Aqua Metals Inc (AQMS) 2024 Q1 法說會逐字稿

Greetings, and welcome to the Aqua Metals first-quarter 2024 investor conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bob Meyers with Investor Relations. Thank you, you may begin.

Thank you, operator, and thank you, everybody, for joining. Earlier today, Aqua Metals issued a press release providing an operational update and discussing financial results for the 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. Please refer to the company's report on Form 10-Q filed today, May 15 for a summary of the forward-looking statements and the risks, uncertainties and other factors that could cause actual results to differ materially from those forward-looking statements.

Aqua Metals cautions investors not to place undue reliance on any forward-looking statements. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law.

As a reminder, after the formal remarks, we will be taking questions. Questions will be accepted over the phone from analysts and all other investors can submit a question using the online webcast portal provided in today's in 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.

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 and low carbon recycling of lithium ion batteries.

We continue to establish and expand key partnerships, while simultaneously commissioning and commercializing this year of 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 an up to $33 million loan term sheet for the completion of Phase one of the (inaudible)

We have executed the 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, technology and the [CRx] ability to generate cash.

This involve 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 timeframe.

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 build-out as the decision time line for Phase one has simply taken too long.

In conjunction with the signing of this up to $33 million loan agreement term sheet, the 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 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. As we all know, the capital markets are challenging now, which is why we strategically chose to finance the completion of this year are 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 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.

Moving on to 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 the 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 master 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 the manufacturing of new low-cost recycled battery. 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 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 has demonstrated success first with a nonrecurring engineering agreement, it accomplished key technology objectives next to our strategic supply agreement and important developments looking ahead, including further technology 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.

even hydro processes that purport to improve environmental outcomes over pyro use massive quantities of onetime use chemicals that are expenses, 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. 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 Sierra ARC continues.

We have completed the vast majority of the building uplift, including brand new concrete floors and coatings. Steel superstructure and equipment platforms, full laboratory operations already staffed 24/5 offices, utility power drop in switchgear and power distribution. We are shifting our focus now to mechanical electrical 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 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.

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 final disposition 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 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 in our organizational capabilities.

And references of earlier remarks. The clean energy industry is still growing and maturing. There are 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.

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, Aqua Metals 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.

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

Thanks, Steve. As we announced this morning, and as Steve discussed on May 13, 2024, we entered into a nonbinding term sheet for an up to $33 million loan facility with one of the largest privately held companies in the world that invest in 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, 2024 or shortly thereafter. And this is subject to closing conditions. 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 loan with our strategic funding partner.

Turning attention now to the balance sheet. 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 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 the second half of this year.

Moving now to the income statement. During the first-quarter 2024, Aqua Metals focused on continued validation of its pilot plant operation. The pilot plant purpose was to test our process for lithium battery recycling and to provide sample production representative metals produced to multiple announced and unannounced counterparties. The Cost related to plant operations were approximately $2.2 million for the quarter. Research and development costs increased approximately 32% compared to the quarter ended March 31, 2023.

General and administrative expenses stayed steady for the quarter ended March 31, 2024, 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. 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.

Our net loss for the year was approximately $5.8 million or a negative $0.05 per basic and diluted share compared to net loss of $4.6 million or a negative $0.06 per basic and diluted share for the same period in 2023.

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. 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 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 one capacity, a commercial scale production. It is expected that once we're 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.

(Operator Instructions)

Michael Legg, The Benchmark Company.

Thanks, good afternoon, congratulations on the quarter and the capital raises, obviously puts you in a great position. When you mentioned the market rate on the $33 million, just can you give us a little more clarity what moved that market rate as it missed that, is it normal, can you just give us a little more clarity there?

Yes. 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 9 ish percent range, and that would have been a better than this rate.

But the market that we've seen, we've and we went out talked to several different lenders and all kind of came in and we'll be able to give more detail once we get the definitive agreement signed. But according to the consultants we used and the people that we reached out to that we're kind of in that market rate for where we're at as a company.

Okay, great. And then covenants attached, are there any cash restrictions or any issues with the covenants that may tie up some cash?

We're very standard covenants all across the board or some financial ratio covenants that you always see in these types of things would be modeled out in our fine with. And then, you know, there's some minimum, very doable minimum cash requirements by the entity.

Okay, great. And then so this is expected because end of June, 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 smooth right now?

Yes. So, everything's moving along as planned. We had cranes show up a couple of weeks ago, some tanks and chillers and things like that. So, all that equipment is being installed. We've got things that we've ordered that are coming.

So, the next phase and it's kind of timely. The next phase is a lot of like the installation and some of the construction like piping electrical and those types of things and selling things in place. And so that is scheduled to happen shortly and so that the timing of that funding works out really well.

Great. And just one last question, I'll get back. The 6K offtake, I believe the Jackson Tennessee facility is not supposed to open until to 2025. Can you talk about when they're going to start, except the plant is up and running?

So, we're already sending samples to 6K from the pilot facility because, they have a UniMelt process capability, pretty kind of a pilot environment just like we do currently. So, when we get this year are 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 PlusCAM-1 facility, then the volume will start heading towards them as well for offtake as they can be. So, we're already getting them materials now that have been put the hands of various battery manufacturers and auto manufacturers that are verticalizing, et cetera. But the PlusCAM facility will come online after Sierra ARC and we're set up for (inaudible)

And what percentage of the offtake would you expect them to take?

So, as time progresses, they can take a significant amount of offtake. We don't disclose the percentages of offtake for various offtakers, but it will be a very significant percent. What our agreement with them that we publicly disclose is that we would target together us providing them 30% of their input feedstock. So, you can kind of map out what that might look like from that.

So, they will have a 30% recycled content and then reminder that the NRE, the nonrecurring engineering projects 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. Congrats on the progress. (inaudible) the things moving along to look forward to the rest of the year.

Thanks so much.

Sameer Joshi, H.C. Wainwright.

Yes, good afternoon, everyone. Thanks for taking my questions and congrats, Steve and Judd, on the financing and all the progress. Just on the same Phase one, 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?

Yes. So, the total CapEx for this project, we've always said is about almost $30 million. And so what's great about this node is we've spent some of our working capital, some of the company's working capital that we set aside for G&A already in operations for CapEx. We've already started building this. And so we'll be able to reimburse us for some of that cost through this loan.

So, really, it's the loan is designed to be a total kind of complete of 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 loan was designed to do.

Understood. And the clarification, I think, Steve's commentary mentioned that there was $8 million cash balance requirement, balance requirement. And I think Judd, you mentioned the $7 million raise was towards that and, is there additional equity capital raised in the works are being planned for this or the cash on hand plus this raise satisfies that condition?

Yes. So, we designed it this way, trying to minimize dilution on the equity side to bring in just the right amount of dollars to be able to qualify for the requirements for this loan. And so what we brought in was the appropriate amount and there's we don't need to bring in another equity key component to that.

Understood. Once again, thanks for taking my questions and congrats.

Thanks.

Thanks.

Thank you. I'll now hand the floor to Bob Myers to go through the webcast questions. Thank you.

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?

Sure. Happy to. So, PADNOS is a big company based in Michigan, and they're one of the largest recyclers in the US. 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 EV.

Therefore, things like lithium battery access. We've known and worked with PADNOS even pre IPO, and they were a major participant in this recent equity transactions. And we've collaborated also with PADNOS and a very large deal(inaudible) 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. This grant is a $200 billion 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, we PADNOS are both aligned and very excited about the opportunity to win that grant together.

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?

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 with our asset. 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 supply for critical battery metals right here in the US. And both companies have notably electrified processes and clear path to net zero. 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 and waste materials that go into the air in the form of CO2 or to land in the form sodium sulphate compared to what's the process to begin with where we together don't have those issues.

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 nonrecurring engineering that I was talking about earlier and initial offtake contracts that we announced is the foundation for additional agreements that we anticipate working out with 6K energy, and that includes things like co-locating ARC's with their PlusCAM facility starting with our Jackson Tennessee facility.

So, we're really excited about that ongoing and growing relationship that we have 6K Energy and differentiators compared to any other component of the marketplace, both environmentally and very importantly economically.

Thank you. Just a couple of 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 of Phase one of the Sierra ARC based on today's metals price?

Yes. So, we haven't talked publicly about specific margin profile. But we have said that Phase one, the first 3,000 tonne plant will be a positive cash flow at the plant level. And just as a side, meet the covenants for the new debt that we're doing and be able to pay back service the debt on that loan.

But if you think about the 3,000 tonne processing capacity, we think about what today's metals prices are and they're kind of just your low, if we kind of look at the last few years that we're able to generate about yield about $34 million of revenue. And so at today's metal prices, we expect that to uptick as we get the plant turned on later this year and start generating more meaningful revenues in 2025.

Great. Thank you. And I should also probably be for you. We've got a few questions regarding the NASDAQ and the relationship that Aqua Metals has on the listing requirements?

Yes. So, as we know, we've been below $1, but we talk to the NASDAQ and they do an offer a six month extension. We're coming up on that first six months at the end of May, it's a couple of weeks. But we've already reached out to the NASDAQ and we qualify for a six month extension.

And so we have that opportunity to get back above $1 and meet that requirements. If not, we'd have looked at alternatives such as you know, we hate to say it, but a reverse stock split. Hoping back to get there, but we have six months to work on that. But in no case, are we going to choose the listing.

Great, thank you. Pivoting back to the partnership. Can you provide a quick update, new home materials and where the discussions on that licensing agreement stand?

Yes. So, I think I said before that we had visited your Yulho late last year and their black mass 8,000 tonne nameplate black mass 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 (inaudible)at 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 Seierra ARC developments and discuss the definitive licensing agreement. 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.

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?

Sure. Happy to. So, really that is a really exciting program. And Aqua Metals is a sub recipient to Penn State, and it was the lead applicant for that grant, unlike the grant that we're applying for Aqua Metals (inaudible) We are a sub in this case. And Aqua Metals from this grant will be funded to work on extending, really operating 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 clean up and community economic development. 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 by-product 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. And the timeline is not immediate for us, but the overall time line is July. The negotiations are expected to begin and that's how it works with the DOE when grant happens. The initial work when 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 the ARC up and running. But we're really excited about being a part of this grant and being able to take our ARC refining technologies and apply them to such a critical applications is taking waste materials out of the environment and then making critical battery metals right here in the US.

So, the desired outcome of that grant for end results is to establish a domestic supply chain circularity and have advanced separation technologies for extraction and recovery of things like rare earth elements and other critical materials from those coal and coal waste coal by-products. And then the creation of permanent magnet alleles for high-tech defense applications and ultimately reduce the US reliance on foreign suppliers for critical minerals and the rare earth materials.

We've also got other stuff that we're partnering with inclusive of 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. It's us on the map with DOE, obviously, as they consider us for our gram.

Perfect, thank you. The next question. Are there any other lithium ion battery recyclers that can deliver lithium hydroxide other than Aqua Metals?

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 costs for crystallizes is tens of millions of dollars, and that would be more appropriate to go to lithium hydroxide in a crystallized form at scale when we get to the Phase two, 10,000 tonne 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.

Lithium carbonate, you don't crystallize. It's like a 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 investors' website, you will see that there is much less stated recycling capacity between Aqua Metals and Redwood materials and a couple of other players as compared to the black mass. It's going to be available for recycling already beginning in 2025. So, everyone who succeeds will win.

Perfect, thank you. 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?

Well, I would say that 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 pyro metallurgical process by literally burning things or through the hydro processes that create a lot of CO2 by moving the atoms around the molecules, they escaped it stacked as a light gas, you can filter it out.

So, that carbon that we get is literally about 30% of the waste that black mass that again does not go into the air, and makes our process very sustainable comparatively to really any other processes. That carbon can be up cycles after initially reduce with things like cement, believe it pencils manufacturers that they're looking for carbon graphite, et cetera, it doesn't have to be the high technical grade, but carbon can be up-cycle to graphite and then ultimately graphene.

So, we'll go from a pathway. We believe from a reuse state, which doesn't have economics of that are very favorable, but no negative economics. And we ought to pay the disposals that we did to reduce carbon in certain applications and then migrate that to a modest amount of revenue that we get from the graphite and then really, if we get to graphene, that would be a very highly valuable material that we can the upcycle from our carbon that we start with.

Okay, thank you. 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 product, even if not at full capacity?

Yes. So, there's definitely a ramp phase one. And as we were mentioning earlier, the fitting of the already built out facility with the equipment getting put in place, et cetera. We still expect to be introducing the first black mass out this year or later this year. And our goal is to produce the first truckloads of material. Truckload is literally 20 tons of material, and there's a lot more nickel than there is cobalt in batteries.

One of the common battery recipes, for example, is [NM-38118] parts nickel and(inaudible) in one part cobalt. So, we'll be producing that nickel and lithium first, and we think that we'll be able to get to the first truckload of the lithium and 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 of time materials that are going to first customers, how ever because, these are commodities that are listed on London Metals Exchange, certainly the nickel and all that we might be able to get to revenue, but it might it go into Q1 of next year to be determined.

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?

So, in our process, very, very little waste of that. The nickel and the lithium and cobalt go out, obviously, through our economic gain by selling those finished product is finished products. And then that carbon, I was talking about is about 30% of the weight of the black mass, that will get into a reuse scenario. So, that's not waste, that's just reuse.

And then we do get a little bit of iron and aluminum and other contaminants elements that don't help to meet battery spec. And those are very diminimus small amounts of material. 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 and crystallizes to dry our trash and send it out crystallized sodium sulphate to the landfill. 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 it. So, that's truly one of the great unique environmental and economic benefits of ARC refining.

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

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.

Thank you. This concludes today's conference. All parties may disconnect, have a good day.