Q1 2024 Aqua Metals Inc Earnings Call

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Greetings and welcome to the Aqua Metals first quarter 2024 investor conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bob Meyers from Investor Relations. Thank you.

Speaker Change: Greetings and welcome to the Aqua metals first quarter 2024 Investor Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded it.

Robert Meyers: It is not my pleasure to introduce your host Bob Myers with Investor Relations. Thank you you may begin.

Robert Meyers: Thank you, operator, and thank you, everybody, for joining us. Earlier today, Aqua Metals issued a press release providing an operational update and discussing financial results for the first quarter ended March 31, 2024. This release is available in the investor relations section on the company's website at AquaMetals.com. 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, management will be making forward-looking statements.

Robert Meyers: 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 first quarter ended March 31 2024.

Investor Relations: The release is available in the Investor Relations section on the company's website at Aqua metals Dot com.

Investor Relations: Hosting the call today are Steve Cotton, President and Chief Executive Officer, and Judd Merrill Chief Financial Officer.

Investor Relations: Before we begin I would like to remind participants that during the call management will be making forward looking statements.

Robert Meyers: Please refer to the company's report on Form 10-Q filed today, May 15th, for a summary of the forward-looking statements and the risks, uncertainties, and other factors that could cause actual results to differ materially from most 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.

Speaker Change: Please refer to the company's report on Form 10-Q filed today may 15th.

Speaker Change: For a summary of the forward looking statements and the risks uncertainties and other factors.

Speaker Change: That could cause actual results to differ materially from those forward looking statements.

Aqua metals: Aqua metals cautions investors not to place undue reliance on any forward looking statements.

Speaker Change: 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.

Robert Meyers: 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 today's and earlier 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. Steve, the call is yours.

As a reminder, after the formal remarks, we will be taking questions.

Speaker Change: 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.

Speaker Change: We will take as many questions as we can in our available time slot.

Speaker Change: With that I'd like to turn the call over to Steve Cotton CEO of Aqua metals, Steve the call is yours.

Stephen Cotton: Thank you, Bob, and thank you to everyone who joined us today. Though it's only been a short time since we shared our Q4 and annual update, Aqua Metals has continued to make strides towards our core focus of developing the circular supply chain that we believe will set the standard for low-cost, low-carbon recycling of lithium-ion batteries. We continue to establish and expand key partnerships while simultaneously commissioning and commercializing the Sierra Aqua Refining Campus, advancing operational capacity with additional funding and financial flexibility. I'll start with some comments on the news of the day.

Thank you Bob and thank you to everyone who joined us today.

Stephen Cotton: Well, it's only been a short time since we shared our Q4 and annual update Aqua metals has continued to make strides towards our core focus of developing the circular supply chain that we believe will set the standard for low cost low carbon recycling of lithium ion batteries, we continue to establish and expand key partnerships while simultaneously Commission.

Stephen Cotton: <unk> and commercializing the Sierra Aqua refining campus in advancing operational capacity with additional funding and financial flexibility I'll start with some comments on the news of the day as most of you have already read we announced a major capitalization milestone for the company today, primarily through and up to $33 million.

Stephen Cotton: As most of you have already read, we announced a major capitalization milestone for the company today, primarily through an up to $33 million loan term sheet for the completion of phase one of the Sierra Arc. We have executed the term sheet for this loan with one of the world's largest privately held companies that are focusing their investments on decarbonization initiatives at a global scale. This term sheet was executed after months of long and thorough due diligence on the company, the technology, and Sierra Arc's ability to generate cash.

Stephen Cotton: This involved detailed reviews of our announced and unannounced feedstock, processing, and offtake partners, as well as the economics. We will be able to reveal more about our loan partner upon execution of the definitive agreement by the July time frame. It is also important to note that this term sheet allows the company to finance up to an additional $8 million beyond what had been previously contemplated with a $25 million USDA loan guarantee. The USDA loan guarantee is still in process, but now targeted for a future phase of buildout as the decision timeline for Phase 1 has simply taken too long.

One term sheet for the completion of phase one of the Sierra arc, we have executed a term sheet for this loan with one of the world's largest privately held companies that is focusing their investments on decarbonization initiatives at a global scale. This term sheet was executed after months long and thorough due diligence on the company.

Stephen Cotton: <unk> and the <unk> ability to generate cash this.

Stephen Cotton: This involves detailed reviews of our announced and unannounced feedstock processing and offtake partners as well as the economics, we will be able to reveal more about our loan partner upon execution of the definitive agreements by the July timeframe. It is also important to note that this term sheet allows the company to finance up to an additional eight.

Stephen Cotton: Dollars beyond what had been previously contemplated with a $25 million USDA loan guarantee the USDA loan guarantee is still in process, but now targeted for a future phase of build out as the decision timeline for phase one has simply taken too long in conjunction with the signing of this up to 33.

Stephen Cotton: In conjunction with the signing of this up to $33 million loan agreement term sheet, a condition was for the company to apply a boost to its cash position to maintain a healthy balance sheet. We received great support from our key shareholders and partners and successfully raised the amount needed to accomplish this requirement. I will also add that we had unanimous and meaningful participation from our board and named executive officers, as well as our VPs and directors, and other managers in the company. I think that says a lot about our team's confidence and resolve.

Speaker Change: Dollar loan agreement term sheet, a condition was for the company to apply a boost to our cash position to maintain a healthy balance sheet. We received great support from our key shareholders and partners and successfully raised the amount needed to accomplish this requirement I will also add that we had unanimous and meaningful participation.

Speaker Change: From our board and named Executive officers as well as our Vps and directors and other managers in the company I think that says a lot about our team's confidence and resolve.

Stephen Cotton: As we all know, the capital markets are challenging now, which is why we strategically chose to finance the completion of the CRR primarily through a loan while utilizing our access to the capital markets prudently to maintain a healthy and loan-qualifying cash balance. So, to conclude on our capital infusion and general comments, we are quite pleased with our loan agreement for Sierra Arc Phase 1 coupled with our qualifying equity support. I would like to thank our to-be-named loan partner, shareholders, partners, and employees for their continued confidence and support. Moving on to additional updates.

Speaker Change: As we all know the capital markets are challenging now which is why we strategically chose to finance the completion of the C or are primarily through alone while utilizing our access to the capital markets prudently to maintain a healthy and loan qualifying cash balance so to conclude on our capital infusion in general comments.

Speaker Change: We are quite pleased with our loan agreement for Sierra Arc Phase, one coupled and our qualifying equity support I would like to thank our to be named loan partner shareholders partners and employees for their continued confidence and support.

Speaker Change: Moving onto additional updates first we remain confident that our methodical approach is the best way to pursue the massive and growing opportunity for lithium ion battery recycling. Unlike others, who attempted to leapfrog to industrial scale. We are taking a more staged approach that reduces risk we are building a circular supply chain.

Stephen Cotton: First, we remain confident that our methodical approach is the best way to pursue the massive and growing opportunity for lithium-ion battery recycling. Unlike others who have attempted to leapfrog to industrial scale, we are taking a more staged approach that reduces risk. We are building a circular supply chain of partners, and we have secured a durable supply of black mass to process, currently at our pilot plant and soon at the Sierra Arc. With our announced and unannounced agreements with offtakers, we also have buyers in place to offtake the recycled materials for the manufacturing of new low-cost recycled batteries.

Speaker Change: Partners and we have secured a durable supply of black mask process currently at our pilot plant and soon at the Sierra arc with our announced and unannounced agreements with off takers. We also have buyers in place to offtake the recycled materials for their manufacturing of new low cost recycled batteries.

Stephen Cotton: Towards this end, in Q1, we secured a strategic offtake agreement with 6K Energy in a first-of-its-kind collaboration designed to address the escalating demand for recycling lithium-ion batteries to support CAM, or cathode-active material, manufacturing. This novel agreement will offer battery manufacturers access to low-cost, low-carbon, domestically produced critical battery materials. This offtake agreement with 6K Energy is what both companies believe is the first decarbonized black mass to CAM supply chain, with what we together believe are favorable economics on the global stage.

Speaker Change: Towards this end in Q1, we secured a strategic offtake agreement with 6K energy in a first of its kind collaboration designed to address the escalating demand for recycling lithium ion batteries to support Cam or cathode active material manufacturing. This novel agreement will offer battery manufacturers access to low cost low carbon.

Speaker Change: Domestically produced critical battery materials. This off take agreement with 6K energy is what both companies believe is the first decarbonize black mask Cam supply chain with what we together believe are at favorable economics on the global stage and our partnership with 6K energy continues to expand and as demonstrated.

Stephen Cotton: And our partnership with 6K Energy continues to expand and has demonstrated success, first with a non-recurring engineering agreement that accomplished key technology objectives next to our strategic supply agreement and important developments looking ahead, including further technological advancements and co-location potential. As we've talked about our competitive advantages, this partnership is a clear indication and important validation of the company's strategy. The combination of the innovative technologies of both Aqua Metals and 6K provides cost and environmental advantages as both processes are electrified and more efficient than traditional processes like pyro and hydro.

Speaker Change: Access first with a nonrecurring engineering agreement, it's accomplished key technology objectives next to our strategic supply agreement and important developments looking ahead, including further technology advancements and colocation potential as.

Speaker Change: As we've talked about our competitive advantages. This partnership is a clear indication an important validation of the company's strategy. The combination of the innovative technologies at those Aqua metals, and 6K provides cost and environmental advantages as those processes are electrified and more efficient than traditional processes like pyro <unk>.

Stephen Cotton: Even hydro processes that purport to improve environmental outcomes over pyro use massive quantities of one-time-use chemicals that are expensive, hazardous to humans, hazardous to the environment, and create a similar volume of waste streams as their input material. As a distinct and unique advantage, our technology regenerates and repeatedly recycles the necessary chemicals for reuse. This is not found with other industry participants.

Speaker Change: Hydro, even hydro processes that purport to improve environmental outcomes over pyrolysis use massive quantities of one time use chemicals that are expensive hazardous to humans hazardous to the environment and create a similar volume of waste streams as their input material as a distinct and unique advantage.

Speaker Change: Our technology regeneration repeatedly recycles that necessary chemicals for reuse. This is not found with other industry participants.

Stephen Cotton: Through patented processes, both Aqua Metals and 6K eliminate the production of thousands of tons of waste streams, which enable a cleaner, more sustainable solution for closing the loop between recycling and lithium battery manufacturing. Our progress at the CRR continues. We have completed the vast majority of the building uplift, including brand new concrete floors and coating, steel superstructure and equipment platforms, full laboratory operations already staffed 24 by 5, offices, utility power drop and switchgear, and power distribution.

Speaker Change: Through patented processes, both aqua metals and 6K eliminate the production of thousands of tons of waste streams, which enabled a cleaner more sustainable solution for closing the loop between recycling and lithium battery manufacturing.

Speaker Change: Our progress at the C. R. R continues we have completed the vast majority of the building uplift, including brand new concrete floors, encodings steel superstructure and equipment platforms full laboratory operations already staffed 24 by five offices utility power drop in switch gear and <unk>.

Speaker Change: Howard distributions, we are shifting our focus now to mechanical electrical plumbing, along with receiving and installing and pre commissioning equipment and we'll be commissioning systems in the coming months, leading up to the introduction of first black mass feedstock later this year I encourage everyone to see further updates of our progress on our website blog.

Stephen Cotton: We are shifting our focus now to mechanical, electrical, and plumbing along with receiving and installing and pre-commissioning equipment and will be commissioning systems in the coming months leading up to the introduction of the first black mass feedstock later this year. I encourage everyone to see further updates of our progress on our website blog. The entire Aqua Metals team feels immense pride in seeing that facility come to life with progress made every day. Additionally, we have managed our commercial scale expansion plans prudently through our methodical approach, and because of this discipline, the project to date remains on time and under budget.

Speaker Change: The entire Aqua metals team feels immense pride in seeing that facility come to life with progress made every day. Additionally, we have managed our commercial scale expansion plans prudently to our methodical approach and because of this discipline. The project to date remains on time and under budget recently.

Stephen Cotton: Recently, the company received additional recognition and third-party validation by being named top project winner in the environment plus energy leader awards program for 2024, which highlights the company's significant strides in environmental stewardship and innovative energy solutions. It's a testament to the understanding that responsible, sustainable recycling solutions are critical in the electrification of the transportation sector. We also made a finalist position in the 17th annual best places to work in northern Nevada awards.

Speaker Change: Recently, the company received additional recognition and third party validation by being named top project winner in the environment plus Energy leader Awards program for 2024, which highlights the company's significant strides in environmental stewardship and innovative energy solutions is a testament to the understanding that.

Speaker Change: A responsible sustainable recycling solutions are critical in the electrification of the transportation sector. We also made a finalist position in the 17th annual Best Places to work in Northern Nevada Awards in the first year, we applied and as the only finalist in the lithium sector, we made that accomplishment in our first year.

Stephen Cotton: In the first year, we applied and were the only finalist in the lithium sector. We made that accomplishment in our first year of application because of the very positive results of our employee survey and our competitive benefits, which allow us to continue to attract and retain our employees and build momentum in our organizational capabilities.

Speaker Change: Year of application because of the very positive results of our employee survey and our competitive benefits, which allows us to continue to attract and retain our employees and build momentum and our organizational capabilities and referencing some earlier remarks, the clean energy industry is still growing and maturing there are over 92 billion.

Stephen Cotton: Referencing some earlier remarks, the clean energy industry is still growing and maturing. There has been over $92 billion of announced investment to date in North America to stand up 80 plus battery manufacturing and materials facilities with a goal of reaching approximately 200X the infrastructure by 2030 as there was in 2020. Nearly all of these facilities produce scrap material that needs to be sustainably recycled.

Speaker Change: Dollars of announced investment to date in North America to stand up 80, plus battery manufacturing of materials facilities with a goal of reaching approximately 200 X. The infrastructure by 2030 as there was in 2020 nearly all of these facilities produced scrap material that needs to be sustainably recycles we remain.

Stephen Cotton: We remain quite convinced in our belief that as we enter commercial and sustainable production, we will be a strong partner for these battery materials and automotive companies to close the battery loop in an economically favorable and decarbonized way. In addition to these exciting developments, AquaMetals remains committed to achieving key milestones in the coming months and quarters and that includes but is not limited to scaling and commissioning of phase one of the Sierra arc to enable us to provide the first recycled material to 6K Energy and other offtake partners late this year and scaling rapidly into next year, are intent to sign a licensing agreement with Yule Home Materials, further development of our commercial partnership, providing updates on future growth capital including government-backed loans and grants and project financing.

Speaker Change: Quite convinced in our belief that as we enter commercial and sustainable production, we will be a strong partner for these battery battery materials and automotive companies to close the battery loop in an economically favorable and Decarbonize. The way. In addition to these exciting developments Aqua metals remains committed to achieving key milestones.

Speaker Change: In the coming months and quarters and that includes but is not limited to scaling and commissioning of phase one of this year arc to enable us to provide the first recycled material to 6K energy and other offtake partners late this year and scaling rapidly into next year our.

Speaker Change: Our intent to sign a licensing agreement with Youll hold materials further development of our commercial partnerships, providing updates on future growth capital, including government backed loans and grants and project financing.

Stephen Cotton: With the support of our investors, partners, and dedicated team, we are well positioned to accelerate our growth and continue to make meaningful strides in creating a domestic closed-loop supply of critical battery materials. We believe our unique technology, cost advantages, and superior environmental outcomes will disproportionately benefit Aqua Metals in the coming quarters and years ahead. I look forward to sharing further updates with you all soon, and I'll turn it over now to our Chief Financial Officer, Judd Merrill, to discuss our financial results for the first quarter.

Speaker Change: With the support of our investors partners and dedicated team, we are well positioned to accelerate our growth and continue to make meaningful strides in creating a domestic closed loop supply of critical battery materials, we believe our unique technology cost advantages and superior environmental outcomes will.

Judd B. Merrill: <unk> benefit Aqua metals in the coming quarters and years ahead, and I look forward to sharing further updates with you all soon and I'll turn it over now to our Chief Financial Officer, Judd Merrill to discuss the financial results for the first quarter.

Judd B. Merrill: Thanks Steve. As we announced this morning, and as Steve discussed, on May 13, 2024, we entered into a non-binding term sheet for an up to $33 million loan facility with one of the largest privately held companies in the world that invests in decarbonized initiatives. This is a five-year note at market interest rates and standard covenants. The note will also include a warrant component to ensure alignment with our shareholders. The term sheet contemplates that the parties will close on the loan facility by June 30th, 2024, or shortly thereafter, and this is subject to closing conditions.

Judd B. Merrill: Thanks, Steve as we announced this morning and as Steve discussed on May 13th 2024, we entered into a non binding term sheet for an up to $33 million loan.

Judd B. Merrill: Facility with one of the largest privately held companies in the world that invest and Decarbonize initiatives. This is a five year note at market interest rates and standard covenants. The note will also include a warrant component to ensure alignment with our shareholders. The term sheet contemplates that the parties will close on the loan facility by June 30.

Judd B. Merrill: 2024, or shortly thereafter, and this is subject to closing conditions.

Judd B. Merrill: The secured loan facility is to be used for the completion of the Phase 1 development of our 5-acre recycling campus in the Tahoe-Reno Industrial Center. We also announced today an additional equity financing. The purpose of the equity financing is to qualify for the cash balance requirements to be on the balance sheet for the loan with our strategic funding partner.

Judd B. Merrill: The secured loan facility is to be used for the completion of the phase one development of our five acre recycling campus in the Tahoe Reno Industrial Center, we also announced today, an additional equity financing the purpose of the equity financing is to qualify for the cash balance requirements to be on the balance sheet for the <unk>.

Judd B. Merrill: Loan with our strategic funding partner.

Judd B. Merrill: Turning attention now to the balance sheet, as of March 31st, 2024, we had total assets of $31.4 million. We ended the quarter with total cash of approximately $8.3 million. During Q1, the balance sheet... had both plant and equipment and other assets that increased as we spent $2.7 million on plant and equipment and another $3 million paid on deposits for equipment related to getting the commercial plant built and ready for commissioning and production in the second half of this year.

Judd B. Merrill: Turning attention now to the balance sheet.

Judd B. Merrill: As of March 31, 2024, we had total assets of $31 4 million. We ended the quarter with total cash of approximately 8.3 million during Q1 the balance sheet.

Speaker Change: <unk> had both plant and equipment and other assets that increased as we spent $2 7 million on plant and equipment and another 3 million paid on deposits for equipment related to getting the commercial plant.

Speaker Change: Built and ready for commissioning and production the second half of this year.

Judd B. Merrill: Moving now to the income statement, during the first quarter of 2024, Aqua Metals focused on continued validation of its pilot plant operation. The pilot plant's purpose was to test our process for lithium battery recycling and to provide sample production representative metals produced to multiple announced and unannounced counterparties.

Speaker Change: Moving now to the income statement during the first quarter 2020 for Aqua metals focused on continued validation of its pilot plant operation. The pilot plants purpose was to test our process for lithium battery recycling and to provide sample production representative metals produced too.

Speaker Change: Multiple announced and unannounced counterparties.

Speaker Change: The costs related to plant operations were approximately $2 2 million for the quarter Reese.

Speaker Change: Research and development costs increased approximately 32% compared to the quarter ended March 31 2023.

Speaker Change: General and administrative expenses stayed steady for the quarter ended March 31, 2024 compared to the compared to the quarter ended March 31, 2023 in line with expectations. In fact, G&A expenses have been about the same each quarter for the last five quarters.

Judd B. Merrill: The costs related to plant operations were approximately $2.2 million for the quarter, and research and development costs increased approximately 32% compared to the quarter ended March 31st, 2023. General and administrative expenses stayed steady for the quarter ended March 31st, 2024, compared to the quarter ended March 31st, 2023, in line with expectations. In fact, G&A expenses have been about the same each quarter for the last five quarters. For the first quarter of 2024, we had an operating loss of $5.8 million compared to an operating loss of $4.5 million for the same period in 2023.

Speaker Change: For the first quarter 2024, we had an operating loss of $5 8 million compared to an operating loss of $4 5 million for the same period in 2023.

Judd B. Merrill: Our net loss for the year was approximately $5.8 million, or a negative 5 cents per basic and diluted share compared to a net loss of $4.6 million, or a negative 6 cents per basic and diluted share for the same period in 2023.

Speaker Change: Our net loss for the year was approximately $5 8 million or a negative five cents per basic and diluted share compared to a net loss of $4 6 million or a negative six cents per basic and diluted share for the same period in 2023.

Judd B. Merrill: Moving to the cash flow statement, cash used in operating activities for the quarter was $4.3 million. Net cash used in investing activities for the quarter was $5.6 million as we invested in the build-out of the Sierra Arc. Net cash provided by financing activities was $1.6 million for the quarter.

Speaker Change: Moving to the cash flow statement cash used in operating activities for the quarters quarter was $4 3 million.

Speaker Change: Net cash used in investing activities for the quarter was $5 6 million as we invested in the build out of the Sierra arc.

Speaker Change: Net cash provided by financing activities was $1 6 million for the quarter.

Judd B. Merrill: We have taken the necessary steps to strengthen our balance sheet as we move into commercial operations. Our phased approach is designed to be responsible with our investor funds and to ensure success as we scale. Our current cash balance, including the cash that we expect to bring in from both this equity raise and from our strategic funding partner, will support the commissioning of the Sierra Arc in 2024 and bridge us to full Phase I capacity, commercial scale production.

Speaker Change: We have taken necessary steps to strengthen our balance sheet as we move into commercial operations. Our phased approach is designed to be responsible with our investor funds and in <unk> and to ensure success as we scale, our current cash balance, including the cash that we expect to bring in from both this equity raise and from our strategic funding partner.

Speaker Change: We will support the commissioning of the Sierra arch in 2024 and bridge us to full phase one capacity.

Judd B. Merrill: It is expected that once we are fully operating in 2025, the company will begin to generate cash at the plant level. That concludes my remarks on the company's financials. I will now turn it back over to the moderator for Q&A. Thanks, and at this time, we'll conduct.

Speaker Change: Commercial scale production. It is expected that once we are fully operating in 2025, the company will begin to generate cash at the plant level.

Speaker Change: That concludes my remarks on the company's financials I will now turn it back over to the moderator for Q&A.

Speaker Change: Thank you.

Operator: And at this time, we'll conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: And at this time, we will conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue you.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: One moment, please, while we pull for questions. And our first question comes from Michael Legg with The Benchmark Company. Please state your question.

Speaker Change: Okay.

Speaker Change: And our first question comes from Michael Legg with the Benchmark company. Please state your question.

Michael Legg: Thanks. Good afternoon.

Michael Legg: Thanks, Good afternoon, congratulations on the quarter and the capital raises obviously puts you in a great position.

Michael Legg: Congratulations on the quarter and the capital raises. Obviously, it puts you in a great position. When you mentioned the market rate on the $33 million, can you give us a little more clarity? What do you mean by market rate? Is it MES debt? Is it normal?

Michael Legg: You mentioned the market rate on that 33 million can you give us a little more clarity.

Speaker Change: Market rate is at Mezz debt is it normal can you just give us a little more clarity there.

Michael Legg: Can you just give us a little more clarity on that?

Judd B. Merrill: Yeah, so thanks, Mike, for the question. If you go out and take a look at kind of where the loans are sitting right now, you know, interest rates have been high. USDA, we said, was going to be in that nine-ish percent rate, and that would have been, you know, better than this rate. But the market that we've seen, and we went out and talked to several different lenders, and it all kind of came together, and we'll be able to get more detail once we get the definitive agreement signed. But according to, you know, the consultants we used and the people that we reached out to, we're kind of in that market rate for where we're at as a company.

Mike: Yeah. So so thanks, Mike for the question. If you go out and take a look at kind of where the loans are sitting at right now interest rates have been high USDA. We said was going to be in that nine ish percent rate.

Mike: And that would have been.

Mike: Better than this rate.

Mike: But the market that we've seen and we went out and talked to several different lenders.

Mike: They're all kind of came in and we'll be able to give more detail once we get the definitive agreement signed.

Mike: But.

Mike: According to the consultants, we used and the people that we reached out to them that we're kind of in that market rate for where we're at.

Mike: As a company.

Michael Legg: And then covenants attached to it; are there any cash restrictions or any issues with the covenants that may tie up some cash?

Speaker Change: Okay, Great and then covenants attached to it are there any cash restrictions or any issues with the covenants that may.

Speaker Change: I have some cash.

Judd B. Merrill: The very standard covenants all across the board are some financial ratio covenants that you always see in these types of things would be modeled out and are fine with, and then you know there's a minimum very doable minimum cash requirements by

Speaker Change: So we're very.

Speaker Change: Our standard covenants all across the board or some financial ratio covenants that you always see in these types of things would be modeled out.

Speaker Change: Fine with them and then you know theres minimum I'm, very doable and minimum cash requirements.

Speaker Change: Entity.

Michael Legg: Okay, great. And then, so this is expected to close end of June or early July. What does this mean for the commissioning of the plant? Obviously, you have the $7 million you just raised today. Do you have to wait for any of this cash to continue to build out, or is everything going smoothly right now?

Speaker Change: Okay, Great and then so this is expected to close end of June early July.

Speaker Change: <unk>.

Speaker Change: What does this mean for the commissioning of the plant.

Speaker Change: So you have the $7 million just raise today.

Do you have to wait for any of this cash to continue to build out or is everything going smoothly right now.

Judd B. Merrill: Yes, so everything's moving along as planned. We had cranes show up a couple weeks ago, some tanks and chillers and things like that. So all that equipment is, you know, being installed. We've got things that we've ordered that are coming in. So the next phase, and it's kind of timely, the next phase is a lot of like, like the installation and some of the construction like piping, electrical, and those types of things, and setting things in place. And so that, you know, is scheduled to happen here shortly. And so that the timing of that funding works out really well.

Speaker Change: Yes, so everything is moving along as planned we had crane show up a couple of weeks ago, some tanks and chillers and things like that so all of that equipment is.

Michael Legg: And just one last question. I'll get back to you. The 6K offtake, I believe the Jackson, Tennessee facility is not supposed to open until 2025. Can you talk about when they're going to start accepting applications if they plan to be up and running?

Speaker Change: You know being installed we've got things that we order that are coming.

Speaker Change: So the next phase and it's kind of timely.

Speaker Change: The next phase is a lot of like like the installation and some of the construction like piping electrical and in those types of things and selling things in place.

Speaker Change: And so that is scheduled to happen here shortly and so that the timing of that funding works out really well.

Speaker Change: And just one last question and I'll get back.

Speaker Change: K Offtake I believe the Jackson, Tennessee facility is not supposed to open until 2025 can you talk about when they're going to start accepting it.

Speaker Change: And is it up and running.

Stephen Cotton: So we're already sending samples to 6K from the pilot facility because they have a unimel process capability, you know, kind of in a pilot environment, just like we do currently. So when we get to see our arc up and running and producing, we've got offtake contracts already lined up and validated by our debt partner with the economics and all those things. And as 6k begins to come online with their Jackson, Tennessee plus cam one facility, then the volume will start heading towards them as well for offtake as they So we're already getting the materials now that have been put in the hands of the various battery manufacturers and auto manufacturers that are verticalizing, etc. But the PLUS CAM facility will come online after RCR, and we're set up for success.

Speaker Change: So we're already sending samples to 6K from the pilot facility because they have a unit melt process.

Speaker Change: Ability.

Speaker Change: It's kind of a pilot environment just like we do currently so when we get to see or are up and running and producing we've got offtake.

Speaker Change: Contracts already lined up and validated by our debt partner, what the economics and all of those things and add 6K begins to come online with their Jackson, Tennessee, plus Cam one facility and the volume will start heading towards them as well for offtake.

Speaker Change: So we're already getting the materials now that have been put in the hands of it.

Speaker Change: The various battery manufacturers and auto <unk>.

Speaker Change: Actors that are verticalizing et cetera, but the debt plus camp facility will come online after RCI arc.

Speaker Change: And we're set up for success.

Michael Legg: What percentage of the offtake would you expect them to take?

Speaker Change: Okay.

Speaker Change: What percentage of the off take would you expect them to take.

Stephen Cotton: So as time progresses, they can take a significant amount of offtake. However, we don't disclose the percentage of offtake from various offtakers. But it'll be a very significant percent. What our agreement with them, which we publicly disclosed, is that we would target together providing them 30% of their input feedstock. So you can kind of map out what that might look like from that. For example, they'll have 30% recycled content. And a reminder that the NRE, the Non-Recurring Engineering Project that we've done for them, allows them to also very economically and environmentally favorably process even mined materials through the Unimelt process as well. Great

Speaker Change: So as as time progresses, they could take a significant amount of off take we don't disclose the percentages of offtake from various off takers.

Speaker Change: But it'll be a very significant percent what what our agreement with them that we publicly disclose is that we would target together us providing you the 30% of their input feedstock.

Speaker Change: So you can kind of map out what that might look like from that so they'll have a 30% recycled content in the reminder of the debt.

Speaker Change: Sorry, the nonrecurring engineering.

Speaker Change: Project that we've done for them allows them to also very economically and environmentally favorably process, even mind materials through the unit melt process as well.

Michael Legg: Great. Congratulations on the progress. Nice to see things moving along. I look forward to the rest of the year.

Speaker Change: Great. Congrats on the progress we used to see things moving along so look forward to the rest of the year.

Speaker Change: Thanks, so much.

Michael Legg: Thank you. And our next question comes from...

Speaker Change: Thank you and our next question comes from Sameer Joshi with H C. Wainwright. Please state your question.

Unnamed Analyst: Yeah, good afternoon everyone. Thanks for taking my questions and congrats to you and Judd on the financing and all the progress. Just on the same Phase 1 3,000 tons per year plan, is the CAPEX expectation still in that $18 to $20 million range? And if so, is there a reason why the financing facility is for $33 million?

Sameer S. Joshi: Yeah. Good afternoon, everyone. Thanks for taking my questions and congrats Stephen dead on the financing and all the progress.

Just.

Speaker Change: On the same.

Speaker Change: Phase 1000 tonnes per your plan.

Speaker Change: Is the capex expectation still in that $18 million to $20 million.

Speaker Change: The range.

Speaker Change: So.

Speaker Change: Is there a reason why the financing facility is 30.

Speaker Change: 33 million.

Speaker Change: Okay.

Unnamed Analyst: Yeah, so the total CapEx for this project, we've always said is about, you know, almost $30 million. And so, what's great about this note is that we've spent some of our working capital, some of the company's working capital that we, you know, set aside for G&A already in operations for the CapEx. You know, we've already started building this, and so we'll be able to reimburse ourselves for some of that cost through this loan.

Speaker Change: Yes, so the total Capex for this project, we've always said is about.

Speaker Change: Almost $30 million.

Speaker Change: And so what's great about this no.

Speaker Change: As we've spent some of our.

Speaker Change: Working capital assumed the company's working capital.

Speaker Change: Set aside for G&A already in operations.

Speaker Change: For the Capex, we've already started building this and so we'll be able to reimburse us for some of that cost.

Unnamed Analyst: So, really, the loan is designed to be a total kind of complete financing the CapEx need for this project. Obviously, we've spent some, and we still have a big chunk of dollars left to spend, but that's the way that this one was designed to work.

Speaker Change: Through this loan and so really it's the loan is designed to be.

Speaker Change: Total kind of complete.

Speaker Change: Capex need for.

Speaker Change: This project, obviously, we spent some and we still have a big chunk of dollars left to spend.

Speaker Change:

Speaker Change: But that's the way that this loan was designed to do.

Speaker Change: Understood.

Judd B. Merrill: I think Steve's commentary mentioned that there was an $8 million cash balance requirement, and I think Judd, you mentioned the $7 million raise was towards that end. Is there additional equity capital raise in the works or being planned for this, or does the cash on hand plus this raise satisfies that condition? Yeah, so we...

Speaker Change: The gratification.

Speaker Change: Schemes commentary you mentioned that there was $8 million cash requirement balance requirement and I think Joe you mentioned, the 7 million resorts towards that then is there additional capital equity capital raise.

Speaker Change: The works are being planned for.

Speaker Change: This or the cash on hand, plus this way is that we played that condition.

Judd B. Merrill: Yeah, so we designed it this way, you know, to try to minimize dilution on the equity side to bring in just the right amount of money to be able to qualify for the requirements of this loan. And so what we brought in was the appropriate amount, and we don't need to bring in another equity component to that.

Speaker Change: Yes, so we designed it this way to try to minimize dilution.

Speaker Change: The dilution on the equity side to bring in just the right amount.

Speaker Change: <unk> dollars to be able to qualify for the requirements for this law and so what we brought in was the appropriate amount, we don't need to bring in.

Speaker Change: Another equity component to that.

Unnamed Analyst: Once again, thanks for taking my questions and congratulations.

Speaker Change: Understood.

Speaker Change: Once again, thanks for taking my questions and congrats.

Unnamed Analyst: Yeah, thanks, sir. Thanks.

Speaker Change: Yes, Sir thanks.

Operator: Thank you. I'm out on the floor with Bob Meyers to go through the webcast questions. Thank you.

Speaker Change: Thank you I'll now hand the floor.

Speaker Change: To Bob Myers to go through the webcast questions. Thank you.

Robert Meyers: Thank you. First question. Can you talk a bit more about Padnos and their relationship with Aqua Metals, as the firm has participated in the transaction?

Robert Meyers: Thank you first question.

Robert Meyers: Can you talk a bit more about pad knows and their relationship with Aqua metals.

Robert Meyers: The.

Robert Meyers: As the firm has participated in the transactions.

Stephen Cotton: Sure, happy to. So, Padnos is a big company based in Michigan, and they're one of the largest recyclers in the U.S. They've got over a hundred years of history in the industry. They recycle metals, plastics, paper, electronics, and automobiles, which primarily these days consist of internal combustion engines, but of course, now EVs, therefore things like lithium battery access.

Speaker Change: Sure happy to so Adenosis big.

Speaker Change: Big Company based in Michigan, and then one of the largest recyclers.

In the U S. They've got over 100 years of history in the industry. They recycled metals plastics paper electronics and automobiles, which primarily these days consist of internal combustion engines, but of course now E. V. Therefore things like lithium battery access and we've known to work with pad notes even pre IPO.

Stephen Cotton: And we've known and worked with Padnos even pre-IPO, and they were a major participant in this recent equity transaction. And we've collaborated with Padnos on a very large DOE MESC grant, grant number 3099, application that closes the domestic battery supply chain. And Padnos is our partner in this grant application for critical feedstock collections and pre-treatment, and processing. So, think of the collections and the black mass production.

Speaker Change: And they were a major participant in this recent equity transaction.

Speaker Change: We collaborated also with patent.

Large deal.

Speaker Change: <unk> Grant Grant number three zero 99 application that closes the domestic battery supply chain.

Speaker Change: And Pat.

Speaker Change: Our partner in this grant application for critical feedstock collections and pre treatment and processing. So think of the collections and the black mass production. This grant is a $200 million plus grant that we applied for together and with some other partners in March after receiving a letter of encouragement from the deal.

Stephen Cotton: This grant is a $200 million plus grant that we applied for together and with some other partners in March after receiving a letter of encouragement from the DOE for that package that we submitted in March. And we do expect to hear back this summer. So, Padnos and I are both aligned and very excited about the opportunity to win that grant together.

Speaker Change: But for that package that we submitted a market we do expect to hear back this summer.

Speaker Change: We've had those are both aligned and very excited about the opportunity to win that grant together.

Speaker Change: Yeah.

Robert Meyers: Great, thank you. The next question goes back to 6K, asking you to help distinguish the partnership between 6K and Aqua Metals and how it is unique within the industry.

Speaker Change: Great. Thank you. The next question goes back to fix K.

Speaker Change: Asking you to help distinguish the partnership between 6K in Aqua metals.

fix K: And how it is.

fix K: Unique within the industry.

Stephen Cotton: Yeah, so with our partner 6K, we really do think it's unique in the industry, for sure. So that is a great leading question there, whoever asked it.

Speaker Change: Yes, so with our partner 6K, we really do think it's unique in the industry for sure. So that is a great leading question there.

Speaker Change: We're asked it.

Stephen Cotton: And as we mentioned in our open remarks, it's important for us to continually point out the competitive advantages that we have and why the strategic partnerships really represent a major inflection point in the battery recycling industry. So together, we believe that we are establishing the first truly sustainable circular supply for critical battery minerals right here in the U.S. And both companies have notably electrified processes and clear paths to net zero.

Speaker Change: And as we mentioned in our opening remarks, it's important for us to continually point out that the competitive advantages that we have and why the strategic partnerships really represents a major inflection point in the battery recycling industry. So together, we believe that we are establishing the first truly sustainable circular.

Speaker Change: Apply for critical battery metals right here in the U S and both companies have notably electrified processes and clear paths to net zero and we're already using renewable energy sources, where others really have significant C. O. Two we mentioned in some cases.

Stephen Cotton: And we're already using renewable energy sources where others really have significant CO2 emissions in some cases, nearly as much volume or more volume in waste materials that go into the air in the form of CO2 or to the land in the form of sodium sulfate compared to what's seen processed to begin with, where we together don't have those.

Speaker Change: Nearly as much volume or more volume in waste materials that go into the air in the form of Cotwo into the land reform sodium sulphate.

Speaker Change: Compared to whats being process to begin with were weak together don't have those issues.

Stephen Cotton: We believe this gives us a lot of cost advantages as well, to scale together and together in a phased approach. And really, the NRE, the non-recurring engineering that I was talking about earlier, and the initial offtake contracts that we announced, are the foundation for additional agreements that we anticipate working out with 6K Energy. And that includes things like co-locating arcs with their PlusCam facilities, starting with their Jackson, Tennessee facility. So we're really excited about that ongoing and growing relationship that we have with 6K Energy and the differentiators compared to any other component of the marketplace, both environmentally and, very importantly, economically.

Speaker Change: We believe this gives it gives us a lot of cost advantages as well.

Speaker Change: The scale together and together in a phased approach.

Speaker Change: And really the NRA the nonrecurring engineering that I was talking about earlier and initial offtake contracts that we announced is the foundation for additional agreement that we anticipate working out with <unk> and that includes things like co locating.

Speaker Change: Arcs with their plus camp facility, starting with their Jackson, Tennessee facility. So we're really excited about that ongoing and growing relationship that we have with <unk> energy and the differentiators compared to any other component the marketplace, both environmentally and very importantly economically.

Robert Meyers: Thank you. Um, there's a couple questions here maybe for Judd, and they started being discussed with the analysts, but We'll go through it potentially again. Are you able to outline the revenue and margin profile for phase 1 of the Sierra Arc based on today's metals prices?

Speaker Change: Thank you.

Speaker Change: Just a couple of questions here, maybe for Jud and they started being discussed with the analysts but.

We'll go through it potentially again are you able to outline the revenue and margin profile of phase one of the Sierra arc based on today's metal prices.

Judd B. Merrill: Yeah, so we haven't talked publicly about specific margin profiles, but we have said that Phase 1, just the first 3,000 ton plant, will have positive cash flow at the plant level and, just, you know, as an aside, meet the covenants for the new debt that we're doing and be able to pay back, you know, service the debt on that loan at www.sameerjoshi.com. And so that's today's metal prices; we expect that to uptick, you know, as we get the plant turned on later this year and start generating, you know, more meaningful revenues in 2025.

Jud: Yes, so we haven't got public.

Jud: Publicly about specific margin profile.

Jud: But we have said that phase one.

Jud: Just the first 3000 ton plant will be.

Jud: Positive cash flow at the plant level.

Jud: And just as an aside.

Jud: The covenants for the new debt that we're doing and be able to payback service the debt on that loan.

Jud: But if you think about the 3000 tonne processing capacity.

Jud: About what today's metals prices are and they're kind of just.

Jud: Low if we kind of look at the last few years.

We're able to generate about.

Jud: $34 million of revenue.

Jud: And so that's today's metal prices, we expect that to uptick.

Jud: As we get the plant turned on later this year and start generating.

Jud: More meaningful revenues in 2025.

Jud: Okay.

Speaker Change: Great. Thank you.

Robert Meyers: This should also probably be for you. We've got a few questions regarding the NASDAQ and the relationship that Aqua Metals has with the listing requirements.

Michigan also probably be for you we've gotten a few questions regarding the NASDAQ.

Speaker Change: And in the relationship that Aqua metals has on the listing requirements.

Judd B. Merrill: Yeah, so... As we know, we've been below $1, but we talked to the NASDAQ, and they made an offer, a six-month extension. We're coming up on that first six months at the end of May, so in a couple weeks.

Speaker Change: Yeah. So.

Speaker Change: As we know.

Speaker Change: We've been below a dollar.

Speaker Change: Talk to the NASDAQ and they do and offer a six month extension, we're coming up on that first six months.

Speaker Change: The end of May is when a couple of weeks, but we've already reached out to the NASDAQ and we qualify for six month extension.

Judd B. Merrill: But we've already reached out to NASDAQ, and we qualify for a six-month extension. So we have that opportunity to get back above $1 and meet that requirement. If not, we'd have to look at alternatives, such as, we hate to say it, but a reverse stock split. We hope we don't have to get there, but we have six months to work on that. But in no case are we going to choose this list.

So we have that opportunity to get back above a dollar.

Speaker Change: And meet that requirement.

Speaker Change: If not we'd have to look at alternatives such as you know.

Speaker Change: To say it but a reverse stock split.

Speaker Change: We hope you all have to get there, but we have six months to work on that but in no case are we going to choose.

Speaker Change: Choose the listen.

Robert Meyers: Great, thank you. Pivoting back to the partnership, can you provide a quick update on U-Haul materials and where the discussions on that licensing agreement stand?

Speaker Change: Great. Thank you.

Speaker Change: Getting back to the partnership.

Speaker Change: Can you provide a quick update on new home materials, and where the discussions on that licensing agreement stand.

Stephen Cotton: Yeah, so I think I said before that we visited Yulho late last year and their Black Mass 8,000 ton nameplate production facility was just about complete, and now it's materially complete and ready to operate, likely by the summer, just pending some final permitting requirements that they have in Korea to get that facility ramping up and all those things. So as that facility ramps up, we will be out there visiting and visiting with them to do our due diligence on their facility and to share with them the updates on the Sierra Arc developments and discuss the definitive licensing agreements. So this summer, we'll be doing that. We expect that we'll have more to report pretty soon on that front. We're very excited about our continued partnership with Yulho.

Speaker Change: Yes so.

I said before that we had visited yoho late last year and their black mass 8000 ton.

Speaker Change: Nameplate Black mass production facility with just about complete and now.

Speaker Change: Materially complete and ready to operate likely by the summer just pending some final permitting requirements that they have.

Speaker Change: In Korea to get that facility ramping up and all those things so as that facility ramps up we will be out there visiting and visiting with them to do our due diligence on their facility and to share with them. The updates on the <unk> arc developments and discuss the definitive licensing agreement. So this summer we'll be doing that.

Speaker Change: We expect that we'll have more to report pretty soon on that front. We're very excited about our continued partnership with you.

Robert Meyers: Great, thank you. In the press release, you indicated another DOE-funded project with Penn State. Are you able to share a little bit more information about that?

Speaker Change: Great. Thank you in the press release, you indicated another D. O E funded project with Penn State are you able to share a little bit more information about that.

Stephen Cotton: Sure, happy to. So that is a really exciting program, and Aqua Metals is a sub-recipient to Penn State, which was the lead applicant for that grant. Unlike the grant that we're applying for where Aqua Metals is a lead, we're a subcontractor in this case, and Aqua Metals from this grant will be funded to work on extending aqua refining technologies to process environmental waste in addition to black mass feedstock. If you look at the title of the grant, it says acidic water pollution cleanup and community economic development.

Speaker Change: Sure happy to so really that is it really exciting program at Aqua metals is a sub recipient to Penn state that was the lead applicant for that grant.

Speaker Change: Like the grant that we are applying for Aqua metals to lead were a sub in this case and Aqua metals from this grant will be funded to work on extending really awkward refining technologies to process environmental waste in addition to black math feedstock.

Speaker Change: If you look at the title of the grant it says.

Speaker Change: Citic water pollution cleanup and community economic development.

Stephen Cotton: And so the objective of it is to extract and recover rare earth elements and other critical materials from coal and coal waste and coal byproducts and demonstrate a 100% domestic supply chain producing these finished products for high-tech and defense applications. So the grant amount in total was $4.99 million, and the AQMS portion of that is $373,994 to be exact, and we'll have a cost share of $74,035.

Speaker Change: And so the objective of it is to extract and recover rare earth elements and other critical materials from coal and coal waste and coal byproducts and demonstrated 100% domestic supply chain producing these finished products for high Tech and defense applications. So the granite mountain total.

Speaker Change: With $4 $99 million and the AQR mess portion of that is $373994 to be exact and.

Stephen Cotton: And the timeline is not immediate for us, but the overall timeline is July. The negotiations are expected to begin, and that's how it works with the DOE when a grant happens. The initial work and projects will begin in October of this year, but Aqua Metals' portion doesn't really begin to pay off until October of 2025. So it's not an immediate opportunity, and that's probably okay for us because we're really focused on getting the arc up and running.

Speaker Change: We will have a cost share of $74035 and the timeline is not immediate for us but the overall timeline is July did negotiations are expected to begin.

Speaker Change: Yeah.

Speaker Change: It works with the dose when a grant happens the.

Speaker Change: The initial work and the projects will begin in October of this year, but aqua metals portion doesn't begin really effectively until October of 2025. So it's not an immediate opportunity and that's probably okay for us because we're really focused on getting New York up in the money, but we're really excited about being a part of this grant and being able to.

Stephen Cotton: But we're really excited about being a part of this grant and being able to take our aqua refining technologies and apply them to such critical applications as taking waste materials out of the environment and then making critical battery minerals right here in the U.S. So the desired outcome of that grant for end results is to establish a domestic supply chain circularity and have advanced separation technologies for the extraction and recovery of things like rare earth elements and other critical materials from coal and coal waste and coal byproducts, and then the creation of permanent magnets and alloys for high-tech and defense applications, and then ultimately reduce the U.S. reliance on foreign suppliers for critical minerals and rare earth materials.

Speaker Change: Take our Aqua refining technologies and apply them to such a critical applications.

Speaker Change: Taking waste materials out of the environment, and then making critical battery metals right here in the U S. So.

Speaker Change: The desired outcome of that grant for end results is to establish a domestic supply chain circularity and have advanced separation technologies for extraction recovery things like rare earth elements and other critical materials from those coal and coal waste coal byproducts and then the creation of permanent magnet alloys for high.

Speaker Change: Defense applications, and then ultimately reduce the U S reliance on foreign suppliers for critical minerals and the rare Earth materials.

Stephen Cotton: We've also got other subs that we're partnering with, including the University of Virginia, a company called Rare Earth Salts, and GE Aerospace. So a really great collaboration, and we're really excited about that opportunity, gets us on the map with DOE, obviously, as they consider us for our grant.

Speaker Change: We've also got other subs that were partnering with inclusive of University of Virginia.

Speaker Change: He called rare Earth salts and GE.

Speaker Change: Aerospace so really great collaboration and we're really excited about that opportunity gets us on the map with deal. We obviously as they consider us for our grant.

Speaker Change: Okay.

Robert Meyers: Perfect. Thank you. The next question.

Speaker Change: Perfect. Thank you. The next question are there any other lithium ion battery recyclers that can deliver lithium hydroxide.

Stephen Cotton: Are there any other lithium ion battery recyclers that can deliver lithium hydroxide other than Aqua Metals Inc.?

Speaker Change: Other than Aqua metals.

Stephen Cotton: So we believe that we'll be producing a lot of lithium hydroxide, obviously, from our process natively, and that's unique to Aqua Metals. And what we'll be doing, though, with the Sierra Arc is producing lithium carbonate. And we chose to go that path because the capital cost for crystallizers is tens of millions of dollars.

Speaker Change: So we believe that we will be producing a lot.

Speaker Change: Lot of lithium hydroxide, obviously from our process natively and that's unique to Aqua metals and.

We'll be doing though with the Sierra arc is producing lithium carbonate.

Speaker Change: And we've chosen to go that path because the capital cost for crystallizes as tens of millions of dollars and that would be more appropriate to go to lithium hydroxide and have crystallized for them at scale when we get to the phase III 10000 ton and beyond so really aqua metals is going to be producing lithium carbonate and the.

Stephen Cotton: And it would be more appropriate to go to lithium hydroxide in a crystallized form at scale when we get to phase two 10,000 tons and beyond. So really, Aqua Metals is going to be producing lithium carbonate. And the cost of lithium carbonate versus lithium hydroxide is pretty comparable and translatable. And we're finding that more and more battery manufacturers that are making next-generation batteries are requesting lithium carbonate instead of lithium hydroxide.

Speaker Change: Cost of lithium carbonate versus lithium hydroxide is pretty comparable.

Speaker Change: And translatable and we're finding that more and more battery manufacturers that are making next generation.

Speaker Change: Batteries are requesting lithium carbonate instead of lithium hydroxide and lithium carbonate you don't crystallize it like a more of a powder is one.

Stephen Cotton: Lithium carbonate doesn't crystallize. It's more of a powdery form. So although there will be other lithium recyclers, and we hope that they succeed, because if you look at the presentation on our slide deck that we have on the investor's website, you will see that there is much less stated recycling capacity between Aqua Metals and Redwood Materials and a couple other players as compared to the black mass that's going to be available for recycling already beginning in 2025. Everyone who succeeds will win.

Speaker Change: So although there will be other lithium recyclers and we hope that they succeed because if you look at the presentation on our slide deck that we have on the investor's website, you will see that there is much less stated recycling capacity between Aqua metals and Redwood materials, a couple other players as compared to the black math, it's going to.

Speaker Change: Available for recycling already beginning in 2025 so.

Speaker Change: Everyone, who succeeds will win.

Robert Meyers: Perfect, thank you. Next question.

Speaker Change: Okay perfect. Thank you.

Stephen Cotton: Aside from the materials that we've already announced that we've extracted, are there any other recoverable elements being investigated from the black mass?

Speaker Change: Next question aside from the materials that we've already announced that we've extracted are there any other recoverable elements being investigated from the black mass.

Stephen Cotton: Well, I would say the biggest economic opportunity for Aqua Metals on that front is the carbon that we collect that does not turn into CO2 greenhouse gases, either through smelting, through the pyrometallurgical process, by literally burning things, or through the hydro processes that create a lot of CO2 by moving the atoms around and the molecules, and they escape through the stack. But if it's a light gas, you can't So that carbon that we get is literally about 30% of the weight of that black mass that, again, does not go into the air and makes our process very sustainable compared to other processes.

Speaker Change: Well I would say the biggest economic opportunity for Aqua metals on that front is the carbon that we collect that does not turn into cotwo.

Speaker Change: Greenhouse gases either through smelting through the payroll.

Speaker Change: Metallurgical process.

Speaker Change: Literally burning things or through the hydro processes that create a lot of <unk>.

Speaker Change: Moving the atoms are out of the molecules. They escaped it stack. It's a shot like gas you can't filter it out so that carbon that we get is literally about 30% of the waste that black mask that again does not go into the air It makes our process very sustainable comparatively to really any other processes that carbon can be upset.

Stephen Cotton: That carbon can be upcycled after initial reuse with things like cement, believe it or not, pencil manufacturers that are looking for carbon, graphite, etc. That doesn't have to be the high technical grade, but carbon can be upcycled into graphite and then ultimately into graphene. And then really, if we get to graphene, that would be a very highly valuable material that we can upcycle from our carbon that we start with.

Speaker Change: After initially reduce with things like cement.

Speaker Change: Believe it or not and so manufacturers that they are looking for carbon graphite et cetera that doesn't have to be the high technical grade but.

Carbon can be up cycled to graphite and then ultimately graphene. So we'll go from a pathway we believe.

Speaker Change: A reuse state, which doesn't have economics that are very favorable, but no negative economics, and we ought to pay to dispose of it we get to reuse deposit in certain applications and then migrate that to a modest.

Speaker Change: The amount of revenue that we get from the graphite and then and then really if we get to <unk> that would be a very highly valuable materials that we can up cycle from our carbon that we start with.

Speaker Change: Okay. Thank you.

Robert Meyers: Okay, thank you. The next question is something we may have covered a little bit, but this person may have missed it. When will phase one begin producing finished products, even if not at full capacity?

Speaker Change: Next question is something we may have covered a little bit but the person may have missed it when will phase one and begin producing finished product even if not at full capacity.

Stephen Cotton: Yeah, so there's definitely a ramp up to Phase 1, and as we were mentioning earlier, the fit-out of the already built-out facility with the equipment getting put in place, etc., we still expect to be introducing the first black mass at the CRR later this year, and our goal is to produce the first truckloads of material. A truckload is literally 20 tons of material. And there's a lot more nickel than there is cobalt in batteries.

Speaker Change: Yeah, So there's definitely a ramp to phase one and as we were mentioning earlier.

Speaker Change: Fitting of the already built out facility with equipment getting put in place et cetera, we still expect to be introducing the first black mass. After thier are later this year and our goal is to produce the first truckloads of material of truckload is literally 20 tonnes of material and Theres a lot more nickels in there as cobalt.

Speaker Change: In batteries one of the common batter recipes for examples NMC 8118 parts nickel and day parts.

Stephen Cotton: One of the common battery recipes, for example, is NMG 811, 8 parts nickel and 8 parts manganese and 1 part cobalt. So we'll be producing the nickel and the lithium first, and we think that we'll be able to get the first truckload of the lithium and nickel by the end of the year. Now, whether we can call that revenue or not will depend upon GAAP accounting rules as it'll be a first-of-kind plant producing first-of-kind materials that are going to first customers.

Speaker Change: Part cobalt, so we'll be producing the nickel in the lithium first and we think that we'll be able to get to the first truckload of the lithium and.

Speaker Change: The nickel towards the end of the year now whether we can call that revenue or not will depend upon GAAP accounting rules as it will be a first of kind plant producing first defined materials that are going to first customers. However, because these are commodities that are listed on London metals exchange certainly the Nichols.

Stephen Cotton: However, because these are commodities that are listed on the London Metals Exchange, certainly the nickel and all that, we might be able to get to revenue, but it might go into Q1 of next year to be determined.

Speaker Change: And all of that we might be able to get to revenue, but if I go into Q1 of next year to be determined.

Robert Meyers: Thank you. Regarding the black mass, as you're processing it, can you talk a little bit about what waste is left over and what happens with that waste?

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Regarding the black mass as Youre processing. It can you talk a little bit about what waste is left over and what happens with that waste.

Stephen Cotton: So, in our process, very, very little waste that the nickel and the lithium and the cobalt go out, obviously, through our economic gain by selling those finished products. And then that carbon I was talking about is about 30% of the weight of the black mass.

Speaker Change: So in our process very very little waste that.

Speaker Change: The nickel in the lithium and the cobalt go out obviously through our economic gain by selling those finished product is.

Speaker Change: <unk> products, and then that carbon I was talking about it's about 30% of the weight of the black math that will get into a reuse scenario. So that's not waste. That's just re used and then we do get a little bit of iron and aluminum and other contaminants.

Stephen Cotton: That will get into a reuse scenario, so that's not waste, that's just reused. And then we do get a little bit of iron and aluminum and other contaminants, you know, elements that don't help meet battery specifications, and those are very de minimis, small amounts of material. We don't produce, unlike any of the other recyclers, we don't produce sodium sulfate from the physical waste stream. So again, we don't have to spend tens of millions of dollars on crystallizers to dry our trash and send it out as crystallized sodium sulfate to the landfill.

Speaker Change: Elements that don't help you meet a.

Speaker Change: Battery spec and those are very de Minimis small amounts of material and we don't produce unlike any of the other recyclers, we don't produce sodium sulphate physical waste streams. So again, we don't have to spend tens of millions of dollars on crystallizes to dry our trash and send it out has crystallized sodium sulfate the landfill.

Stephen Cotton: And so there's really a very minimal amount of waste stream from our process because it's regenerative, and it is a closed recycling loop within itself. That's truly one of the great unique environmental and economic benefits of aqua refining.

Speaker Change: And so there is really a very minimal amount of waste stream from a process because it is regenerative.

Speaker Change: Is a close recycling loop within itself that's truly one of the great unique environmental and economic benefits of Aqua refining.

Speaker Change: Thank you.

Robert Meyers: And that's all the questions we have for today. I'll hand the floor back over to Steve Cotton for closing comments.

Speaker Change: And Thats all the questions we have for today I'll hand, the floor back over to Steve Cotton for closing comments.

Stephen Cotton: Well, great. Thanks, everybody, for attending. Great questions, and feel free to reach out to FNKIR. If you felt like you didn't get your question answered, we want to be here for you. And we look forward to continued updates. And it's going to be an exciting rest of the year, I can assure you.

Stephen Cotton: Well, great. Thanks, everybody for attending great questions and feel free to reach out to F. N. K IR. If you felt like you didn't get your question answered we want to be here for you and we look forward to continued updates and it's going to be an exciting rest of the year I can assure you.

Operator: Thank you. This concludes today's conference. All parties may disconnect. Have a good day.

Speaker Change: Thank you. This concludes today's conference all parties may disconnect have a good day.