normally do however, I'm able to share some key financial information today, let me start with the balance sheet.
As of December 31, 2023, we ended the year with total cash of approximately $16 5 million.
Cash on hand will support costs related to operating the pilot plant general working capital and the ongoing outfitting and commissioning of the phase one of this year art.
As Steve discussed this build out of our phase one commercial facility is on schedule and under budget.
It's been a priority for aqua metals to accurately forecast the capital needs of our phase growth plan.
There are no other significant changes on our balance sheet since our last report so I'll move to the income statement.
For 2023, we were focused on executing our operations at our pilot plant and the build out of our commercial facility.
The costs related to plant operations were approximately $6 3 million for the year.
During the year, we did record modest revenue service fees from the successful completion of the N R E or the nonrecurring engineering agreement was 6K energy.
Research and development costs decreased approximately 4% compared to the year ended December 31 2022.
General and administrative expenses increased approximately 19% for the year ended December 31, two.
2023 compared to the year ended December 31, 2020 Q.
Which was in line with our expectation and our growth plans.
For the year ended December 31, 2023, we recognized a noncash impairment charge of approximately $4 8 million.
This is related to our investment in many co and Acme metals.
For Lenox Hill, we wrote off $1 4 million and this is a result of the sale of our linear co common stock to win at COSE parent Comstock each for $600000.
In addition, we recognized a loss of $3 5 million related to the Acme construction in progress process.
As a result of the pause of the development our recycling operations.
Loss is accounted for to comply with GAAP standards, but this showcase facility remains a place Acme, Taiwan and can still be operated for various prospective opportunities that Steve outlined earlier.
Net loss for the year was approximately $23.
$23 9 million or negative <unk> 25 cents per.
Basic and diluted share compared to a net loss of $14 $15 4 million or a negative <unk> 20 per basic and diluted share for 2022.
When we remove the one time noncash related impairment charge, our non-GAAP net loss for the year was $19 1 million or a negative <unk> 20 per basic and diluted share which is in line with expectations for the year.
Cash used in operating activities for the year ended December 31, 2023 was $3 2 million.
Our cash flows from financing activities increased.
Related mainly from a 2023 equity raise and a strategic investment from our partnership with U haul.
We believe 2024 is important year as we finish construction began production at our first commercial demonstration plant with Sierra Art.
Which we believe will begin to generate cash at a plant level in 2025 construction installation and equipment are liable was on time and currently under budget.
We will need additional capital to fund our proposed business plan beyond the next 12 months, including the completion of the phase one build out of our Sierra arc recycling campus and the start of our full scale commercial operations. We are actively pursuing non dilutive options such as the USDA government guaranteed loan for two.
$25 million, which we should have an answer from USDA and the coming weeks.
In addition to the USDA alone as we have been we have also been working on securing funds from other sources such as conventional lenders the D O E strategic partners impossible dilutive options.
We have filed with the D O for a sizable grants and expect to hear back this summer.
Our access to cash is key to ensuring our funding success and greatest deposit of cash generation that we expect from our first commercial demonstration plant.
That concludes my remarks on the company's financials I will now turn it back over to the moderator for Q&A.
Thank you, we'll now be conducting a question and answer session.
By the phone you May press star one to be placed in the question queue.
Over the web you may type of question into the ask a question feature on the left side of your screen.
None: Once again to be placed in the question queue. Please press star one at this time one moment. Please while we poll for questions. Our first question today is coming from Michael <unk> from the benchmark Company. Your line is now live.
Thanks, and good afternoon, and congrats on all the accomplishments to date I wanted to touch base on <unk>.
How much Capex is left on phase one.
And I'll start.
Let's start with that.
<unk> don't want to get into.
None: Yeah.
Yeah. Thanks, Mike.
So we are.
None: From year end.
Through the rest of this year, there's about $18 million to $20 million left on the capex needs and shut the plant.
We've already spent some of that in Q1.
Okay and then.
And then operational from the G&A burn how much more do we expect the burn over the quarterly.
So on a quarterly basis about $5 million per quarter.
Got it.
And we expect to hear back from the USDA give me a little more detail on the rig.
Acquirements to get approved by the USDA and why do you think you have a good shot of getting it.
Yeah, one of the biggest things that the USDA wants is to see that we can create jobs in rural area and that's exactly where we're at we've actually got a USDA loan guarantee when we started the lead recycling I'm back in 2018.
So they like this type of area. They liked the type of company.
Oh, that's <unk>.
Creating jobs and bringing more industry to these areas.
And so that is an important step.
<unk>.
And then we went through all the process that they require them, which is completing a feasibility study, which we did which was positive. It was done by a third party I always completed an engineering study by a third party, which we did and turn those and they'd like to see.
Some operations and so our pilot plant operated all last year and so that's positive so there's a lot of positives there.
To check the boxes for the USDA requirement.
Okay, great that's good to hear.
And then as you get closer to commercial production from the pilot plant has proved out.
What type of inbound.
Hi.
Requests are you getting from possible clients.
And then long term how much of the production do you want to have contracted out first blue Sky.
Okay.
Yeah. So this is Steve answering your question.
Here you might so.
For the.
Makeup of our offtake, we announced yesterday the partnership in partnership with 6K energy that we're going to supply 30% of their plus Kim facility and that is equal to around $50 million. A year is that facility gets up to its full capacity at today's mineral price.
And then in our full campus environment that would be a portion of our output because it'll produce more than that that allows us to continue to find other offtake partners and we are having a lot of meetings to develop those relationships and it also allows for us to work with six.
None: <unk> energy to have them incorporate 30% recycled materials into their processes through the technology that we developed with them through the non recurring engineering projects that nitrates metals that they can get from us and they can get from other sources mined or otherwise so they can fulfill their.
It needs. So it's a really good symbiotic relationship with neither party is totally 100% dependent upon each other.
For our off take or pay them for their supply and then we also have optionality and the ability to continue to develop our relationships with other off take partners for which we are meeting with a lot.
Great Greg Congrats on your accomplishments and look forward to seeing the rest of the year Pan out.
Thanks.
Thanks.
Thank you next question is coming from Sameer Joshi from H C. Wainwright. Your line is now live.
Hey, Thanks for taking my questions just a clarification on the previous question.
Liaison to.
The 50 million dollar potential is once you ramp up to the.
Total 30% of their capacity right.
Correct.
Yeah.
Yes, Amir so.
There.
The capacity of the plus Cam facility there'll be in Jackson, Tennessee, It's being built as we speak and turned on later this year. They will reach a capacity that will in order for us to fulfill 30% of that capacity will be into phase two by the end of our <unk> arc development.
And phase one is did in today's metal prices worth about $30 million of revenue phase two.
Pretty much triples, the capacity or more of the phase one facility. Yeah. So that's how those numbers work, we'll need to get phase two built ultimately to fulfill them as they ramp to their full capacity.
Yes understood. That's what I was trying to get to thanks for that clarification.
Sure.
Include those back in New York like cost of plant operations.
None: Also included in there and you can do SG&A and R&D.
Yeah, that's correct excludes production ramp.
Our ramp ups and G&A and R&D.
Okay.
The Dragon Friday energy I know you briefly touched on it but what are the next steps and are there any milestones that we should expect next year I mean doing 'twenty 'twenty four and when you quantify it.
Yeah. So it's really exciting what we've already done together with dragonfly, where we provided them the lithium hydroxide right out of our pilot plant processes, and they've taken that lithium hydroxide and incorporating that into their advanced dry depositions.
P a.
Battery technology, which has solid state silicon anode et cetera, and that gives them the opportunity to take our lithium produced cells and cycled those cells and prove it out and which would they've already done and the next steps are as they continue to develop their pilot line for.
Ultimately, they're giga factory production capabilities right here at Tahoe, Reno, Theyre going to need more and more lithium and that's another offtake partnership that we're working out with them much like we've already worked out with 6K.
And that's a local partner right here in the state of Nevada that were really excited about continuing to develop that relationship as they develop their giga factory operations over time.
Understood.
And then the last one.
None: The equipment that is with that.
Is that where is it located in.
It has been written off as of now, but I think you mentioned that it can still be used towards demonstration.
Who is in control of that equipment, and where does it guarantee.
Yeah. So so that installation is.
Sitting near Taipei, So it was really Taipei, Taiwan, and our partner Act need that's there has that equipment on the ground and runs it from time to time, we actually still have quite a few interested parties that we're engaging with that are very interested in the led technology and that is more of our <unk>.
Licensing only.
Of solution for the led technology to focus our capital efforts on the build own and operate at a lithium but that's still serves as a showcase disc.
Display and wheel for example, we're planning currently to visit that with one of the prospects from Southeast Asia that we're engaged with to talk about licensing led recycling too in the coming month or so and so that is a great showcase facility that just happens to have an accounting rule that required us to.
To do.
What we had to do to comply with the GAAP accounting it doesn't mean that the the investment made in the showcase effect that the facility is any different and our partner at Acme is very excited about continuing to work with us and show that technology to other parties and participate in potential business dealings.
Thanks for that color that's all for me.
I'll take other questions offline. Thank you.
Great. Thanks, I would like to turn the floor back over to Bob Myers for further Q&A.
Thank you operator.
The first question is on fixed K.
What does the supply agreement with 6K mean for the company and.
And how long do you have until you need to start defending them recycled materials.
Yeah, Great question. So we're really excited about getting the supply agreement finalized which is the first of some more agreements that will come down the line that our memorandum of understanding.
Outlined and that's the real pivotal event for the company and really the industry because together, we're establishing the first sustainable circular supply chain for all these critical battery minerals right here in the U S. We think between our technology and 6K Decarbonize technology, we really are that first.
None: And then it's really another validation of our Aqua refining technology with the partners that can absorb large quantities of our processing capacity.
And we will be sending them. Some initial amounts of recycled lithium carbonate. This year in 2024, and that's going to start ramping up to larger quantities of all the various battery minerals.
We get into 2025 and beyond when we get to see or are fully up and running in phase one and again, that's really a foundation for additional agreements with 6K that we're working on now which includes things like co locating another arc.
Right next to their Jackson, Tennessee facility for which we have sent teams out to look at workforce development and engineering and land allocation and all the things associated with the co location type of an agreement.
There's more to come was 6K and this is a really.
Foundation, we established first big step in the partnership and both companies are really excited about it.
Thank you Steve next question you mentioned the Sierra Arc is currently on time and budget can you share a bit more detail.
Sure.
The fact that this year arc is on time and on budget I think is really truly a validation of our phased growth strategy. Unlike others in the industry.
We took a painstaking detail of time and effort and resources to go with the pilots and pilot the technology first and outfit the new plant ultimately with lower and more predictable overall capital spend which helps us to stay on time and on budget, because we took that discipline.
None: To approach. It also took a lot of financial discipline to work with the various suppliers and.
Any expected delays in unknown that are in the supply chain, because we had already gone through that supply chain a bit to get the pilot and so it's more of an established mature supply chain for us now that gives us that confidence and time and schedule and cost and all those things.
And then as we showed in our opening video for those of you that are called and you can also see that video on our Aqua metals site just click on media.
None: But they didn't go to the blog that will be the first entry that they're under the log area, but that video shows the significant progress we've made and our current future offtake partners are really eager to see us get to that production stage a lot of the folks that were engaged with beyond who we've already announced.
Really supporting our efforts and are working with us to take those sample materials and then get that in there.
Those sample materials are coming from the pilots and get that to the stage, where they can sign up for off take agreements for the <unk> as well.
So the updating of that plant is really being finalized and the.
Video shows the inside of the plant ready with the equipment platform in the brand New base score and we now have epoch Sema Florida's even subsequent to the closing of that video with the equipment is ready to get staged and put in and it will be turning that play on this summer and again on time and on budget really driven by our disciplined modular.
<unk>, where we took the pilot.
We always have that informed the build of the plant.
None: Great. Thank you. The next question can you elaborate.
A bit more on the path to revenue generation.
Yeah, absolutely aside from the Dod.
Non recurring engineering.
Receipts that we've already received from 6K energy to develop the nitration Tech.
None: Technology, which we're gonna be finalizing that whole project at a matter of a few weeks the pilot plant output really serves more strategic purposes.
Providing samples to our partners.
And that has been really going well, where we provided the lithium and nickel and cobalt various.
Partners that are out there and some of that material of course has gone through 6K, where they've taken that material and produced cathode active material to get that into the hands of cell manufacturers and automakers and the like.
So this year arc is really what's commercially focused to grow revenues and drive profitability for the company starting with that phase one at that 3000 tonnes per year, we expect it will be able to produce materials for black mass that we introduced this summer in 2024.
The production ramp to scalable quantities.
2024, but certainly as we get into Q1 of 2025 and worked through revenue recognition, but production is slated to commence as we get into the latter part of the year. After the commissioning is complete.
Thank you know the next question.
On the funding side can you offer an update on your capital needs and funding and the status of the USDA in particular and other options as you talked about on the prepared remarks.
Hey, Bob I'll take that question you know as we've discussed.
The USDA or another lending.
Mechanism is important for us to finish the build out of the of the phase one Sierra art.
On the USDA.
Obligation that's been filed and submitted and from our understanding has gone through the initial review process on their side and so I think there is.
Final committee that has to still meet and review and so we should be hearing back soon.
Now.
The government kind of takes longer than we'd like it to but but I think we're very close.
The hearing back and he likes the USDA.
Bone because the debt service is pretty good just the terms makes the debt service good cost of capital is a little better and some of the other options out there, but we have been talking to other lenders.
Because the USDA is really kind of map for funding that phase one and there's this opportunity to not only fund phase one, but I think about how it contemplate phase one and phase III through a funding mechanism through additional debt lending.
And so those discussions are ongoing we're having some meaningful discussions with potential partners that we really really like.
I think it would be a good fit so even if we if we didnt get USDA, we could use those guys to fundraise, one essentially phase two.
You get the USDA in place.
We use these guys to fund phase two.
Starting next year, so there's a lot of groundwork being done.
Make sure that we protect our ability to move forward.
Thank you.
Moving back to some partners on you whole.
When do we expect to get closer to an agreement and more updates on that partnership.
Yeah. So.
Take that one Bob so the productive trip, we had late last year to South Korea, seeing Youll hose black mass facility really made.
A lot of proved to us that they're on the precipice of turning that facility on and in fact, it was materially complete at the end of last year and initial commissioning and things like that have been happening subsequently and it's an impressive brand new facility with state of the art technology, where the crushing.
Technology et cetera is actually developed and designed and developed in South Korea, So they're not importing stuff to do that they are developing that technology right. There and they're currently working on permits the final environmental permits to operate and start putting batteries through.
And one of our team members is actually over there right now witnessing some of the initial act.
Activities associated with preparing to do that and then we'll be working with Han Young University. There can you evaluate those materials and provide.
Assays and things like that so that's really the setup for us to continue our conversations in the coming months.
Where we work out what the licensing agreement looks like with them on a final.
Negotiation and pending the success of those final negotiations they would begin building what looks a lot like this year arc phase one so the engineering package is already complete and they can move very quickly to put up a process that looks an awful lot like <unk> phase one so as we have.
Those conversations are material items developed will continue to provide updates, but we're very excited about the opportunity that we have still with our partner and investor with you'll hope materials.
Great. Thank you.
Related to Acme metals, you you indicated earlier.
Earlier, there were some noncash impairment charges can you review that in a bit more detail.
Yeah. So it's really a GAAP accounting exercise when you look at assets it's no. It's.
We've been pretty clear that our focus and our lot of our capacity in time and efforts related to the lithium side of the business and that doesn't mean that things arent going on on the led side, but when you look at the assets specifically sitting over there.
In Taiwan that we had listed on our balance sheet, we kind of went through that gaps checklist of items and just concluded that it would be better off and more appropriate for the accounting to just write those down.
None: But at the same time.
The payment that we made that that's still available so operational it's still a showcase.
None: And still optional to advance the led side of the business is still intact.
Great. Thank you with another question here about cash burn and if you could talk a little bit about what you see going forward.
Yeah.
Yes, as we stated I think.
With a couple of questions from before.
We have additional capex related to the plant was one piece and the other piece is just the ongoing cash needs for Opex and G&A of about $5 million per quarter.
Okay.
Thank you.
Next question, how many tons of black mass is the pilot plant currently processing per week.
So the pilot plant is scaled to be.
130 <unk>.
Size of the.
Production plan, so that allows us to really operate around 50.
<unk> 50 to 100 tons per year of processing capacity and that capacity is black mass input and we will take.
To take those materials that were already producing from the pilots and using that verse.
Samples and sample quantities, which are significant they're not in grams or kilograms, but more than that to the various folks in the industry. So that's really the purpose of the of the pilot is to produce those materials and get those into the hands of all the various announced and then ultimately unannounced partners. So they can value.
And qualify the materials that will be coming out of the <unk> when that comes online.
None: Great. Thank you.
What is the typical lithium yield from one ton of black mass.
Yes, the easy bit confusing answer is it depends and it depends upon the makeup of the Ariel what's really great about our technologies that we've been able to process lithium.
With a 5%.
Composition in the black mass to maybe a little bit more than that all the way to a much higher percentage in things like cathode powder. So we're very flexible in the types of recipes that come its a whole alphabet of letters you know NMC or L. F. P. R. L F I L M N P and.
None: Other.
Mixes of the materials. So we're very flexible in the way we do it but the important aspect of what we do is we extract very high 90% of the lithium right out of whatever those sources are from those various battery recipes, that's really important because if you compare that to pyro or smelting.
None: That recovers zero percent of the lithium.
That has had a great economic advantage that we have compared to those types of.
Cumbent applications that are out there much better economics and of course, it's probably a good idea is not to burn lithium and put it into the air but rather to capture it and.
Reuse it over and over infinitely.
Thank you next question.
How many times can you recycle the precious metals and a typical lithium ion battery without losing their efficacy.
Yeah. So that's the beauty of <unk>.
These critical minerals recovery is all of these various critical minerals can be used over and over and over again infinitely.
So once you reuse it once youre certainly ahead of <unk>.
Oil and gas, where you can't recycle gasoline and oil, but you can recycle these minerals and you can't.
Recycled plastics more than multiple times and then it starts to degrade the very complex molecules in the plastics, but these are atoms and we're recovering them one item at a time and a very pure form and that allows for an infinite re cycling and closing the loop with the idea broadly of digging things.
Once.
Processing them getting them into batteries, and then reusing them over and over and over again as students of history. As we look at the led market and the lead battery market. If you buy a brand new lead battery today.
Gonna have 80, 90% or so of recycled lead and even other materials like copper and plastics that are in it.
Lithium batteries day or close to zero to 1% and over time as the recycling begins to close the loop and build that supply chain.
Drew migrate from that zero to 1% up towards ultimately as the market matures.
Probably a couple more decades to those high percentages of recycled material, that's infinitely recycled over and over.
Okay.
Thanks, Steve.
Next question, despite some of the progress and opportunities that you've outlined there still has been some headwinds in the market and the way the stock trades a little bit.
Do you believe to be the disconnect and what milestones can we look for in the coming year.
To further investor confidence in the company.
None: Sure. So there's investor confidence generally in the industry and then in the company I'll do it in that order. So if you look at the investor confidence in the industry. We have seen metals prices come down we have seen some misleading articles about evs being a fad and this is really isn't going to grow and our hopes.
Hopes of production and things like that but when you look at it back and you look at the data.
We've seen 30% year over year growth in Evs just in 2023, we've seen in the January report for 2020 for continued growth. We've seen the first time that well over 1 million Evs were sold in the U S.
And which has a lower market penetration percentage of other places throughout the world.
And certainly in China with higher EV penetrations.
EV manufacturers would be a big auto or emerging evs no that by 2030, it's going to cost them less.
Electric vehicles, and it's going to cost them to make internal combustion engine vehicles because of the cost.
Managing the supply chain and the cost of goods sold so for the consumer the performance to price ratio is already.
Pretty much equalize and we expect that will continue to grow so all evidenced in real data points towards.
But the ability in this industry and I keep talking about auto, but then there's also energy storage like solar and wind and all the giga factories that we've talked about on the call earlier today in the U S. Expanding by 200 Bucks for what 2020 was that as a whole industry being stood up very quickly the recycling it needs to look to.
Closed so we see over time, the inevitability of this industry.
Despite some folks that may say, it's not growing or not growing as fast as it could or should now when you switch gears to the company and the views of the company is because it's a nascent industry the ability to close the loop and do the recycling of lithium ion batteries, it's not easy and there is some companies that have made these moon shots.
<unk> had some challenges in the past a little bit of a shadow over the industry as a whole, but that's actually created opportunities for aqua metals that are unlocked in terms of what the share price looks like and those opportunities are from commercial parties, realizing that they need to consider working with recyclers is actually developed a pilot and ARPA.
The pilot, we think that as we make the progress and start to produce minerals and materials.
We will see a great opportunity to increase the value of the company and the share price if the investor community.
Besides to reward us.
That's our plan and our intent to keep the nose to the grindstone and do what we said we were going to do and keep doing what we say we're going to do in the future and we believe that the valuation of the company will be commensurate with that.
Great. Thank you.
Next question are there any active discussions that you can expand upon with U S auto Oems or battery manufacturers.
None:
As I've said before we can't name names, but we have them coming through in visiting all the time and we're providing samples over time either directly to the Oems be it an auto manufacturer that has a big auto.
Or auto manufacturer just came through this and emerging auto manufacturer looking for a way to close this loop and providing these materials directly and through 6K energy in the form of the cathode active materials to even sell manufacturers et cetera. So there are a lot of those meetings and conversations and getting to know each other.
Developing.
The relationships and it takes time, but we think that Oh.
None: Our funnel.
And level of engagement Thats, driving our commercial and engineering team.
None: <unk>.
And quite a bit of time each week on those projects and activities will ultimately yield an exciting further announcements beyond what we've already announced yesterday with 6K.
Great. Thank you.
And you touched upon this a little bit.
On the earlier question, but another question about the market.
And your perspective on Aqua metals, not getting as much credit with the carbon friendly.
Yeah. So so it's not only the C O two and the fact that alternative hydro and payroll processes generate a heck of a lot more cotwo inhouse gas by weight than what's being recycled to begin with when we create de minimis amounts, but what's also.
Track that folks in the industry to us and people are quite take note believe me well noted within the dose within.
Within the industry within the industry trade groups.
For our it.
None: Our lack of sodium sulfate production, we produced no sodium sulfate waste streams, and we hear more and more folks in the industry, saying that it is absolutely unsustainable for processes that generate sodium sulfate and that's not only from an environmental perspective, but it's just from a cost per.
The cost to build tens of billions of dollars of crystallize there is nothing more than trash dryers.
Produce sodium sulfate that you didn't have to transport to landfill or the ocean. We don't have any of those costs. We just have.
None: Our our plant with the electricity coming in driving the process and we don't bring in a bunch of onetime use chemicals that they create those waste streams or the fossil fuels that go into a smelter that burns the materials. So.
We see a lot of recognition that a lot of notice and a lot of engagement within industry and we're still waiting for the world to catch up a little bit and noticing the fact of our sustainability, but also has great economic comparative benefits compared to any other process thats out there.
Thank you. This is all the time, we have for questions I'd like to turn the floor back over to management for any further or closing comments.
Thank you again, everyone for your time and attention we are rapidly advancing our operational and commercial initiatives on a global scale and it's an exciting time for Aqua metals, and we look forward to providing updates on our continued progress and in the meantime, if anyone has any questions feel free to contact us or F N K IR.
Thanks again.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.