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Aqua Metals’ DeepDive Ep. 1: The Pilot

INTRO: Welcome to the first episode of DeepDive, where we take a plunge into the world of Aqua Metals and sustainable lithium battery recycling. Today, we have President and CEO, Steve Cotton to discuss the company’s now fully operational pilot battery recycling facility and exciting plans for expansion in the future. 

What’s next for the company’s groundbreaking pilot facility? Now that you have completed commissioning and are fully operational? 

The completion of our lithium recycling pilot is really an industry first achievement for Aqua Metals and the entire sustainable lithium battery recycling industry.  

And I feel this heralds a future where sustainable lithium battery recycling becomes the standard.  

First and foremost, it’s crucial to note that the transition moves Aqua Metals from the development stage to the production of salable quantities of material, which is monumental as it marks the beginning of generating revenue for the materials that we recover with our pioneering clean recycling technology.  

As best as we can tell, Aqua Metals is the first company to be able to offer sustainably recycled battery materials to manufacturers and metal suppliers in the US.  

Moreover, now that we are fully operational and recovering and running on 24 hours a day by 5 day a week schedule; we are focused on staffing up and scaling our operations to even fuller capacity. 

And our team is incredibly dedicated and this staffing increase will facilitate a much smoother operation and ultimately drive our mission forward. 

I’ll also add that the successful commissioning of our pilot facility does enable us to strategically relocate more of our engineering team to our forthcoming commercial facility just down the street. 

And that’s now happening at our larger 5-acre clean metals recycling campus that we’ve previously announced, it’s very exciting to see the team move over there and begin gaining momentum on that process.  

And this move really allows us to focus on scaling our technology and focus on innovating further within the battery recycling industry.  

Also, by having the specialized team in place at the commercial facility, we can accelerate our development of that facility to reach that commercial scale production that we’re planning for in 2024, which is just months away and the next year isn’t going to be here before we know it.  

So, I’ll summarize with our pilot facility fully operational. Aqua Metals is making strides not just in technology, but also in realizing our mission to create a cleaner and more sustainable environment through innovation and recycling. 

How is the performance of the pilot facility to date and what are you doing with the material that you are recycling? 

The performance of our pilot facility has been extremely encouraging and has been performing as expected and what excites us even more is the speed at which we’ve gone from bench scale to an operational pilot. 

And this rapid progression is really a testament to the ingenuity and dedication of our engineering and operations teams and they’ve worked tirelessly to make this happen.  

In terms of the material recovery, we’re seeing remarkable efficiency. Currently, we’re recovering 95% of those valuable materials that are processed through our AquaRefining technology and achieving great purity levels.  

And these numbers are significant because as we ramp up our operations, we expect to see even further refinement to the quality of the materials that are being recovered.  

So now on to what we’re doing with the material that we’re recycling. We’ve got a multifaceted approach.  

First, we’re using the recycled battery materials as samples for potential partners and off takers. And that includes previously announced partners like Dragonfly Energy and 6K Energy.  

Secondly, we are stockpiling a certain amount of those recovery materials and this stockpile is going to be instrumental in commissioning and turbocharging that commissioning of our commercial facility, ensuring that we have sufficient high-quality materials on hand and streamlining that process.  

Lastly, as we accumulate salable quantities – which entail multiple tons at a time – the bulk of the material will be sold to metals buyers. This not only generates revenue, but also will support the burgeoning market for recycled materials and contribute positively already to the circular economy.  

So in conclusion, we’re making headway in efficiency and quality and we’re putting the recycled materials to good use through strategic partners, preparation for scaling up and contributions to the market. 

We’ve seen a lot of movement in the price of lithium, nickel, cobalt and the other metals that you are now actively recovering. How did these changes impact your market and revenue projections going forward? 

Changes in the prices of metals like lithium and nickel and cobalt and others are indeed an essential factor in our market, and we do closely monitor these fluctuations.  

Despite the observed volatility in these metals prices, I’d say we remain comfortable with our rough estimation that each ton of lithium and battery black mass contains approximately $20,000 worth of these valuable recoverable materials. And that’s in the near term.  

It’s crucial to understand that our future growth and revenue projections are based on a holistic view. We don’t solely rely on the high value of these metals today. We also consider future projected shortfalls in the availability of metals that we recover.  

There’s substantial evidence to suggest that lithium, nickel, copper and cobalt are all going to face multiyear supply deficits as the push towards electrification continues to ramp up. 

And this trend in turn is likely to support the demand for our recycled materials, which are essential components for batteries and various other applications in this whole clean energy sector.  

And moreover, I’d say it’s important to remember that the market dynamics play a role in how we purchase too. For instance, shifts in the market values of metals are not only affected by the selling price, but also the cost of our input materials. When metal values drop, our input costs go down as well. 

By adapting to these market conditions and managing our procurement strategies efficiently. We believe we can maintain healthy margins in spite of market fluctuations, as I was talking about earlier. 

And volatility in these metal prices is going to continue and our model accounts for both current and future market dynamics. We think we’re pretty well positioned to thrive in this environment by leveraging the increasing demand for these critical metals in the clean energy economy.

How important is the milestone to your funding needs in securing capital for the phased expansion plan? 

Well, this milestone is foundational to our funding needs and securing additional capital for our phased expansion plan. 

And by completing the commissioning and becoming fully operational, we fundamentally answered that pivotal question. Can we do it at scale? And I’d say the answer is a resounding yes.  

This validation is essential because it demonstrates to investors and stakeholders that our technology isn’t just cutting edge, but it’s also cost effective and is the only demonstrated viable solution for sustainable battery metals recycling.  

As we move forward, we’re actively engaging with a wide range of additional sources of capital and that includes investors, partners and other stakeholders.  

And very importantly, I’d say the non-dilutive financiers, such as the $25 million USDA loan guarantee that we’re applying for, which by the way, is. Really an act two for us as we successfully borrowed and paid back $10 million in the past with a similar program.  

We’re examining all these various funding options to ascertain what will best align with our growth and trajectory and with our shareholders. And our aim is to secure partnerships and funding that will fuel our expansion while staying true to our mission. 

Further, with our pilot facility now operational and soon generating revenues from metals, we expect this to have a significant impact on our valuation as a company. It’s notable that Aqua Metals will become the first recycler in the US to be generating revenue from sustainably recycled battery metals. 

This accomplishment really sets us apart in the market, doesn’t it? And it highlights the viability and potential of our technology and our business model.  

So, I think investors are likely to recognize the value and potential that we bring to the table, which is going to be crucial in securing the capital that’s needed for our phased expansion plan. In essence, this milestone serves as a springboard, and it positions us favorably for laying the groundwork for the next phases of our growth and contribution to a sustainable and circular energy economy. 

When do you anticipate needing to buy more black mass for processing? 

At Aqua Metals, we’ve been proactive in ensuring that we have a consistent supply of black masss for processing. 

In fact, we’ve already contracted for black mass to cover operations not just at our pilot facility, but also for commissioning and initial production or upcoming commercial facility in 2024.  

So, this strategic move is really essential in making certain that we have enough material to reach commercial scale seamlessly because despite the flurry of recycling company announcements in recent months, there is not an unlimited supply of black mass today. So locking up our supply contracts has been a significant strategic advantage that we believe that we’ve gained.  

And in addition to researching and securing contracts for black mass, we’re also focusing on diversifying our supplier base. And this diversification is really key to maintaining a steady supply of black mass as we expand from diverse sources – and it also mitigates the risks associated with relying on any single or limited number of suppliers.  

So, with these contracts in place and our efforts in diversifying the supplier base, we’re ensuring that we have the necessary materials as we begin to generate initial revenues and move into our next phase of growth.  

DISCLAIMER: This podcast is as of the date of recording and may contain forward-looking statements that are based on Aqua Metals’ management’s current expectations and beliefs. We encourage you to review our Investor Relations website at ir.aquametals.com for a more detailed discussion of the risks and uncertainties associated with forward-looking statements, and for the most current information about the company.