Comstock Inc. (LODE) Earnings Call Transcript & Summary

Please take notice that we will make forward-looking statements during this program and that any statements relating to matters that are not historical facts may constitute forward-looking statements. These statements are based on management's most current expectations and are subject to the same risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in previous reports filed by the company with the SEC, and all forward-looking statements made during this call are subject to those same risks and other risks that we can't identify. [Presentation]

Welcome to UPLODE. I'm William McCarthy, Chief Operating Officer of Comstock Inc. It's my great pleasure to be your host today as we take a deeper dive into Comstock Inc. and each of our business units and share our excitement for the opportunities surrounding our singular goal: to accelerate the commercialization of decarbonizing technologies. The world is changing. Our climate is changing. The way we think about and interact with our natural resources is changing. For some, this creates fear. But at Comstock, we see massive opportunity to build and deploy sustainable technology solutions for the future. Sustainability is more than a buzzword to us, and it goes far beyond environmental impact. Sustainability means the ability to be maintained at a certain rate or level. What value does a new technology bring if its benefits cannot be maintained for the long term? We must prioritize sustainability across all metrics to survive and thrive in our changing world, financially, environmentally and socially. Before we look forward, let's take a minute to reflect on where we've come from. Like many of you, when I first met Comstock, the company was exclusively a gold and silver exploration and mining business. But our Executive Chairman and CEO, Corrado De Gasperis, had a different vision for the future of the company. Corrado deeply understood that we could achieve global net-zero carbon emissions within our lifetime by taking a systemic approach, applying the minds and tools necessary to deliver, significant, commercially relevant technology breakthroughs across multiple industries. Energized by Corrado's vision and empowered with a greatly expanded team, Comstock Inc. has truly moved on to new ground over the past 3 years. And that's our theme for this inaugural UPLODE event: new ground. UPLODE 23 will be a conversation about the problems our carbon-reliant way of life is created and an exploration of how we can profitably correct them. It's your chance to sit back and have the solution served to you. We hope to open your mind to the very real impacts of our work at Comstock: profitably commercializing new technologies that will reduce and eliminate the negative ecological impacts of our long-term unsustainable relationship with the Earth's natural resources. We're going to cover a lot of new ground today. We're going to talk some about Comstock Inc., but we're going to go deeper to explore Comstock Fuels, Comstock Metals, Comstock Mining and GenMat. Together, these 4 businesses will change the way you think about energy, minerals, mining and material science forever. When you walk away, we want you to be absolutely buzzing about the technology-driven opportunities we have in store and the future of these critical industries. Today, Comstock Inc. is an emerging technology company, making brave strides towards the next industrial revolution with breakthrough commercial solutions that prove decarbonization is not only possible. It's profitable. Before we get going, a few logistics. The agenda is posted here on our website for you to follow along with the program. Please send in your questions via e-mail to [email protected]. Let's get started and kick off UPLODE 23 with an overview of Comstock Inc. and a preview of what's coming as we explore each of our businesses. Corrado De Gasperis, Comstock's Executive Chairman and Chief Executive Officer, is a visionary, who knows our carbon-neutral future isn't going to happen by accident and that achieving it will take more than just luck. Without further ado, it's my great pleasure to introduce Corrado De Gasperis.

Good morning. My name is Corrado De Gasperis, Executive Chairman and CEO of Comstock. And welcome to UPLODE 23, our inaugural event for showcasing our groundbreaking technologies, businesses and leadership teams. Comstock operates systemically, that is, we operate as one system with one goal: to accelerate commercialization of decarbonizing technologies. Our fuels and metals business do this by commercializing unprecedented extraction technologies that efficiently convert underutilized waste into renewable energy products. GenMat does this by commercializing its physics-based generative artificial intelligence for exponentially faster material discovery and by working directly with Comstock Minings teams for bigger, faster mineral discoveries. Each business is advancing new sustainable technologies for financially and environmentally impactful results. And we're doing this in either very large existing markets or fast-growing new markets. In all cases, our solutions unblock the major constraint of that industry supply chain, enabling unprecedented breakthroughs for our customers. Take for example, that most renewable fuel refineries draw from the same feedstock pools: vegetable oils. The total vegetable oil supply can only meet a small fraction of their total demand. We unblock that constraint by converting abundantly available lignocellulosic or woody biomass into bio intermediates like Bioleum for refining into high-yielding renewable fuels. Remarkably, our fuels teams recently demonstrated commercial readiness, with unprecedented yields approaching 100 gallons of equivalent fuel per dry ton of wood. This technology breakthrough positions exponential growth. David Winsness and our fuels team are working today on executing new license agreements with sophisticated experienced refiners. Our solutions leverage existing refineries, existing infrastructures and existing transportation fleets for immediately impactful decarbonization. This means we can effectively practically decarbonize mobility, one of the largest polluters beyond -- well beyond net zero. The world is also obsessed with electrification. This includes, of course, the current ramp-up of lithium-ion batteries but also the widespread and now nearly 1.5 decade use of solar panels. This aggressive electrification is creating scarcity for these critical minerals. And it's also having a very bad unintended consequence of overwhelming our landfills with contaminated and toxic materials. And this is desperately increasing the demand for metal mining and metal recycling. Comstock Metals is now deploying a system to safely and profitably crush, condition, extract and recycle the highest-purity metals from end-of-life solar panels first today and then for end-of-life batteries as well when their time comes and many, many other electronic devices. We see the market clearly, and we're meeting demand for profitable growth today while also positioning for exponential growth that will come as more and more of these electronic devices start reaching their true end of lives. As Fortunato and probably even David would say, electrification is only part of the solution. And it's not the only solution for true practical systemic decarbonization. These renewable fuel and renewable metal innovations are truly groundbreaking. But we need even more technology, and we need it much, much faster to meet humanity's demanding metal, mineral and, frankly, climate-smart needs. Conventional material development takes way too long, especially when you appreciate that the lithium-ion battery alone was first introduced in 1992, well over 30 years ago. And what about the time that's required to explore, discover, quantify, engineer and build a mine and put it into production? I think we know a little bit about that. The time from discovery to production for a new mine now spans almost 2 decades, 2 decades. It literally now takes anywhere between 13 and 17 years to define a new resource, permit it and put it into production. This is why we love the Comstock Lode with defined resources, with existing infrastructure and with all of our permits. And this is why we also, over 2 years ago, invested in a physics-based generative artificial intelligence, and many thought we were crazy. Many still do. Yet this is the technology that is enabling the sensing, simulation and engineering of new [ battery ]. That is new materials. We're talking about generating new battery chemistries, talking about generating new energy sources. We're even talking about engineering new cathodes with AI. What was science fiction is now, today, with GenMat, science fact. GenMat has built a world-class team of physicists, chemists, classical and quantum machine learning engineers and geophysicists, now at 40 strong. And this U.S.-based team, led by Deep Prasad, has already built a generative AI called, ZENO, that can accurately simulate material characteristics like electrical conductivity, like thermal conductivity, the band gap, heat densities, all in exponentially shorter times. We have effectively gone from taking years and months to do this to now taking days and minutes. And now ZENO is even working on accelerating mineral discovery, and Comstock Mining is the perfect early adopter. This mining problem is both too much data and not enough of the right data. It's just too difficult and too cost-prohibitive to unlock the hidden evidence of where all these minerals really are. Comstock already has vast amounts of geologic data. With GenMat sensing and predictive algorithms, we can analyze, corroborate and enhance our own known mineral resources and then expand that along miles of known trends. The groundbreaking advances will increase the certainty of our mineral targets and support the advancement of our mineral categories into much larger proven and probable reserves, all while massively reducing the cost of traditional drilling. These energy, pollution and discovery dilemmas and most of today's conflicts require another level of groundbreaking innovation with faster, more scalable solutions for humanity's needs and in our current efforts for sustainable clean energy. This requires new technologies, new materials and a systemic delivery system to ensure our ability to deliver exponential growth. This is our system. This is our methodology, and this is our culture. Comstock takes a systemic approach to achieving our goals. We're here to show you that although it's logical and commonsensical, you'll understand it. It's just not so common. We have literally designed and implemented a system that synchronizes the rate at which we decarbonize with the same rate that we generate cash. This was one of the first conflicts that we surfaced and resolved for system-wide alignment to one goal. Comstock's system is not only designed to inspire innovation. We enable it. We accelerate it. To what end? Probably one of the most important questions you can ask me: to what end? In our system, to a precise and purposeful goal. Comstock has designed a positive sum transformational enterprise. And again, to what end? I'll tell you: enabling systemic decarbonization. Everything that we do is to that end. We apply a science-based method to our business, and our approach is not trivial. We identify the most meaningful dilemmas in society and in the industry struggling to serve them. These are complex that they are struggling with that they are blocked by. These are the dilemmas constraining them if you want to think of it that way. Our theory of management is basically focusing on and unblocking these constraints. Once we understand the dilemma, we focus on surfacing the assumptions, surfacing the obstacles that are truly blocking their ability to move forward. We do this methodically. We do it thoroughly, obsessively even, yes, unrelenting, yes, for our markets and our customers. You might be surprised, shocked possibly, at the rigor of the process that goes into our technology making and our market making. These are strategic thinking processes that are integrated across all of our businesses consistently, continuously. This is how we built the Comstock system and the people suitable for operating in that system. People are not only willing but enjoy surfacing these conflicts, enjoy attacking the hardest of these dilemmas, the assumptions, the obstacles head on every single day. We are motivated by the possibilities that others shy away from or, frankly, that others just can't see. I mean maybe that's visionary, but maybe it's just being much, much more thorough. This is our definition of an innovative culture. Our people need to be purposeful, curious, dedicated, selfless and logical to name a few. Our teams must be aligned and operate interdependently. This defines our culture. This is our culture. Our approach demands that we don't make or accept assumptions that we are focusing on conflicts and obstacles that make the most impact, the ones that create and add the most value. This is the Comstock system, the Comstock way, our way of creating operating, sustaining and innovation-based culture. This is the way. This results in an acceleration of breakthroughs and advances at every stage of our readiness, every stage of our commercialization throughout our organization. From basic research, TRL 0 to 3; advances in research and development, TRL 3 through 6; and engineering and business development, TRL 5 through 9, the system works in independently with each other and with our customers and with our technology partners, the universities, the university laboratories, the independent laboratories and our suppliers, with feedback loops from all of them so that we're focusing on and dedicating ourselves always to the biggest problems, to the most meaningful accelerators. This is what our team is here to show you today. All of our technology readiness levels have leapt forward and are now quickening such that our first cellulosic fuel solutions are now commercially ready at TRL 6, and we're advancing commercialization with GenMat and Comstock Metals, now both on the verge of TRL 6. This means that fuels, metals, mining and our physics-based AI are all accelerating their commercial objectives now. It is truly, by far, the most exciting time to be part of this company, this system, this enterprise, this way. The Comstock Lode has one of the most remarkable legacies of innovation. The miners in that century had to overcome assumptions and obstacles to access and build 700 miles of underground tunnels, often establishing new global standards for mineral extraction. We have embraced and honored that legacy, both in the preservation, through the Comstock Foundation for history and culture, and now through these groundbreaking technology advancement. As Billy said earlier, and I can assure you, it's not luck. It was difficult to assemble and coordinate and very, very difficult to replicate this unrelenting reality-facing modus. I am sure you'll see it over the course of today's UPLODE activities as our world-class teams are not just technologists, engineers, marketers, but frankly, positive-sum futurists will demonstrate an already new paradigm. We have enabled the system for you and for the needs of a very different and demanding world. We can't wait to share it with you. Thank you, and I am sure you are going to enjoy. [Break]

Now let's turn to Comstock Fuels. The idea of carbon neutrality is big. It's a globally impactful concept that can be tough to conceive of. We find it easier to grasp by focusing on a small, simple concept that contributes to over 25% of the global emissions challenge. We're talking about one of humankind's most defining traits: our need to move. The ability to travel from A to B, mobility. The need for mobility inspire technologies that transformed life on earth during the last industrial revolution: trains, automobiles, airplanes and more. Unfortunately, these technologies also created a deep reliance on long-cycle fossil fuels. Comstock Fuels has charted a course to a future where the fuels industry can positively impact the planet in the matter of a few short years. Here to show you the path forward is the President of Comstock Fuels, David Winsness.

David Winsness, President of Comstock Fuels. I'm really excited to talk to you today about our renewable fuels business. Our team has a strong history of success in renewable fuels and progressing the industry. But what we're going to talk about today is our biggest achievement yet: our ability to not only reduce greenhouse gas emissions from transportation but to completely eliminate them. As I mentioned, our team has a strong history of success in renewable fuels so much though that in the first-generation plants built, 200-plus ethanol plants in the United States, our technology was adopted by over 95% of that industry to produce roughly $5 billion a year of new value, new fuels, offsetting 20 million barrels of crude oil consumed every year from our advancements. Our achievements were so significant that the EPA changed the regulations it set in the renewable fuel standard. Now what's the renewable fuel standard? It's a program that was adopted into law by Congress in 2004 to set milestones to include agricultural-produced sustainable fuels into our transportation fleet. Now the program started with something very easy: to allow the fuels to get produced and adopted more quickly and then to progress into more challenging feedstocks that have much more meaningful impact. The program started rapidly as I expected, but then it hit a wall when it got to the more challenging feedstocks. The ability to produce net-zero carbon fuels. And that's where we come in at Comstock. We have finished the pathway to enable meaningful levels of advanced fuels to offset our greenhouse gas production from transportation. So these advanced pathways not only reduce greenhouse gas emissions, but they eliminate them, providing carbon-neutral fuels, net-zero fuels or even below-zero fuels. Now let's go back to those earlier easier fuels to produce and what they're doing today and why aren't we producing more of them. So when the EPA established these programs, it was a progressive pathway. I was going to start with corn ethanol first because it's easy. What's corn ethanol? It's moonshine. It's 100% alcohol, 200 proof alcohol. And it can be blended and used in automobiles very effectively. In fact, Henry Ford did it with his Model A. He wanted farmers to be able to have the ability to produce their own fuel if they wanted to. So he had a carburetor that could operate on ethanol or gasoline. Now that we're adopting this program, why did the EPA set the limits where it to hit 15 billion gallons? Well, it's because that's 1/3 of our corn crop. And I know that's a big number. 1/3 of our 90 million acres of corn, that's a big number, but it's sustainable. The EPA set the numbers because it's sustainable. And at the time in 2004, we were still paying farmers not to farm. So using 1/3 of the supply brought land back into use and put it in production. So it didn't harm anything, but it's a big number. What is the impact on the greenhouse gas reduction from this crop? 15 billion gallons of ethanol is the equivalent of only about 9 billion gallons of gasoline out of our 200 billion-gallon need. That's a small percentage of our need, 5%, but it's only about 20% better than gasoline. So that means 1/3 of our corn crop producing 15 billion gallons of ethanol has about a 1% reduction in greenhouse gas emissions when compared to gasoline. The second class of fuels in that early-stage adoption of the renewable fuel standard was biodiesel produced from soybean oil. Now soybeans are grown on the same acres that corn are. They alternate crops every year. So we have an abundant supply of soybeans like we do corn. And we produce a lot of soybean oil, the same stuff you buy in the grocery store. Soybean oil, biodiesel. Biodiesel made from vegetable oil is a pretty easy process. You can just look at the oil and say, "I could see how that could be used in the car. It's already oil. It's already fuel. It already burns." The name is still misleading. It's not diesel. It's a product that can be blended with diesel. So this quality is good but not great. The same thing with soybeans is similar to corn. There's a lower amount of soybeans, so the mandate is lower. It's not 15 billion. It's 2.4 billion gallons is the mandate for that class of fuel because they don't want to take all of the fuel. They don't want to take all of the soybean oil that's produced and use it for fuel, but they allowed a certain amount that would not affect the food supply. And that amount is 2.4 billion gallons. It's better than ethanol. It has about a 50% reduction in greenhouse gases. So it also has about a 1% improvement. If we consumed at all, like the same thing, only a 3% improvement. It's not sustainable. But that wasn't the purpose. The purpose wasn't to have the best crop first. It was just to get it into the supply chain. Now we move to more advanced fuels. That's the second generation. But a really interesting thing happened along the way with biodiesel. Like I said, the quality is good but not great. Big oil shows up to the party. And they say, "Hey, why are you making biodiesel? We can use our refinery know-how, our knowledge, our infrastructure to convert that same vegetable oil into the exact same product, diesel fuel, the same specification." And they're doing that today at really meaningful scales. Okay. So big oil enters the party, right? But I thought they were the problem. I thought big oil was the problem. All these refineries. Now you're telling me they're going to get involved. Aren't they the ones producing all the CO2? No, they're not. They're a very efficient way of converting crude oil, something you can't burn in your cars into a cleaner product that you can burn in your trucks, tractors and cars. So they're just the intermediate. They convert crude oil into drop-in ready fuels. They're not the problem. That infrastructure to do that is very efficient. So what's the problem? It's the cars, right? It's the cars that are burning the fuel producing the CO2, right? It's got to be the car. No, it's not the car. It's not the car that's the problem. It's the source of the carbon. Where did the carbon come from that's being burned and released in the car? That's the problem. If we can change the source of that carbon, we can have a system that's in balance. So what are we talking about? We're talking about a shorter or better carbon to fuel these refineries. What are you talking about? Short carbon, long carbon. Well, we call it long-cycle carbon and short-cycle carbon.

How is fuel created? Through something called a long-cycle process. Plants and animals expire and slowly break down into the soil. Then over the course of hundreds of millions of years, the heat and pressure applied to the carbon-dense soil transforms into petroleum. Today, humans extract this petroleum, turn it into petroleum products and burn it. The long-cycle process works as it takes an incredibly long time, and there needs to be a better solution. That solution is a short-cycle process. The CO2 in our atmosphere is always being absorbed by trees. We use these trees to make products like paper and lumber. But the companies who harvest these trees often don't use most of the branches. This results in the creation of waste wood. The technology that Comstock Fuels has developed can convert this waste wood into petroleum-equivalent materials. These materials be converted into fuels that work with the same infrastructure petroleum products utilized today. This is a net-zero fuel creation process because trees never absorbing CO2 and it moves exponentially faster. Without our reliance on nature to create petroleum for us to use, the short-cycle process takes as little as 5 to 15 years. But what if there were an even better solution? The enhanced short-cycle process from Comstock Fuels expands on what short-cycle processes can achieve by enabling afforestation. We incentivize companies to plant fast-growing trees that reach maturity in just 3 short years. The roots containing as much as 40% of the carbon will remain. This cycle reaches completion in just 3 to 5 years and, thanks to the fast-growing trees and the carbon they keep out of the atmosphere and trap in their roots, successfully achieves a below-zero output of carbon emissions. This enhanced short-cycle process, made possible by Comstock fuels, isn't simply disruptive. It's revolutionary. This is what the future of fuels looks like.

Okay. So where does that leave us? We all agree that -- or understand now that short-cycle carbon is better than long-cycle carbon, okay? So if we can use short-cycle carbon, we have a solution. We also learned that the oil refinery says they can participate and help. This massive infrastructure that's processing long-cycle carbon can be used to process short-cycle carbon. Okay. What are we left with? What's our constraint? Feedstock, sources of short-cycle carbon. How do we get it? How do we capture it and convert it into a material that existing infrastructure can convert? Well, as you may guess it, that's where we come in. We have the process that harvests the biomass, converts it into an intermediate that can be sold to an oil refinery. So why did we choose woody biomass? Of all the crops that are out there, why would he biomass? Well, it was easy. It's the most obvious choice. It's 80% of all terrestrial biomass. It exists, so it's dominant. It's robust. It wouldn't get to 80% domination if it wasn't extremely robust. So we start with the biggest, most abundant crop. And then we encourage the planting of new abundant crops, right? If this is the best crop out there, let's grow more. How much more? Well, the United States used to have 1 billion acres of forest lands. Now we're down to roughly 600 million. Let's go reforest. Let's afforest. Let's plant new crops that are going to be consuming more CO2 more quickly. Now we've made a lot of progress in the types of woody biomass that can be grown. Universities have worked very hard. In the north, they have hybrid poplar, shrub willow. These are short-rotation trees, they call them SRTs, that can be harvested in a little as 3 years, 10 or 20 years, depending on what your cycle is. These plants in the north with the shorter growing cycle can consume 10 tons of CO2 per acre per year. You go a little further south, we have a larger growing cycle season, you can use faster-growing trees or trees that grow more per acre per year, like pine and eucalyptus and reach 20 tons of CO2 per acre per year. Further south, you can have bamboo. We've seen numbers of 30 tons per acre per year of CO2 removal. So we've identified the crop, woody biomass. It's abundant, obvious. How are we going to do it? How are we going to build these facilities to make this product that's going to slide right into these oil refineries? Well, we've analyzed woody biomass, and we determined the best thing, the best way to process it is to, first, separate it into molecularly consistent materials. There's been a lot of attempts to process woody biomass and a lot of failures. And the biggest reason is they try to do it all in one step. We don't do that. We determine that if you separate the biomass into molecularly consistent materials, then you process each stream in the best available method for those streams. So what do we use? We use conventional off-the-shelf equipment that's been used for over 100 years in the pulp and paper industry. They do the same thing. They bring in woody biomass, and they pulp it to separate the cellulose, molecularly consistent, glucan that can convert into glucose, and they separate everything else because all they've ever cared about is that paper, that cellulose. We care about the entire biomass stream. We separate that stream using their equipment, the standard equipment in a better way that allows us to capture all of the materials that were extracted from the cellulose. So we have 2 streams. We have a pulp stream, just like they do. Pulp can be converted just like starch into ethanol and biofuels using the same methods that all these facilities were built using corn. We can use that and apply that same method, and we do apply that same method to pulp, but our biggest achievement by far is this Bioleum stream. This other product that we have separated from the tree. It's the richest source of carbon in the tree. It should have been -- the focus should have been what everybody was going after first, the richest source of carbon in the tree. We take that material. We further process it into our product that we call by Bioleum. And it's that Bioleum that we want to ship to the oil refineries. We've got the feedstock. We're going to use off-the-shelf equipment. How fast can we go? Let's talk about speed, right? Well, I just mentioned earlier that we're going to use the same process to convert our pulp that they use for corn. 80% of our facility is that step, okay? The first step is just separation. Second step is processing the starch. The third step, somebody else is going to do, the oil refineries, right? So how fast can we build these systems? That corn ethanol industry that we talked about, how fast it went, they built 200 facilities in a little as 7 years. Let's use that same process because we have the same process and build ours at equal or better paces. We've learned a lot from that. So we're going to use that same methodology to build quickly, and we're going to use existing infrastructure to finish our Bioleum. Okay. So we're going to process everything that's out there. How much is out there? There's 500 million tons that we can convert into 40 billion or 50 billion gallons of fuel where we consume 200 billion, right? That's only 25% of our fuel need. When we started the conversation, I told you we were going to offset all greenhouse gas emissions. How can we possibly do that? If we only have biomass, it's available for 20% or 25%. We're going to plant, plant, plant. We're going to plant as fast as we can. We're not going to do the planting. We're going to incentivize others to do that, right? If we go plant these woody biomass sources that I talked about, that hybrid poplar that can consume 10 tons of CO2 per acre per year, a pine or bamboo but using 10 as the example. If we were to plant 100 million acres of hybrid poplar, for example, that consumes 10 tons of CO2 per acre per year, it will consume 1 billion tons of CO2 every single year on that 100 million acres. That's 50% of the U.S. emissions from transportation. So 100 million acres, we have the land, we have the crop. While it's growing, it doesn't have to wait for all these facilities that get built. It just has to be planted. Every year, it's consuming 10 tons. The biomass just gets bigger, gets bigger, gets bigger. We're building an inventory, a standing inventory of carbon. How big is 100 million acres? Corn has grown on 90 million acres. Soybeans, 90 million acres. We have the land, right? We had 1 billion acres of forest lands. Now we're down to 600 million. We have the land. We just have to plant the crop. We talked about short-rotation carbon, we love it, right? We got it. We're using existing equipment and designs that we can build quickly. Got it. We're going to plant. We're going to make things happen very quickly. So what does all this mean? Well, we were selected by the Department of Energy and a grant application that we submitted last year. And in that application, we talked about everything that we're talking about with you using woody biomass, separating it and converting it into fuel. And we published a minimum fuel selling price using their calculations, their methods that they ask were to calculate this minimum fuel selling price of $2.68 per gallon. That's competitive with fossil fuels today. And we know we're going to get better. We are 100% confident that our costs are going to continue to go down. There is no faster way to decarbonize transportation than the method we just talked about today. So the takeaway here is that our pathway is the fastest way to achieve meaningful results. There is no other pathway that we're aware of that can reduce greenhouse gas emissions so rapidly, 100% of all emissions in a very short period of time. And this is what the future of fuels looks like: Comstock Fuels.

Hello, everyone. My name is Corrado De Gasperis, CEO of Comstock Inc., and I'm here with Comstock Fuels team today. To my left is David Winsness, President. To my right is Chad Michael Black, Director of Business Development; and Rahul Bobbili, our Chief Engineer. David, why hasn't anybody been able to commercialize cellulosic fuels to date? And how are we different?

When the industry transitioned from corn ethanol to advanced cellulosic fuels, the industry used corn stocks first, and that's a problem. They thought it would be very easy to use corn stocks because it's available. But the bulk density of corn stocks is very low. So you have a big truck hauling very little weight, very little mass to the facilities, and you only harvest at one time a year. So you have to store enormous amount of material. We elected to use a much more dense feedstock, woody biomass. Woody biomass can be collected year-round virtually, a little different for some climates, but virtually collected year-round. And we've been doing it for a century. So we're using the most dense feedstock with existing methods to collect that material.

But people have used feedstocks before -- woody biomass feedstocks before, never seem to quite get there. What are we really doing different there?

Well, the challenge with converting wood, and it's -- a lot of it's in the name, they originally gave it cellulosic ethanol as a title, and that really limits the mentality. You're considering only converting the cellulose when you say cellulosic ethanol. And you really should say lignocellulosic fuels, which is the entire plant mass. So when you -- if you only focus on cellulose, woody biomass is comprised of only about 50% cellulose. What about the other 50% of the biomass? And that's where we go. We were able to convert not only the cellulose but the entire biomass, the other part.

Yes. With our patented process, as David explained, it allows us to completely separate the cellulose portion away from the hemicellulose and lignin, creating Bioleum. And that's our unique value add that the industry has not ever looked at in time past. And it -- a simple -- with this pulping technology that's been around for 100 years, we're using off-the-shelf equipment that's been around in the pulp and paper industry for quite some time. It's just the way in which we do it. It's a solvent. That's really what makes our process different.

The feedstock composition consists of lignin, cellulose, hemicellulose and dirt. Usually, corn stock has low density, as David said, and any wood biomass has high density, and the lignin contributes to substantial amount of fuel in our process.

So David, what does our technology do? How does it work?

Yes. We essentially break the biomass into different components that can convert more easily into fuel independently. So instead of trying to convert a biomass stream all in one step from start to finish, we separate it into a cellulose stream and a Bioleum stream, and they're grossly different in mechanical or molecular makeup. So we separate them into streams, and then we process them independently into fuels, and we achieve much better results that way.

The beginning of the process, call it, the foundation of where we start, where our patent in the process actually lies at the pulping technology, right, the pulping technology added with a solvent completely being able to separate those 2 streams and being able to walk them down further advancing downstream technologies. But to David's point, once you separate those out, that's how the process works, but it's simple. It's off-the-shelf equipment that's used all over the world in other industries. So it's really easy to implement and operate.

And many people stayed away from the lignin. The lignin is the armor that protects the cellulose. We embraced it because when you look at the lignin, the cellulose and hemicellulose, lignin is the richest source of carbon in the plant. So it's -- it might only be 20%, 25% of the plant itself, but it's 40% of the carbon content. And we're trying to make fuels. So we should -- we embrace that. We want to take the -- it should be the first thing you look to. And it is actually what we look at first. It's the richest source of carbon, and we produce more fuel from it, releasing far less CO2 than cellulose.

It doesn't sound that complex. So probably, is it complicated or...

Not really. It's a known process in the industry today. The extract lignin basically from the woody biomass and the residual masses, cellulose and hemicellulose, the cellulose and hemicellulose converts to ethanol using enzymes, and these enzymes love when they only expose. They are exposed to only cellulose or hemicellulose. The lignin part of it is processed separately and converted to fuels.

When I'm simplifying it for a layman, someone that's not in the industry, we do what Mother Nature did over hundreds of millions of years in order to create fossil fuel. Our process does it hours to be able to create Bioleum.

So David, are there challenges in meeting the unique needs of different customers?

Yes, definitely. In a perfect world, you can invent one solution and just repeat for everybody, but it's not a perfect world, and every location is a little different. Every biomass is a little different, and the resources at those sites are different. And then the outputs that customers may want are different. Some are focused only on sustainable aviation fuel. Others are, what's the most amount of fuel I can get in the most revenue I can generate. So are you looking for strictly revenue? Are you looking for a special market? What's your access to feedstock? And what's your access to market. So we blend all of those into our solution for them to help them build a solution energy. What resources do they have available? Some areas have very green electric grids already there. So we can use that grid. Some don't. So we have to build a grid. But we look at the resources they have and craft a solution for that area.

And do we have a solution for every customer?

So far, we've been able to answer a lot of good questions. So we've had very diverse customers. Some are really laser-focused on ethanol, and they don't want to convert to Bioleum. So we'll introduce them to an offtake party to buy the Bioleum and convert it. Some want to do everything at one site. They want to go all the way to fuel from biomass to finish so we can offer solutions for both parties.

Yes, it's unique. It's client by client. I mean everyone that we interact with, it's important for us to understand their business model on a granular level. That way, we can provide them with the most not only economic success but business success as well because they all define it differently. We have some clients that look at a demonstration plant facility at 50 tons per day, and others look at 1,500 tons per day, right? So it's varying, the degree of not only the byproducts that they want or their final desirable fuel blender mix that the core focus of where we're at, we're the foundation that enables downstream technologies. Our sugar, our Bioleum is the focus. They can go into multiple downstream technologies to be able to create very unique fuel blends for the clients.

Do you find that challenging, Rahul, that some customers want small scale? Some customers want large scale?

So we have the capability in-house to customize solutions for customer needs.

The way that we started with the technology too at the R&D facility, looking at what the yield results were going to be as the technology scales, now that we can continue to scale with those parallel yields as well. That's what makes -- it's unique for our engineering team because they're able to structure it based upon what the customer wants in regards to their throughput.

And we work with really well-known equipment manufacturers, and we've used their most optimum design to come up with the beginning of our process, our digester. And if a company wants to be really big, they just get more lines in parallel. So it's really -- we have modular components that are very essentially identical for each case, but we may configure them a different way to provide a different result, more sustainable aviation fuel, more ethanol.

So Chad, we're staring at a massive market opportunity, over 200 billion gallons of fuels in the United States alone. How did you guys decide how you wanted to go to market?

Yes, great question. So Comstock has a team -- Comstock Fuels has a team. We looked at these technologies, and we were the great debate internally. How are we going to commercialize these technologies? If you look at our core ethos about what we value, it's the rate at which we decarbonize. The quicker that we can implement these technologies into the marketplace, the quicker that we can decarbonize, it makes pure sense to license these technologies to like-minded companies that have a similar focus of reducing greenhouse gas emissions as well as capitalizing on the current infrastructure that they spent 100 years building, right? We're tapping in. We're enabling them. We're not a competitor of any of these downstream technologies. Hydrotreating, big oil, corn ethanol, et cetera. We enable them, right? So licensing makes the most sense for us long term. And a lot of questions come in regards to the revenue streams that come off of those. So even though a plant might take 48 to 60 months to commission and physically turn on, that's when the royalties would start long term in the 60th month. But in and along the way, Comstock Fuels will be collecting upfront licensing fees as well as preengineering fees as well, Phase 1, Phase 2 that Rahul and his team will be working on.

And David, it sounds like that you and Rahul and the team, you've cracked the code on accessing the carbon from the wood. But then you're engineering this holistic solution to deliver it to whoever the customer might be, whatever their circumstance might need.

Yes. The equipment is not unique. It's been around for decades. It's the way that we sequence it. Our goal is different. We're making fuels now. We're not trying to make paper or chemicals out of the cellulase. We're trying to make fuel. And so we're using the same old equipment, but we've resequenced it so that it's much more efficient and effective at our goal, making fuel.

Right. And we're saying, instead of -- what I think you're saying is instead of taking that entire burden on our shoulders, why not partner with the market, why not partner with the customer, but really enable the solution that best fits their scenario for the fastest possible decarbonization.

Yes. I think one of my biggest and best skills is my ability to network. That's how I met Rahul. I invented a process that recovered corn oil. He has a process that converts it into biodiesel. We're doing the same thing now. We're networking with new team members. We came up with a very efficient process of separating wood into molecularly consistent materials, and now we team up with people to convert those. We're using the same exact process to convert [indiscernible] corn and the fuel from pulp, so it goes into that system. The system thinks it's corn. It doesn't know the difference. It's molecularly consistent with starch. We take the Bioleum. We change it and make it feel like vegetable oil that these hydro treaters are going to convert. The oil refiners say, I know what to do with oil. I don't know what to do with starch, but I know what to do with oil, semi or Bioleum.

In your mind, the solution doesn't need to be singularly Comstock.

Right. We invite people to come to us and say, "Hey, I've got an idea. I've got a solution that I think can help you here." It's a team -- a network that we have of great technologists to come up with these solutions, and we are inviting. And I think if you speak to any of our parties, you'll say the same, they'll say the same things about us that they like to work with us because we do it openly. We're transparent about how we operate with our customers, the solutions that we provide and how we are all rewarded for our contributions.

We enabled downstream technologies, right? We want to be looked at as an enabler, not a competitor. We want to facilitate the advancement of these downstream technologies, whether it's hydrotreating to specific blends, whether it's taking ethanol to jet or sugar to gasoline, et cetera. We want to be able to work homogeneously with these collaborators and not look at -- not be looked at as a constraint, but as a foundation, right, a prerequisite to their technologies.

What is the biggest constraint in the industry, Chad?

The biggest constraint the industry has faced today has been just a scalability, like making it commercially viable, right? The technologies that exist, which they are out there. The [indiscernible] guy, like, if you go back and look at the DOE grant that we were -- that we had applied for that we're currently in the process of awarding on, they looked at it as 60 gallons. That was the benchmark focus. 60-gallon gasoline equivalent was what they were looking for out of 1 ton of dry wood, right? So when we talk about the ability to use the entire tree, right, that's what makes it unique, right? We have the ability to double what most of these other technologies are looking for in regards to their fuel output because we're utilizing the entire tree. And frankly, a lot of these -- they're not able to scale down. Some of these clients that we work with, we had to bump up our proposals to be able to meet the minimum demands of competing technologies. Other technologies out there can't go below 1,500 tons per day. So because of that, we have to push up our demonstration scale to meet those demands. And then their equipment, too, is extremely sophisticated. It's extremely labor-intensive to run. It takes a lot of man hours, and it takes a very, very skilled, if not PhD individual to be able to operate those systems. It's very complex.

You're saying scale up, we can scale down.

That's right.

The biggest advantage of our technology is we are handling feedstock, which is a high-density feedstock and it requires a less footprint facility to produce the fuel, whereas other facilities or other technologies have load [ and see ] feedstocks and they're producing same volume with a bigger footprint of the facility. So that's a tremendous CapEx advantage for us.

Yes. We've literally seen competing technologies that require a 2,000 to 3,000 acre campus just to be able to operate, right? And on a base scale, without incorporating the size of the wood power yard, the infrastructure to get the wood in and out of the facility, we can operate under 10 acres, right? I mean it doesn't take much to operate our process.

What would you say the biggest constraint in the industry is?

Policy has been some of the constraint when they came up with the renewable fuel standard. They really were narrowly focused on corn and soybean oil because it was easy to get the gears going, you get the industry started and they admitted this. They said about three years ago, they said we neglected the cellulosic path. We knew that we had some policy barriers to overcome. But if we tried to do it in 2004, we knew nobody would even be attempting to make those fuels until at least 2015. So let's focus our policies on something that get adopted quickly.

And do you even see another tech that could effectively solve the carbon problem?

I don't think anything competes with biomass. Photosynthesis, bar none is the most efficient way to pull carbon dioxide out of the atmosphere, stick the carbon in the plant and release oxygen. There is no faster way to decarbonize, and we enable that, right? We are going to go take waste materials and process them. And we're going to build a lot of plants quickly, but we're also going to encourage and incentivize people to plant new plantings. And the day the sea hits the ground is when it starts to decarbonize right after germination, let's say. It starts to decarbonize immediately. We don't have to have the operating facility running when we plant the seed. The seed is already germinating. It's already pulling in CO2 for 20 years maybe before we harvest it.

And we let Mother Nature take over. I mean, a tree is an advanced example of carbon sequestration technology. The most, right, it's had hundreds of millions of years of experience to be able to perfect this process. So how we enable the downstream technologies too, to David's point, we enable afforestation upstream as well.

And we can build a lot of plants quickly, which is what we want to do, and the corn ethanol industry was fantastic. They prove that 200 facilities could be built in 7 years. 200 facilities produce 15 billion gallons a year of fuel. They did it in 7 years, really out of thin air. They just said, we're going to do this, and they got it done quickly. Our systems largely are the same equipment that they use. We want to build at that same pace. But even if we were just to build at that pace, which is impressive and produce 15 billion in capacity in 7 years, that's only a 7% reduction in greenhouse gases, right? And in the next 7 years, we get another 7%. But in parallel to that, people are going to plant, they're going to affor, like Chad was saying, and when they plant, you plant 100 million acres, you consume 1 billion tons of carbon dioxide per year. That's 50% of all of our missions. So you don't have to have 7%, 7%, 7% built for decades. You have to get that process started so that they're ready when the new crops arrive.

I actually haven't heard it said that clearly before. Not only are we deploying the solution in the fastest possible mechanism to decarbonize, but we're incenting the entire upstream to decarbonize and provide a massive amount of feedstock that could effectively solve the problem.

That's the fastest way to decarbonize transportation bar none.

I mean, philosophically, you're saying why compete with big oil. Why compete with other technologies, why not collaborate. I think that's what attracted me the most this notion of creating a system, creating a network of not just technologies, not just feedstock suppliers, not just customers, not just laboratories, but all of that together, it seems like every time you guys introduce yourself to another counterparty, they cease to become a counterparty and they start to become a partner. Is that luck?

No.

What's happening here?

It's tenacity and effort, and it's just logic, right? We're building biorefineries to take biomass into a refinery to make fuel. But we don't have to go all the way to the finished fuel, right? We can make a crude oil intermediate and let the existing infrastructure do it. Why build another hydrotreater to convert the intermediate into jet fuel. They already exist and it speeds the process. It adds to our speed. The infrastructure is there. We don't have to build it.

There are a lot of petroleum infrastructure that is idling currently in the U.S. market, and our feedstock is best suited for these infrastructure.

So instead of creating a brand new system, you guys are integrating and leveraging, really leveraging and exploiting the existing infrastructure that's already in place.

And we are providing alternatives to the U.S. farmer to plant forestry and replace corn fields with forest.

The average forester today makes about $25 per acre per year in income. $25 per acre per year in income out in the Midwest, corn and soybean, they're making over $200 per acre per year. We shift afforrester for making $25 to $200, $300 per acre per year. That's a huge amount of incentive to afforest.

So you're not saying you're just revitalizing them. We like -- you're just bringing them back to life. You're creating a prosperity.

We used to be 1 billion acres of forestry in the United States. Now we're 600 million, and we are encouraging it to go back the other way.

One thing I want to go back and unpack in regards to the pulp and paper industry. I think it's important for the market to understand. It's not a shift in focus, right, with what we're looking at. This byproduct, this waste stream of lignin that's currently being unutilized in the pulp and paper industry. We can now come in with our technology, repurpose it into Bioleum into fuel. All the while they can continue to process pulp, the same way that they have, a little bit different in regards to the chemicals used, but the pulp and paper plant can stay open and spit out 100 gallons of fuel for every roughly 1 ton of wood still, right? It continues the process.

Yes, that's money that was lost. They never integrated the system. They were only recovering half of the biomass to make pulp that was either used to make paper or rayon. Textiles are made out of pulp. Chemical pulp has made -- used to make textiles. So whatever business they're in that uses pulp and cellulose, they can continue, but for every ton of product they were making, like Chad said, we get 100 gallons of fuel now from their waste stream.

In a world that's constrained, in a world that has truly finite resources, your solution takes underutilized, unutilized natural resources and leverages it for a carbon neutral or below zero carbon solution. Why isn't it better known, why isn't it moving faster?

I've been in the renewable fuel industry for 20 years. And I always saw a lot of resistance from a lot of different parties. Protect the forest, right? Now they're saying protect the forest, we need somebody to harvest it. We would have less forest fires if we've managed them better, okay, so they were resistant for a while. Now they're accepting oil and ethanol, right? I always saw them as competitors. They -- at least they sounded like it. But last year, the EPA had a comment period where they said, "Hey, we're thinking about changing the standard. We're going to tweak it a little bit. Instead of going from farm all the way to fuel at one location, what about making it intermediate?" What we've been talking about, taking the wood in our case, to an intermediate and shipping it to somebody else to convert. We're going to call that a bio intermediate and the EPA suggested that as a rule change. Two years ago, that was illegal. You couldn't go and ship in stages. February of last year, all the comments came in, there were over 900 comments. We, of course, commented favorably that's our business, but so did everybody else. I don't remember seeing any negative ones, but the ones I do remember seeing the most were the ones I didn't expect, and that was all of the oil companies individually and through the American Petroleum Institute, their body, they recognize and work under all of them said, "Yes, we want intermediates." and we'll use our resources to convert those. So I'm seeing alignment from people that want to protect forest. We want to protect forest. We want to grow more. So let's work with those groups. The paper industry was a little concerned about us tapping into their resource. Now they're saying, "Hey, we can participate. We can get 100 gallons of fuel now for every ton." So they want to participate and now the oil companies.

As I listen to the powers that be, talk about electrification in a way that we're going to replace the entirety of the United States infrastructure or the global infrastructure for that matter. And then to see that we have a solution that's not just impactful, not just meaningful, it could lead the decarbonization with the existing infrastructure. Even then, I didn't -- I couldn't foresee partnering with all of these constituents. I mean you've created a coalition beyond what anyone would typically even think of.

I think you're going to see a change. They were broadcasting EVs heavily because that's the best available technology they knew about. They're just learning about us. The Biden administration not too long ago announced they want to increase purpose grown crops, purpose grown for fuel crops to 1.2 billion tons per year. He didn't talk about that last year that just came out. So now they're just starting to see purpose growing crops, intermediates, existing infrastructure with refineries, you're going to see a continued advancement in shift. EVs is going to have its role. It's a great thing. We're much faster, much better.

I think -- and even to Chad's point, when you said the Department of Energy came out looking for someone who could produce more than 60 gallons of gasoline equivalent per dry ton of wood, and we were looking at each other saying, "Oh, my goodness, we have something here that's much bigger than that." And David, I mean, just in the last 3 months, what's happened with our view of our yields?

Yes, they're going up and up and up. And we don't have a black box technology. We don't have -- we're not going to tell you we invite people in to come toward our demonstration facility, and we use conventional methods to pulp the wood, converted into ethanol, ethanol to jet, right? We're using all these basic tools to do it, and our yields are exceptional. And it's because we split it and let these fuels convert in the most efficient way that they can. And that's why we're achieving yields of 100 and potentially even higher gallons per ton.

What is the theoretical maximum yield from a ton of wood?

Every wood has got a different energy density a little bit, but my math is maybe 140 gallons per ton is perfect efficiency. So 100 gallons per ton is substantial.

But it also speaks volumes. If we're thinking 140 gallons per ton is the theoretical max and the government's asking, begging for people that can do 60 gallons per ton, it shows you that the industry was not where it needs to be. And you're showing the industry as a whole, how to get there.

Yes.

There's been mass adoption as well to the renewable fuel space. There's been large-scale oil companies that have converted their hydrotreating capabilities to strictly to renewable fuels. With what's currently online today versus what's coming online over the next 60 months, there was going to be a massive shift. Over 40 plants in the U.S. alone are set to go into commissioning and deployment to the renewable fuel space. All the while, big oil is looking for the feedstock. They're simply constrained by the feedstock in which they currently operate. That was a reason why they all spoke favorably of allowing biointermediates into the process last February with the EPA. I went to the first ABLC conference I went to last October in San Francisco. It's the who's who of the aviation fuel industry, gasoline, petrol, et cetera. I mean it's all the major names that you would think of household names. There's 700 people in the room roughly that are being impactful that are making, the impact to this renewable fuel standard, right? And out of that, all the business development leaders, all they talk about, we need feedstock. We need feedstock. We need feedstock. We need to feedstock. So it's been a rapid shift, right? You asked a great point. Why have we not gotten here sooner. We're here at the perfect time. We're here exactly when we're supposed to be, and that's right now. We only went public with the way in which we do this process in Q1 of this year, right? So we're just getting warmed up.

Clarify something for me like I'm confused. So we already know that big oil is moving to renewable fuels. They've got some, I don't know, a dozen or 2 facilities. And you just said they're building 40 more. So they're building 40 more and how are they going to feed that facility, like they've already committed to these conversions using vegetable oils.

That's a true commitment. When you are building a pace above supply.

Yes, well, you're getting a -- even a step further when you talk about supply, it's a unique position because right now, the administration is trying to decouple the food market from the fuel market. Right now, there's direct correlation, right? Food products are being used in fuel production. And so because of that, the scarcity thereof, food prices are going to increase as more and more mandated requirement or more and more of these renewable fuels facilities come online.

So they're building a tremendous -- they're converting -- I'm sorry, they're converting a tremendous amount more capacity. Their facilities use food feedstocks and there isn't enough of that. So that's why you're saying we're coming in at the right time because they're going to hit a wall.

It's a perfect timing. I've talked to others in regards to -- in the political arena. How do we feel -- how does Comstock fuels feel in regards to who sits in the White House? My regard is the train has left the station, right? The green movement has begun, and we're at the forefront for the fuels division.

So when it comes to feedstocks, all these renewable diesel facilities are relying on oils and fats, whereas we are providing them an alternative, which is Bioleum, which is more or less similar to an oils and fats and which can replace the need for all these renewable facilities to basically use it as an oil and fat.

So Rahul, they can use Bioleum instead of those oils and fats with the same outcome?

Same outcome, yes.

So right now, where the technology is that we can enable their current feedstock sources and immediately by adding Bioleum double the amount of feedstock that they can put into a facility.

So you can supplement the existing facility. You can also replace?

Long term, when you get into the theoretical maximum, which David alluded to, that's what would the long-term goal.

Yes. I mean if you have an abundance of woody biomass and you have a scarcity of food feedstocks, why wouldn't you transition?

Right.

It was a great gateway or pathway to this industry, though. It was easy to do, and it was exactly what the EPA intended for it to be as a pathway to bring. We have a network that brings crude oil into a port, sends it up to pipes, pipelines, to refineries that go through more pipelines to terminals, right? We had no way to go the other way from the field to the refinery to the network. There's no pipeline from the field to the refinery or to the terminal, so that infrastructure had to be changed. And those terminals that are distributing to towns that are now blending 10% ethanol or biodiesel. They had no means to bring the trucks in. They were only receiving fuels by pipeline. So how do you integrate fuels into that stream? You had to start with a pretty low bar to get it done. And that's what they did with corn, ethanol, soybeans. And it was really effective, now we can come in with the advanced feedstocks.

And that was the point I made in regards to how technology grows and along the way, but the result is still the same, right? So we're still creating the fuel. We're creating it in a different manner. It was a great -- corn, soy was great to get us up until this point, Bioleum is what shifts us in to the new revolution.

So Chad, what excites you the most about Comstock fuels?

Yields and demand.

Rahul, what excites you the most?

It's the team and the expertise.

David, what excites you the most about Comstock?

Speed and impact.

What excites me the most about Comstock fuels is the way we operate as 1 system and solves the problem. I just want to thank you guys for the time, conversation, all the input. I really look forward to working with this team and really delivering this solution into the market.

Next up on our agenda is Comstock Metals. Electrification is changing life as we know it today. There are so many exciting products enabling average consumers and huge corporations to change their relationship with energy and carbon output. But all those products have a shelf life. And effective solutions to deal with decommissioning and disposal when that life comes to an end have not been widely adopted. Comstock Metals sees this opportunity for what it is, the chance to mindfully manage the recycling of these products in a way that keeps harmful materials out of the ecosystem, gives them an extended life and gives businesses a chance to leverage this imminent opportunity. Here to help shed more light on the subject is the President of Comstock Metals, Fortunato Villamagna.

My name is Fortunato Villamagna. I am the President of Comstock Metals Corporation. Being new to Comstock, I wanted to take a few minutes to introduce myself. Academically, I have a PhD in computational or theoretical chemistry. I also have an MBA, and my original ambition in grad school was to work on small molecule modeling for the pharmaceutical industry. But fortunately, I was introduced to one of the preeminent companies in Canada, and specifically their nitration and explosives group, fell in love with the technology and the industry and the company. And as they say, the rest of this history. As I transitioned out of that Fortune 500 world after 27 years, I started the first business, which took recovered propellant and explosive from aging munitions, some as far back as Vietnam era and reformulated them into commercial explosives. The basic concept from that business was to be paid to take the munitions, process the ingredients and convert them into value-added products. And that's the first milestone I wanted to bring your attention to, which was the revenue model for that business. An offshoot of the knowledge gained from that work was a thermal process I developed to clean the contaminated metal before recycling, residual materials, grass steel, some consumables were contaminated with energetic materials. They needed to be clean before recycling, and I did this by thermally decomposing the energetics without causing them to explode and treat the resulting VOCs. I had the good fortune to be part of a joint venture with a large food producer that wanted to enter the energy business, much like ADM had done with methanol. My company developed an electrochemical process using alkali metal selective ceramic membranes to make sodium methylate for biodiesel production. The methylate is used to cap the fatty acids when you're making biodiesels. But it also takes me to the third milestone that I wanted to highlight, which is the selective removal of metals in solutions. Throughout this entire period, I continue to work on the underlying science of the thermal technology, and that underlying science led to the development of a system for the destruction of medical waste. And the third business I started, which was a business that was and is the only reliable alternative to incinerators for medical waste. And that takes me to that fourth milestone, which is a service model for those -- for that business. In parallel with these developments, the underlying thermal science was also independently adapted to a broad range of private label thermal treatment systems, which have been installed across the U.S. in a number of applications. And that's the fifth milestone, which is the breadth of applications that you can use thermal systems for. Taking the understanding and experience gained from these 5 distinct milestones, we were able to formulate new and different path for the recycling of recovered metals, culminating with the Comstock Metals proprietary system, which was specifically designed to recycle metals from all electrification products. So what's the driver for Comstock Metals? Put simply, is sustainability in its most fundamental form. How many times in human history has a technological solution to one problem, indirectly caused another problem. There are numerous examples out there. All you have to do is look at Facebook, great idea. But I don't think they foresaw the social problems that would create or if we take the example of James Watt in the development of the steam engine at started the Industrial Revolution, I am sure James Watt wasn't thinking about carbon dioxide, greenhouse gases, global warming and climate change. Unfortunately, electrification products are starting down that same path, whether it's solar panels, whether it's batteries, whether it's fuel cells, ask yourself how much thought has gone into what happens to these products at the end of their useful life. And we're not talking about water to make steam, like in the steam engine, we're talking about materials that are mined and are scarce. And more importantly, they're not domestically mind. Put simply, I think the electrification industry is just not prepared for what's coming. As a result, this represents an opportunity for Comstock Metals by allowing us to augment the supply of these scarce materials and capture value, mitigate the environmental impact from these materials and capture value, all the while underpinning and supporting decarbonization. I want to take a minute just to summarize where we are. And I think it's clear that there are increasing demands for alternative energy. That's a given. Electrification will happen. We don't know the extent. We don't know the implementation rate. But I think at this point, it's an irreversible process, and electrification has a few common denominators. The key materials are scarce. The materials are mostly not domestically mined and these very same materials and metals have the potential to cause significant environmental problems. We need to mitigate the environmental impact and capture value. We need to augment the supply of these scarce materials and capture value, all the while supporting decarbonization. So where does the opportunity come from? And the answer is all electrification products, whether it's the solar industry with photovoltaic panels, whether it's energy storage with batteries, the hydrogen economy, the fuel cells and even wind through turbine blades. And this is a little different than the other 3, and I'll explain that in a little bit, but applications in turbine blades are also an opportunity for Comstock Metals. When we plot them out in terms of potential recovery value versus environmental mitigation value, we can create a plot where on the far left-hand side, you have turbine blades, which really represent no recovery value in that there is no -- there are no metals in them to recover, but they represent an appreciable environmental mitigation value, mainly by conserving valuable landfill space and keeping them out of landfills. As you move across that plot, you will run into solar panels and EV batteries. They do have significant potential recovery value in terms of the metals they contain. More importantly, they also have an environmental mitigation value, which is fairly high because of the toxicity of those metals. And obviously, at the far end, you have fuel cells, which have an immense recovery value because of the precious metals they contain. As such, we are not just focused on batteries and will make Comstock Metals Corporation the leader in metal recovery from all end-of-life electrification products using our proprietary process as a foundation. And we're going to do this by enhancing the recovery of those metals, preventing the pollutants from enter into landfill, provide much needed and strategically scarce raw materials and contribute to the implementation of electrification, all the while underpinning decarbonization. [Presentation]

The life cycle of the electrification products that revolutionized our relationship with energy is coming to an end. Comstock Metals is positioned to lead the market in recycling decommissioned solar panels in an effective carbon neutral way that can unlock new commercial opportunities for businesses of all kinds. But just how big is the scale of these opportunities? Let's crunch the numbers. The total volume of deployed solar panels in the United States measures to approximately 230 million cubic feet. Comparatively, a typical 18-wheeler truck measures 4,500 cubic feet. What does that amount to? The equivalent of 51,000 trailer trucks at 72 feet long each. That's 700 miles of trucks or the distance from Virginia City to Seattle. How about this? The collective size of all the solar panels poised for decommissioning is the same as 7,300 large airplanes. If you think these numbers are impressive today, just wait, in 5 years, they'll double. We've done the math for you. Solar panels present an undeniably strong near-term opportunity that's simply too promising to resist.

So we've talked about solar panels. We've talked about batteries and fuel cells and turbine blades. So what's the common feature of all these products? Well, the simple answer is lamination. In the old days, they're running joke used to be that the hardest thing to recycle was milk cartons because of our lamination, whatever you did to delaminate them or remove the plastic off the paper cause the bigger problem you started with. And lamination has always been a problem for recyclers and all electrification products have some form of lamination, whether it's solar panels with layers of plastic to separate the components, whether it's batteries, where you have the anode and cathode separated by a layer of polymers, sometimes microns thick, whether it's fuel cells that also have a layered structure separated by polymers. Or in the case of turbine blades, these are both composite and laminated products and their sheer size is what illustrates the problem about landfill space for them. The common denominator for these systems is essentially layers of metals separated by polymers, where the metal extraction is diffusion controlled, it's particle size control, concentration-dependent and obviously binder dependent. To give you a mining analogy, it's the same as removing overburden to get access to the metal. We need to remove the plastic to get access to the metals. In terms of the recovery process, I won't say much for obvious reasons, other than to say that typical recovery is either physical dismantling of these systems, hydrometallurgical recovery or pyro metallurgical recovery, and Comstock doesn't start with any of these. But Comstock's innovation is the patent-pending pyrolytic process that delaminates and enhances the recovery of the metals to extract more of the scarce raw material. So why start with solar panels? For solar panels or any of these products or any product in general, you can draw a product life cycle curve, just basic economics or business school 101, where you have an introduction, a ramp-up or inflection point, maturity point and declination point. And this curve will run years or decades depending on the product. Simultaneously, you can, in parallel to that, create a replacement cycle curve that mimics the profile of the product life cycle curve. And in the case of solar panels, we've made the case that 2008 represents the transition point or ramp-up or inflection point of the use of solar panels in the market, and the business will grow from there. Likewise, at some point in time, we will see the same inflection and ramp-up point in the replacement cycle. If on top of these graphs, we superimpose the typical life of the solar panel, which based on solar companies is recommended to be 25 to 30 years, more practical estimates from customers have it at 15 to 20 years. And in some of the harshest environments or more difficult cases can be as short as 10 to 15 years. By superimposing all these curves, we can actually predict when the start of that replacement cycle for solar panels will be, and it turns out to be 2023. So with solar panels seeing their inflection or ramp-up point in terms of installation in 2008, roughly 15 years later, 2023, we are starting to see the inflection point and the rapid ramp-up of that replacement cycle. We can have a similar analysis for the rest of the electrification products, whether it's cells or fuel cells or batteries. In the case of batteries, we can make an argument that the inflection point or the ramp-up point started in 2018. Whether it coincides with the opening of the Gigafactory or whether it coincides with a rapid increase and sales of EVs, I think 2018 is generally regarded as the starting point for the ramp-up or inflection of EV batteries in terms of their product life cycle. Some point down the road, we will see that same inflection and ramp-up in their replacement cycle as these batteries or cars are replaced. And our estimates indicate that, that's roughly 2028. May be 2030, but roughly in that time period is when that inflection cycle will begin. And we can have the same analysis for fuel cells. Fuel cells are a little different than that bifurcated. You have an automotive application, which is a little slow. You have freestanding energy application, which is a little faster. But same sort of profile, we're anticipating a ramp-up or inflection point of around 2025 or later, which means the inflection point for the replacement cycle should start 2030 or later. As we start with solar panels, we will begin with an electrification product that is starting its ramp-up cycle or inflection cycle. It's going to strategically position Comstock Metals to do all of the electrification products. We're going to deploy a common treatment technology. We're going to deploy a common recovery process, but the panels represent the current largest installation base and replacement base. It has the fewest constraints and least uncertainty in terms of the recovery, the lowest capital requirement for recycling and basically will allow us to validate the entire business plan at a point where solar panels are starting to be replaced at industry scale and are actually coming out faster than anticipated because of the lifetime issues we talked about a minute ago. They represent the fastest path to cash flow and will allow us to simultaneously mature the business for other electrification products. In summary, we are essentially going to recycle all electrification products. We are starting with solar panels for the reasons I gave. We have isolated turbine blades and looking at them on a case-by-case basis, but this plan will allow us to essentially derisk the business and accelerate cash flow. And what excites me the most is the fact that we're not just focused on batteries. We are focused on all electrification products, the future of metals recovery from all electrification products, Comstock Metals.

Hi. My name is Corrado De Gasperis, CEO of Comstock Inc. And I'm here with Dr. Fortunato Villamagna, the President of Comstock Metals. Welcome, Fortunato.

Thank you.

We're going to talk about Comstock Metals. And let's just start off with what -- it seems like you're taking a little bit of a different approach from everyone else. Why are you taking this approach? How is it different? Why isn't everyone else taking this approach?

Well, the reason as to why everyone else is not taking it. I can't speak for them. But what other groups have tried to do is start by recycling EV batteries. They focused on EV batteries, even though the replacement cycle for the batteries isn't fully developed yet. And one of the common problems of EV batteries and all electrification products is that they're laminated, that lamination effectively masks or covers the materials you're trying to recover. So once you crush or shred a battery or any electrification product, that plastic lamination coats the materials and in an asset [indiscernible] slows down the recovery of those materials. The approach we've taken is pretty much along the old milk carton thought process where we start by delaminating the electrification products by removing the plastic layer, you now allow full access of whatever solution you're using to attack the metals and extract them more fully out of the matrix.

So which electrification products then are you recycling?

We are looking at all electrification products, obviously, starting with photovoltage and there's a reason for that of solar panels. We're looking at storage systems as in EV batteries. We're also looking at the hydrogen economy in terms of fuel cells. And we also can look at wind turbine blades in the wind industry. They're somewhat different than the other 3, but all of those are open to us as opportunities for recycling and recovery.

So okay. So it seems like everyone [ in their mother ] is going after the EV batteries, the lithium-ion batteries. So you're saying, yes, that's in the scope of what we want to do, but you're starting with solar panels.

Right. And if you look at the life cycle of any product out there, products have an inception. They have an inflection point where their use ramps quickly, a maturity stage and a stage where they decline, and that can last years or decades depending on the product. And of the electrification field, solar panels saw their ramp-up or inflection point somewhere around 2008. We can argue whether it was a year or 2 earlier. But generally speaking, around 2008, which means at some point in the future, they will have a similar ramp up in terms of the replacement cycle. And based on our estimates, that ramp-up point is now, okay? If you conduct the same analysis for batteries, one can argue that the inflection point or the rapid uptake of batteries took place in 2018, whether it corresponds to the opening of the Gigafactory, whether it corresponds to a rapid increase in electric vehicle sales. But somewhere around 2018, we saw a significant spike in the deployment of batteries for electric vehicles. So at some point in the future, when those vehicles start to age and have to be replaced, we will see a replacement cycle spike for the batteries as well. And right now, our estimates are showing that, that's roughly 2028, some estimates head of the 2030. But clearly, the moment right now is not the point where EV batteries will start to spike in terms of the replacement cycle. It's somewhere towards 2028 or a little later.

Yes. So like we're estimating 5 to 7 years before we start to see a meaningful flow of lithium-ion -- end-of-life lithium-ion batteries. But I've heard also people say, that's really not the end of their life. Like what's that all about?

Well, when the battery reaches a certain efficiency level, it can be redeployed for different applications, more traditional energy storage. But regardless of the redeployment, at some point, that battery will reach the end of its life. And I think all the data we have indicates that is roughly a 10-year period, maybe 12 years. So if you're extrapolating 10 or 12 years beyond 2018, you get to the 2028, 2030, where you will see that rapid increase in replacement cycle.

So yes. But you're saying solar panels are here now. So it seems to me -- it's intuitive to me, it's obvious to me that people are chasing lithium, nickel, cobalt, manganese even though you're saying it's not a sprint, it's a marathon, but why would we chase solar panels?

The biggest issue with solar panels -- and all these products will have a combination of a recovery value from the metals they contain, but also an environmental mitigation value. So the larger impact of a solar panel, if it winds up in a landfill is that they do leach cadmium, cadmium is toxic. After a long period of time, a decade or 2 we're going to wind up seeing the cadmium in our drinking water or our groundwater, which will contaminate the environment. So there's 2 drivers. There is definitely an economic driver to recover the metal, but there's also a driver to mitigate the environmental impact and you can extract value from both of those drivers.

Yes. So you're saying now we're seeing panels reach end of life, and they got nowhere to go. Or are they going to landfill. Really, what you're saying is you would like to redirect that material flow, but you're not recovering any precious metals or any...

Not precious, but we would recover cadmium. There is a commercial market for cadmium, and we will certainly tap that market, so that's the extraction value. But if you look at the revenue model for the business, the 2 revenue streams are the value you obtain by extracting those metals plus the value you can obtain through disposal fees by avoiding the landfill or the environmental issue.

Meaning, if I understand you, meaning you will get paid, you will have revenue from taking those materials. And then you'll have some recovery value, but it sounds like you have [ 2 tons ] of value. The recovery fee, the tipping fee, whatever we call that is right up front.

Right upfront and the recovery values as you process the materials and all electrification products have the similar balance in the case of, say, wind turbines, which are part of our business plan, although a separate part. Most of that value, 99% or 100% is in that tip fee or the environmental avoidance, and because the turbine blades take up a lot of valuable landfill space. So there is a value there. There's almost no value in anything you can recover from a windmill blade. But then at the far end of that example, you have fuel cells, which contain 10%, 11% platinum. So the recovery value from the metals in that fuel cell are very high relative to the environmental mediation value.

So the technology that you're deploying the system that you're deploying to recycle these materials or, in some cases, efficiently dispose of these materials. Is it similar?

The technology is uniform across the group because what the common link with the electrification products is that they are laminated. They're basically layers of active material separated by layers of polymers. And by eliminating the polymers, you can increase your access to those active materials and increase the extraction rate by orders of magnitude.

Is that how you're different? Is that how you would describe the difference between what you're doing and what others might...

Yes. That is fundamentally one of the differences. And if you take a traditional hydrometallurgical process, which we are not, you shed or crush the materials. They still retain the structure. They still retain the lamination. You still have plastic covering the metals that you're trying to extract and you put them in an acid bath. Well, the ability of those metals to diffuse out of that matrix is constrained because of that polymer coating.

I see. So the polymer is an obstacle. It's a contaminated undesirable.

It's an obstacle to extraction. It's a contaminant post extraction because you're carrying this polymer along with you until you can filter it out at some point. So it has a number of negative impacts on the overall recovery. And interestingly, when people talk about percent recovery, they usually talk about black mass forward and black mass being the powder you recover from batteries. They seldom talk about from the battery to the black mass in terms of recovery. So you actually will leave a considerable amount of black mass in the battery even after the acid wash, and guess where that residue goes. Generally speaking, goes to landfill.

Yes. So you have a process that is uniform that has a core capability, taking out these contaminants laminates. So you're resulting in a pure black mass, a pure or cleaner material or a more efficient? Is it efficient?

Well, it's a more efficient extraction process because you've eliminated the barrier.

Is it labor intensive?

The amount of labor is comparable. It's the same across the board. What you're simply doing through our proprietary process is eliminating that barrier. That barrier, once it's gone, you can accelerate and increase the efficiency of the extraction process and you can recover the metal more fully.

So I see. You start -- it sounds like you start with solar panels and ore blades.

Blades are a little different in that they don't have a recovery value. So for us, it would be an economic decision. The value of keeping out of landfills is quantifiable, but not large, so we will have to evaluate that as the business evolves. But what the solar panels do -- and by the way, we've coined a few new terms. Black mass refers to the powder you obtained from batteries. We've coined gray mass and white mass to reflect the powder that comes out of solar panels as well as fuel cells because it is, in fact, a different color. But what that does is it gets the business going in an area that is active right now. So there's -- there are a lot of panels coming out. They've started their replacement cycle. They're coming out at industry scale, and they're actually coming out a little faster than people predicted. The 25- to 30-year life span of a solar panel isn't quite working out. They're more like 15 to 20 years. So not only are they coming out at industry scale, they're coming out faster than people anticipated. So the supply chain is here now.

So where are they coming out of?

There's basically 2 routes. There's a residential application release panels. So in residential facilities converting or changing over panels is one source of those. The other is the industrial energy generating application. And I'm sure you've driven by the solar farms that have thousands of panels. They will tend to be coming into a replacement cycle themselves. Quite often, these farms are in fairly harsh environments, the Mojave Desert or the Sonoran Desert. And those environments, panels actually last -- they don't last as long as in residential applications, even though they have a greater maintenance schedule. So those applications are also quite important to us.

You're seeing sources of panels from both segments now?

Both segments now. Yes.

So -- and I guess when you think about the scale of some of the solar farms, if we're starting to see some come out now I guess, more will be coming out.

Yes, this is really the beginning of the replacement cycle. So that's going to ramp up very quickly just like the installation cycle ramped up quickly.

And so -- what happens if -- I mean, honestly, I haven't heard of anybody targeting photovoltaics until we met, right? It seems very logical. I do see incredible amounts of capital from a broad spectrum of companies building capacity for lithium-ion batteries. And superficially, it seemed like, yes, we were doing it, too. But when you think through the capacity relative to this life, end of -- true end of life, I guess, it seems like the market is going to be ahead of itself. On the flip side, we haven't heard anybody positioning to process these panels. I mean what happens if we don't process, what happens if we don't address this segment?

Well, it's what's happening today. So some of the supply chain agreements that we are negotiating right now are with collectors that would otherwise go to a landfill. And whether it's Arizona or Nevada, they would wind up in a landfill. Eventually, the cadmium that these panels contained in leach out over the course of 5, 10, 15 years, make its way into the leachate in the landfill and eventually the groundwater in the vicinity of the landfill. So that's the end state if we don't do anything.

Right? So it's almost -- like it's an urgent need. It's an urgent need just for protecting the environment.

There's a need and a value to protect the environment.

And what about the regulators? I mean what are they saying? I mean it seems insane to be sending these things to landfills.

Well, there aren't any other alternatives at the moment other than just stockpiling them. So that has clouded the conversation somewhat. I think with the introduction of a viable alternative, I think that will change the conversation and guide them in the right direction because at the end of the day, the published exposure limit to Cadmium is 2 parts a million. It's fairly low.

It won't take much to affect our ecosystem.

Correct.

When it's obvious that there is an alternative, I would imagine people will start prohibiting these materials.

It will be a different conversation for sure, okay? And the solar panels actually have a smaller CapEx footprint in order to establish a recovery facility. But at the same time, it allows you to fully evaluate the process and the business plan and all the aspects around that in the most cost-effective way, and you effectively validate your business before the onslaught or the large ramp-up of batteries and the subsequent large ramp-up of fuel cells.

All right. So you're approving your attack, you're expanding its readiness, you're getting paid upfront to do it and essentially a lower capital or capital safe environment. But what you mentioned though -- you also mentioned storage when you're talking about the blades. So we successfully jump through hoops to permit storage for lithium-ion batteries. We have that capability approved. But I'll tell you, right? When it came to the hazardous nature of storing the concentration of these materials, it was quite enlightening to us. We learned a lot. What about solar panels, what about blades? .

In terms of solar panels and blades, we are actually going through that conversation with the regulatory bodies as we speak. The conversation is extremely positive. They're viewed considerably different than batteries. And I think we can put together a situation where certainly prior to treatment, storing a solar panel is no different than you having it on your roof at home. There's no additional environmental implication, if you will. And as we...

No spontaneous combustion.

No spontaneous combustion as we evolve that business to fully recovering the metals ourselves, then that mitigates the issue about storing hazardous waste.

And is there a practical offtake for some of these materials?

The main material that you're recovering is cadmium, as I said, whether it's an oxide or sulfate whichever way we form it, there is a market for cadmium. It is not as lucrative as cobalt or gold, but there is a market for cadmium. So there is a value there that we can tap into. And as I said, in the grand equation of revenue is the sum of your environmental mitigation plus your recovery value, environmental mitigation for cobalt might be higher than the recovery value. Sorry, for cadmium, it might be higher than the recovery value. but there's a value nonetheless.

Yes. Well, I mean it seems like in that case, you've got a positive equation on both side.

On both sides, right.

Whereas in these critical metals, the lithium ion batteries, people are aware of the inherent value. So you have a cost and then a value. And so that equation is a little bit more difficult to manage. But the point, I think, is you're building Comstock Metals you're building a system that addresses the core problem, right, of safely, of efficiently, right, renewing these materials. And it's exciting. I mean to the extent that we can do it safer, both from a hazardous material perspective, we do it safer both on the immediacy of the market and the profit that can be derived, yet you're validating it across because I've gotten a number of questions, are you abandoning lithium ion batteries?

No. Like we are preparing for the point where we'll see that ramp up, which we believe is 2028. We might be off by a year or 2, but that provides us time to prepare for that ramp-up. Meanwhile, we are cash flowing with the solar panels and validating the process.

Right. Because your readiness starts with solar panels quickly expands into all of those other material flows.

I mean, alternative, we can spend $100 million building a battery facility and then wait for the batteries to come.

We prioritize photovoltaics, what if we don't, what if we started with batteries, what would happen? What do you see happening in the solar panel market?

Well, the only alternative for solar panels since they really cannot be disassembled fully. You can remove the frame, you can remove some copper wire. But once you've laminated the glass and the components underneath the glass, there's not much you can do with it. So the only alternative is the landfill. There really is no other way you can slice that one. And so if we don't do it, just like the old lead-containing TV screens, they wound up in landfill.

So it's just a matter of time? It's a matter of time before it leaches into the environment. It should be illegal now.

Well and I think there are a number of people that are having those conversations. The thing that blocks those conversations is obviously the producers standing up and saying, "Well, what do you want me to do with them? There is no alternative." So I think if we provide an alternative, then that will change the dynamics.

It's very consistent across Comstock, we try to find one of the most meaningful, one of the most apparent, one of the most immediate problems. We were saying earlier some people say it's visionary. We don't feel there's any visionaryness here at all. There is a problem today, right? It's negatively impacting the environment today. We provide the solution today.

And lay the groundwork for subsequent solutions.

Before beyond. Yes. What's most exciting to you about Comstock Metals?

Oh, geez. That was a little different.

Sorry for that.

Look, I am new to Comstock or relatively new. Clearly, I've known about the company before. But I think the reengineering of the company and the people that are now part of the company makes it extremely dynamic. I am really, really happy to have joined the group.

We couldn't be more thrilled to have you on board. I'll tell you what excites me most about Comstock Metals. When you think about the -- first, the environmental impact and then just the scarcity of these materials. So we're saying we're using up landfill space. We're using up in a very negatively impacting way, right, to be able to take these waste materials, take these hazardous materials and profitably turn them into a productive use. It's extremely exciting. It was your vision really. We didn't see it, right? We didn't see it. We weren't getting hit by it, right? It wasn't touching us, right? And yet those -- that thinking that you infused into our system changed our strategy, didn't abandon lithium-ion batteries, did not even contemplate hydrogen fuel cells, but sequenced the technology deployment for the most immediate, most productive use.

In 2010, Comstock Mining started work to preserve the collapsing historic mining resources in and around the Comstock lode. In 2013, the Comstock Foundation for history and culture was formed. The foundation, a registered 501C3 charitable organization, encourages the preservation and promotion of historic and cultural resources within the Comstock Historic District, also known as the Virginia City National Historic Landmark district. Since 2013, the foundation has made tremendous impact restoring and preserving our history. We're excited to share the great work being done by the foundation and encourage you all to come visit Virginia City to experience it yourself.

The Comstock Foundation for history and culture is a nonprofit that takes its inspiration from the same brave pioneers who made the Virginia City National Historic Landmark District and the Comstock Historic District into the beacons of ingenuity they are today. At the foundation, we knew that this sensational landmark and bastion of American and mining history was something special. Something that commanded respect, inspired all and deserved nurturing. And just like that, the foundation's mission came to be a mission powered by preservation. Our simple, but far-reaching goals is to take up the restoration of the unique expansive structures that make up the Comstock lode that others were unwilling or unable to tackle and breathe new life into them. The Comstock lode blew the world away when it became what was then the richest place on earth. In many respects, it still is. Rich with profound culture, mining heritage, historic structures, artifacts and breathtaking landscape. Today, this destination is as fun and enriching as it is prolific. This world-renowned district is a home of breathtaking industrial technology, touting huge successes in precious metal mining and processing. The lode carries with it an incredible and impactful legacy that deserves to live on and continue benefiting us into the future. So we protect it. We preserve it and we restore it, all with a tireless commitment to honoring a path that's as good as gold. The Donovan mill is one of the foundation's most cherished projects in the district with aspirations to transform this internationally significant site into a place of community, connection and commerce. The foundation's impact is so inspiring it caused a ripple effect of progress, enabling and urging others to support the special places that make this area worthy of the title of national landmark. The time has come to take our work further to inspire everyone to visit this groundbreaking place and join us in bringing it back to its original glory, to educate, to celebrate with special events that spotlight the vibrant past of the landmark, the Comstock Foundation has created something truly irresistible and engaging opportunity to step back in time to discover the impact the Comstock lode has had on our daily lives and to marvel in the possibility of the landmark'sfuture. Get involved, discover your power to help preserve history. Visit comstockfoundation.org today to learn more and to start planning your trip to the Comstock Historic District. [Break]

Comstock Mining was where the company started. Let's now explore its critical role in our future. Striking gold has never been harder. I mean that in a literal sense. Over the past decade, the number of new gold and silver discoveries has plummeted. Some industry leaders believe there simply isn't any more gold to be found. Comstock Mining is ready to dig deeper with game-changing technology that can help us thwart the naysayers, find the mineral stores and reach them quickly with a reduced ecological impact. Comstock's CEO wears multiple hats. One of the most important ones is his role as President of Comstock Mining, a role he's held for over 12 years. Under his leadership, we've consolidated a historic world-class silver and gold mining district, including 10 square miles of mineralized property and millions of ounces of SK 1300 compliant gold and silver resources with a permitted processing infrastructure in place. Here to tell you more about what Comstock Mining is doing to revolutionize mineral exploration, please welcome back Corrado De Gasperis.

My name is Corrado De Gasperis, and I've been leading Comstock Mining's operations for the past 12 years. And in that time, we've seen the mining industry hit a proverbial brick wall. When I first arrived on the Comstock, the industry had been discovering 8 to 10 new major gold deposits per year, that is deposits of greater than 1 million ounces being discovered every year. But just over the past 10 years, despite a massive increase in exploration spending, that number has dropped to less, on average, than 1 new major discovery per year with, believe it or not, no major discoveries, 0 over the past 4 years. The precious metal industry is now in a severe net depletion mode. They're literally depleting their gold reserves without the ability to replenish those minerals. Here in the Comstock, we facilitated an unprecedented consolidation of one of the most prolific, historic, world-class silver and gold mining districts in one of the best, if not the best, mining jurisdiction in the world. The Comstock lode produced over 8 million ounces of gold and nearly 200 million ounces of silver from a relatively small 1.5-mile strike. We know this because even those miners were data-centric, collecting voluminous records of precise data from every foot of ore mined and every cart of ore process, setting up a trove of historic data on this remarkable geology. The initial prospectors could visibly see mineral outcrop but the technology to effectively explore it and mine it to the extent needed just did not exist. The true legacy of the Comstock is the innovations that enable these pioneers to break through and overcome the massive obstacles to mine these rich ore bodies. They literally broke new ground and enabled decades of record prosperity, most all of which was on previously unmineable lands. How did they do it? Those Comstock innovators engineered many unprecedented transformational changes in the mining industry that was extrapolated globally, including, for example, honeycomb inspired square set timbering by mine engineer, Philip Deidesheimer. This network of square set timbers facilitated hundreds of miles of deep underground mines in loose, unstable rock terrain information or Professor Jackson, from the University of Nevada's then Mackay School of Mines, who perfected cyanide leaching right on the Comstock at the historic Donovan Mill in Silver City, effectively enabling an entirely new surface mining industry, making previously noneconomic lower-grade gold deposits into a new global standard for open pit and surface mining. Imagine engineering an entirely new type of globally adopted underground mining techniques or perfecting the chemistry and processes that created an entirely new surface mining industry. Yet these are only 2 examples of the Comstock innovations that transformed global mining over 1.5 century ago and inspires our vision of an almost unimaginable future. Over the last decade plus, we, at the Comstock consolidated hundreds of individual mining claims, resulting in over 10 square miles of mineralized property with over 6 miles of contiguous mineralized trend. We explored and developed mineral resources. We permitted an entire operating infrastructure. We even mined at our Lucerne project, producing nearly 1 million ounces of combined silver and gold. And all of that occurred in a very small portion of our Comstock Mineral Holdings. Since that time, we have modeled the second mineral resource at our Dayton project, validated by a third-party technical report. Our combined published, measured and indicated mineral resources at Dayton and Lucerne, contain over 600,000 ounces of gold and nearly 6 million ounces of silver. We are proud of what our team has accomplished. This was all necessary. It's just not sufficient because I stated earlier, the mining industry has hit a massive wall and it's unable to discover, grow and replenish its mineral resources despite the massive untapped potential of these in-situ minerals, remarkably, most global and Nevadan experts concur that there's likely much more gold still to be discovered here, right here in Nevada when compared to all of the gold that's been previously mined here today, this lack of new discovery dilemma is grounded in the fact that the majority of the surface of Nevada is under cover, a rock, gravel, soils such that the remaining mineralization is not immediately visible or evident. We're predicting these new targets. Most of the historical discoveries offered some evidence, some inkly of mineralized structures from the surface. The Comstock is a microcosm of Nevada with most of the rainy minerals and substantially all of the southern half of the district undercover and hidden, we believe that they can be hidden in plain sight. With our new sensing innovation, meaningful new discoveries require the ability to acquire and sense vastly more and better data, ultimately in much deeper ground penetrating ways and having a horsepower of artificial intelligence to process all this new and different data, the predictive algorithms that will more precisely identify newer, larger mineral targets for us to prove. The application of these new technologies like low-orbit hyperspectral satellite imaging, predictive AI and ultimately, quantum sensing has immediate and direct applications on the Comstock. This is because we already have a treasure trove of geological data with extensive historical data, thousands of new current modern drill holes, extensive ecological interpretations and even partially constructed 3-dimensional geostatistical models of highly prospective mineralized areas, yet even then, this only represents a small fraction of the Comstock lode, especially if you can appreciate the depth and the dimensions of these mineralized zones. We have an incredible starting point with all of this existing information. But if we just kept chasing the known tracks with conventional approaches and traditional drill programs, it could require hundreds of millions of dollars on a district this large. And all of that with no guarantees that the discoveries would even justify the investment. We realized long ago that we needed more advanced and more predictive data analytics to enable large economically feasible mineral discoveries. We need this on the Comstock. We need it in Nevada. And frankly, the rest of the world needs it because we are pervasively constrained by the minerals required for nearly everything. The minerals required for energy, transportation, computing, communications, even our infrastructure. We have already entered into a commodity super cycle, and it's just started with insufficient minerals and no new discoveries, transformative change is a desperate and urgent need. It is not a want. So well over 2 years ago, we began investing in generative artificial intelligence that would accelerate the advancement of sensing technology and predictive algorithms that can accurately identify mineral characteristics and pull them out of an ocean of data quickly. GenMat has done this and also designed and built one of the most powerful hyperspectral imagers that can scan properties and provide new and relevant data from anywhere in the world. With the artificial and human intelligence required to analyze that data and start better pinpointing these potentially huge mineral targets, we will certainly start with the scanning of the entirety of the Comstock Lode District. When coupled with the AI that can then analyze corroborate and enhance Comstock's known mineral trends, we will be able to increase the certainty of our mineralized targets. We'll be able to reduce the cost of traditional drill programs and increase all the supporting evidence for establishing and categorizing these mineral discoveries ultimately, into large proven and probable reserves. With significantly less deployed capital, we increase the precision of our mineral targets in a way that allows us to ground troops. We ground troops at these locations and deploy much more efficient drilling to actually prove the minerals that we predicted, the minerals that we targeted. Remarkably, our generative AI can start analyzing this information today even before we enhance that data with our new hyperspectral imager. [Presentation]

Technology enables us to do things that have never been done before to marry the digital and physical world, to locate and access valuable mineral stores in a fraction of the time. GenMat is a peerless AI-powered technology platform within Comstock's portfolio that can achieve this and more. Data can be chaos. GenMat brings that chaos into order uncovering insights with unmatched precision. What GenMat can do with AI, accurately forecast mineral availability, explore untouched areas of the current lode, reduce resource use and ecological impact to help access 1 million-plus ounces of gold. GenMat met leverages our extensive library of data and uses it to design a digital twin. What is a digital twin? Highly accurate 3D digital model of the lode. Empowers us to explore on a computer before digging on site. This digital twin is then amplified with advanced sensing data from powerful GenMat satellites that provide us with a more detailed understanding of the nuances below ground. This means we can explore the model on a computer and optimize our plan before we prove the model on the ground, giving us an unprecedented advantage. This breakthrough development will do away with the notion that gold and silver stores have depleted and show the entire industry that technology can dig more efficiently and effectively while reducing the ecological impact of mining. With this technology, we can create a mining industry that feels totally new, one that's as ecologically minded as it is economically focused and grounded in the power of technology.

Once we demonstrate the efficacy of our mineral discovery platform, within our known -- well-known historic district, we can then immediately extrapolate those innovations well beyond the Comstock, repeating and exceeding the innovations that enable the prosperity of the original Comstock miners with greater financial, natural and social impacts from these groundbreaking innovations across the entire global mining landscape, breaking this new ground in a way that enables faster and bigger mineral discoveries and systemic decarbonization for all of mining. The future of mineral discovery, Comstock Mining.

Hello everyone, I'm Corrado de Gasperis here with Comstock Mining and the Comstock Mining team. To my far right, I have Chris Peterson, our Director of Operations; Mike Norred, our Chief Engineer; and to my left is Deep Prasad, the CEO of Quantum Generative materials, better known for us as GenMat. Let's start, Mike, with the Comstock and the Comstock lode. I think most people really do appreciate. It's one of the most historic mining district in the country at the time Nevada is called the Silver State. And we have over 1.5 century worth of information and data from the inception of the Comstock's initial discoveries and all those years of mining, how much data do we really have, Mike?

Right. Well, starting with the historical, we have the records of every mine and they mined from surface onto over 3,000 feet below Virginia City. The mining period was most intense from the 1850s through 1910 or so, lots of records of every week of production. But then in the more modern age, we've got thousands of drill holes, miles -- representing miles of drilling with detailed assays every 5 feet along those drill holes. Hundreds of thousands of assays. So a wealth of drilling data, we also have geophysical data, we have surface mapping, surface samples, tremendous amount of data to work from.

Despite the amount of useful information that we've been able to accumulate over 150 years' worth of data, despite the modern miles of drilling that we have actually put in place that we've actually generated. We still have a vast amount of unknown. If people can picture 12 square miles of property and then picture 3 dimensionally what that looks like if you go a mile deep, okay? How vast is that area? And without question, the resources that you defined, right, which was data-intensive also gives us a more accurate view of a portion. But we have so much data. We have so much -- such a vastness of space. How do we get more of the right type of data and then how do we make it more useful?

When we look at the components of success of artificial intelligence systems that have an impact on the world commercially. Chat GPT is the most recent example of that, right? But then you also have the neural networks and artificial intelligence algorithms that run your search queries when you go to Google, you have AI algorithms that convert your speech to text. You also have AIs that help self-drive cars, and push billions [indiscernible] metal. And so the key components, there's 3 of them that go into their success are the following in no particular order. But the first one is data. So how much data and the quality of your data matters significantly. The other factor that matters is to what extent and how complex is your model in the first place? How sophisticated is the model architecture? Because how sophisticated the model architecture is gives you the ability to recognize more and more complex patterns. So the more complex the architecture, the more complex patterns is going to find in the data that you're giving it. And then the third component is how are you deploying, monitoring and testing the performance of the AI in real life, in real time. So if you can fix it on the flight, it's making bad hit recommendations, right? Do you have a feedback system in place where you give it feedback if it did a good job or not? So it's these 3 components, the data, the model and the human feedback loop that really differentiates failed AI technologies with more successful ones. So when we look at the mining industry and particularly the Comstock, something that is extremely amazing is the amount of data we have.

When I first got introduced to GenMat and I understood this concept of enabling the sensing, the simulation and the engineering of -- I mean literally of matter, okay? The sensing of matter, the sensing of information -- really was the attraction. We were a mining company only then, how do you sense matter? How do we apply this to our district?

So -- the -- great question, Corrado, because in the end of the day, if part of your AI is constrained on the kind of data it's getting, then we should be looking at how can we create new forms of data to give to it. How can we give it a better understanding of the physical world more information so that I can -- it has more information to act on in the first place. With humans, for example, up to 50% of our brain is dedicated to processing just visual information. That's how meaningful visual information is. Visual information gives us the idea of texture, composure, composition of an object, how far away it is and so on and so forth, it's velocity, it's geospatial distributions of certain items. So there's a lot of information that just visible information gives you. And we can think of visible information as just part of the electromagnetic spectrum. One of the ways that we can improve the sensing of mining is by building these hyperspectral sensors and deploying them for remote observation. So the human eye sees the world as a combination of effectively 3 different colors: red, green and blue, right? So that's your typical RGB values. So when you look at the visible spectrum that slice of the electromatic spectrum that we particularly have a conscious experience of, that's really just sliced and broken down to a combination of these 3 colors which is kind of mind-boggling if you think about it, right? Look how distinct the world around us looks right now, all these different colors and yet really our brain is rounding down to the nearest 3 and just combining them. The hyperspectral imager that we're going to be launching with SpaceX, that imager sees the world as a combination of 442 different colors. So 2 shades of pink that might look the same to any human will look distinctly different to our imager. 2 minerals with the same exact chemical composition, but different crystal structure will have very unique differences to our sensors that we can pick up on. So it's -- so a lot of it is being able to extract more electromatic information about the world. And remote sensing, particularly through satellites, it's really good because you have really wide surface area coverage. It can be often cheaper to do than, let's say, drone-based surveys and so on. And then also, there's this interesting ability that arises, which is we can start monitoring the vegetation and looking for changes in the vegetation index on the Comstock. So anything that's covered under vegetation as we monitor how the BGI, the index is changing, we'll be able to infer the acidification and mineralization and it'll just -- it will just contribute to our inference.

You've built this hyperspectral imager?

We built the satellite sensor that integrates the hyperspectral imager.

And you've leased space on SpaceX?

That's exactly right. So the same way that you might rent an Uber. We rented a rocket.

And so will one of the first tasks, one of the first objectives of this hyperspectral imager will be to scan the Comstock.

Exactly. So the first thing that we're going to be doing is building the spectral libraries. And we're going to be using our physics AI that GenMat's developing called Zeno to power these spectral libraries. Then what we're going to do is we're going to cross validate what the spectral libraries are saying about the distribution of minerals. And then we're going to compare that with the historical data from Comstock.

We've got a perfect opportunity to ground truth, the hyperspectral results with what we know is there physically. So we have a combination of remote sensing and physical on-the-ground measures.

So we're going to have more data. We're going to corroborate the data, but then we have to further process this data?

Indeed, because now we're talking about terabytes of data and that too data type that mankind has not previously dealt with in the past of this granularity. So what do I mean by that? Our satellite will be joining a glass of cube sets that represent the most powerful hyperspectral imagers to ever go into space of its kind. So the amount of sheer data that we're seeing, it will go beyond any patterns of human maybe can alone recognize. You really need a super intelligence to look for the correlations across these terabytes of data that will be downlinking as we take pictures of Comstock.

And you've built the computational platform to handle this capacity?

Exactly, Corrado. So this is -- this application of hyperspectral sensing is just one application of many that we can apply our core underlying physics artificial intelligence technologies to.

Maybe just shifting gears for 1 second, Chris, we've got 12 square miles of property. And Chris ran the mine, Chris operated the mine, Chris controlled the grades coming out of the mine. We're not operating the mine right now. We're exploring, we're expanding. We're developing the resource. What else are we doing with these properties?

We're always taking interested parties and finding out what technologies they've had. They've got -- we've talked to companies that wanted to do power generation projects where they pump water up the hill and down the hill. We've talked to geothermal companies that wanted to do temperature gradient geothermal power generation transmitters. There's always practical uses for the land. Sometimes that doesn't work out, sometimes it does.

Yes. Was that recent project that you -- we just went through with that quarry property, what did we do there? .

So we recently got a conditional use permit from Lyon County to store universal waste in the form of lithium-ion batteries, which is a booming sector, especially in Nevada, but all over the world right now. And so the idea is that we could safely store these used lithium-ion batteries for further processing .

I also understand that we've gotten interest from other miners or other explorers, are we doing anything there?

There is always somebody who's interested in either the portion of our mining assets to explore, lease potentially operate in various stages of the mines -- a mine project has a life span. Sometimes it's an exploration greenfield thing. Sometimes it's a shovel-ready, operation ready to go that's permitted. And we have pieces in various stages of that process, and people are always looking at it.

But in some cases, it sounds like some of the properties are peripheral. Some of the properties are not necessarily gold and silver laden so there's alternative uses that you're considering.

Some underground targets have very practical uses on the surface that have nothing to do with mining.

There were 33 bonanzas discovered on the Comstock and anyone who understands the breadth and scope and depth of the district would know that it's mathematically impossible that the old timers have discovered all of the minerals or frankly, all of the Bonanzas, okay? But I don't want to go down a futile effort and waste finite resources. And I mean not just Mike's time and Chris' time, but our capital, right? I want to ensure -- or at least, I think you said it best, maximize the probability right that, that capital will yield a better return and really, we don't think of Comstock and GenMat as 2 teams, right? We're seeing this one of our favorite words, amalgamations, right, of these resources. We can add tremendous amount of foundational knowledge to GenMat, we can help not just ground through some of the predictions but correct some of the errors, infuse some of the learning. At the same time, GenMat's scientists, GenMat's geophysicists, GenMat's machine learner researchers, engineers will add new knowledge to the equation. Together, we'd have sufficiency. Now -- last question or next question. Do we stop at the Comstock border?

No. That's where I think -- to me, that's the biggest promise of all is we use the Comstock in the existing data to help us improve the method, prove the method. But the most exciting thing is how many more Comstocks can we find where nobody is looking now? Because it's cheap to fly a satellite over a large swath of ground and look for the same signatures, these same patterns, and that's exciting.

You got it. So well said, Mike. This satellite is revisiting in the same part of the earth 24 hours. So we end up seeing the entire planet every day. And so Mike actually made a funny joke, which I really appreciated, which was that when you're flying a helicopter, I really appreciate this example. When you're flying a helicopter over a prospective land, you might want to stake a claim in it. People know you're looking for something. There might be something there. So suddenly, the property value has already gone up when you go to buy it, right? They know what you're intending. But when you have a satellite flying over the planet, you have no idea. You cannot see what we're up to or what we're taking pictures or interest in. So it is an interesting.

We find one that nobody else is even interested in or has any notion at all.

Exactly. And so when we look at the future, what other sensors do we need to build? Just to talk about that just briefly. So yes, to conclude your original question, we want to expand outside of Comstock. In the next 20 years, we would love to have the most comprehensive database of where the world's geological resources are on the planet, whether it's water, oil, gas, minerals. And so the next sort of step beyond this current class of hyperspectral sensors is that we want to start developing hyperspectral satellites with wavelengths that go into the mid-infrared and long-wave infrared. So right now, we go between 450 to about 900 nanometers in terms of wavelengths. So this helps us search for like, for example, critical minerals such as -- Neodymium is a great example, where Neodymium is a pathfinder element rare earth element for other rare earths and its spectral signature is very bright and salient in the range that our camera operates in. So we'll be able to look for all these other minerals that might be on the Comstock and just haven't been looked for or searched for before. The second sort of class of sensors, longer-wave infrared will be able to show us where different clay minerals are and the differences between these clays and so on and so forth. So that helps for path finding, co-location, right, in precious metals. But then the next generation sensors after that, which is what I think we're both particularly interested in are the quantum sensors right? So classes of sensors that use quantum phenomenon in order to perform measurements. An example of that would be a quantum magnetometer. These are the kinds of sensors we want to develop where a quantum magnetometer is, on average, up to 1 billion times more sensitive than the kinds of magnetometers we can get access to today for geophysical exploration.

So you said 1 billion. Not 1 million.

No, 1 billion.

So when you're saying that in the context of relative to today's powerful hyperspectral imagers?

I'm saying it relative to today's magnetometers.

So we're going from a magnetometer to a very, very powerful hyperspectral imager to a very, very -- another level of sensing, the quantum sensing realm.

Exactly.

And quantum sensing tech exists today?

You got it. In fact, what a lot of people often don't know is that quantum sensors as a technology are more mature than quantum computers, their sister technology. So that's really fascinating, right? They've been deployed already more primitive versions of these sensors that we like to build for mining applications. They have led to discoveries and so on and so forth. What we would like to do is take these quantum sensors, make them portable so that you can fly them on a drone and make it very easy to do these surveys where the sensitivities will give you the world underneath the surface will light up like a Christmas tree that's how I like to describe.

All this technology sounds like it's going to provide a lot of capability, but some people are worried, are you planning to replace geologists and engineers in developing these mineral deposits.

Yes. It's a very valid question, Mike. And the short answer is no, absolutely not. The long answer or the more nuanced sensor is I'd like to look at -- there is an analogy that Steve Jobs actually used to describe the evolution of the computer and its impact culturally. And the same analogy applies today to with us as we build AI as a civilization. And the analogy is the following. So he brought up the point that when you were to -- if you were to try to determine what species is most energetically efficient in covering a 100-meter race, let's say, right? Humans are one of the worst. We are one of the least energy efficient, right? We have these swanky legs. We are not using our energy very efficiently and the Condor ends up being the most efficient, right? So it makes sense. It's a bird. It has another 3rd dimension like going for it, so fair play. But when you give a human a bicycle, suddenly, the human becomes twice as energy efficient as a Condor in covering 100 meters. Suddenly, we become the most energy-efficient species on the planet in terms of covering space time and distance. And so I see technology and particularly AI as this example of the bike where it's not replacing humans, it's augmenting our capabilities and amplifying what we're already good at. But giving us the sort of superpowers that we then have access to today. So I see what we're building as a, let's say, a really friendly, very intelligent assistant or a robotic assistant, but it will never replace the human who needs to finally make those executive decisions and calls on whether we should mine here or not. That will still require human ingenuity and intuition for a long time to come.

Yes. Thanks. Thank you, guys. [Break]

Let's now turn to Quantum Generative Materials or as we call it, GenMat. What role will artificial intelligence play in our carbon-neutral future? The technology is obviously not going away and thank goodness because machine learning is the key that will unlock the meteoric opportunities that sustainability holds. Despite a clear and urgent need for innovation, material science hasn't seen a breakthrough in quite a while. But GenMat's about to change that and change that again and change that again many times over. The innovative AI-enabled technology that makes GenMat so valuable can solve countless problems for businesses of all kinds. The solutions needed in the material space are within reach with GenMat's powerful algorithms and sensing capabilities. And no one knows the full breadth of what this tool can do better than the Founder and CEO of GenMat, Deep Prasad. [Presentation]

For years, the idea of finding something new, making something new, seemed all but impossible, then GenMat happened. Artificial intelligence has crossed over from futuristic fat to present day disruptor. Every industry is or will be leveraging it. GenMat is leading the charge on applying the breakthrough potential of artificial intelligence to physics and material science. We make the tools that fill in the gaps in material development. The systems currently in place can't keep pace with us. And we're only gaining speed. Our innovations begin with proprietary physics-based models enabled by artificial intelligence. These models help us find what's next fast. If we can't find what's next, we'll make it. Like we need this zettaflop entangled neural oracle or Zeno for short. Zeno can simulate known and new materials at high precision and extreme speed today, but it has even more to learn. We're appending the notion that innovations are too hard to come by in today's day and age. We are accelerating research and development in a way that promotes decarbonization on a groundbreaking scale. Material science has plateaued in recent years but with our team of positive sum futurists, leading the way, this powerful technology will advance the field exponentially and help every industry evolve to meet the opportunities of the future, experience a new industrial revolution.

Hello, everyone. My name is Deep Prasad, and I'm the CEO of GenMat. GenMat stands for Quantum Generative Materials. And my background is in industrial engineering, AI, fintech and quantum computing. I was always interested in how to build an artificial intelligence that understands physics better than any human can and a big part of that is being able to understand quantum physics. And so I was exposed to quantum computing technology, the hardware and the pioneers in the field many, many years ago. All of these different skill sets, the combination of them and the ideas I was interested in eventually led to what is GenMat map today. In order to improve our ability to engineer research and development new technologies, there are 3 components that we have to improve first. And these core components play a very large role in engineering, research and development. The first component is sensing. You want to be able to make measurements about your new prototype, your new engineering design, whether it's a new battery or a new airplane or a new electronics device or a gaming console. You want to be able to make sure that it's physical properties are as you expected them to be. The next critical component of engineering, research and development is the ability to simulate your prototype because it costs so much money and time and resources to test new designs for new technologies, new products, such as the next generation of EV batteries, the next generation of automobiles and airplanes. We want to simulate as much of it as possible before we spend all the money in building that new prototype. And the third critical component to engineering, research and development is the ability to engineer the prototype itself, which can really be thought of very simply as how do we arrange a specific combination of atoms to get that combination to do what we want. What do we have to do to these atoms in order to achieve that? That is really engineering matter. Why is this relevant? Well, first of all, engineering, research and development is slow, complex and resource intensive. In order to design next generation of EV batteries, the next generation of aerospace applications and electronics, we have to spend billions and billions of dollars in R&D across the globe. And on top of that, it takes many, many years, often decades to truly make fundamental advancements in engineering today. One of the biggest bottlenecks today in engineering research and development is our access to advanced materials and our knowledge of material science. Now why is this important? Why would we want to improve our ability to engineer research and develop new products? What is so special about this capability that mankind has developed? And the biggest reason that we would want to do it is that our ability to engineer and research and develop products of tomorrow will be pivotal to being able to transition ourselves to sustainable space-faring civilization. In order to determine what are the most optimal energy infrastructures, what are the most sustainable automobiles? What are the most sustainable electronics that we can develop, we really have to be able to improve how fast we engineer research and develop new technologies. And in the short term, we really want to be able to improve the quality of life for the average man. So if you look at our quality of life today, we enjoy a much higher quality of life than somebody would have even 100 years ago or even 200 years ago. We have access to the Internet, right, billions and billions of books worth of knowledge at our fingertips. We have access to Netflix. We have air conditioning. We have Ubers and cars that we can just ride and hail at the press of a button. We have water that comes to us instantaneously. We have food that gets delivered to our doorstep. All of these things are possible because of our ability to build advanced technologies such as the trillions of transistors and semiconductors that power our smartphones, all the way to the very advanced satellites that we have in space that manage and keep our Internet infrastructure up and running in our communications. So improving engineering research and development in the short term will improve our quality of life and in the long term is going to guarantee us a world where we live sustainably, in harmony with the environment and a world where we're able to live in other worlds. In order to accelerate engineering research and development, we decided that we need to be able to solve the biggest bottleneck today, which are advanced materials. In order to do that, we have built an artificial intelligence specifically designed to apply knowledge of physics to accelerating the discovery of advanced materials that will power the technology companies of the future. When we think about what advanced materials enabled, there is a very long list that affects everybody today. Silicon-based semiconductors enables every modern smartphone and computer and electronics that we have access to today. Lithium-ion-based cathodes enable lithium-ion batteries. Another example are plastics. Plastics enable all these products that we can sell to the average person very easily that we would not have been able to previously without these materials. And so just looking at a few of these industries that rely on advanced materials, these industries alone from energy infrastructure, communication, computing and transportation represent trillions of dollars of opportunity, foreign artificial intelligence that can discover better materials than the ones that exist today that power these very massive, very powerful and relevant trillion-dollar industries. Just a few thousand years ago, when we discovered bronze, bronze enabled the ability to make spears. It enabled the ability to make cooking utensils and enabled the ability to make very cool armor. Finally, the next iteration of advanced materials, where we discovered iron enabled us to make even stronger armor, better utensils, better hunting tools and so on and so forth. And so our ability to access advanced materials ended up dictating the kinds of technologies we had access to in the past. So much so that they define entire eras of human activity from the bronze age to the iron age. And then when we discovered steel, another advanced material, steel ended up enabling us to build the printing press. That printing press, a new form of technology enabled the free flow of communication and the free flow of information. That free flow of information accelerated our ability to improve our scientific and engineering knowledge as a civilization. That improvement in our ability to disseminate scientific and engineering knowledge accelerated the discovery of new technologies, which eventually led to the discovery of silicon and semiconductors. And these silicon-based semiconductors led us to the silicon age. And these silicon-based semiconductors empowered and enabled all the computers that we have today from the supercomputer that fits in the palm of your hand called your smartphone to the computers that manage the energy and grid infrastructure today. These computers are enabling the creation of once again new materials. And so what we're really trying to do here is take this historical trend where an advanced material ended up disrupting human civilization in a positive way and creating all these new technologies that were not possible without the materials before and accelerating the time it takes to find those new materials because by accelerating our discovery of Advanced Materials, we are essentially accelerating human evolution. Here's an example of just how hard it is to find new materials today. Discovering a new material according to an IBM study that optimizes for just one material property takes on average about 10 years and $10 million to $100 million to make. It's just one material that you get out of it, that's optimized for one property. With an AI-based approach, you can discover a new material, thousands of new materials that are optimized for one property and less than a day for less than $10,000. Fundamentally, this is important because engineering R&D leads to a higher quality of life for the average person. And so by improving our ability to engineer, research and develop new technologies, we will improve the quality of life for the average person. We've established how important advanced materials are to humanity. They define entire eras of human existence and the kinds of technologies that we can and can't create with those advanced materials. But discovering those advanced materials are a really cumbersome, very expensive process that takes a long time. It's written by trial and error. And so today, it takes, on average, 10 years to discover one material for just one property that you want a desired characteristic. And on average, it takes from $10 million to $100 million to come up with just one candidate material for that one property that you desire. An AI-enhanced approach allows us to come up with thousands of candidate materials that optimize for one desired property within less than a day and for less than $10,000. The analogy here is that right now, the way that we discover advanced materials through trial and error is a lot like searching for a needle in a haystack. The AI version or the AI approach is like building a very powerful magnet that attracts the needle right to your magnet and so you don't have to search through the haystack. That's pretty mind boggling. The number of materials that we can discover in such a short amount of time compared to what used to be able to be possible in the past. What does it mean to discover new materials that could define entire human eras. But being able to discover those materials millions of times faster than it would have through just trial and error. What that means is that we are talking about kick starting the next industrial revolution or the fourth industrial revolution. The reason why we can confidently say that is because, fundamentally, we're amplifying human capability. We are giving humans the ability to supercharge their search for these really complex materials that will change everyone's lives. And by making it millions of times faster to be able to search through all these different material combinations and discover materials that they care about. We are improving human productivity by a significant margin. And so by turning humans into superhuman because of how much we augment and amplify their capabilities, we also end up inadvertently improving the productivity of the average person. And so that combination is what will power the fourth industrial revolution where we will go from figuring out not how to build something, but why should we build this thing? So when we think about improving engineering research and development, one of the things that we have to do is ask ourselves what is engineering fundamentally. And fundamentally, engineering is our ability to understand physics and to apply that knowledge of physics to the real world. A real-life example of that is how we built radio transmitters. Without the physics equations that described electromagnetism and the understanding of the electromagnetic spectrum, we would never have been able to design those radio waves. Without knowledge of quantum mechanics, we would never have been able to design the semiconductors that end up powering all the consumer electronics available today. And so engineering ends up being a question of how deeply do we understand the physics of the world and how well can we apply it. So how do we actually accelerate and improve our understanding of physics and our ability to apply physics. Let me just go over an example or an analogy that might help you understand the complexities of what we're dealing with here. So take music, for example, where just a combination of notes, 7 notes and very simple musical rules leads to all these complex emergent songs that are all uniquely different from each other. Similarly, the physical world is the result of a number of atoms instead of musical notes and basic physics rules that dictate how they interact with each other. But when you combine these 2 things, you get extremely complex emergent phenomena from black holes to orbits to semiconductors to EV battery materials to the human body itself. There is a very, very complex range of physical matter that emerges from just this combination of 92 naturally occurring elements and the basic physics rules that we know of. So we want to build an artificial intelligence that understands these physical rules and can predict nature and the complexities that are emerging from these basic physical rules. In order to handle all the complexities that nature throws at us, all the different ways that atoms can combine together and express themselves at the immersion scale, where you have humans, biology. You have matters such as semiconductors, superconductors, entire planets and so on. In order to predict how the physical world will behave, we built an artificial intelligence called ZENO. ZENO stands for the zettaflop entangled neural oracle, which is a generative artificial intelligence built with the idea in mind of designing an ability, a new capability for humans to understand the physical world and make predictions about the physical world with better levels of accuracy and scale, than that was ever possible before. Some of you might be familiar with ZENO as the Greek philosopher who discovers ZENO's paradox. ZENO stands for the zettaflop entangled neural oracle. Zettaflop is in reference to a measure of compute power. So the world's most advanced supercomputers today operate in the exaflop regime. And a zettaflop is 1,000x that. The E stands for entangled, and that comes from quantum entanglement. A big part of being able to model the physical world is to be able to model quantum physics, which plays a key role at the atomic scale and determining how materials will behave. So in order to properly represent the rules of quantum physics, a phenomenon that we have to be able to model is quantum entanglement, and therefore, we include entanglement in the name. And then the N stands for neural, which is short for neural networks. Neural networks are mathematical frameworks that we design software based off of and these mathematical frameworks were designed to mimic the human brain and the way that the human brain learns using neurons. And then finally, the O stands for oracle because we want ZENO to act like an oracle about the universe and the physical nature of reality. We want you to be able to ask ZENO how does this item -- this new idea that I'm designing work? How could it work? How can I improve it? And we want ZENO to be able to tell you all these things. We want ZENO to be able to tell you where are the world's precious metals, the world's rare earth elements. So how does ZENO work? You give a list of parameters about the product that you are designing or interested in improving and ZENO builds a model that is accurate to the atomic scale. And that gives you 3 capabilities. It gives you the ability to model existing materials and their properties. It gives you actual insights into how to improve those materials and improve the properties of those materials that you're interested in. And then finally, ZENO will generatively suggest and design new materials that no human has ever conceptualized before in order to meet a specific desire property that you're interested in. These 3 capabilities combined are going to lead us up the technology curve. So how do we plan on bringing ZENO to the real world? Well, we're going to make ZENO available to the rest of the world by building these physics software libraries that our customers can use for their day-to-day applications as they work on engineering, research and development. They'll be able to use ZENO from the very beginning of the IDN conceptualization stage all the way to the testing, trial and error and reliability engineering, that's downstream of a product that's been built. Earlier, I mentioned that there are 3 critical components to engineering, research and development. There is the sensing, there's a simulation and there's the engineering. And these are the 3 things that ZENO is going to help with significantly. These are the 3 activities within engineering, research and development that will amplify human capability. So we will be able to sense the world with much greater sensitivities and at deeper scales and accuracies than we have ever before. We're going to be able to simulate the world at the physical and atomic scale. Again, at greater levels of accuracy and scales that we have been able to achieve before. And finally, we'll be able to engineer new higher-quality sustainable products much faster and much cheaper than we could before. We've established that our access to advanced materials defines the entire human eras of civilization from the bronze age to the iron age to the silicon age that we're in today. And therefore, in that respect, because we're revolutionizing our ability to discover advanced materials thanks to ZENO. We are now going to be entering a new era of civilization. As we enter this new era, ZENO's era, we hope that you are just as excited to change the world as we are, the future of physics, GenMat.

Hello, my name is Corrado Gasperis, CEO of Comstock Inc., and I'm here today with Deep Prasad, the CEO of Quantum Generative Materials. Hi Deep.

Hi Corrado. How is it going?

It's going great. Thanks for being here. So GenMat stands for quantum generative materials. And we met a number of years ago, but it seems like today, generative artificial intelligence is the buzzword. What is generative artificial intelligence?

So yes, it's a great question, Corrado. Generative artificial intelligence is simply stated as a type of AI that generates net new knowledge. So rather than just memorizing facts about the world and then spitting it back to you, rather than just recognizing patterns, generative AI tries to determine how do I create this net new knowledge. So for example, the most prominent example of a generative AI that's really entered the public zeitgeist lately is ChatGPT which is a form of generative AI that creates net new knowledge around language. And so there are lots of things that we can represent with language. For example, programming is written using letters and numbers. So ChatGPT as a result, can generate net new language or new programming codes and so on and so forth because it's generating this net new knowledge. It can create poems that have never been written before by any human, and it can write it in the style of your favorite poet. And on any subject you can think of. So for example, you can ask ChatGPT to write a poem about quantum computing in the form of Shakespearean language, and it will do that instantaneously.

It's not searching. It's not spitting out. It's reasoning?

It's exactly. It's -- not only is it -- it's reasoning about things that it knows, it can generate new knowledge because of its understanding. There are sort of 2 things at play here. We have had AIs or neural networks to be more pedantic that we're capable of generating net new knowledge without having that reasoning ability. But very recently, this new class of generative AI models called transformer architectures, they have this ability to reason about the world and the knowledge that they've gathered, which is historically different and fundamentally different than previous architectures.

How is GenMat different than from, let's say, a large language model?

So the biggest difference between GenMat and what other companies are doing in generative AI with large language models is that every company today that is a generative AI company is focusing on generative AI on some flavor of language. So ChatGPT, for example, is generative AI for language. We are building a generative AI for atoms instead. A generative AI that understands the physical world and generates net new knowledge about the physical world that we can turn into actionable insights to advance sensing, simulation and the engineering of matter.

So when you say physics-based generative AI, physics-based generative artificial intelligence, that's what you mean?

That's what I mean.

So you're sensing, you're simulating, you're engineering matter? How do you do that?

So what we do is, first, we build a model of the physical system that we're interested in improving our understanding. For example, we work with titanium dioxide semiconductors. A specific flavor of them, if you will, which we deposit clumps of copper and platinum on top of these titanium dioxide semiconductors and these nano materials, if you will, they are 10 to 25 nanometers in length on average. They create this series of co-catalyst reactions that leads to the absorption of carbon dioxide, water and sunlight and convert it directly into natural gas in a clean and renewable reaction. And so what we do is we model the underlying system at the atomic scale so that we can predict how it's going to behave if we tweak certain parameters about the material because we're interested in understanding how it works so we can optimize it and build economically viable and scalable versions of these materials.

Well, when you say you tweak certain characteristics at the atomic level, like what kind of characteristics?

So I'll give you a few examples. We do things like varying the oxygen vacancy concentration, right? So with TiO2 the materials will change or its behaviors will change based on the concentration of the oxygen vacancies, meaning literally a vacant oxygen atom. The more of these oxygen atoms you pluck out the more you change its behavior. Now how exactly you change its behaviors, predicting that, today requires a supercomputer and very complex, very archaic software that will only get you a very approximate understanding at best, and it will take you lots of money and lots of time to get to those results.

How do you do it then?

So our generative AI lets you get to those same exact results thousands of times faster and thousands of times cheaper than what is possible today with today's similar technologies. In addition to that, we can scale our technologies to larger systems of atoms that go well beyond what today's software is capable of. So we're offering a new level of insight into the physical world, starting at the atomic scale. And that's important because many of the properties that we're interested in when we talk about building technology products require knowledge and are based on and constrained by what's happening at the atomic level.

So when you say at the atomic level or titanium dioxide, you take a molecule and you say, let me simulate what will happen to this material electrical conductivity.

Exactly.

If we tweak this or if we tweak that, is that what you're saying?

That's exactly what I'm saying, Corrado. Exactly.

So you can run various simulations like many simulations on a materials characteristic?

That's one of the things we can do. So one of our first technological milestones that we wanted to accomplish was, we wanted to take a transition metal oxide system, starting with titanium dioxide and predict various properties about it. What is the heat capacity of particular materials inside that system? What is the electrical connectivity, particularly the DC of the system? What is the local density of states, charged density of states, the band gap? These things give us optical properties, information about its optical behavior. And we wanted to see, can we predict this using our AI thousands of times faster and cheaper than what existing solutions can give us? And can we actually go and measure it in a lab. And that's what we were able to do. So we then ask ourselves, can we figure out -- can we now use this technology to predict what will happen if we tweak the material, if we change the oxygen vacancies, if we change this stoichiometry or the chemical composition, and it turns out that, indeed, we can do all of these things, and we can make a lot of useful predictions.

So you take a molecule, you're simulating a characteristic. You're simulating another characteristic. You're simulating another characteristic. Before you know it, you're simulating potentially what a certain metal oxide titanium dioxide or otherwise, would do.

Right.

So if we do this, then we get that.

Right.

You're not just simulating it. You're teaching an artificial intelligence to start thinking about and reasoning how to do that?

Exactly. The attempt is to have this artificial intelligence reason its way to optimizing these materials on our behalf. That is the ultimate sort of goal of these technologies is rather than just leaving it to a group of humans to try to use their years and years of experience and intuition, and basically guessing, it's still guess work at the end of the day, what should I tweak to improve the connectivity. Instead, imagine if they could using AI to help them figure that out, so that their decisions become more executive in nature. Should we tweak it this way, what are the resource constraints as a company in implementing the solutions that our AI gave us. But it's really, this idea of elevating human capabilities as no human has that sort of quantum mechanical intuition that lets them predict exactly how different behaviors will occur if you tweak a material a certain way. That requires an incredible amount of complex physics and math to understand.

I can start to envision, right? You said earlier, sensing, simulating, engineering. But start in the middle, it seems that if you can teach a child, if you can teach a brain how to simulate a material characteristic, how to simulate many material characteristics? It then has the ability to recognize a material makes me understand a little better how the same AI applies to sensing in our prior discussion about, identifying new minerals or new materials in a mining context. But now you're going beyond. You're saying, we're not just simulating. We could enhance. And to what end? What can we do with this?

So first of all, I want to talk about the fact that the materials that we're starting with, we can simulate molecules, but we particularly focus on lattice structures that are basically repeating combinations of atoms and then we tweak those combinations. So if I have 144 atoms of titanium dioxide, and I put a couple of surface defects. And I tweak maybe the stoichiometry a little bit or the chemical composition, what happens to the optical properties, what happens is conductivity. So we're starting with these solid state materials. And so when you think about what is this leading to? To what end do we want to build something like this? Well, I envision a world where the earth is permeated with AI engineered matter. So today, we live in a world where everything around us is made of human engineered matter, where the chair that you're sitting on, to the mics that we have, to the lights and so on, all of these things were matter created by a human. Somebody had to sense the world with their eyes as primitive as that sounds, and then they have to simulate what happens if I put these 2 wires together or these...

Often by trial and error.

Yes, exactly. And then how do I actually engineer this thing? And so I believe that the next level that we're going to reach as a civilization, which I hope that GenMat plays a fundamental role in, is a world where the planet is covered with this AI engineered matter where the physical products that are created are higher quality, last very long amount of times and they're sustainable, and they're cheap and easy to make. And again, they don't harm the environment. So for example, imagine plastics that are sustainable. So alternatives to that AI engineered matter means trains that can travel 5x the speed of sound and levitate using magnetic levitation. AI engineered matter means buildings, tall megalithic structures that are very aesthetic and made of materials that last forever. These are just a few possibilities moon bases and so on.

Why is humanity so slow? Like why can't we simulate and engineer a new material faster?

Yes. So here's why I really love that question. The short answer is that we never evolved to need to have to no quantum mechanical rules as well as we know classical physics rules. What do I mean by that? So the universe follows, for some reason, paradoxically 2 unique sets of physics that have oftentimes completely contrasting contradictory rules, yet they're both true simultaneously. So those 2 physics are classical physics, AKA, the world of the large. So when you have millions of atoms or billions of atoms, these atoms behave classically. So that means that if I were to throw a ball, which is basketball, which is made of billions and billions of atoms, it will follow these classical mechanical rules. And those classical mechanical rules, those physics we have built intuition over millions and billions of years as a species because it was far more valuable from an evolutionary perspective, to know how to throw a spear, right, at something you're hunting then to be able to solve Schrödinger equation. That didn't mean we would survive 100,000 years ago or even 10,000 years ago. So we have lots of intuition for how the physical world works when you have many, many atoms. It doesn't take us long to learn how to swim, right? It might take a few months. But you're not solving partial differential equations and figuring out how the buoyancy works and fluid dynamics works. You just know how to move your body. And while we take that for granted, that required many, many millions of years for your brain to evolve the physics intuition for the physical world at large scales. Now when you go down to the atomic scale, if I were to shrink this the basketball to the size of a atom, and I were to throw that basketball. I would have no way of predicting how it's going to behave. Gravity behaves in unknown ways at the quantum mechanical scale. It's so weak that it's impossible to detect whether instruments today at those scales. And so we have no intuition that we've evolved on how the world works at the atomic scale. And when it comes to predicting how materials will behave, lithium-ion batteries, the cathodes, the anodes, the electrolytes that go into these materials. All these things require knowledge of what's happening at the atomic scale, and we just have not evolved that intuition. So our bet is why don't we teach a super intelligent AI to evolve and understand those physical rules instead.

We can do that today? With what? With supercomputers, to quantum computers. How do we do it today?

We do it today using a combination of CPUs and GPUs that are indeed called supercomputers. And we use software such as VASP or Quantum ESPRESSO. These are software codes written in Fortran. And they're implementing extremely slow in archaic algorithms that iteratively try to get to the right answer. Our AI learns patterns in the data, fundamental patterns that it uses to make predictions. It's different than calculating the answer iteratively. And that's why it's so much faster.

And so when we talk about speed, like how fast can we simulate known material or a new characteristic or a characteristic of a known material?

So take, for example, the local density of states of the titanium dioxide or the band gap, which gives you the band gap. Simulating 144 atoms would take you easily more than 6 hours to do depending on what functional you choose AKA depending on how accurate you want your simulation, the more time it's going to take. But let's just go with the most like optimistic, most like favorable number for those conventional simulators. That's 6 hours. Our AI predicts it in less than a second, the right answer. That 6 hours of engineering time just waiting around twiddling their thumbs.

So you'll be able to simulate thousands and thousands of characteristics in minutes, in seconds.

Exactly. And that is indeed what we've recently been doing over the past few months.

So this is revolutionary to material research, material development, who would use your solution?

So there's a number of customer segments. And the one that we're targeting outside of geophysics and mining is the advanced materials industry. So that's anyone who works with semiconductors. That's anybody who works on alloys for aerospace applications or transportation. That's anyone who works with leading battery technologies like lithium-ion, for example. These are some of the industries that we can sell to.

You're talking about transforming everything. All these materials you said aerospace, transportation, communication, energy. I mean there's not only -- not a limit, but the speed at which we can now simulate these new materials. I mean there's companies out there that spend billions of dollars and years to have a breakthrough on a material characteristic. Are you telling me that they can do it in days?

That's exactly what I'm saying. What I'm saying is that what we used to believe would take us many, many years to do.

30 years for lithium-ion battery.

Right. We are getting to a point where we can do this in a matter of days. And we're seeing these kinds of speed-ups in other industries. So generative AI companies for language, right? Creating, for example, a new graphic, let's say, you want to make a poster for your company, you might have hired a graphic designer, right? You might have given some ideas to them on like, "Hey, here's what I want." You go back and forth over many weeks. You might pay a whole team to do this, right? You might do some studies on the side and so on and so forth. You can now do those in seconds using companies like Midjourney, which is a generative AI company, but for pictures.

So people have asked me, how in the earth, how in the world is Comstock associated with GenMat. I would like to both answer and ask the question of you. From my perspective, Comstock is a material science-based. Comstock is seeking to solve some of the most difficult problems, some of the most formidable conflicts that we're facing. We're on a mission to enable systemic decarbonization or a monstrous issue for our climate, for our environment. And we think scientifically. We use a scientific method in how we attack problems, how we surface conflicts, how we challenge assumptions? I mean this is what I was saying earlier is that how do you create an innovative culture? How do you challenge the norms? How do you surface assumptions, how do you break through? And so we're searching for what's the biggest conflict. What's the hardest obstacle? How do we break through? How do we break in ground? How do we break through to a solution and conventionally, we were thinking about that. I mean and then we come across generative materials, generative AI and it wasn't a notion of science fiction. It was a notion of science. And so I never thought of GenMat as an IT company, an information technology company. I always immediately thought of GenMat as a material science company. And so we -- for us, it was my God, how else can you tackle these monumental conflicts, how else can you tackle these challenges. And so you're not -- a lot of this generative AI, I mean, it seems like it's making good thinking great. It seems like you're going beyond that. I mean I don't know how to describe it. It's science-based, it's physics-based. What did you -- where do you see the synergy, the alignment with Comstock?

So I see 2 synergies. The first 1 is the synergy between the management and particularly the project management and organizational design level help that we get from Comstock. So being able to understand how to use the theory constraints, being able to apply that on some of the world's hardest scientific and engineering problems, has actually been extremely helpful to us. And we see how that's going to end up making a big difference even on the AI alignment and safety part, right? As I said something earlier that I'd like to say, which is that if building artificial general intelligence is the 800-pound gorilla, then building a safe artificial general intelligence, is the 900-pound gorilla. And so what I appreciate is that no matter how hard of a problem GenMat is going after or solving or whichever grill we're dealing with, we have these tools that Comstock has provided us. That Comstock provides not only the tools, but the leadership too, to actually help facilitate solving some of these difficult problems at the sort of meta and organizational level. So I found that very helpful and kind of one of our secret advantage is getting up and running because what a lot of tech companies are guilty of doing is they follow, kind of this model of like just shipping product as fast as possible without any constraints, no guardrails, not really caring about anything, but growth and optimizing for that. And the cool thing about the theory of constraints is that it lets you manage us both your growth needs and your controlling needs. And most tech startups, even today I'm willing to bet, are not even aware of what those growth or controlling needs are. It's implicitly defined at best.

It's ironic because I spent a great part of my initial career dealing with mature industrial companies. And you said it very well, right? The need for control and the need for speed or the need to be thorough and the need for speed in our view, has never been in conflict right? But we saw all these mature companies unbalanced, overbalanced on control. And for us, it was about unblocking that so that they could move faster. They could prosper more. In your arena, there's almost -- it's the opposite. The need for speed overwhelms everything and then there's a lack of thoroughness and so that was my first question, like how do you do it safely? How do you address the 900-pound gorilla?

So the way -- and just before I answer that, I also want to mention the second thing that's like really synergistic. And that second thing is the commercialization angle. So we're building this physics intelligence, this artificial physics intelligence for sensing, right, simulating an engineering matter, as you pointed out. Well, how many companies are working with or need sensors. A mining company is one of the best examples of that. Where you have Comstock with hundreds -- over 100 years of useful training data for our AI, right? So when it comes to building these large geophysical models and so on, using these systems. There's a lot of synergies there. Comstock has experts in mining that have already helped us, right? Like Mike and our team have fantastic discussions every time that we get together. And then on the materials science side as well, this other application of the same underlying physics AI that we're building, AKA discovering advanced materials. Well, what is, for example, Bioleum doing, right? It's trying to discover and it's using better catalysts. And so there's synergies on both sides of the table and across both our businesses and in our separate technology streams.

I think it's probably been a very good kept secret that initially, at Comstock we think very systemically, we think very thoroughly. But we're constantly challenging assumptions, which is our basis for our innovative culture and for breakthrough. I don't think it's luck, that we attracted David Winsness and the fuels technology to this way of thinking. I don't think it was luck that we attracted Fortunato in these material technologies because there is a common -- there is an aligned common notion of operating systemically and that doesn't just mean designing the organization for scale. I mean it absolutely means that, right, to move from mature industries where the paradigms are -- the assumptions are accepted as facts. They just take it for granted. What is the potential? How big of an impact can this capability, this technology have?

The impact could affect civilization at the fundamental level, the foundational level. So I see a world where humans live amongst the stars and other star systems in different galaxies entirely in different planets. And we also live on earth still, but earth is far more sustainable, and we're not constantly worried about is climate change going to destroy us, as a comment going to destroy us and so on and so forth.

Do we have enough food? Do we have enough material?

How can we actually produce these high-quality products sustainably for everybody. I see a world where a human being will be able to, at the cellular level, programmatically change themselves to adapt to the environment that they choose to live in. That means humans who can live under water if needed. That means humans who can live on exo planets that they were never born to live in the first place, but they can adapt to it. That means making colonies that last forever with materials that are very sustainable for that particular planet we live in and so on. And the question is, how do we get there? What does the physics AI have to do with such a grand scheme in the first place? Everything I described is a consequence of ultimately the ability to manipulate matter to our will and our desire, right? So that is really what a physics artificial intelligence allows you to do. When you're sensing, simulating and finally, engineering matter, you're really manipulating that matter in a way that is meaningful to you. So that could mean making the next iPhone, if you're Steve Jobs, right? Or that could mean making the next SpaceX Starship rocket that finally brings humans to Mars. So there is a very, very wide number of possibilities that a physics intelligence will affect because it touches on anything made of matter and the world is made of matter.

It could mean generating a new material that's abundant for a certain application. It could mean finding a material that is abundant, but not within plain sight. We have a physics-based generative artificial intelligence. We can simulate characteristics of known materials. What do we do next?

So the next thing that we do is generatively design new materials, net new knowledge of materials that has never been known before to mankind. We go to places in material space where we design new batteries, new forms of alloys, new semiconductors that the world has never seen before and would have taken potentially decades or even centuries to discover on our own without the help of a super intelligence of the kind that we're building. What does it actually mean to be able to generatively design new materials, thousands, potentially millions of times faster than what used to be possible. The thing that, that means is that the world in short order will be covered with AI engineered matter. Matter that allows us to basically build products that are high quality last forever and are sustainable.

You could come up with a new chemistry to power a house. You could engineer a new battery to replace an existing battery. But it gives even further beyond that. You could identify a new material that much more efficiently and sustainably powers, communicates, elevate. And then what?

And then we're going to get to a point where the matter that our AI has engineered and created become so sophisticated that they themselves become a certain level of intelligent and a certain level of sentient. So matter that is so complex that it leads to this level of intelligence, right, that allows it to interact with you at ways that inanimate matter would not.

So Deep, when it comes to generative AI, what are people getting wrong? What are 3 things that people are missing or getting wrong?

So I think the first thing that people are getting wrong, both experts and the general public alike is, they are getting wrong what's happening underneath the hood of these systems. So some experts will say recently, there's comments made by a world-leading theoretical physicist Michio Kaku that these things just plagiarized, right? But that is not what these systems are doing. Underneath the hood, they are doing something far more sophisticated than just copying and pasting knowledge that they've seen and passing it off as their own. They're actually amalgamating and combining knowledge to generate net new knowledge. So that's something that I think a lot of people get wrong. And the other aspect of that is that people also get wrong what's going on underneath the hood, in the sense that they think it's magic, and it's not magic. It's matrix multiplications. It's mathematical operations that any undergrad understands. It's just the way that you stitch these things together, that leads to this complex emergent intelligence that we need to understand. And so I think the second thing that people get wrong is that there's going to be some sort of take off, a fast takeoff that will lead to some AI becoming super sentient, super intelligent all of a sudden, deciding to kill us all and then dominating the world. And then going off to different galaxy. There are going to be many, many, many steps before we get to a point where you truly have a super artificial intelligence that can recursively improve itself and so on and so forth. And I think by the time we get anywhere near that, we will have a deeper understanding of what's happening underneath the hood so that we'll have programmed these systems to be more reliable from the get-go as they become smarter. And then the third thing that I think people get wrong about these systems is that they believe that they will be murderous or violent, the smarter they become. I would say that there's enough evidence just looking at humans as we've become more knowledgeable about the world, about science and nature, we have become less violent as a species. We don't sure, we go to war but it's not acceptable to randomly kill somebody over fight over a farmland, right? You go to jail now for that. There's so much more ethics. Women can vote as like simple as that sounds, that was not obvious or given 100 or 200 years ago. So as civilization, society becomes more educated, more scientifically knowledgeable about the world, I believe that they develop more empathy and more morality, more sophisticated rules. And so I think we can expect that from a super intelligence as well.

Yes. I think it's hard to imagine that the answer is ignorance. It's exactly how we met. It's exactly how we aligned right? Is how do we pursue knowledge? How do we enable faster breakthrough? I mean, frankly, how do you stop it? It's impossible. So if it's not possible to stop, if the entirety of human history, right, is the advancement in pursuit of knowledge, who's on your team, what does your team look like?

So we have a very interdisciplinary team of various engineers and scientists spanning from computational chemists, material scientists, experimentalists, classical machine learning researchers and engineers, quantum machine learning researchers and engineers, and folks who specialize on high-performance computing systems as well as aerospace and basically rocket engineers.

All that's in place now. How many people do you have on your team?

We have 40 people currently.

And I understand that you have recently relocated to Austin, Texas. Why Austin?

So I chose Austin, again, aside from the food and music which I love and keep thinking about. We chose Austin because that is where a lot, particularly hundreds of billions of dollars of deep tech investments are going in various different industries that we can immediately commercialize our AI for physics applications into.

Which would like, give me some examples what industries are relocating to Austin?

So some industries include Samsung, TSMC, they're putting their massive deca billion dollar semiconductor fabs nearby. And then also, very recently, over the past few years, Tesla and SpaceX have moved their headquarters. And then there are also very, very deep technology companies that are not so well known, some of them in stealth that we know of what we can't say who are also planning on being there. So we're trying to create this essentially the next Silicon Valley, we would like to create it in Austin.

Even with the core team of competencies, I would imagine there'd be a huge pool of relevant human resources as you grow, as you continue to grow. So how are we being responsible stewards of such a powerful technology?

So first of all, we're creating a road map towards safely developing both the kinds of systems we're building and in general, powerful artificial intelligence systems. And we're putting together a working group of very interdisciplinary experts to execute this road map. And there's really 2 core components to the safety issue. One is we're going to be red teaming, and we are red teaming, how can you exploit this technology so that we can prevent it. And then the second thing that we're doing is we are thinking deeply and kicking off the research into how these emergent mathematical structures that lead to reasoning and understanding of these AI systems, how they operate, what is the nature of these structures that are created when we train a powerful large language model or a large physics model like the ones that we're building. And then once we understand that, we can build safety modes in place. We can build these safety guardrails and so on.

People that don't understand fear this black box. But you know, you understand what you're building, what you're programming, what it's capable of?

Exactly, it's this idea that if you know what's going into the black box and you know how the things in the black box are being put together, then it is only a matter of time that you can -- that it takes to reverse engineer the functions of that black box to fully characterize it. And once you can fully characterize how that black box works, then you can create these safety guardrails around those systems.

What are you most excited about in terms of GenMat?

So in the near term, I'm most -- outside of accomplishing our vision, I'm most excited about discovering room temperature superconductors that are economically viable because these materials will revolutionize energy, transportation and computing, to name a few.

I'm just so excited also about the fact that we can create an intelligence to address, to tackle some of the biggest constraints, some of the biggest obstacles that humanity is facing. Thank you, Deep. It's almost unimaginable. And here at Comstock, we're really excited to be a partner and be here with you on this journey.

That's the full download on Upload 23. We hope you're as excited and inspired as we are. And we're so glad we were able to share these details on our breakthrough work with you. I'm sure all these innovations have inspired some questions and we want to get you the answers you're looking for here and now. Please send your questions by e-mail to [email protected]. I'm William McCarthy. And on behalf of our entire team at Comstock thank you for joining us to explore new ground today at Upload 23. We hope to see you again next year at Upload 24, if not sooner. The future of decarbonizing technology Comstock Inc.