Metallium Limited (MTM) Earnings Call Transcript & Summary

Well, welcome to another episode of on the couch with myself, Henry Jennings. And in this episode, I'm talking to Michael Walshe from MTM Critical Metals. MTM is the stock code there. I know they're going through a name change, but I'm not sure if that's happened as yet. But I'm really excited to be talking to Michael. It's been an interesting time, I guess, Critical Metals very much, Critical Minerals, very much in the zeitgeist at the moment, of course, with supply chains, Donald Trump, et cetera, the U.S. So it's been an interesting time, a bit of a roller coaster ride, I guess, for Michael. And we're delighted to have him on the show today. So welcome, Michael.

Thanks, Henry. Thanks for having us.

It's a pleasure. Now you were a chemical engineer, you got an MBA, 15 years of international experience, engineering operations, tech commercialization, and you're originally from Tipperary and a long way from there, I guess, in Perth, Australia at the moment. But most of your operations, I understand, are based in Houston.

That's correct.

So we're looking forward to having a chat anyway. Just before we kick off, I'd just remind listeners that this is general advice only. So please do your own research, contact your own financial adviser regarding any of the thoughts, ideas or insights. So Michael, congratulations first up on your recent capital raise of $0.55, very nicely executed, I have to say. So maybe, Michael, you could tell us a little bit about what a Critical Metal is and why it's important at the moment.

Yes, sure. I suppose, yes, broadly speaking, Critical Metal means one of the metallic elements that are essential for both modern technologies and also they generally have some national security edge as well. And so that means basically used in either something related to like manufacturing in a country like the United States or the military type technology. So generally speaking, they have a dual use, both domestic and defense. And another key point is that they're vulnerable to supply restrictions or shocks. And that's how they typically end up on one of these critical metal lists or strategic metals. They keep changing the acronyms or the names, but it's pretty much, they make the cut on that list if they've got a dual use, both military and civilian use in technology and they would be vulnerable to supply disruptions. And it would cover metals like Gallium, germanium, rare earth elements and antimony as a couple of kind of top examples because -- the main reason being is that the Chinese are in control almost of the complete downstream processing of these metals currently. So over the last 40 years, the West has offshored most of these metal -- the downstream processing of them to China. And as a result, there's a lot of eggs in this Chinese basket and countries like the United States have recently woken up to the fact that it's not really -- it's not a pleasant situation to be in, especially when the things might become adversarial between these countries. So yes, that's a high-level pitch as to what they mean.

So why has the West been so asleep at the wheel, I guess, in terms of processing capacity for rare earths and these critical metals?

I think the big push happened in the late 1970s mainly due to -- there was a lot of stagflation at the time in the United States in companies like General Motors, they were under a lot of financial hardship. And that's when their -- I suppose their execs were looking for ways to improve their profit margins. And that's when they started looking at making things cheaper. And China at the time was, I suppose, a much different country than it was today, and they were willing to do the dirty work that, say, a typical Western country wouldn't necessarily put up with. And most of these metals are quite complex and environmentally taxing to process. And rare earth elements are a great example. And yes, so it's like -- it was conveniently offshore for corporate profit reasons primarily. And rare earth elements is a sad example because all of the IP and know-how to -- in terms of processing rare earths was developed in the United States as part of the Manhattan project. So they needed to remove these contaminant rare earths from uranium ores, and there was a lot of research done at the Ames Laboratory as part of that Manhattan project. And then that same lab after World War II went on to develop the IP around the neodymium magnet. And that's the real key technology that are important for rare earth elements right now. But all of that IP was invented in the United States. And some of the later separation work was done by Solvay in France as well. But pretty much it was a Western IP that was offshored to China in the late '70s. And Deng Xiaoping at the time saw a real strategic opportunity. And he's quoted with a statement something like, that the Middle East has oil and China has rare earths. And it was his vision that pretty much then set them up for being the powerhouse in terms of metal extraction and refining that they are today. So It's a sad history, but...

It is, isn't it? I mean the U.S. has only got itself to blame really, isn't it? These guys invented all these procedures and this IP and then let it sort of go to China. I guess it's the same to some extent with EVs and the battery technology, which as well was developed by the U.S. initially and then ended up being made massive in China with cattle, et cetera. So yes, not good look. Anyway, let's not get into the politics of the last few decades. What is more important is you guys, now you're changing your name to -- is it Metallium?

Correct, yes.

That's how you pronounce it?

Yes.

Why the name changed?

I suppose MTM was originally called Mount Monger Resources. It was an early-stage exploration company. And this really is just to try and finally signify a shift towards industrial technology. And Metallium, it's a really simple name really. It's the combination of metal plus I-U-M. And most of these metals that we're targeting like neodymium, germanium, gallium, they all end in the I-U-M. I think it's a Latin origin. So it's metal plus I-U-M and extra L in the middle, that's -- it just basically signifies the metals that we're targeting and that we're now a different company. We're not a mineral exploration company anymore.

It's always good to have that extra L in the middle, I find, makes such a significant difference. So you're not a metals exploration company anymore. You are more involved in processing, I believe. Is that what makes you different from, I guess, other resource companies on the exchange?

Yes, definitely. We're in the process of commercializing a technology called Flash Joule Heating, which was invented in Rice University in Texas. And it's got applicability for pulling metals, extracting metals out of waste streams like scrap computers, which are rich in gold and copper or it's also got used in mineral processing. So improving how challenging minerals like spodumene, which is the main source of lithium, basically improving how these minerals are processed. So there's 2 business units. There's waste, recovering metals from waste and there's improving mineral processing. So we're trying to build it around those 2 business units. And it's a platform type technology. So it's got applicability not just for one particular metal like lithium or gallium. It's got wide applicability and that we've now demonstrated on several different feedstocks. So that's -- the plan is to be producing recovered metals as early as the first half of next year. So we hope to be revenue producing by the first half of next year, all going to...

So with this Flash Joule Heating technology, do you own all the IP? Or is there a royalty payment? Did you buy this from someone?

Yes. So we obtained a global exclusive license from Rice University in Houston, Texas. And it's come from the stable of a famous professor there called Dr. James Tour. He's previously had success with getting technologies into ASX companies. An example would be Weebit Nano, which was -- went to quite a significant valuation last year, over $1 billion market cap. And that IP was developed in his lab. So his -- generally speaking, his lab is very focused on only getting his PhDs to look at stuff that's actually got some commercial outcome, not for the sake of pure academia. And we've now got the global exclusive license for this tech for all metals and mineral ores. And it's for the longest duration of the newest patent, which is 20 years currently. And each time we add an additional patent, which we do plan to just to further strengthen the overall IP, the time gets extended. So it's pretty much an infinite patent, like realistically speaking. And there is a royalty, but it only kicks in after, I think, $50 million of free cash flow, and it's very modest. It's, I think, 1% on gross revenue.

Interesting. So what makes this Flash Joule Heating technology better -- sorry, is this existing technology? Or is this something that's completely new?

There's a couple of different techniques that we would be competing against. And typically, most of the heating elements, anything to do with metals. It's either done in a rotary kiln, so these big long cylindrical tubes. They've been around for hundreds of years since the bronze age. Either a rotary kiln or a smelter, which is basically just a machine that has like a welding torch inside that dissolves all the metals up at once. And another technique is called hydrometallurgy is basically dissolving everything into a soup of acids or solvents. And the issues with all of the ones that I mentioned is that you don't just pull the target metals in a feedstock into your solution or you end up pulling all of the unwanted stuff into your solution and then you have to spend energy, CapEx and OpEx to figure out how to separate the waste from the valuables. What we are doing is effectively vaporizing the target metals out of the feedstock, and selectively doing that and keeping the unwanted stuff behind in the solids. So that's the real edge over the traditional techniques. It's a much more elegant solution than these older incumbent techniques, if that makes sense.

It does make sense. And what happens to the bits that you don't want?

Generally, we can suppress the unwanted stuff for not -- by not vaporizing. We keep that in the solid. And because we're not using any harsh acids, the residual solids then are benign and they can just be landfilled. Whereas if we were using likes of sulfuric acid, which a lot of these existing flow sheets do use, then your tailings can also become very acidic, which then they become hazardous tailings and the storage of them needs a special tailings storage facility. So we won't have any of that because we're not using acids.

That's good, I guess. So you just raised some money at $0.55, I believe. Well done, congratulations. What are you going to be using the money for? It's always good to know.

Yes, and it's basically to accelerate our plans. And we do have our first site already locked in, in Houston, Texas. That's for our own waste processing facility that's going to be recovering gold and copper and platinum group elements from printed circuit board waste and also having a second line treating gallium and germanium waste. And what the extra money does means we can now grow the team in the U.S. a lot quicker than we had originally planned. And also, we're looking at not just Texas as our home base, we're looking at least 5 additional sites across the United States. And we're aiming to replicate what we've found in Texas, which is a pre-permitted already existing site that we don't have to put in a lot of CapEx to develop ourselves. So we think we've got at least 3 of those sites now earmarked, and that's in Ohio, Florida and Louisiana. And we're looking at more in Nevada and Virginia as well. And what that will allow us to do is set up shop close to these already existing e-waste, electronic waste collection centers rather than having to transport all the material to Texas. And we were actually suggested to adopt this strategy by a fellow who's an adviser to the Department of Defense because we're actually currently applying for some significant Department of Defense and Department of Energy grant funding. And we think we've got a strong opportunity to get some significant funding because of the -- I suppose, the renewed interest in critical metal onshoring since Trump has come into power.

And do you have to pay for this e-waste? Or is it just you're doing them a favor about taking it off their hands?

So generally speaking, at least at this stage, we purchased the feedstock at a very kind of typical market price. The current -- the only other option for these current e-waste collectors is to ship the materials to smelters in Asia or Europe. So these smelters typically have quite a big monopoly. And we -- our pitch to these guys is we'll pay them more for the in situ value nature of the metals. They only get paid for the gold and the copper, they don't get paid for the tin, the minor metals by these overseas smelters because of the monopoly, whereas our pitch to them is we'll pay them for all the metals that we can recover so they get a better deal and they don't have to ship the material overseas. And then there's also no tariff implications, which I suppose there's a lot of tariff chaos since Trump announced them back in April. So there's several benefits for these local e-waste guys. We've already signed 2 of them up. And if they deal with us rather than the typical route, which is shipping the material halfway around the world.

That sounds far more sensible to sell it to you, I have to say.

Yes. And we hope that these type of projects will get the attention of the DoD and the DoE in our grant pitches that we're currently doing.

And what sort of CapEx is required to build one of these plants in the States?

Look, it's very modest for -- look, we haven't put out anything public on this, but it's -- for sub AUD 10 million, we can think we can have one line under operation. So it's very modest compared to what you might be instead of $1 billion smelter or hydrometallurgical plant that needs huge footprints. We think we're much more efficient and both in cost and also footprint.

So you have a big team in the U.S. at the moment?

It's not big currently, but we do plan to expand it. We primarily have been using the services of an engineering company called Nighthawk. They've got about 15 guys dedicated to our project in there, and they're kind of world-class engineers, specialists in high-temperature process engineering, which is exactly what we need. So we -- over the -- I suppose, the coming months now, we will gradually replicate the expertise of the engineers that we're currently using via these consultants internally. And we also plan to have like a full-on commercial team like sales guys and people dealing with offtakes and supply agreements. So that's all planned. And now with this new capital, we can rapidly achieve that target.

So I guess once you produced all the critical metals, you are hoping to get those supply agreements, offtake agreements in place. Is that the way to do it? Is there a spot market that you can just take advantage of initially?

There certainly is a spot market for electronic waste. For the more niche stuff like gallium, germanium, refinery waste that we've sourced, that's a different ball game. But certainly, there's a very liquid market currently just for printed circuit board waste. And we do now have supply agreements with 2 big players for at least 1,000 tonnes per annum, and we've got more discussions with other players underway. And we do hope to get binding supply and offtake agreements before we -- before the end of this calendar year. So before we actually enter commissioning on the first plant, we do hope to have binding agreements for both the electronic gold-rich waste and the gallium, germanium waste from this company called Indium Corp., who are based in New York.

Right. So this is one of the milestones we should be seeing in this year. Is there any other sort of things to look out for? You've raised some money, which is good. So you've got a nice lot of cash, what is it, $60 million or something on the balance sheet, which is good. That's obviously going to see you through to, I would imagine, some sort of production, at least.

Well, definitely. Yes, there's no -- we think that ideally in an ideal scenario, we'll be cash flowing next year, and we hopefully won't have to hit the equity markets ever again. But that's -- obviously, that's wishful thinking, but that is the ambition because we do hope to be cash flowing by H1 next year. And yes, we're very pleased with the raise. It was executed, I suppose, during the Gulf War, Iran, Israel was heating up, and we were just recommended that we go in the very short time that we did, and we had a very good outcome.

Yes, I think you should be buying your advisers a bit of a bottle of champagne there because they did very well. The stock price took off on the news of the capital raise, which is somewhat unusual to say the least. So what should we be looking for this year? What are the catalysts?

Yes, we have lots of news flow to come. We have a backlog of feedstocks because of the amount of inbound interest from like mining companies and other feedstock suppliers to test their materials. So we've got a huge amount of testing material that we need to get out there, including antimony, which is very topical for the Department of Defense, antimony type results. More gold-related results and lots of other critical metal type feedstock testing. On top of that, we're soon to appoint some heavy-hitting U.S.-based advisory board members that will hopefully help us with our -- navigate the complex grant funding situation with the Department of Energy and Defense. And they'll also be just, I suppose, improving our overall credibility within the United States. So that's coming quite soon. And there's a lot of, I suppose, any of these grant opportunities when -- if they do arise in the near term will be hopefully big catalyzing events for us as well. And we've got several more of these collaborations that we're working with, say, mining companies or other waste suppliers. And as soon as we can announce those publicly, we think that's another big event for us. We're working with rare earth element companies, gold companies, antimony companies just as a short example. So there's lots of strategic collaboration in news flow that will hopefully drop over the coming months. And then we'll be putting out regular progress updates as we put -- as equipment starts arriving at the Texas site and commissioning starts. And then options on these further plants that we're aiming to secure around the United States. So yes, we won't be short of news flow is the main point that I'd like to underline.

You're going to be busy man, Michael.

Yes, that's the plan.

That's good. Is it hard for a little Aussie battler in your case, a little Irish Aussie battler to do business in the U.S.? Is that a doors opening or doors being sort of slammed in faces and you're having to price the amount due to Mr. Trump?

It's a good question. Yes. No, we've been very particular about having a U.S. team. So our guy in the U.S., Steve Ragiel, he's lived in Texas for nearly 30 years. And it's been very apparent that if you want to do business in states like Texas, you need to have a local presence. And that's why all of our new hires are going to be based in the U.S. So yes, that's our main operations by Steve, he's based in Texas. And I do go over a lot myself, but it is really important to have a local when we're -- especially negotiating supply agreements with e-waste suppliers. He keeps telling me -- Steve keeps telling me that the scrap dealers is the third oldest profession. So you have to be on your toes, and it's good to have like a local. Steve is over 30 years in the waste game. He used to run Waste Management Inc.'s global recycling division. So they're the world's biggest waste company. So there's pretty much nothing about waste in that whole industry that he doesn't know, in particular, in the United States.

That's good to have that kind of expertise on the ground. As far as your shareholders go, what does that look like? Is it mainly retail or you got a few institutions?

So it certainly was 100% retail before around last November. And then last November, we had 2 funds out of Sydney come in, Pengana Capital. that's Jim McDonalds. He runs a high conviction fund within Pengana and also Germany Bond, Terra Capital. So that's when we first got proper institutional shareholders on the register back last November. And now after this raise, which was 100% institutional, we -- the institutional component of the register, I think, is now about 35%. So yes, we're definitely aiming to -- whilst we obviously respect all of our retail shareholders, and we love the liquidity. We're a very liquid stock. We -- the ambition is to keep growing the institutional nature of the register. And in particular, we're targeting U.S.-based much bigger funds. And I think even right now, we'd still be considered too small for some of the big institutions over there that we are targeting, but that's the ambition to get big U.S. institutional shareholders who are lying only on the register.

I know that you're looking at maybe in 2026, a U.S. listing on one of the OTCQX.

Well, we actually hope the OTCQX listing will be in the next couple of weeks actually because -- we've been on the QB for a while, and we've now surpassed the point at which I think the threshold is being above USD 0.25 for 25 days in a row. I think we're getting close. So as soon as we qualify there, we'll be going up to the QX. And then the brokers over there can actually recommend our stock, whereas they can on the QB. But then the plan is to look at potentially an ADR, basically a bank over there to effectively buy some shares and then they can trade. It effectively -- it's like an intermediate way of getting towards the NASDAQ. But the main thing I'd like to say is that we wouldn't be jeopardizing any Australian liquidity or shareholders by targeting this. It would be a dual listing, and we'd only do it if it made complete 100% for the shareholders, the Aussie -- the ASX shareholders.

And how much do the Board and management have a stake in the company?

Board, management and the other key insiders, I think it's at least 15% to 18%. It's on the back of the latest deck.

This is significant.

Yes, it's about 12%.

12% amazing. So all is looking good. What's the next thing we should be looking for? You're going to bed down the money. You've done that. The share price has responded well. Is there an event that we should be looking at in the immediate future that's going to give you another catalyst for another leg up, perhaps?

I think the next big one for us will be when we can go binding with the feedstock supply agreement on this gallium, germanium material, which is ultra-high in value and also offtake agreements from that same potential customer, which is Indium Corp. So both the binding supply agreement will be one event and a binding offtake agreement will be another event. And we're also trying to go binding on these gold-rich e-waste supply agreements as well. And then on top of that, we'll be hopefully announcing some more of these strategic collaborations with mining companies or whenever they allow us to publicly announce that we're dealing with them. So that will be another good event. And there will be ongoing regular updates on different metals that we recover from these different feedstocks, lots of testing-based updates as well.

And is it a competitive sort of business buying circuit boards and the e-waste? Is it a lot of people trying to do it as well?

I know Basically, we've got really good guys. I mentioned Steve, who's in the industry for nearly 40 years. And currently, there's only about 10% of the quality printed circuit board waste recycled in the United States. The majority of it is still landfilled. And there are certain states that are forcing people to actually not put them in landfills anymore. And so it's competitive amongst the collectors for that particular material, but we -- our pitch, which we've had a very good reception to is that we'll pay them more for the contained metal value because we can recover all of the valuable metals. And currently, they only get paid for the copper and the gold by these overseas smelters. And their payment terms are really bad. They only get paid typically 9 months after the material leaves the United States. They don't get paid for 9 months. And they wear all the commodity risk during that time. They don't get paid on the day -- on the commodity price on the day it leaves. They get paid whatever the price is 9 months' time. So they really are getting screwed by these overseas smelters. So I think we're a nice alternative to it.

Yes. 9 month, you have a baby in that time. That's crazy. 9 months risk on your pricing outcome. That's mad.

Yes.

No wonder they're looking at you.

I know. This is where it's really good to have an insider like Steve, who understands the mechanics of all of that.

Yes, very much so. Well, Michael, it's been great chatting to you. It's an exciting story. It's a bit different, I guess. No more exploration. It's now down to this Flash Joule Heating tech process, very much an American focus, I guess, Houston. We have no problems, hopefully. And yes, no, it's all looking good. So congratulations on the placement. Congratulations on how high you've come. Thanks very much for coming on.