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spk00: Greetings and welcome to the AquaMetals first quarter 2024 investor conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bob Myers with Investor Relations. Thank you. You may begin.
spk03: 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 Investment 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 15th, for a summary of the forward-looking statements and the risks, uncertainties, and other factors that could cause actual results that differ materially from most 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 and 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 AquaMetals. Steve, the call is yours.
spk06: 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, AquaMetals 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, low-carbon recycling of lithium-ion batteries. We continue to establish and expand key partnerships while simultaneously commissioning and commercializing the Sierra Aquaree Finding Campus and 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 1 of the Sierra Arc. 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 CRR's ability to generate cash. This involved 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 timeline for phase one has simply taken too long. In conjunction with the signing of this up to $33 million loan agreement term sheet, a 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 raise 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 the Sierra Arc 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 for Sierra Arc Phase 1 coupled and our qualifying equity support. I would like to thank our to-be-named loan partner, shareholders, partners, and employees for the 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 to 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 mass to 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 batteries. Towards the send 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 mass to 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 non-recurring engineering agreement that 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 AquaMetals 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 one-time use chemicals that are expensive, 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 CRR 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 by 5, offices, utility power drop, and switch gear, 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 AquaMetals 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 finalist position 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 referencing some 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 ULHO Materials. Further development of our commercial partnership 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.
spk04: Thanks, Steve. As we announced this morning and as Steve discussed, on May 13th, 2024, we entered into a non-binding term sheet for an up to $33 million loan a facility with one of the largest privately held companies in the world that invest in decarbonized 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 30th, 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 31st, 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's 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 costs 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 31st, 2023. General and administrative expenses stayed steady for the quarter ended March 31st, 2024 compared to the quarter ended March 31st, 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 of 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 five cents per basic and diluted share compared to net loss of 4.6 million or a negative six cents 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 commercial production it is expected that once we are 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 thank you and at this time we'll conduct our question and answer session if you would like to ask a question please press star 1 on your telephone keypad and
spk00: A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. And our first question comes from Michael Legg with The Benchmark Company. Please say your question.
spk02: 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, can you give us a little more clarity? What do you mean by market rate? Is it Mesdet? Is it normal? Can you just give us a little more clarity there?
spk04: Yeah, so thanks, Mike, for the question. If you go out and 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 nine-ish percent rate. And that would have been better than this rate. But the market that we've seen, and we went out and talked to several different lenders, and they 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, we're kind of in that market rate for where we're at as a company.
spk02: And then covenants attached to it, are there any cash restrictions or any issues with the covenants that may tie up some cash?
spk04: The very standard covenants all across the board, there's some financial ratio covenants that you always see and these types of things would be modeled out and are fine with. And then, you know, there's minimum, very doable minimum cash requirements by the entity. Okay, great.
spk02: And then, so this is expected to close 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?
spk04: Yeah, so everything's moving along as planned. We had cranes show up a couple weeks ago, some tanks, some chillers, and things like that. So all that equipment is... you know, 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, like the installation and some of the construction, like piping electrical and, and those types of things and setting things in place. And so that, you know, is scheduled to happen here shortly. And so that the timing of that funding works out really well.
spk02: And just one last question on the back. The 6K offtake, I believe the Jackson, Tennessee facility is not supposed to open until 2025. Can you talk about when they're going to start accepting if they plan anything up and running?
spk06: So we're already sending samples to 6K from the pilot facility because they have a Unimelt process capability, you know, kind of in a pilot environment just like we do. currently. So when we get to see our ARC 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 plus CAM1 facility, then the volume will start heading towards them as well for offtake as they need. So we're already getting the materials now that have been put in the hands of various battery manufacturers and auto manufacturers that are verticalizing, et cetera. But the plus cam facility will come online after our CR arc. And we're set up for success on that.
spk02: What percentage of the offtake would you expect them to take?
spk06: So as time progresses, they can take a significant amount of offtake. We don't disclose the percentages of offtake from various offtakers. But it'll be a very significant percent. What our agreement with them that we publicly disclosed 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'll have a 30% recycled content. And a reminder that the NRE, the non-recurring engineering project that we've done for them allows them to also very economically and environmentally favorably processed, even mined materials, through the Unimelt process as well.
spk02: Great. Congrats on the progress. Nice to see things moving along. Look forward to the rest of the year. Thanks so much.
spk00: Thank you. And our next question comes from Samir Yoshi with HC Wainwright. Please set your question.
spk01: Yeah, good afternoon everyone. Thanks for taking my questions and congrats to Steve and Jared 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 dollar range? And if so, is there a reason why the financing facility is for $33 million.
spk04: Yeah, so the total CapEx for this project, we've always said, is about almost $30 million. And so what's great about this note is we've spent some of our working capital, some of the company's working capital that we set aside for G&A already and operations for the CapEx. We've already started building this. And so we'll be able to reimburse us for some of that cost through this loan. And so really, 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.
spk01: Understood. And the clarification, I think Steve's commentary mentioned that there was an $8 million cash balance requirement, and I think, Jad, you mentioned the $7 million raise was towards that end. Is there additional equity capital raise in the works or being planned for this, or is the cash on hand plus this raise satisfies that condition.
spk04: Yes, so we designed it this way to try 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. So what we brought in was the appropriate amount. We don't need to bring in another equity component to that.
spk01: Understood. Once again, thanks for taking my questions and congrats. Yeah, thanks, sir. Thanks.
spk00: Thank you. I'll now hand the floor to Bob Myers to go through the webcast questions. Thank you.
spk03: 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 transactions?
spk06: Sure, happy to. So Padnos is a big company based in Michigan, and they're one of the largest recyclers in the U.S. They've got over 100 years of history in the industry. They recycle metals, plastics, paper, electronics, and automobiles, which primarily these days consist of internal combustion engines, but of course now EVs, therefore things like lithium battery access. And we've known and worked with Padnos even pre-IPO And they were a major participant in this recent equity transaction. And we've collaborated also with Patnos on a very large DOE MESC grant, grant number 3099 application that closes the domestic battery supply chain. And Patnos is our partner in this grant application for critical feedstock collections and pretreatment and processing. So think of the collections and the black mass production. This grant is a $200 million-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 and Padnos are both aligned and very excited about the opportunity to win that grant together.
spk03: 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.
spk05: Yeah, so with our partner 6K, we really do think it's unique in the industry for sure.
spk06: So that is a great leading question there, whoever asked it. And as we mentioned in our open 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 minerals right here in the U.S. And both companies have notably electrified processes and clear paths 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 in waste materials that go into the air in the form of CO2 or to the land in the form of sodium sulfate compared to what's being processed 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 non-recurring 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 ARCs with their PlusCam facilities, starting with their Jackson, Tennessee facility. So we're really excited about that ongoing and growing relationship that we have with 6K Energy and the differentiators compared to any other contract. to the marketplace, both environmentally and, very importantly, economically.
spk03: Thank you. There's a couple 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 prices?
spk04: Yeah, so we haven't taught... publicly about specific margin profile but we have said that phase one is the first 3,000 ton plant will be positive cash flow at the plant level and just you know as a side you know meets the covenants for for the new debt that we're doing and be able to pay back you know service the debt on that loan But if you think about the 3,000-ton processing capacity, if we think about what today's metals prices are, and they're kind of low if you kind of look at the last few years, we're able to generate about $34 million of revenue. And so that's today's metals prices. We expect that to uptick as we get the plant turned on later this year and start generating more meaningful revenues in 2025.
spk03: Great, thank you. This should also probably be for you. We've gotten a few questions regarding the NASDAQ and the relationship that Aqua Metals has on the listing requirements.
spk04: Yeah, so as we know, we've been below a dollar, but we talked to the NASDAQ, and they do an offer six-month extension. We're coming up on that first six months. at the end of May, so in a couple weeks. But we've already reached out to the NASDAQ, and we qualify for a six-month extension. So we have that opportunity to get back above a dollar and meet that requirement. If not, we'd have to look at alternatives, such as, we hate to say it, but a reverse stock split. We hope we don't have to get there, but we have six months to work on that. But in no case are we going to you know, choose to listen.
spk03: Great, thank you. Pivoting back to the partnership, can you provide a quick update on UHO materials and where the discussions on that licensing agreement stand?
spk06: Yeah, so I think I said before that we had visited UHO late last year and their black mass, 8,000 ton 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 Korea 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 CRR developments and discuss the definitive licensing agreements, folks. 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 you.
spk03: 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?
spk06: Sure, happy to. So really, that is a really exciting program. And Aqua Metals is a subrecipient to Penn State that was the lead applicant for that grant. Unlike the grant that we're applying for where Aqua Metals is the lead, we're a sub in this case. And Aqua Metals from this grant will be funded to work on extending really aqua 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 Cleanup in Community Economic Development. The objective of it is to extract and recover rare earth elements and other critical materials from coal and coal waste and coal byproducts and demonstrate a 100% domestic supply chain producing these finished products for high-tech and defense applications. 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 timeline is. is july uh the negotiations are expected to begin and um that's how it works with the doe when a grant happens uh the initial work and 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 new york up and running But we're really excited about being a part of this grant and being able to take our aqua refining technologies and apply them to such critical applications as taking waste materials out of the environment and then making critical battery minerals right here in the U.S. 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, recovery of things like rare earth elements, and other critical materials from those coal and coal waste, coal byproducts. And then the creation of permanent magnets and alloys for high-tech and defense applications, and then ultimately reduce the U.S. reliance on foreign suppliers for critical minerals and the rare earth materials. We've also got other subs 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. Gets us on the map with DOE, obviously, as they consider us for our grant.
spk03: Perfect. Thank you. The next question, are there any other lithium ion battery recyclers that can deliver lithium hydroxide other than aqua metals?
spk06: 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've chosen to go that path because the capital cost for crystallizers 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 ton 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 investor's website, you will see that there is much less stated recycling capacity between aqua metals and redwood materials and a couple other players as compared to the black mass that's gonna be available for recycling already beginning in 2025.
spk05: So everyone who succeeds will win.
spk03: 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?
spk06: Well, I would say the 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 pyrometallurgical process by literally burning things, or through the hydro processes that create a lot of CO2 by moving the atoms around in the molecules, and they escape through the stack because it's a light gas. You can't filter it out. So that carbon that we get is literally about 30% of the weight of 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 upcycled after initially reuse with things like cement. Believe it or not, pencil manufacturers that are looking for carbon, graphite, et cetera, that doesn't have to be the high technical grade. But carbon can be upcycled to graphite and then ultimately graphene. So we'll go from a pathway, we believe, from a reuse state, which doesn't have economics that are very favorable, but no negative economics, and we don't have to pay to dispose of it, and we get to reuse the carbon in certain applications, and then migrate that to a modest amount of revenue that we can get from the graphite, and then really, if we can get to graphene, that would be a very highly valuable material that we can upcycle from our carbon that we start with.
spk03: 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?
spk06: Yeah, so there's definitely a ramp to phase one, and as we were mentioning earlier, the fitting of the already built-out facility with the equipment getting put in place, etc., We still expect to be introducing the first black mass at the Sierra Arc later this year. And our goal is to produce the first truckloads of material. A 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 NMT 811, eight parts nickel and eight parts magnesium and one part cobalt. So we'll be producing the nickel and the 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-kind materials that are going to first customers. However, 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 go into Q1 of next year to be determined.
spk05: Thank you.
spk03: 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?
spk06: So in our process, very, very little waste. The nickel and the lithium and the cobalt go out, obviously, through our economic gain by selling those finished products as finished products. And then that carbon I was talking about is about the 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, you know, elements that don't help you meet battery spec. And those are very de minimis small amounts of materials. We don't produce, unlike any of the other recyclers, we don't produce sodium sulfate physical waste streams. So again, we don't have to spend tens of millions of dollars on crystallizers to dry our trash and send it out as crystallized sodium sulfate 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 itself. That's truly one of the great, unique things
spk05: environmental and economic benefits of aqua refining.
spk00: Thank you. And that's all the questions we have for today. I'll hand the floor back over to Steve Kahn for closing comments.
spk06: 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.
spk00: Thank you. This concludes today's conference. All parties may disconnect. Have a good day.
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