Aqua Metals, Inc. (AQMS) Earnings Call Transcript & Summary

Greetings, and welcome to the Aqua Metals Investor Presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Glen Akselrod of Bristol Capital. Thank you, sir. Please go ahead.

Thank you very much, and thank you, everybody, for joining our webcast today with Aqua Metals. Again, the purpose of today's presentation is to give our audience a better understanding of the business through a PowerPoint presentation and then questions and answers with management. The discussion is going to be led by CEO, Steve Cotton, who is also joined by CFO, Judd Merrill. You should see the presentation through the webcast, and I would have e-mailed it to you earlier in PDF. If you don't have a copy of one, simply e-mail me, Glen, G-L-E-N, @bristolir.com, or you could download it from the Investors section of the Aqua Metals' website. We are going to break for Q&A at the end of the formal presentation. When we do break, we encourage questions. And as mentioned, we're only taking questions through the web portal. [Operator Instructions] Remember, you could submit a question at any time. I'll ask the questions on the air for anyone to hear, and Steve or Judd will then answer. I'm not going to reference any names, but simply read the questions asked. And as we have a very large audience today, if I can't get to your questions online and in time and has not yet been addressed during the call and can be, I'll be sure to come back to you via e-mail. If for some reason you're experiencing any issues in the start, you could also e-mail me, and I'll be happy to assist. I'm not going to read the forward-looking statements. But I do state that they apply and I referenced them on Page 2 of this PowerPoint. With that said, once again, thanks for joining us. Remember, this is fairly informal, and we do encourage questions to help you better understand the business and its growth path. And now I'll turn the call over to Steve to start his part of the discussion and presentation.

Thanks, Glen, and welcome, everybody today, and appreciate everybody taking the time to learn and/or learn more about Aqua Metals and our journey forward with leading revolution in both lead recycling and lithium battery recycling. I'm going to move on to the safe harbor Slide, #2. And as Glen mentioned, that's for you to read in your own time. So starting off really with Slide #3 in our mission statement. And that is really to provide sustainable metal recycling for materials that are truly strategic to energy storage applications, be it lead or lithium batteries as what areas we're focused on. And we've already proven our breakthrough technology AquaRefining and our ability to extract at a very high-purity level of metal with a clean hydrometallurgical process that we've commercialized, which we'll talk about and set the stage for continued development of AquaRefining. And that returns raw materials back to the manufacturing supply chain in both a clean way and in an economical way. And that will really help reduce reliance on mining to meet the massive growing demand that we'll talk about during this presentation for battery energy storage regardless of the chemistry that's out there. Change is truly imperative. We're all talking about the migration towards electrification of transportation, but also electrification of industrial processes to support the electrification of transportation. And today, smelting produces at roughly 7% of the global greenhouse gas emissions. And this number is going to do nothing but go up greatly unless change happens now. New recycling technologies to support the electrification of the transportation sector as well as other sectors that require battery energy storage, which we'll talk about, really need to have a replacement for smelting and other environmentally damaging metal recycling processes. And even the U.S. Department of Energy is saying that their vision for the global production of metals should just use air, water and clean energy as inputs. Peers Aqua Metals innovation milestones to date, the company was not founded terribly long ago in August of 2014, with our first Aqualizer prototype in Oakland, California. By July of 2016, we actually commenced operations with our 140,000 square foot AquaRefinery in Tahoe Reno Industrial Center after our IPO in mid-2015 and a USDA loan guarantee, which we since paid off that funded that initial development. By October of 2018, we had already become a North American certified lead supplier for one of the world's largest battery manufacturers. And we produced 35,000 ingots using our novel clean recycling innovative method called AquaRefining. By October of 2018, we achieved 24 hours a day, 7 days a week commercial production with that Aqualizer technology. Then if you move forward towards February of 2021, we began our expansion of flying off refining towards lithium battery recycling with an investment in a LiNiCo, standing for lithium, nickel, cobalt on the periodic table development. And LiNiCo is taking over the AquaRefinery that was the proving grounds for AquaRefining for lead and converting that to lithium-ion recycling facility that will be one of the largest lithium-ion recycling facilities in the world, projected to reach a of about 100,000 tons per year of processing. We also filed a provisional patent, in addition to our very robust patent portfolio, around the extension of AquaRefining for lithium-ion recycling, which we'll talk about later in this presentation. By July of 2021, we had our first commercial agreement for AquaRefining for a deployment of an equalizer technology suite for ACME in Taiwan, which is one of the largest markets and market growth areas for batteries and energy storage. We'll talk more about that deal as we go through the presentation. By August of 2021, we've already reached pretty much our third-generation Aqualizer, which tripled the throughput over the first generation where we did -- made those 35,000 ingots in 2018 and 2019 to over 1,296 kilograms per day per Aqualizer. On a now and moving forward basis, as you see the green, our background and our ability to execute on our innovation and commercialization of our technology is going to apply towards our expansion of our second horizon, which is while we commercialized the lead recycling for the existing lead battery acid industry. We're also already at lab scale testing of our circuits for the lithium-ion recycling and multi metal recovery, which we'll talk more about. In December of this year, we expect our AquaRefining equipment to be shipped and on its way to our partner in Taiwan. And by August of 2022, we expect to already have operational testing of a full-size lithium-ion AquaRefining recycling unit ready to go on the ground at a licensed site and facility. By January 2023, we see that deployment taking place. Ticker for Aqua Metals is on NASDAQ, AQMS. Our corporate headquarters is in Tahoe Reno in Nevada. And we have 69.5 million shares outstanding as our last Q reporting, cash on hand, $10.7 million as of June 30 and another $5.25 million of insurance proceeds that were received in July. And we'll be talking more about our updated quarterly financials next week, and Judd will talk about some details around that. We are absolutely debt-free and have a very strong balance sheet as we progress forward in our journey. Next Slide 6 is that AquaRefining's proven technology for lead recycling is very leverageable to apply many of the same principles that you see to the right towards AquaRefining for lithium battery recycling and the multi metal recovery. Those things and tenants of our technology that are really critical and important to impart upon everyone is that this room temperature is a closed loop, and it's a fundamentally nondilutive process. We've patented the process greatly, which will show the results of our patent prosecution over the years, and we've commercially proven the process. It's cleaner and it's more cost-efficient recovery in terms of its recycling processes. It produces an ultra-high-quality product in the case of lead that resulted in 99.996% ultra-pure lead product, which we were able to command a premium for over the London metals exchange rates from those, which we expect to apply and expand to recycling the multi metal recovery in the lithium space. Here's the AquaRefining advantage for lead compared to traditional lead recycling technologies, which is smelting. AquaRefining offers some really large advantages. I've mentioned earlier, the ultra-pure lead and metal production that we make. And also, we enable global battery recyclers to meet demand with a reduced environmental impact. And that is really important as emissions controls and environmental concerns are on the uptake around the world to try to reduce the carbon -- decarbonize the processes of industrial processes to conduct recycling. And we can do this all with a potentially equal or even lower cost to recycle, particularly when you look at the entire ecosystem advantages of the high-value product, coupled with the OpEx and the worker safety issues and the environmental mitigation processes that are associated with smelting that you don't have to deal with when you're doing off-rate buying. Next, Slide #8 talks about our Taiwan agreement in a little bit more detail. It's our first partner and really the largest and fastest-growing global lead market. The U.S. and Europe, for example, are more stable and growing at a slower clip. But the lead market is growing, but it's growing much faster in the Asia Pacific region simply because there's more cars being put at the roads, there's more data centers being built, there's more energy storage infrastructure projects that are being deployed in the Asia Pacific region. This will deploy -- this deployment will showcase our clean recycling in a market where the environmental drivers are really the strongest in the world and it opens and unlocks potential future partnerships through our partner, ACME, and their existing partnerships with global battery manufacturers that they already provide refined metal alloys for, to develop a new and novel methodology that takes AquaRefined into the next level by being able to produce oxide directly from the material that comes off of our machines rather than have to go through the ingoting process. You can see more about that in the press release in the recent months about our direct to oxide capability, and that is an innovation feature that we believe is going to be highly valued by battery manufacturers and tighten that link greatly for the production of a commodity between the recycling and the manufacturing. Slide #9 talks a little bit more about market drivers and revenue opportunities and how we'll make money doing this in the lead market as our workforce market drivers really are the secondary lead demand is actually projected to increase at an estimated 1.8 million tons just from 2018 to 2030. Restrictions in furnace permitting are due to environmental regulations are also going to reduce secondary lead smelting expansion opportunities or greenfield builds, unless there's a cleaner way of doing it. The revenue opportunities that we can get from these types of deployments include potential engineering revenues of hundreds of thousands to million dollar-plus figures per project, much as you hire an architect to design your home, potential equipment supply revenue of $10 million or significantly more dependent upon the size of the project for Aqua Metals. And then potential recurring royalties on the AquaRefined lead produced. So as an example, a modest 100 ton per day of refining facility, which is much bigger than the Aqua refinery that we ran could generate $70 million of AquaRefined lead per year in value. The premium value that we already attained with those 35,000 units that we sold was about 10%. So that leaves a premium value for sharing with our purchase of about $7 million in that example. And that premium value, we believe, could rise over time beyond 10% is the ultra per led demand increases for higher density energy storage and longer life and higher-performance batteries over time, which are becoming more and more important than the lead acid battery industry. Maintenance and upgrades that happen day 2 and beyond and potentially generate millions of dollars over the plant lifetime with equipment, replacements, expansions, new sites, et cetera. Now moving on to the lithium ion recycling is that lithium-ion is really powering the new energy era, and it does demand, from the get-go, the cleanest within battery recycling solution to make the whole thing worthwhile. If we're going to make the transition from fossil fuel-based energy to a clean-based energy like solar and wind and other renewables and energy storage, we have to be able to close that loop and close that loop cleanly and be able to recycle the materials and minerals that are so critical to this development to be able to make -- have all been worthwhile and impact global climate change in a positive way as possible. Else, we may as well as stuck with fossil fuels to begin with. Aqua Metals has a very unique opportunity because rather than being capital-heavy and plant-based, we are an equipment supplier and licensor of our technology and capabilities, both in the lead and will be in the lithium space. So our total addressable market is the entire market. It's not based upon the capacity of one given facility or one given region or location. We are unbalanced because we can work with anyone who's building and planning to build both lead and lithium recycling facilities around the world. So if we get more than 1 or 2 customers, we have faced a larger total addressable market than any single operator could do on their own. The total addressable market, as you see, going from 2021 on towards 2030 show that the lead market will continue to grow, and that will grow at more of a stable and mature market rate, while the lithium recycling market will grow up to $26 billion when you combine the two. So we are not only growing in the lead space, but with the lithium space, we see great opportunities in the total addressable market that we view it from the lens of what we can AquaRefined and what values in metals we can create. So lithium-ion really powering the new energy area in a shift to electrification of cars, and that's really imperative for our planet. And the transition is going to create an environmental time bomb if we don't do it right without the metals recycling innovations that are clean and are cost efficient. 140 million electric cars are expected globally by 2030, and that's going to create massive demand for both lithium-ion batteries and, of course, the critical minerals that support them from the mining and now the recycling and remining and urban mining. More than 50 million tons of lithium batteries are expected to reach the end of life just by 2030 already. The demand for lithium-ion battery materials in the next decade is projected to grow at a staggering level where you see just two examples: 575% for lithium; and 1,237% for nickel. And we just simply can't mine and scale the mining of these raw materials quickly enough to meet the plans that major companies are making to provide for the electrification of transportation and other sectors using lithium in to power that transition. AquaRefining for lithium is applying its commercialized clean water-based room temperature recycling technology with a closed loop in all those principles with the goal of developing the cleanest and most cost efficient recycling solution for the lithium batteries. It's important to note that there, currently at commercial scale, is no lithium recycling other than smelting. And that is a plan. And we'll take you through in terms of the various technologies that the world needs to see a better plan, and we're here to provide that better plan. Lithium AquaRefining approach is different from other recycling technologies and solutions. First of all, there is no smelting. There is no furnace required, and there is literally little to no greenhouse gas emissions. AquaRefining provides a higher percentage of recovery in metals in a higher-quality ultra-pure form. And AquaRefining has minimal waste because we have a closed loop process that we'll talk about a little bit more of the differentiators there of the technology from what's generally available in the marketplace that truly recycles the chemicals and the water so we can continue that closed loop within the recycling process itself. And that's a very important area that we've evidenced further in our lead efforts with our partnership with BASF, which is the largest chemical company in the world that provides one of the key ingredients for our lead recycling technology. We intend to apply those principles towards the minimal waste for the lithium recycling and recycle those chemicals and close that loop. A higher quality output is obviously important to create a lower operating cost. There's really a gold rush for lithium-ion battery recycling as the metals rush and already two of North America's largest actual operators that plan to get into lithium-ion battery recycling have raised more than $1.3 billion recently with a combined valuation of $5.4 billion as lithium-ion recycling operators. And global companies are making multimillion-dollar investments in lithium-ion battery recycling all with net zero emissions expectations. You can see some of these logos here, and there will be plenty more large corporations that are involved in anything related to energy storage that are investing both directly and in support with contracts and partnerships in this area. And our strategy is to sell the shovels and pickaxes for this gold rush. We are an equipment and technology supplier unbound by those geographies. So the lithium-ion battery recycling market drivers, some more on that, that there's more than 15 million tons of lithium-ion batteries that are expected to retire just between now and 2030. All major car manufacturers want zero carbon suppliers. They're calling their supply chain and asking how their supply chain is going to reach net zero emissions, so they too can reach net zero emissions. The U.S. and EU regulations to achieve 2050 net zero emissions are coming. And even with COP26 happening, we might even see more commitments made country-by-country across the world to accelerate the -- addressing the urgent need to address climate change with further emissions reductions plans. The market landscape is quite complex, and major players are pursuing very resource and capital-intensive approaches, which is what it takes to physically recycle all of these batteries. That's inclusive of the center of the loop that you see on the right, things like land, building buildings, labor cost and management, regulatory, OSHA relationships, supply chain logistics and partnership agreements. And you can see all the various areas that if you're going to be in the capital-heavy approach that require a lot of capital, a lot of dollars and a lot of attention on those things, and not all that money is going to go directly into innovation on the way that the recycling happens in the technology. And that's where we can help enable this entire industry with our AquaRefining processes to meet the needs for these operators to achieve their goals, and we can do so with our business model in a geographically unbound and capital-light methodology. We learned from operating our plant at our AquaRefinery, all these things that we're showing here and the capital intensiveness. And amazingly, when we completed the proving grounds for our AquaRefining and focus on innovation, we were able to iterate AquaRefining for Aqualizer twice from doubling to the tripling it's output and throughput amongst many other improvements and efficiencies in just one year's time. So that is why we are singularly focused on innovation as we move forward. Aqua Metals plans to deliver cleaner and more efficient and cost-effective recycling solutions to all these companies by offering better economics through the cost efficiency and the higher percentage of the metals extracted, a modular design with a smaller footprint per real estate, would have flexible and streamlined installation capabilities, much like our Aqualizers for lead. Mutually beneficial economics and shared value of the higher value and higher quantity of metals that are recycled by these partners, again, that truly borderless revenue opportunity where we can be licensable to the global metals recycling market. This is now a comparison of AquaRefining to the existing processes that are out there today addressing the growing need to recycle lithium ion batteries. First, there's pro which is also known smelting. And then there's kind of a precipitation-based standard hydrometallurgical process, and then there's op-refining. And while I'm going to build the table here to take you through the differences. Products produced by pyro and smelting really are alloys of cobalt and nickel, which need further processing. If you look at standard hydro precipitation and chemical precipitation processes, they create cobalt, nickel hydroxide that also requires further processing in manganese hydroxide. Compare that to AquaRefining, which will produce high-quality cobalt, metal, nickel and copper in that pure metal form as well as manganese hydroxide and lithium hydroxide. Now moving on to the environmental impact. Pyro, not only in addition to the air emissions and the emissions that you have to be concerned fugitive within the facility that OSHA will obviously be interested in terms of worker exposure, it creates flag. And slag is a physical byproduct of materials that includes manganese and lithium that have to be disposed of in the landfill and not be recovered. Standard hydro precipitation creates significant liquid waste streams that include things like lithium sulfate, sodium sulfate and some cobalt and nickel that don't make it all the way through the process. Compare that to AquaRefining, which will have the most complete closed loop process with minimal nonhazardous waste for lithium just as it does today for lead. The economics of pyro is equal publicly to AquaRefining in OpEx, but with lower quality and less value of the produced product. The standard hydro has, we estimate, about a 25% higher OpEx due to the continual chemical consumption of the process. You can track that to AquaRefining, which will be equal to or less than these other processes, and that will have a higher percentage of the recovered metals and less waste. There are a lot of revenue opportunities that we see with our global approach, and our sales strategy really feeds into our revenue structure. Our sales strategy, again, is to enable the recyclers across the globe that are existing, nascent and to be invested in to have the best economics and the lowest environmental impact. And the licensing model enables the global market, and there's no sustainable lithium recycling method to date that has been proven at scale. So this is a new industry that everybody is working together, and we want everybody to be successful. Environmental regulations are still taking shape. As I mentioned, COP26 and beyond is going to continue to influence that as well as regional, national, local regulations. And we're going to leverage our competitive advantage as the only metals recycler that has already proven our technology at the commercial scale. The revenue structure for lithium is similar to the lead and that we can get potential energy -- excuse me, potential engineering revenues of 6 to 7 figures per project. But then you look at the value of the AquaRefined metals in the lithium space can generate $100 million to $500 million in royalty payments over the next 5 years, really dependent upon the size of the throughput as well as additional equipment sales. Just as a matter of comparison, lead trades at $2,000, @2,200 or $2,300 -- $2,200 per ton. And if you look at things like nickel, somewhere about $19,000 a ton, cobalt, $54,000 a ton, copper $9,300 a ton, et cetera. There's higher-value metals, which we would get higher royalty opportunities and sharing the benefits of the more pure metals and the more quantities that output with the environmental benefits tied to it. So Aqua Metals' competitive edge really is that we recover more of those metals in higher quality. We have an OpEx that is equal to or lower than the other solutions, and that's important with our value proposition. And we can sell the products at a higher price point as our clients will be able to sell their products at a higher price point. And it's really environmentally cleaner and much safer for the worker environment, which is a critical foundation of making sure that this all happens correctly as we electrify transportation and energy storage throughout the world. And Aqua Metals' AquaRefining is already founded on commercialized IP, which I'm going to show you here a map that shows that we're the only company with IP on a global basis or really at all for clean battery recycling starting with lead and adding lithium. We already have 71 patents issued and allowed with a massive coverage of the globe where battery recycling is going to be taking place. We have 44 additional patent applications pending, inclusive of lithium-related of refining patent applications that we are very confident. We will be able to prosecute just as we did with the lead and cover that patentability. It's important, particularly, if you're licensing technology that you have a very strong IP portfolio that is inclusive of patents in addition to trade secrets. Trade secrets are going to be -- trade secrets are going to move from company to company. But if you have a strong IP portfolio, you can protect and not get ripped off. So summarizing here with Aqua Metals. Why invest in Aqua Metals? Well, first, we are that proven environmentally friendly metals recycling technology company that has already commercialized for lead, and creates high value and high-quality metals while lowering the polluting emissions. We've already proven a derisked to the technology at a fundamental level. We're the first AquaRefining partnership that's already been secured for lead in Taiwan. And we'll be deploying and growing our lead business not only in Taiwan, but in other locations, and we have a very robust sales funnel that will allow us to continue AquaRefining for lead to address the conversion from smelting to a cleaner way. We have an $18 billion addressable market just in 2025 when you add the lead and lithium battery recycling opportunities specific for AquaRefining. That's a very large addressable market in a very short period of time that's growing at a very rapid clip. And we have the ability to sell into all markets with that geography unbound, as I mentioned earlier, and work with any recyclers worldwide, inclusive of our partner, LiNiCo, which we made that investment in and has taken over our of AquaRefinery to get into the space of lithium-ion recycling. So we've already got a good start in developing good relationships with recyclers that are out there that we can show in the public forum. With that, we'll move on to questions and answers. So I'll turn it back over to you.

Yes. Thank you very much, Steve. Great presentation. We do have quite a few questions already in the queue. So I will just get going and to our audience member. If you have a question, just use the question and answer text box within the webinar portal. So your first question, Steve, is, do you place any priority on advancing lead versus lithium recycling technologies?

So there's really not a priority. There are equal priorities. I would characterize it as a first horizon and a second horizon or a workhorse and a racehorse. Our lead efforts are further along because we've been at it for longer and are fully commercialized on a third-generation Aqualizer and we've already got our first client and beginning to deploy with our first client. And anticipating acquiring additional clients for the lab space and getting into revenues. And that happens while our innovation center is focused on the innovation side of the lithium and the lithium will follow as the second horizon. Both are a very high priority for the company. So it's -- I wouldn't characterize our efforts in the lithium space as a pivot I would characterize our efforts in lithium space as an expansion in the second horizon for taking off refining and our clean metals recycling technology across the portfolio of the key energy storage battery chemistries that are out there.

Okay. Thank you. I've got a number of questions related to ACME and Clarios. So I'm just going to try to capture everything in one question. So you launched your first deal with ACME in Asian clearly, Clarios was a partner in the U.S. What's your strategy for the U.S. market and the global market? And why did you choose to focus on a small vendor like ACME in Taiwan?

So we are an entrepreneurial company that wants to work with companies that are going to deploy our technology passionately, enthusiastically and have opportunities to grow the space in a market that's growing as well. As I mentioned during the presentation, we see great opportunity in the Asia Pac region, not only because the market is growing there rapidly. They're simply putting a lot more cars on the road that require a lot more lead acid batteries and that's where the market growth is. That's where greenfield new lead acid battery recycling facilities are going to be built. We know that the government there would like to see clean recycling facilities built versus smelting recycling facilities built. So we feel that being in the region is a good showcase to show that region that is in that high-growth mode that, that is the technology that they want to choose and use for their greenfield builds and expansions and refitting of those existing facilities that are out there to meet that growing capacity demand. So that's really in a summary as to why we felt that the Taiwan opportunity was the best application of our first deployment of AquaRefining for Aqua Metals, and we'll continue to seek opportunities where the licensing client is well positioned in the need to address those environmental and market growth concerns. So that's where our sweet spot is.

Thank you for that. As you think about Taiwan, when do you potentially see first engineering and equipment revenue starting to come in? And how does it scale?

So we'll be shipping equipment for the first phase of deployment this quarter, so very soon. and we'll provide updates as we do that. We'll be getting the equipment on the ground and installation and commissioning happens and we'll hopefully have our showcase beginning to produce material in Q1. One strategic benefit we have is that we have concentrate already ready to go with the BASF-made chemical already impregnated with the lead from our battery breaking and digestion processes that we had at the AquaRefinery. So we can turn those units on very quickly and begin making those protests to come off of our process. and getting those into the hands of those very large battery manufacturers. Phase 2 and 3 deployments with ACME are planned throughout 2022, and we'll continue to scale and we'll begin to see more meaningful revenue opportunities. But really the measure of importance now is the innovation opportunity to get those projects into the hands of those large battery manufacturers that are already their clients and begin working on that process to incorporate a direct to oxide link between of refining, recycling and manufacturing that will truly transform that link between recycling manufacturing, not only in the lead industry but set the stage for the lithium industry, which we and ACME, we're obviously interested in that space as well for that region.

Okay. Thank you for that. You've covered a little bit of this in to, I believe, Slides 19 through 21. But can you just go over what are the key differences between, say, Aqua Metals and Redwood Materials and a life cycle? And given that these companies have launched, I guess, large partnerships with other automotive manufacturers, how do you see yourself participating in that marketplace? And really, what is the core difference between you and those companies?

Yes. So Redwood Materials and Life Cycle and LiNiCo,, who we have an investment in are all prospective clients of Aqua Metals. Aqua Metals was already in the business of building plants, improving technology and operating a plant and selling metal and related compounds as the output. That's the business that Life Cycle and Redwood Materials and LiNiCo and other emerging battery recyclers are in. We're in the business of enabling those companies to do it better and to do it with a better technology that can enhance a set of technologies that each company has is unique to their own, they're all going to have their areas of specialty. And our area of specialty is plating of those peer metals and an extracted process that recycles and close that loop and adds value to what it is that they're already doing. So view us as -- I mentioned in the presentation as an arms dealer is an equipment supplier as a licensor of key technologies. And each client relationship is going to look a little different than the other one. One may want the full suite from the lithium extraction from the black mass all the way through to the completed output, which we can provide another entity may be interested in, hey, we've got areas 1 and 2 covered for some of these metals, but we would like to work with you on metal #3 and metal #4. And we can customize our solutions through our Aqualizers for those various multimetal extractions to work with any client's opportunity with the goal of making them the best that they can be and increasing their value proposition. And obviously, with our goal of securing equipment supply, licensing and revenues for the value-add that we share. So that's why our unique business model is geographically inbound and allows us to address the total addressable market and work with as many players out there that would like to work with Aqua Metals.

Okay. Next question is how you collect your raw materials or dead lead acid batteries, I guess, black math, what have you for your end products?

So the question is how do we convert that material? Could you restate the question, Glen?

How does that material come to Aqua Metals?

So for Aqua Metals, now that we are enabling ACME and others in the lead space, that material -- those materials that get crushed the dead batteries, whether they're dead labs, lead acid batteries that's live, dead lithium ion batteries will go to our clients. Our clients will crush and separate and focus on all the activities related to the braking crushing and separation, which they all have their unique capabilities. And that will produce in the lead world, the paste material, which we AquaRefined for the lead. And in the lithium world, it will create what's called black mass. The black mass is an amalgam of things like lithium and cobalt and nickel and manganese and many other elements that are in that black mass. We take it forward from our technology from the black mass through to the production and output of ultrapure metals and compounds that are battery-ready type materials. And so that is our enabler technology that on the lithium side, really takes it from that black mass. And just on the lead side, it's the pace, which is kind of the lead version of black mass, we'll call it, it's really brown mass, is what blood pace looks like. but it's kind of similar, but it's a singular metal that you're going after and a singular element as compared to lithium, which is more complex and has more higher value, multiple elements that we're chasing after with our technology sitting on the floor of those recyclers.

Okay. Thank you. If smelters are producing 7% of the world's greenhouse gas emissions, then what is happening in terms of policy and regulation to reduce them? And what is Aqua Metals doing to raise the awareness in Washington, D.C. Are there any bills being pushed forward by legislatures that would -- that we could be aware of?

So there's definitely environmental pressures that are happening throughout the world and in various regions, it's different than others. In the U.S., we've already seen smelters get closed down, either by the regulator. U.S. attorney or self-elected to close down facilities due to emissions challenges and things along those lines. So net of it is in the U.S., there's less smelters than there used to be because of environmental challenges. The odds of seeing more legislation around decarbonization and the reduction of emissions and particularly greenhouse gases is obviously going to be higher. You cannot achieve that by smelting because smelting by very nature uses fossil fuels. And we are just like the electrification of transportation, the electrification of the industrial processes used to do that recycling and enable the electrification of transportation and other industries. In China, you see the strategy employed by the government to reduce the number of lead recyclers as an example, by simply saying you have to be a certain size, otherwise, we're shutting you down because we can't regulate all of you. And so that has created the need for other areas in Southeast Asia, not to be able to rely on China for the production and the need to put greenfield new facilities in. And those governments in those countries places like India and Southeast Asia are very focused and very concerned and very interested in making sure that those new greenfield builds for lead acid recycling as well as, frankly, for lithium recycling are using clean technologies that are not going to produce those greenhouse gas emissions and flag and environmental safety hazards and worker safety and things along those lines. So across the board, those are just a couple of examples. I could go on for hours. But the net of it is that there is continuing greater and greater interest on the global scale. That's what COP26, again, is all about is making sure that countries are making their commitments to reduce those emissions. And so we'll see more of that in the future.

Okay. Thank you. Now following up on that. Can you quantify the carbon footprint of AquaRefining versus the smelting process?

So the carbon footprint of AquaRefining versus a smelting process being an electric process is significantly lower, particularly when the renewables distribution of the electrical supply are going up and up very rapidly as we see in most countries of the world, the electrical supply is renewables. So in addition to the reduced emissions just by the very nature of not using furnaces, which have energy-intensive power sources such as gas and even oil and even coke, which is a product that's derived from coal. So if you go swim upstream and look at the environmental production of coke and coal and gas and all those things as it relates to the incumbent process compared to an electrified process that could be plugged into a growing higher percentage of electrical production, you can actually achieve net zero emissions through of refining. It's impossible to do it any other way unless you electrify the process.

Okay. Thank you. With regards to the lead portion of your business in AquaRefining, are you in any discussions with other U.S. smelters outside of Clarios for AquaRefining deployment in the United States?

So we're talking to multiple parties on multiple continents, inclusive of the U.S. on a regular basis and through our partner network as well as direct and are engaging with and drilling down with the clients that are the best fit. What I said before, though, is that we are finding better fits for Aqua Metals in the Asia Pacific region. And even in South America, for example, than in the U.S. And I just think that, that has something to do with the growth demand and the government focus and interest that's been a little bit ahead of the U.S. in prior years on -- you and things along those lines. And so we see that as the market to play in. We want to play in the market that has the growth drivers and the high priority for reducing the emissions. And the good news is that's all over the world for the most part. And we're going to pick the clients that are the best for us. We can only do so many clients at once. And we want to make sure, as I mentioned earlier, that it's the best fit for innovation, for enthusiasm for the project and focus and unlocking of opportunities that go beyond the base deployment of the equipment itself.

Okay. Thank you. Could you give a comparison of energy use in AquaRefining versus other processes?

So AquaRefining in terms of its energy use, when you look at the technology that we utilize is again, electric electricity. And so if you add up the energy use in terms of conversion, whether it's a fossil fuel process and the upstream things required to go and mine coal out of the ground and convert that to coke and then explore for gas and transport the gas and all those things as compared to the renewables mix of the electrical -- electrified process AquaRefining certainly wins the day. And particularly as that percentage of those processes are from renewable sources. So if you look at our finding process being electrified, it's just like transportation. It's just like the age old question or not agile, but it's a newer question of like, well, is it worth it to make the transition to electrical vehicles, because they might be plugged in the coal-fired plants instead of carbon-free emissions plant. It's the same for the industrial processes that support that electrification. If you're going to electrify transportation and electrify other processes, you need to electrify the industrial processes that support those, else you're going to have transfer to problem and move default versus solve the problem.

Okay. Thank you. I'm going to go a little bit to IP now. Can you please go over through how your IP was created, obtained?

So we've had a very robust patent prosecution strategy from the get-go. And the founding team for Aqua Metals had great levels of experience in metals recovery. And in fact, 1 of our chief scientists was involved with lithium on the mining primary lithium side and chemical processes associated with that. And our lead processes and patents were applied for back beginning in 2014. And that patent prosecution has been at a very steady and strong pace throughout. And we've taken that very seriously knowing that the company was going to be migrating towards a licensing company. And if you're going to be licensing technologies, you have to have a secure and solid patent portfolio, which we've proven with that map that I showed and the over 70 patents that we have issued many more pending. We view it the same in the lithium space. And we're at our core, really an IP company that has all kinds of IPs that relates to continuous processing and continuous metals recovery at ultra-pure levels with the specific ways that we plate those metals to create a higher value output and recirculate that chemical and recycle the chemical use to do so.

Okay. Thank you. What -- can you talk about the timing of your portfolio in terms of when the first begin to expire?

So our first patents were issued. It takes a couple of 3 years to get your patents once you begin applying. So we've started applying in 2014. I think in 2017, we received our first patent from one of the toughest patent prosecution offices in South Korea and that began patent #1 through now where we're over 70 patents. So really, 2017 is the oldest patent. And many of our patents now are probably circa 2019 to 2021 time frame. So they're fresh. They're new about as new patent portfolio where that many patents could be. about a runway.

Can you talk a little bit about what percentage of lead and then lithium is currently recycled? And what is the price difference between recycled lead versus lithium versus virgin led or virgin lithium?

So the lead acid battery industry has done a great job of creating that closed loop and the lead acid battery industry today already recycles probably 99-plus percent by weight of those batteries. That's a shining example of the circular economy, thanks to the existing lead acid battery recycling industry. This really needs an upgrade because the methodology to use -- to do the recycling of smelting which is less sustainable perhaps than an electrified process like AquaRefining. If you compare that to the lithium recycling space, it's a different situation. About 93% of lithium batteries are not recycled today. and that's going to change as these recycling companies get up to speed and get some capacity and get their processes up and running and begin recovering those metals. So much of it ends up in the landfill or in containers or in people's drawers, frankly, when it relates to consumer electronics and lawn and garden products and other areas where what do we do with these lithium batteries hasn't been figured out yet. That is where the tremendous opportunity is to close the loop to recycle them to begin with and keep them out of the landfill, but then to recycle them more cleanly and efficiently as we move forward and grow that as a world really the lithium-ion energy storage industry. So it's a nascent industry, the recycling piece of it to close that loop. And that's where we think that applying our innovation and our technologies that we've already applied towards the lead will help us help the operators apply the best possible and best available technologies to recycle the lithium batteries and get from that 7% recycle up to a comparable 99-plus percent as we already see with the lead acid battery industry.

Okay. Thank you. I have quite a few questions around LiNiCo,. So maybe I'll just characterize it all into one and then let you have a little bit of room to answer it. So could you just talk a little bit about your current relationship with LiNiCo? Where you see that going? And who are the major shareholders of LiNiCo and what technology they're using today?

So LiNiCo was recently capitalized both with Aqua Metals investment as well as Comstock, which was Comstock Mining and Comstock is transitioning to a metals valorization company and environmental metals recovery and environmental company. And so really, LiNiCo was capitalized in a private deal between LiNiCo, Comstock and Aqua Metals. So the benefit to Aqua Metals for that is we would have the opportunity to share in the success of LiNiCo's planned up to 100,000 ton per year facility and that could be an input revenue stream for Aqua Metals. But in addition to that, LiNiCo has the capital required to complete the acquisition of our building, which is our AquaRefinery, over the next several months as they convert that facility to a lithium-ion battery recycling facility. So it's a privately held company with the major shareholders really being Comstock and Aqua Metals, both companies which have a Board position on LiNiCo.

Okay. Thank you. As you sort of look across the global technology spectrum. Have you run across any other companies that have similar recycling technology that you have today?

So it's a big world out there and there are hydrometallurgical process technologies that are out there for recycling, but there is no known by Aqua Metals commercially deployed and proven technology to hydro metallurgically recycled lead acid batteries. And there are nascent hydrometallurgical precipitative technologies that are out there, as I was mentioning during the presentation but not in the plating area and creating those high-value ultra-peer outputs, such as what Aqua Metals has. So there are technologies that are out there. Our goal is the patent our areas of specialty and make sure that we protect that and make sure that those who license our IP have that competitive advantage because that IP of its dairy nature is protected and not trade secret and leaked over to other operators and can enable and provide those competitive advantages.

Okay. Thank you, Steve. We've got about 5 minutes left, and we still have quite a few questions in the queue. I think most of them have been answered throughout the discussion. But one area we really have in covered is the balance sheet and your ability to fund operations. So with only $10 million cash on hand, how do you plan to finance operations going forward?

Yes.

So go ahead, Judd.

Yes. Thanks for that question. So as Steve mentioned, at the end of the quarter of Q2, we're about to release Q3 numbers next week. So we'll have an update there. But Q2 public information is that we had $10.7 million. On the balance sheet, we did bring in another $5.25 million from the final insurance payment. So that provided further cash. And then subsequent to the end of Q3 in October, we received the first deposit from LiNiCo on the plant, and that was $1.25 million. And so we do have cash coming in that supports us. As we've discussed last quarter, our burn rate has been about $700,000 a month. So with the cash we have on hand and expected another deposit from LiNiCo to come next year, they'll be able to pay that plan off shortly thereafter. And so let's provide another $13 million to $14 million, depending on the timing of that payoff. So we have some good amounts of cash coming in and really worked hard to reduce our burn rate. And so we feel like that takes us into next year very easily and beyond, depending on the types of investments and things that we make. And that's based off of kind of what we're modeling out is that we'll see some revenues coming in, in 2023 and then more meaningful revenues coming in 2022 with more meaningful revenues coming in 2023. So with that, we feel very comfortable. We felt that we have a very stable cash position and a long runway to take us where we need to go. And the fact that we don't have any debt, we feel like we're in a very stable position.

Okay. Thank you. And as you expand into the lithium business and obviously grow the business with new licensing agreements, how do you sort of see your overhead and staffing levels needed to grow and to continue to sort of fund that growth?

Yes. So there's two components to that. The first one is the G&A and just kind of the holding cost of being a publicly traded company. And that's -- we don't really see that growing. We have a very solid base team in place, and we feel like that we won't really see significant cost increases over time. Now obviously, as we get bigger and bigger down the road, we'll see some small increment growth there. But it's kind of in the short to medium term, we don't see that piece growing. And then the operations cost to support R&D and growth, we'll see some growth in that. But we've been very careful to manage the cost and to make sure that we're spending the right amount to get to our first licensing deals and first kind of growth in the lithium and the lead. So we won't see a lot of increases right away, but we'll have an appropriate amount as we start bringing those revenues to kind of balance that growth out.

Perfect. Thanks, Judd. And I know that you and Steve have sort of given the guidelines for the amount of revenues that licensing, I guess, deals can generate over time. Can you just maybe, one, walk through the ACME relationship and talk about how that scales over time? And then how you sort of see future deals rolling out so that investors get a better understanding of when this company gets to meaningful revenue?

So at a higher level, and I'll ask Judd to take it one level down, the specific question around ACME is it's a phase deployment. The first revenues, as I mentioned earlier, would not be a material amount of revenues for the company to get it to the point of breakeven with the early phases. Down the line, that one lead deal, as we expand with ACME pending the success of the installation and the oxide approach, will grow to a very meaningful level of revenue. And then you add that plus another lead deal and getting into its full size gets to be a meaningful chunk, if not the full chunk of our monthly cash burn. When you add the lithium opportunities that we expect that we have the opportunity within a year's time or so to get to that stage, where we can begin collecting revenue from operating AquaRefining equipment and collecting the equipment supply and royalty revenues. That's when the company can achieve self-sustainability. And as Judd mentioned earlier, we really feel like we have the cash runway to get there. And with 70 million shares outstanding, the valuation of the company where it sits today, that is a great opportunity as we can become one of the first companies in this space to reach profitability.

Okay. Thank you for that. So we've reached the top of the hour, and we've literally got another 100 questions in the queue, and I know we can't go over that. So through our audience, if we haven't answered your question, I promised to get back to you, Steve and Judd are available for, I guess, institutional calls after our earnings call next week. With that, Steve, I'll ask you for some closing remarks, and then we'll end the call.

Yes. Well, I appreciate everybody's time here and great list of questions. Well, as Glen said, try to follow up with anyone who didn't -- the questions answered in this serial forum, and we'll circle back with you. And I just want to restate a couple of key points is that Aqua Metals really doesn't view any of the players in the lithium battery space getting into recycling as a competitor. We view them as potential partners and potential deployers of our technology, starting with LiNiCo, obviously, but with the other players that are out there. So I don't want anybody to leave this thinking that we compete with anybody. We are the enablers. We are the geographically inbound technology innovation providers that is leveraging what we've already derisked and we've already proven with a very related battery recycling technology. And that's what's unique to Aqua Metals and unique to our business model and we're capital light because of it. And that's how our runway can last us and get us through to profitability with the least amount of dilution to shareholders. and hopefully, an increase in shareholder value. That's what we're here for. And I appreciate everybody's time, and we'll continue the conversation over the coming weeks and months.

Thank you very much, Steve. Judd, thank you, operator, thank you, and to our audience. Thank you. This concludes this presentation.

Thank you, everybody.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.