Aqua Metals, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Aqua Metals fourth quarter 2018 corporate update call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero I would now like to turn the conference over to Alison Ziegler, Managing Director of Darrow Associates. Please go ahead.

Alison Ziegler Thank you, Operator. Welcome to AquaMetals' year-end 2018 conference call. Earlier this afternoon, AquaMetals released financial results for the year-ended December 31, 2018. This release is available on the Investors section of the company's website at www.aquametals.com. Joining us for today's call for management is Steve Cotton, President and CEO of as well as Judd Merrill, the company's chief financial officer. During today's call, management will be making forward-looking statements. Please refer to the company's annual report on Form 10-K filed today 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. And with that, I'd like to turn the call over to Steve Cotton, CEO of AquaMetals. Steve, go ahead.

Thanks, Allison. Good afternoon and welcome. As you read in today's press releases, we have made significant progress readying the company to scale our aqua refining operations in our McCarran, Nevada facilities. and, with the help of our new strategic partner, we are positioning AquaMetals to expand on a global basis. Let me first update everyone on today's announcement of our new strategic partnership with Veolia North America Regeneration Services. Veolia is a multi-billion dollar global leader in operations management known for their commitment to sustainability and the circular economic business model. Today's announcement comes after months of mutual due diligence. including engineering process review, mass balance of the plant, which identifies all material flows, detailed financial modeling. Under the terms of the initial two-year agreement, Veolia will provide operational and technological expertise and organizational capabilities in aqueous-based processing chemistry and will also take on responsibilities for operations, supply chain, offtake, and management of the plant. The agreement has been structured to ensure that both companies' interests are aligned in reaching our goal of scaling plant operations to 16 modules of aqua refining capacity by the end of 2019 and future rate increases in 2020. Veolia teammates will officially begin working on site beginning on March 4th. Longer term, we believe that having Veolia manage operations at the McCarran plant will also enable them to provide go-to-market support as we seek to deploy our technology on a global basis. facilitating our transition to the next phase of our business strategy to become a capital life technology licensing organization. Veolia's size and technical regeneration capabilities are expected to provide valuable and additive expertise as we execute on our business plan. We chose to partner with Veolia for its well-deserved reputation as a global leader in operations management and its commitment to sustainability in a circular economy business model. Turning to progress at the plant, The Phase 1 plant upgrades to recycle and reuse electrolyte in order to increase our contribution margin are nearly complete. We chose to operate the plant 24 hours by 4 days a week for portions of Q4 and through Q1 to date to safely complete the Phase 1 upgrades and Phase 2 piloting. We are still in the process of commissioning the large new filter press we have successfully installed on its new concrete steel platform. and plan to commence commissioning next week and hand over to production by the end of March. This should allow us to scale the production of the concentrate that feeds all of our aqua refining modules. The full-size centrifuge replacing the pilot unit arrives by the second week of March and is slated for commissioning by early April. We need the larger centrifuge for getting concentrate production beyond four modules, so at this point, its commissioning schedule, albeit delayed, is not on the critical path for our scaling timelines. With the new filter press and centrifuge in service, we expect to pick up the remaining electrolyte recovery to get the full 75% target from the 67% that we've already accomplished. Moving on to aqua refining modules, we have made tremendous progress and have demonstrated that the aqua refining modules can consistently achieve steady-state production with each of the initial four modules for weeks at a time, not days. We have also commissioned and run our fifth module with additional updates that we believe will significantly reduce the labor requirement, including automated controls that we plan to roll out to the remaining modules once dialed in. With these and other process improvements complete, we expect to be in a position to begin scaling by the end of Q1 and expect to achieve full-scale production of our initial four modules, including returning to 24-by-7 staffed operations by the beginning of the second quarter. With the 100 kilogram per hour parameters we have set for the modules, this should enable us to achieve the target production of 2.3 to 2.4 metric tons per day per module. Our ingot line became operational in the fourth quarter, and truckloads of aqua refined lead have been shipping directly to battery manufacturing facilities, with these facilities already building and testing batteries made from aqua refined lead. As we previously reported, we also achieved official lead vendor approval from Johnson Controls, which is a major accomplishment for the company. We have completed installation of an additional kettle to process the hard lead from the batteries we break, and those operations have also begun. We expect the new kettle to result in up to a 25% increase in finished lead ingot, which can then be sold for more than we are currently receiving for uningoted hard metallic lead, further aiding our contribution margins. On the human health and safety front, in Q4, we completed the comprehensive safety and process audit by Worley Carson's Abyssinian Group, a global leader in health and safety engineering and consulting, and we have been implementing recommendations systematically. Ensuring a safe environment for our people is critical, and we've made major enhancements over the last year. Additionally, under the guidance of our VP of HR, Terry Bradfield, We also implemented formal performance and incentive compensation systems to attract, retain, and motivate employees. Terry was also instrumental in recruiting our new CFO, Judd Merrill, who has already strengthened our finance and accounting functions and initiatives. Judd and his team have implemented multiple cash-saving efforts over the last several months, anticipated to conserve $2 to $2.5 million in 2019. Judd was also instrumental in executing the equity offering in January which raised net proceeds of $9.1 million. This funding gave us the flexibility to pay off our convertible note due May 19 with interstate batteries, saving approximately $300,000 in the first and second quarters. We also continue to strengthen our board of directors, most recently adding Gail Gibson, a former leader of DuPont Central Engineering. On the patent front, we continue to strengthen our already comprehensive patent portfolio and recently received our first patent grant in the European Union and additional grants from both the Ministry of Economic Development and Trade of Ukraine and the Korean Intellectual Property Office. This brings the total number of grants to 13, and our allowances now stand at two. In addition to the new European Union patent, we have one U.S. patent as well as international patents and allowances in Korea, Japan, China, Europe, Australia, Canada, African Intellectual Property Organization, Mexico, South Africa, and the Ukraine. We also have over 90 patents pending in the United States along with 20 additional jurisdictions. Since our long-term vision is to co-locate aqua refineries alongside smelters around the world, implementing an aggressive global patent strategy to protect our first-of-kind technology is key to supporting our business plan. I will now turn the floor over to Judd Merrill, Chief Financial Officer, to review our Q4 and 2018 financials. Judd.