Aqua Metals Inc (AQMS) 2022 Q3 法說會逐字稿

Hello, and welcome to the Aqua Metals Third Quarter Investor Call. (Operator Instructions) It's now my pleasure to turn the call over to Bob Myers of FNK Investor Relations. Please go ahead, sir.

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 third quarter ended September 30, 2022. This release is available on the Investor Relations section of the company's website, www.aquametals.com. Hosting the call today are Steve Cotton, President and Chief Executive Officer; 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-Q filed today, November 3, for a summary of 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, management will be taking questions. Questions will be accepted over the phone from analysts and investors can submit a question using the online webcast portal provided in today's and last week's press release. We will take as many questions as we can and our available time slot.

And with that, I would now like to turn the call over to Steve Cotton, CEO of Aqua Metals. Steve, the call is yours.

Thank you, Bob, and thank you to everyone who joined us today. This was an important quarter for Aqua Metals, laying the groundwork for key milestones as we move rapidly towards revenue generation. We are making progress in several fronts and on 2 continents. As we have deployed both our lithium and lead AquaRefining equipment this quarter, our confidence that AquaRefining represents a game changer for the industry has only increased.

We continue to advance our technology, recovering high-purity critical battery minerals improving our solution. We are already producing ultrapure lead metal in Taiwan, and over the next few months, our now well-trained partner in license, ACME metal, will regularly operate a Phase 1 system in Taiwan as a showcase for industry partners to witness firsthand. ACME and Aqua Metals are currently in discussions for what [3:02] Phase 2 and beyond could look like, and we will have further updates to share on next steps by later this quarter or Q1.

Our state-of-the-art lithium AquaRefining pilot plant in our innovation center at the Tahoe-Reno Industrial Center is nearly completed, and we expect to commence operations this month, giving us the ability to demonstrate our lithium recycling capabilities to several potential suppliers, partners and customers the rest of this year and into 2023. This is clearly a very exciting time for Aqua Metals.

The demand for a clean, sustainable, and affordable recycling solution for lithium-ion batteries grows each day. Batteries are everywhere in all sorts of technologies from wearables and phones to electric vehicles, buses and forklifts. The current processes for recycling batteries are inherently dirty and economically inefficient. Smelting does not recover many of the rare materials that are needed for making new lithium-ion batteries.

Proposed chemical-based alternatives, many based on an older mining leaching technique have not been successfully demonstrated at scale with acceptable environmental and economic outcomes and in several cases, are not yet successful at all. A better solution is needed, and we believe that AquaRefining is the answer.

To date, lithium AquaRefining is the only solution that has recovered high-grade pure lithium hydroxide, cobalt in pure metal form, nickel in pure metal form, copper in pure mental form and manganese dioxide and we do it cost effectively with the closed-loop sustainable process that is inherently clean using renewable energy.

Turning now to our strategic initiatives and progress in lithium. To date, we have successfully recovered all the high-value metals and minerals from used lithium-ion batteries, including high-purity lithium hydroxide, copper metal, nickel metal, cobalt metal and manganese dioxide. Our technology is proven at bench scale.

Our first lithium-ion recycling plant operation, which is located at our innovation center in Tahoe-Reno Industrial Center continues to be on schedule to begin operations later this month. Interest in our lithium accruing process has been extremely strong and having the pilot plant up and running to showcase our technology is a critical next step. In fact, it's really a critical inflection point for the company.

We have prioritized and scheduled visits for Tier 1 potential partners and customers beginning next week through December and Q1. We are also looking forward to welcoming investors and analysts as we more broadly open the innovation center and pilot after the New Year.

In the slide deck accompanying this call and also in our current investor deck on our website, we have a slide that shows the black mass that we've taken into our innovation center and the metals and compounds recovered from our AquaRefining process.

Starting with the lithium hydroxide, which we make natively with our unique process. We believe that we'll be one of the, if not the first U.S. producers of lithium hydroxide from a recycling versus a mining source. That's a double benefit for meeting critical U.S. produced mineral requirements and for a totally sustainable production when compared to mining lithium.

The metals we produce are extremely pure, making them highly valuable, both to customers and to our revenue model. We can sell these directly into the general metals and super alloys markets to a large array of customers that are looking for these metals right now or, of course, into the battery materials market with a shorter qualification process to other recycling methods due to uniquely being able to start with pure metal with cobalt, nickel and copper.

We have already produced PCAM, meaning pre-cathode active material, and we'll have more to say soon about taking these metals to CAM, meaning cathode-active material. We have already signed the letter of intent with Dragonfly Energy Corporation, a lithium-ion battery producer based right near in Tahoe-Reno to provide Aqua Metals smelt [7:09] lithium-ion cells and manufacturing scrap as well as for the purchase of commercial quantities of lithium hydroxide from Aqua Metals.

We plan for Dragonfly to use our sustainably produced lithium hydroxide in their next-generation solid-state lithium-ion battery technologies and future manufacturing activities. And in addition to samples already provided, we will be sending them production representative samples from our pilot operation very soon.

Today, just 5% of lithium-ion batteries are recycled while the other 95% end up in landfills. Lithium AquaRefining recovers the high-value lithium that's currently lost in the smelting process today. In fact, today's commercial method for lithium battery recycling, smelting recovers 0% of lithium and only a fractional percentage of the other minerals, while lithium AquaRefining recovers over 96% of the lithium.

At up to $82,000 per metric ton just this year, this is an important achievement not only for our environment but for our business model. Demand for lithium is growing rapidly, and industry analysts project a deficit in the lithium market as soon as 2025 due to the electrification of transportation and the rapid deployment for energy storage systems, such as those produced by Dragonfly. There will be significant demand for recovered lithium in the future, especially for North American companies as China dominates lithium refining today.

With the goal of rapidly building our partnership eco-network, we are in active discussions with cell manufacturers, black mass providers, cell component manufacturers and CAM manufacturers. As our pilot plant comes online and potential partners who have already reviewed our process flow sheets and mass balances under nondisclosure agreements, visit our innovation center and with us this process and the materials we recover from Black Mass, we expect to forge additional partnerships. Interest in our technology is increasing, and this provides significant confidence as we look towards 2023.

Finally, let me speak to our progress with grants and specifically the Department of Energy. Recently, the DOE announced over $2.8 billion in grants for the first rounds of critical battery materials. Many of these grants went to parties in the general critical battery materials space. As Aqua Metals completes our pilot plant operation and identified a location where we intend to scale beyond our initial pilot plant in the coming months, along with our strong environmental advantages, we believe we will be in a great position to receive one or more grants in 2023 earmarked, particularly for sustainable battery recycling.

We have our CFO and Chief Business Officer and a top-tier K Street Washington, D.C. firm working hard on these efforts in conjunction with partnerships we are cultivating, and we expect we'll have more to say about these efforts in the coming months.

And speaking of our CFO, I'm now going to hand it over to Judd Merrill for the financial overview.

Thanks, Steve. Let me start my comments with our balance sheet. We ended the quarter with total cash of approximately $9.3 million, and we had working capital of approximately $15.5 million. This means that we are well funded through to when we expect to begin generating revenue.

During the quarter, we locked in a $6 million Alpen Mortgage, giving us additional nondilutive path to expand our cash position and ensure sufficient resources to reach revenue generation. The note was closed on September 30, 2022, with a 24-month term and interest at a fixed rate of 8.5%. Monthly payments are interest only commencing on November 1, 2022, and all unpaid principal and remaining accrued unpaid interest are due 24 months from the close date. And this loan is secured by our commercial property.

And subsequent to the end of the quarter, we received the second nonrefundable deposit from LiNiCo. This $2 million deposit further bolsters our cash position. As a reminder, we expect to collect the remaining balance of approximately $12 million in a few months. Part of the proceeds from this cash collected will be used to retire the note with Altan [11:31]. There are no other significant changes on our balance sheet, so I'll move to the income statement.

During the third quarter of 2022, Aqua Metals continued to focus on the research and development activities related to the lithium-ion battery recycling. We had no commercial production during the quarter of 2022, and as a result, no significant revenues were generated during the quarter.

Cost of product sales decreased by approximately 50% during the quarter of $0.8 million compared to $1.7 million in Q3 2021, but a decrease in this quarter was due to wrapping up the plant's cleanup projects. Research and development costs, which included expenditures related to improving lithium-ion battery AquaRefining technology during the 3 months ended September 30, 2022, increased by approximately 80% compared to the 3 months ended September 30, 2021.

Our ongoing investment in R&D is crucial and part of our business strategy, enabling the further advancement of the development of AquaRefining. These costs included expenditures made towards building our pilot facility, which we said is expected to be commissioned later this year.

General and administrative expenses decreased approximately 3% for the 3 months ended September 30, 2022, compared to the 3 months ended September 30, 2021, but increased approximately 7% for the 9 months ended September 30, 2022, compared to the 9 months ended September 30, 2021. The year-to-date increase in this category included changes in stock-based comp and increase in professional fees. Noncash charges included in G&A, including stock-based comp, were approximately $1.8 million.

For the third quarter of 2022, we had an operating loss of $3.9 million compared to an operating loss of $4.6 million for the third quarter of 2021. Our net loss for the third quarter of 2022 was $3.9 million or a negative $0.05 per basic and diluted share compared to a net loss of $1.4 million or a negative $0.02 per basic and diluted share for the third quarter of 2021. The net loss in 2021 was lower due to an offset of insurance proceeds received in the third quarter of 2021 of approximately $4.3 million.

We continue to manage our cash utilization. Cash used in operating activities for the 9 months ended September 30, 2022, was $9.3 million. Q3 cash needs were approximately $800,000 to $850,000 per month as expected and largely due to the addition of more employees and consultants as we invest more in our lithium-ion battery recycling technology.

Net cash used in investing activities for the 9 months ended September 30, 2022, was $1.7 million. This consisted mainly of $2.3 million utilized towards the purchase of properties and equipment, offset by $1.4 million proceeds from the sale of equipment and $0.5 million utilized towards the additional investment in LiNiCo.

Net cash provided by financing activities was $12.1 million for the 9 months ended September 30, 2022, and this consisted of $5.6 million in net proceeds from the sale of Aqua Metals shares pursuant to the ATM and $5.9 million in net proceeds from the bridge loan. So we maintain a healthy balance sheet, and we have sufficient resources as we head into 2023.

And with that, that concludes my remarks on the financials, and I will now turn it back over to the moderator for Q&A.

(Operator Instructions) One, first question today is coming from Sameer Joshi from H.C. Wainright.

And congratulations on the progress being made. The Tahoe Reno facility that is going to be commissioned soon. Will it be up for -- or will it be generating commercial revenue beginning next quarter? Or should we expect these visits to materialize into orders and then eventually in the second or third quarter, some revenues from that?

Yes, Sameer, this is Steve. Yes, good question. The pilot plant will actually be operating and producing materials this quarter, Q4, very soon, and we expect to be able to get some revenue that we may not report until next quarter just because of the sales cycle, but it will begin producing revenue producing material this quarter and then beginning to scale as we go into the new year.

Okay. And then just part 2 of that question is the pilot fees then is planned to be of around 840 metric tons per year. And that only completes by December of 2023. During this ramp up, do you expect to continue production at this planned demonstration facility? Or like how should we look at it as a revenue-generating source.

Yes. So by nature, it will continue to produce revenue, but the interest in our part is obviously to get that scaling to happen as we get towards the end of '23 and into '24. And that will require a additional facility. And that's what we're looking at now is where that will be and the timing of that and interlaying that in. However, the innovation center will continue to operate with updates and continued improvements in the technology that we expect that we'll get from our learnings of operating while we then take the demonstration commercial facility is the next step forward. So really, we would have the summation of the innovation center across that demonstration commercial facility as we get into 2024 and beyond.

Okay. And then just on costs. The costs, it seems are pretty controlled at the moment. But as you start building this scaling -- start to scale next year, should we expect these to increase year-over-year relating to what they are currently? I think you're around 2.4% to 2.6% of cash burn per quarter is what you are projecting or guiding.

Yes, Sameer, this is Judd. The initial kind of part of the ramp-up, we don't expect cost to increase too much, too significantly. It starts out small and then gets bigger. And so we probably will see some increases in the latter half of next year as we get into more full ramp-up. The pilot facility that we have now, it's not huge. So it doesn't require a lot of CapEx in terms of like buildings and things like that. But there will be some people to help run it and operate it. But still, it's a pilot operation. So it's not a ton of people. And so we'll be evaluating those costs and we can give a little more clarity kind of on the next call or even in the first part of the year. But for Q4, Q1 and probably into Q2 will be pretty much stable like we have been in the last 2 years.

Okay. And then just a clarification on the -- of your cobalt metal copper and manganese dioxide operations. Is that this -- will it happen at the same time when you extract lithium or recover the lithium? Or are these other units that need to be set up and tested similar to what you have done for lithium? Just wanted to see how that works.

Yes. So all of those materials will be extracted as a part of the connected end-to-end pilot system. So it will, at the same time, be producing all those various materials. So the lithium hydroxide will end up in one place, whereas the metallic copper and of course, cobalt and nickel will end up in another place on the plating cells and then the manganese dioxide in up in another place. But it's all what people will be able to see with the connected system and the pilot as the input feedstock, which is the black mass comes in on the front end and those materials come out on the back end.

So this is what we would see if there is a plan to visit early next year, we will see all these operational at the pilot or?

Absolutely. Absolutely. Yeah. And that's what we're very excited to have people come and see, particularly in we're prioritizing industry potential partners from the feedstock partnership and offtake side that have -- we've shared our NDAs under NDA with our process flows and things. They want to see it operate. And that's what will be happening in November and December. And then as we get it towards January, we'll be bringing in more investors, analysts, et cetera, but all the people that visit will be able to see these connected processes.

Our next question today is coming from Colin Rusch from Oppenheimer.

Can you talk a little bit about the pipeline of potential licensees for the lead process? Obviously, that's the most mature technology here. I'm curious how quickly you might build that another customer there?

And we're really excited about our progress in the AquaRefining for lead that we've deployed in Taiwan, and we've already produced materials there with our partner, and we've got the equipment to the point where it start stop, the function capability is all integrated with the automatic logic control, et cetera. So now that is a showcase facility sitting in one of the hottest battery markets in the world in the Asia Pac region. So ACME is evaluating what it would look like for them to expand that facility and get it more into a 24/7 type of an operation. But in the meantime, using that as a demonstration plan to show off that facility and the technology to their partners that they've brought to the table as well as some additional parties that are quite interested in coming to see that technology in that process.

So we're excited about that showcase taking place there. It was just in the news today that European smelters are getting idled or wound down or shut down due to the extraordinarily high energy costs that are happening in the EU. So we're also seeing what we view even as late-breaking news is more of a sales funnel opportunity for the European market. And a lot of these energy costs now that's gas versus electricity, but once you start to wind down and turn off a smelter, you might not be as inclined to turn it back up. and that can create sales funnel opportunities for us in addition to what we see in the Asia Pac region as well as a couple of U.S. partners who are taking a look as well.

Great. And then with the relationship with LiNiCo, can you talk about how mature the conversations are around who's putting what capital in to move the collaboration forward. Just curious about your underlying cash needs and how much time you're going to really need to clarify all of that?

Yes, sure. So there's a few dimensions to that. One dimension is the acquisition of the building, which they paid us all of the rent payments on time. We've received the recent payment of the $2 million towards the final payment that will be coming by March of next year. And in the meantime, we have our pilot turning on to operate at the innovation center. And we, of course, talk to LiNiCo all the time, and Tom stock is really the owner -- the primary owner of LiNiCo.

And we could potentially still take the AquaRefining technologies and deploy that right within that facility and work with them as they make their decisions on how they're going forward and scaling their operation, they've got some recent permits and things like that. So there's a partnering opportunity that's associated with that relationship, but that's separate from our own opportunity that is under our own control, which is our pilot demonstration plant that gets turned on in made a couple of weeks.

Great. And then, I guess, in terms of staffing, are there key hires you guys need to make in the next 6 to 9 months?

We've really staffed up pretty well to get to the pilot and the operation of the pilot. There will be a few net-adds in terms of technicians and operators and some key commercial type rules, et cetera. But nothing terribly material to the burn rate, as Judd was answering a question about earlier. So we feel that we're pretty well staffed up for the time being to get through this next phase of our efforts. We did receive a little bit of a rebate now that our team has returned from Taiwan, parts of our technicians and installers, et cetera, for that installation that we'll be helping to work with the lithium AquaRefining pilot and getting that operation where it needs to be. So net-net, we should even out pretty well.

(Operator Instructions) At this point, I'm going to turn the floor back over to management for any web questions.

Yes. Thank you, operator. We certainly have some questions from the line, and I'll help provide these to Steve and Judd. Steve, maybe a few for you. Can you discuss how you think about lead acid versus lithium in terms of priority? What does the marketplace look like the lead asset technology since electric cars use lead acid batteries as well?

Yes. We see both markets still a tremendous opportunity for Aqua Metals. The lead market is an exciting time for us to have gotten to the third generation of the technology in a product form that's now out there with its first license in that showcase. And as I mentioned earlier, we see great upside and opportunities with the development of that product as a license and equipment supply product in a market that we know could really use an upgrade to the technology. So we're very excited about that and continue to hope that we can continue to get more partners and penetrate that market.

In the meantime, as we develop our lithium efforts, -- we see a great opportunity as we've communicated before, to be an operator and to be a recycler of the lithium recycling technologies, and that is starting with the pilot system and then going on through the step functions of getting to the demonstration commercial plant, et cetera. So that's a different business model for the Lithium business from a primary perspective, which is to be an operator as compared to the lead business, which is to be a supplier.

The lead business is much more mature. All those smelters that are out there are already operating and owned by others. And so it makes sense to partner and license and provide equipment in the lithium business and the financial opportunity in particular because now we're dealing with critical minerals that are worth upwards of $70,000 a ton as compared to $1,700 to $2,000 a ton in the lead space we see that opportunity as being recycled to really accelerate our revenue run line as we continue to scale that the lithium efforts.

And so the company does have the organizational capability to handle both of those businesses. As demonstrated by building a plant that will not to turn on to the lithium processing and by getting on another continent, the off-refining technology deployed for lead. So that's why this is really a good inflection point for the company in our view for the coming year.

I have a couple more around customers, potential customers. And the question here is, why is LiNiCo primarily moving forward with green lithium-ion technology versus Aqua? And related to that are what are the additional strategic partnerships you're seeking?

So LiNiCo and Aqua Metals have a relationship where Aqua Metals would provide plated metals with the -- I think you're speaking of the Green Lion technology that LiNiCo has spoken of in the past, which is an opportunity for them to consider some direct recycling capabilities for some of that material. So they're totally separate parts of the process for what their vision about what that plan would look like. So that's a partnership opportunity that we have, and particularly as a part owner of the company.

In terms of other partnership opportunities in addition to our own build plant and run plant business model, which can generate by 24 and 25 -- hundreds of millions of dollars of revenue. There's also the partnership opportunities with black mass providers to us that are interested in verticalizing their businesses where we can partner with them. There's also partnership opportunities with the actual EV and cell pack manufacturers that are out there that are trying to close the loop and provide for the return of materials in exchange for providing feedstock and things along those lines.

So there's a lot of partnering opportunities, we see the lithium business developing not only in the primary recycler, but it's a partner, a joint venture partner and potentially working with other parties and other structures, which could even include licensing because we -- the company have the capability to license technology as we've demonstrated with the lead of refining business.

So we see lots of optionality in the way that we work with various players in the ecosystem. So we don't really view anyone, frankly, as a competitor. We view every player in the lithium space is really a partner potential.

Great. And related to that, the question from the line is why sell your current plant to LiNiCo, if you're already looking for another facility that sort of ramping up in the pilot?

Yes. So that sale commenced back in 2019 into 2020 of the lead of refining plant. And that plant is being -- we've agreed to and have worked with LiNiCo to work that deal out. In the meantime, we've really prioritized and stepped up our lithium op-refining capabilities at our innovation center and that's really where the focus is on our refining for lithium development today, which is inclusive of us extending that towards a demonstration plant of our own. And we would be putting that in place effectively to suit for our efforts, specifically while we look at LiNiCo and other parties as partnership opportunities and licensing opportunities, like I mentioned to the earlier question.

And I guess this was touched on upon as well. But as you -- with -- related to the black mass, how are you thinking about access to Black mass as you ramp for 2024?

Yeah. So we've already announced that we've secured quite a bit of black mass for our operations in 2023. And we physically received quite a bit of it that we just tweeted some photos about, I believe, in the past week that people can see, and it's on our latest corporate deck as well. So we have a lot of the black mass here. We've got the supplier partners and diversity in that side of it. So we see that as a great opportunity.

And also because our process is so environmentally favorable to really all the other processes that are out there, we are able to get cells in and work with black mass providers to work out deals for them to effectively crush those cells and deliver to us the black mass. So we're bringing value to the table with these black mass providers, and we see that as a continued way to continue to be able to scale our efforts.

And all that said, we obviously have a lot of battery breaking and crushing capabilities from our history as a company. And in the longer run, we see opportunities for us to also be able to generate black mass from the cells directly ourselves in addition to partnering.

Okay. Perfect. There's one that's a little bit more technical. Maybe I'll ask this and then we'll take a pause, how adaptable is the lithium-ion battery recycling technology to various compositions of batteries? -- i.e., does each type require recalibration or can you group any type of black mass and separate the elements?

Yes. So our technology is quite flexible in the composition of that material that comes into our process. And it really comes down to how you optimize how many lithium nickel cobalt cells you put in there as compared to the production of the lithium hydroxide material itself. So we try to work with the black mass suppliers to get it to a spec range that's actually quite wide that includes multiple battery chemistries.

We also beat through our process because it's really the most economical process in addition to orders of magnitude improved environmental processes, it affords us the ability to process LFP or lithium iron phosphate batteries that are cobalt and nickel free and work to produce that lithium hydroxide. That's one of the reasons that we saw a great opportunity to partner with Dragonfly that makes that type of battery chemistry is a safer battery chemistry for stationary in particular applications.

So we think that we have the most flexibility, including being able to process LFP-type batteries that really nobody wants that other recyclers based upon the chemistry of those batteries, not having those other materials and their process not having the economic capabilities to recover them as we can. So that's one of the real strengths of lithium Aquarefining is the ability for us to work with all these various chemistries and players in the ecosystem that have these various chemistries.

Okay. A couple more here, and it relates to strategy, and I know you touched on some of this, but at what stage of the business life cycle do you think Aqua Metals is at, at the end here of Q3 2022?

So I would say that for our licensing business, we're in a stage of launch and commercial launch of the licensing business for the lead of refining as evidenced by what we have in ACME in Taiwan and a continued desire to develop that as a licensing and equipment supply business with now a mature product with a technology risk level that's very commercialized. When you look at the lead -- I'm sorry, the lithium op-refining business, we have a higher technology risk level than the lead side, but we're rapidly progressing that forward, particularly with the inflection point of opening up the -- one of the world's, if not the U.S. is first end-to-end black mass full production facility to produce all these various minerals.

And that will take us to the point where we can then begin to commercialize for ourselves as well as partnerships, the lithium on refining technology in a revenue-producing mode as early as this quarter and getting into the next year. So that is a very exciting thing for Aqua Metals to be able to have that lithium on refining to the point where it can start to generate revenue as we continue to derisk and then scale the technology through '23 and '24 and beyond to the point where we can generate hundreds of millions of dollars of revenue per plant.

Right. And are you seeing multiple companies, customers, potential partners making arrangements or becoming interested in visiting the plant to see it operational in the coming months? And what is your competitive leverage around that?

So we've definitely been very active with our commercial team working with the various players in the ecosystem. And that's why we're prioritizing November and December, those that we've shared are process flow sheets and capabilities under nondisclosure agreements and talk in details about how it would look if we partner together, whether it be supply of black mass, ranging to an offtake partner to anything in between looking at things like joint ventures and how we get from pre-can to can materials.

And so those players, you can count on -- you need more than 2 hands to count them that would like to come and see the facility as soon as possible. And that should facilitate further discussions with some, if not all of them, on what that partnership opportunities could look like. And that's really what we're focused on in really the remainder of this year and as we get into Q1, but it's also very important for people in the investment community and analysts to come and see the facility as well.

We're trying to balance the visitors, so it doesn't become a showcase visitation facility, but it's actually an operational facility because from time to time, we're able to host visitors and not disrupt our engineers and operations team. So that's how and why we're prioritizing in the coming weeks and months. And we're really excited to have everybody there and look forward to welcoming everyone here to Tahoe-Reno.

Great. I want to bring the operator back in? Because as I understand, there's another question on the line. Is that accurate?

Certainly, our next question is coming from Steve Kruger from Foresight Investing.

I'm still trying to get my head around the relationship between your plans for operating the pilot plant for recycling lithium and then scaling that up with your own facilities and the relationship with that enterprise with what LiNiCo is going to be doing. I thought LiNiCo was going to be doing the same thing. Are they going to be doing something different? Are they not recycling lithium? What's the relationship between what you're going to be doing and what they're going to be doing?

Yeah. So LiNiCo is focused on acquiring battery cells and crushing and producing black mass material. As -- and we're focused on taking black mass materials and input to our process and creating the minerals that we've talked about earlier in the call today. So really, we're focused on a different part and stage of the process, and that is a very complementary thing for what LiNiCo's planned operation is to look like as well as our own operation, which starts with Black Mass, not the cells and takes it through to the end result. And so they're complementary with that -- them as a partner, and it's solely an operation that we can operate ourselves as we operate that lithium AquaRefining pilot and get that scale to a demonstration plant and beyond.

So essentially, the LiNiCo plant will be a supplier of black mass, and that's going to be their principal business. Is that what I understand, Steve?

Which could be greatly enhanced by in that same plant, taking that black mass that's produced forward to all those critical minerals, just like we're doing in our pilot plant.

So LiNiCo could be evolving into a competitor essentially.

No, not at all because they would be incorporating and working with our technology to take the black mass that they produce forward to pure nickel, pure cobalt, lithium hydroxide and other materials that we would work with them to complement their technologies with ours, not competitive. Complementary. Additive to our business.

I guess I'm confused that you both be recycling lithium lithium-ion batteries to produce high-value pure metals, cobalt, nickel and so forth. You both be doing that same thing, right?

LiNiCo would be taking in battery cells, storing battery cells, crushing battery cells, separating the materials, creating the black mass material. Aqua Metals will be taking the black mass material and creating nickel and cobalt and copper and other minerals from the black mass that LiNiCo produces in a noncompetitive complementary fashion. In any time, Aqua Metals will operate its own facility that will take black mass from LiNiCo potentially as well as others that we've already been taking black mass from and take our part of the process forward.

Okay. Got it. So have you done any kind of initial planning as to what kind of size of plant you would be building as you start to scale up your own recycling process?

Yeah, of course. So the 840 tonnes plus for the plant that is the pilot plant is step 1. And then the demonstration plant will have to be in a different location, and that commercial demonstration plant is something that we have not announced what the location or configuration and tonnage of what that plant will look like, but it will be a lot more than the 840 tonnes, and that would get us into 10s, if not towards $100 million plus of revenue in the next stage of the development of the plant. And then you go to the larger plant from there and so on depending upon who you partner with and organically built facilities.

Right. The current price is at 840, the size of the pilot plant capacity. How much is that price out to per ton on a blended basis of the metals you'll be producing?

We've said before that the pilot plant can generate up to $20 million of revenue.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over to Steve for any further or closing comments.

Thank you all again for your time and attention today. We are positioned for an exciting end to 2022 in a transformative 2023. Several important initiatives are ready to deliver meaningful benefits, and we are growing our base of partners and customers. We look forward to providing updates to our shareholders and stakeholders and interested parties.

In the near term, I will be attending conferences and meetings with investors in New York in late November and early December, and we'll also have more information on the pilot plant tours for investors to begin in January. If anybody has questions in the meantime, please feel free to contact us or FNK IR, and we look forward to our next quarterly update call. 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.