Aqua Metals, Inc.

Greetings. Welcome to AquaMetal's full year 2021 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may submit a question via the web at any time by using the ask a question feature on the side of your screen. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to spokesperson, Glenn Axelrod. Thank you. You may begin.

Thank you, operator. Welcome to Aqua Metals' fourth quarter and year-end 2021 results conference call. Earlier today, Aqua Metals released financial results for the quarter and year ended December 31st, 2021. The release is available on the investor sections of the company's website at www.aquametals.com. Joining us for today's call from management is Steve Cotton, President and CEO. Judd Merrill, the company's chief financial officer, and Ben Tucker, chief engineering and operating officer. During today's call, manager will be making forward-looking statements. Please refer to the company's report on Form 10-K filed today, February 24th, 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 site statements to reflect new circumstances or unanticipated events as they occur, except as required by law. As a reminder, after management's formal remarks, we will be taking questions. Questions will be accepted over the telephone from analysts, and all other investors can submit a question using the online webinar portal provided in today's and last week's press release. 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 Codden, CEO of Aqua Metals. Steve, please go ahead.

Thank you, Glenn, and welcome and thank you everybody for attending today's call. And I will start and I'll read off the slide numbers and all of us will read off the slide numbers as we go through the deck so you can follow along if you're offline. So the first slide is slide number one about AquaMetal's leading revolution both in lead and lithium battery recycling. And slide number two, Glenn basically just read to you the safe harbor. It's for reference on the website. Slide number three starts off with our mission, and that is to provide sustainable metal recycling for materials that are strategic to energy storage applications. And our proven technology, which we call aqua refining, returns those raw materials back into the manufacturing supply chain in a clean way and an economical way that reduces the reliance on mining to meet demand and growing demand for all these minerals. Slide number four, clean metals is really, in terms of recycling, is key to our future. You can see the quotes there, both from the U.S. Secretary of Energy as well as the U.S. Department of Energy. And I'll point out that aqua refining uniquely uses the renewable electron versus fire or chemicals as the reagent, which is really in support of what the U.S. Department of Energy is saying here, which is that the vision is for a global production of metal using just air and water and clean energy as inputs. If you use the electron as the reagent, you have the ability to vastly reduce the emissions and make it worthwhile to electrify the world and recycle the batteries in that closed loop. Slide number five is pointing out that aqua refining for lead and aqua refining for lithium are really the only technologies that are aligned with that vision. And supporting that is that it is room temperature in a closed loop in a fundamentally non-pollutant process. We've already commercially proven the extraction of lead and have proven a cleaner and more cost-efficient recovery and recycling process. We also produce a higher quality product because we plate metals. We plate ultra-pure metals. In fact, very high purities that command higher values in the marketplace. We're expanding the lead into lithium recycling and you'll see the listing of minerals there such as cobalt and nickel and manganese and copper and lithium. And we'll get into some more detail on how we're doing that and our status as we move forward through our development process in the lithium space. And this whole area of technologies and suite of aqua refining technologies is patent protected and I'll get into more details on that a little bit later. Slide number six really shows our journey as a company. And I'm not going to read all of these milestones to you all, but I'm going to point out that in the last quarterly update call, the green area is the future. The blue area is the present and the past. And we've moved to the present and past, really, the September and the December milestones. And the key milestones that we've had recently that we're reporting on is that we've achieved lab-scale testing of the lithium ion recycling. while we also shipped aqua refining for lead equipment to our first licensee and partner in Taiwan. So if you look forward and look at the green portion of the arrow, you'll notice that in August of 22, we expect to achieve operational testing of a full-size lithium-ion aqua refining recycling unit. And then by early next year, potentially a full-scale development and deployment of aqua refining for lithium-ion batteries. Our ticker on the stock exchange is AQMS on NASDAQ. Our corporate headquarters is in Tahoe, Reno area of Nevada. We were incorporated in 2014. And as of the end of the year, we had 70.4 million shares outstanding. And the cash in hand is 8.1 million as of 12-31. And we are debt-free with a strong balance sheet. And Judd will speak to our financials in more detail coming up in our discussion today. moving on to slide number seven we're going to get into the highlights of our accomplishments for 2021. this is the year of 2021 summarized in two slides first off we wanted to really brag about our innovation center that we did open up in the tahoe reno industrial center this is a separate facility that's less than a mile away from the original aqua refinery that we sold to linico with the emerging lithium ion battery recycler and our innovation center is really focused on the development and prove out of the lithium ion battery recycling technology. We also developed our third generation aqualizer for lead and completed that in a year. And that resulted in a 300% improvement in the production as compared to the original model that we ran 24 by 7 in 2018 and 2019 and that version that's shipping to our partner in Taiwan. We also increased our ownership throughout the year in Lineco by 20% through some exercised warrants. Our patent portfolio increased pretty significantly for the year to eight U.S. and 63 international patents from six and 40 international patents in the prior year. And the lithium ion patent application did convert from a provisional recently to a non-provisional patent. and expect to see a lot more activity from Aqua Metals in terms of patent prosecution, because we do take EIP very seriously and ensure that we protect it on a global basis. We signed our agreement with Acme Metal, and that agreement is to deploy and license aqua refining equipment at its facility in Keelung, Taiwan. And we also did our final insurance settlement and payment and collection of $5.25 million. So a total of 30.25 million in total insurance proceeds collected from the 2019 fire event. Moving on to slide number eight, a little bit more on the progress of the Innovation Center since we've established it through the year. And that is that the lithium ion battery recycling R&D is well underway, and we've completed an already lab tested plating of cobalt. We believe that the cobalt plating is the first cobalt that's been plated from lithium ion batteries in a metal form. We're also targeting a pilot circuit to produce materials by Q3 of this year in that innovation center on the pilot circuit. We also established a collaboration agreement which is really important with Linneco. Linneco stands for lithium nickel cobalt and again that's the company that purchased the aqua refinery which is about 140,000 square foot facility that's about a mile away from our innovation center in the Tahoe Reno Industrial Center. And that collaboration agreement anticipates commercial production beginning to scale by late this year and getting into early 2023. The focus on that collaboration agreement really is that Linneco will focus on the lithium ion battery breaking and separation and creation of black mass. which is the amalgam of the minerals that need to be recovered, and Aquametals will focus its technology and efforts through the Innovation Center on extraction of the various minerals from that black mass. We also added some very important strategic capabilities for the year. The first is Dave McMurtry as our chief strategist. You can find a profile of Dave McMurtry on the About Us management team section of our website, and I recommend you go and look at Dave's vast background in strategic corporate activities. Dave is also spearheading our relationship with Silver State Government Relations. That's also headed up by Sarah Adler, who was really a champion for aqua metals in achieving our U.S. Department of Agriculture $10 million loan that we repaid early to de-risk and establish our technology. We're working with her and Silver State Government Relations as it relates to lithium battery discussions with local and national politicians. Justin Chen also joined us as our Asia-Pac regional leader. Justin comes from a deep background of lithium-ion space and is also helping us with our efforts with ACME in Taiwan and building those relationships with ACME's customers. We also shipped the first shipments to Acme Metals and expect soon to be in the installation and commissioning efforts later this year. Next slide, number nine, summarizes the latest status of our really robust and strategic IP portfolio. And you can see here the coverage being the blue, dark blue of issued and allowed patents, and then the lighter blue of the pending patents, really covering the space that we intend to operate it. Because remember, our model as an enabler is technology and licensing, and it's also strategically beneficial because it's geographically unbound, and we can take off refining technologies anywhere in the world. The next slide, number 10, talks really about the lithium space and the really, truly massive market opportunity as lithium ion recycling grows. The predicted volumes of used batteries really make it imperative that the recycling is done. And to begin with, because today only 5% of lithium ion batteries are recycled, the rest of them aren't. And the industry aims to get that to 100%. But to get there is one thing, but to get there sustainably is another. And that's back to the point of the technology that our underlying off-refining technology enables. And we'll be getting into some more detail on the differentiators there shortly. But to summarize here, we really estimate our total addressable market to be about $10 billion by 2025 and $31 billion based on a 2030 timeframe. and the aqua refining recovery rates that we'll be getting into some more detail on. So it's a very rapidly changing and growing and new industry, and it's going to be very complementary to the lead industry in the sense of our business mission, because you've got an established lead industry that we're innovating and working to evolve, and then a new lithium ion battery recycling industry that we believe that we've got some really differentiating technology. And to do justice to describe that technology, I'm going to ask Ben Tacker, who is our Chief Engineering and Operations Officer, to take everybody to the next two slides and describe what it is about aqua refining that makes us special and unique. So I'm going to hand it over to Ben. Go ahead, Ben.