RecycLiCo Battery Materials Inc. (AMY.V) Earnings Call Transcript & Summary

So let's start the meeting. Good morning, everyone, and welcome to the Annual General and Special Meeting of the Shareholders of American Manganese, Inc. The meeting will come to order. My name is Melody Yiu, and I'm Counsel for the company. I will act as Chair for the meeting, and Teresa Piorun has kindly agreed to be the Secretary for this meeting. So I'd like to introduce the members of management with us today. I'm sure you know them all, Larry Reaugh, President and CEO; Zarko Meseldzija, COO; Shaheem Ali, CFO; and Teresa Piorun, Corporate Secretary. At the end of the meeting, members of management will give you an update on the company's activities for the year, and there will be a period for questions. So it's my pleasure to welcome you all to the meeting today. [ Kinsey Woo ] of Endeavor Trust Corporation is here to act as scrutineer for our meeting. Thank you, [ Kinsey ]. So let's proceed with the business of the meeting. I have been advised that the notice calling this meeting together with the management information circular for the company and the form of proxy were mailed to shareholders of record in accordance with applicable law. Endeavor has filed with me proof of service of such mailing, and I direct that a copy of such proof of service be annexed to the minutes of this meeting as a schedule. So I am advised there is a quorum present and that the scrutineer's preliminary report on attendance is as follows: that 30 -- we have 40.977 million votes cast already, and that this is more than the 5%, which we require for quorum. And as you can see, we have quite a number of people attending today somewhere in the neighborhood of 63 participants. So as I said, because we don't have any registered shareholders who have not already voted, we will not be actually holding a vote, but we'll be -- I'll be announcing the results of the votes already cast. So the first item of business for this meeting are the company's financial statements. The consolidated financial statements for the fiscal year ended July 31, 2021, a copy of which was filed on SEDAR. Terry Piorun can e-mail copies to anyone who wants them, unless there is any objection, I don't propose to go through them. Are there any questions at this time on the financial statements? Okay. I don't see anything in the chat box or hear anyone. So then I will just run through the resolutions, which have been already voted on. So the first resolution was to set the number of directors to 5 and that was voted for, and 40.887 million-odd votes were in favor. So that resolution passes. The second resolution is to elect Larry Reaugh as a Director. Again, the votes in favor were 40.342 million votes, roughly, which represents a majority. So that resolution passes. The next resolution is to elect Andris Kikauka as a Director. The votes were 40.239 million votes, roughly, and that also passes. Then we have a resolution to elect Edward Skoda as a Director, and the votes for were 40.371 million, roughly. And that resolution also passes. The next resolution is a motion to elect Zarko Meseldzija as a Director, and the votes were 40.903 million roughly. That resolution passes. And the next resolution is to elect Paul Hildebrand as Director, and the votes were 40.859 million in favor, so that resolution passes. So all of the directors that were nominated were elected. The next resolution is to appoint DeVisser Gray LLP as auditor of the company for the ensuing year and to authorize the directors to fix their remuneration. 40.935 million votes approximately were voted in favor of this resolution, so it passes. Then we come to the resolution to change the name of the company to RecycLiCo Battery Materials Inc. There -- I put in quite a lengthy resolution for legal reasons. I will refer you to the information circular for the exact text, but suffice to say, it is just to change the name, which I think everybody is quite excited to get done. I can tell you that 40.911 million votes were in favor for this resolution. It is a special resolution, which requires 3/4 vote, but it does pass. So I'm very happy to announce this is going forward. At this time, I don't have any further formal business for the meeting. Is there anyone who wishes to bring any business before the meeting? Okay. I see that no one. There is no business to be enacted. So I will now declare that the formal portion of this meeting is terminated. And I will now turn things over to Zarko and Shaheem to give you an update on the company's activities and to give -- answer questions. At this time, I'd like to thank [ Kinsey ] of Endeavor Trust. I'm sure he has other meetings to attend. So if you wish to leave, please feel free to do so. Thank you, [ Kinsey ], and we'll see you next year.

Thank you very much. Take care.

Okay. Over to you, Zarko and Shaheem.

Thank you, Melody. First of all, just thanks for everybody for attending. I just wanted to start off with a brief overview of where we stand today. First, I know there's many questions around the demonstration plant. So as the first update, as we announce at the end of May, we began feed of material into the demonstration plant. So this is the feeder material is going to be passing through the different stages of the demonstration plant process, this scaled up flow sheet that we've developed. And this will require very in-depth analysis of each stage. We're going to need process input and output data that we're going to need to interpret and also in terms of optimizing on efficiency of the demonstration plant. So as these results are announced, as these results come in, we'll also be announcing them, but do expect that the demonstration plant testing and work around that is continuously going on, any optimizations as well. All of that is -- has been underway and kind of [ leave it ] there for the demonstration plant. In terms of -- at the same time as the demonstration plant work is going on, there is additional, call it, lab work. That's required for third-party testing. So we have announced some of these -- some of this in our press releases, where we've sent precursor material out to third parties. We do continue to do work with third parties, that involves either making our final products, which would be something like lithium hydroxide or cathode precursor materials and then specifically working with these individual companies, understanding the material spec that they require. And then on our end, looking to achieve that, sending that material out to them for further analysis and continuing to grow our relationship and hopefully lead into a strategic partnership, which is part of our business model of licensing and joint developing the technology. But like any technology, due diligence is key when it comes to this, and this is the third-party work that is happening along at the same time as anything happening in the demonstration plant. So it is a very busy time right now with our contractor and research partner, Kemetco Research. I spent many of my days there, focusing on that. And the updates will come. It's not stalled. There's work, like I mentioned. And in terms of direct marketing, I say, we have definitely upped our direct marketing now with the demonstration plant. I think on the global picture, we are seeing a lot more serious with the demonstration plant in place. So this is now a direct marketing, going on trips to factory visits, presentations. We'll be seeing a lot more of that coming up as well. But now I think we're in a good position to leverage something real, like our demonstration plant, in these discussions with companies and in these presentations. So I'll leave it there for that update. I mean we do have our podcasts that you've seen both me, Shaheem and Larry do. We do our proactive talks as well. And we'll be making any press release announcements as the information becomes public. So I'll kind of leave it open there. Melody, if there's anything else to add?

I see a question here from a shareholder. Without violating any NDA, is there a percent of any parties interested in RecycLiCo as the demo plant is completed? Maybe you can sort of discuss that in general terms?

Yes. Well, I mean, as we've mentioned before, we do have many NDAs and that does restrict us in our communications. And I think when it comes to working with different companies, some very large -- some would be very large firms with many moving parts and many steps to get through in terms of the due diligence and validation process when it comes to looking at our technology and understanding our demonstration plant. So I think time lines are very difficult to predict when you're working with third parties. We're dealing with our own, and then they're dealing with their own and in between sending materials and analyzing on both ends. Those time lines can be unpredictable. And I'd say there's many different stages, some where we can produce a few smaller sample sizes of precursor material or lithium hydroxide to as an initial analysis, and then there's some at later stages where now this is -- a few -- second, third iteration of some back and forth that we've had.

Yes. Great. I see a question here. Does the company have a business plan, okay? That's an easy one, even I can answer that we do. It's up on the website. Is it not, Zarko? I believe we have a version of the business plan actually on the website.

Yes. So in terms of -- so this is constantly changing business plan. And I think what we've tried to do is really consolidate a lot in our company deck, that outlines where we stand and then that gets updated every few months in terms of technology progress, what our business model is. And I think we've made that very clear. But in terms of financial projections and pro forma, I think those are ones that we have not announced publicly in terms of -- for competitive landscape of recycling right now. We are not announcing any kind of financial projections. And those are also very hard to predict until you have more of a defined terms of size, location of those plants, and a lot of that depends on the potential strategic partners we're talking to.

I just wanted to add to because there are subsequent questions coming to the business plan. So the main structure of the business plan is our structure, company structure, our market research, our strategy, our business model, our management and personnel and financial documents and as such, people are asking, I see in the chat that well, a business plan of the type that you could go raise money. So we have been meeting with investment bankers. We have been meeting with people who are trying to come up with some kind of financial support, diluted, non-diluted. So to give you comfort that to appear in front of these people to have discussions, these are minimal requirements for due diligence. Together with that question to say that do we have a business plan for purpose of financing, for the purpose of knowing what we are doing? Yes, we do. The second question that comes on a chat also on Q&A is, is AMY looking at doing a reverse stock split? At this time, there is no consideration to do a -- given the market conditions today, there is no intent to do a reverse stock split anytime soon. Further to add to it, please take comfort that we do have the money to keep going, which means we are sitting on a very good financial comfort. We did file our interim last week, I believe. You will see that our cash position is good. In these kind of market conditions, do we want to go out there and raise money and further dilute? No. Do we need to, at this time? No. In future, like Zarko mentioned, given how we are evolving, if things change rapidly, will there be one required? Perhaps. What options do we have? We have both options at that time. We have a dilutive option and a non-dilutive option. So the talk about reverse stock split is not on the horizon at the moment.

A question for Zarko. What sort of profitability do you see on the horizon for the exciting RecycLiCo process?

So I mean we've -- like Shaheem has mentioned, there's -- in terms of this NDA discussions and due diligence we do with third parties that can be technology validation, that can be financial overview or pro forma of the financials. And so there is numbers that we've done in terms of how a commercial plant is structured in terms of size and location, and that's really a case-by-case basis. Numbers that won't be sharing here, but there's in terms of multiple commercial plants with -- in different regions to be licensed or joint developed with larger companies. We're looking at a win-win solution when coming to these deals and making sure the company is profitable at the end.

Another question. Where do you see the development of the company compared to competitors? Is AMY in time or too late or ahead of compared with them?

Yes. I see from a technology standpoint that we've gotten a very large head start on many companies that have been out there in the recycling space. From patents, publications, this is all details that may not be as exciting to somebody that's not as familiar with some of the very technical details and then what that translates to in bigger operations. But I'd say we did have a very good head start, starting in 2016, on this development, securing our patents, scaling up to a demonstration plant. And I think the existing landscape of recycling right now on a commercial scale, a lot is in terms of high heat operations. And then others being more in terms of the mechanical shredding of batteries. There's the hydrometallurgical processing is where I think there is a lot of room for that to grow. The technology needs to grow and needs to scale. And at the demonstration plant, I'm very confident of our scale being one of the ones in the lead in terms of capacity and technology.

Here's a question. Do you anticipate that each stage of the demo plant testing will be done by September 2022?

I would say that for 2022, I would, as a company allocates to demo plant testing, working with third parties throughout 2022. The way our business model is structured, things could move very quickly with the right partner with the right investment from a collaborator.

I think they were asking about just the testing -- is that -- the testing is going to be done soon?

Well, see, that's like how testing is defined of the demo plant can be varied. There's -- we can do initial full run of the demonstration plant and then there may be a third party that wants to come in as well with additional material to do testing and more analysis. So this -- there can be...

Scope can change. So the scope can change.

Yes, scope can change.

Okay. Okay. Let me see if there's one in the chat differently here. There was a question about the Minviro report. I'm not sure what that is. Is...

Yes, that's our life cycle assessment. So that was -- we did report that we were lower and then that was sent out for a critical review by independent reviewers, external reviewers under ISO standards. And then there was some questions that we helped to answer after the review. And we're just working with the Minviro team on communicating that. I mean we're talking over 70, 80-page report that we're trying to summarize and communicate to all investors in terms of what the results mean.

Got you. Do you have any partners on the horizon for full battery packs and [ CAM ] production?

I don't know how to really answer that. There's discussions we're having with companies at different stages and kind of what their urgency is in the situation of recycling. That can either be on the near-term horizon or later, but we are having the discussions on this moving forward, and it's positive to me, but I can't give her a time line.

Great. Okay. I think I have read out all the questions. Okay. Have you begun processing nickel for Zenith?

The MOU of Zenith was not under the objective to process nickel for Zenith. That is their business model of producing nickel-based products. The interest there was of us sending precursor materials for analysis as they're looking into that area of their business as well and the precursor production from recycled material.

And what's the latest on Italvolt?

Yes. I mean I'm in constant contact with Lars, the CEO of Italvolt. Under the MOU with Italvolt, the objective there is to build and colocate our RecycLiCo plant beside the Italvolt Gigafactory. So up until the Italvolt Gigafactory is producing [ scrap ], that still needs to happen. So it's also waiting on Italvolt and getting into production of their plant for us to be able to tie-in our technology as well as we've discussed in the MOU. So yes, that's as clear as I can explain it there.

Fantastic. Another question on Zenith. When do you anticipate sending precursor materials to Zenith?

As we announced in one of our press releases, we have been sending precursor materials to many companies. We haven't announced which companies, some under NDA. But as with Zenith as well, sending precursor materials to them has happened as well as other companies and in different regions in Europe and North America.

Okay. Great. I think we should wrap up meeting soon. Please, if you have any final questions, type them in. I'm just going to briefly speak about the name change. Now that the special resolution has passed, I will take the next steps to implementing the name change. It does take a bit of time because I have to coordinate it with venture exchange and with our transfer agent and with CDS. There will be a new CUSIP number. You do not need to submit your old share [ certs ] in. They're still honored. We'll sort of keep you updated as the name change is happening. But I anticipate no promises. I anticipate the new name will be effective for some time later next week. Cross our fingers. It depends on various parties, as I said. So is there any other questions -- final questions? I think we can do 1 or 2 more, Zarko, right? Yes. This question is kind of a motherhood question. What positive message or morale boost can you provide to us as we work through this terrible market time? Indeed, it's been quite a carnage out there, I have to say. But I think it's just across the board to. It's not particular to any company, right?

Yes. Yes. Maybe -- I mean I can have a few words, and Shaheem, if you want to add as well. But yes, it is definitely -- and yes, the stock symbol will still be AMY. But, yes, I think across the board, there's a lot of market corrections happening right now. And I believe we are holding very strong. And when I just see it in terms of long-term vision, when you see the electric vehicles on the road, when you see the necessity of it, there may be other recycling competitors and their different business models that they have. But I think when it comes to the technology and reviewing other patents and reviewing other publications and having these discussions with executive leaders and really technical experts, that always gives me the confidence and gives our team the confidence. And then just one thing is just these things do take time. And like an app, we can't do a software update in a short amount of time and send that out to everybody. This requires material to come in and material to be analyzed, to determine our best path forward, making precursor material and doing the [ leaching, infiltration ] and precipitation stages. That all takes time, labor, and then analyzing the materials that are produced, sending those off as well. So it's not that things have just gone quiet and nothing is happening. Things are very busy, if not the busiest they've been. And maybe that doesn't leave our small team much time to give as much updates in the public markets, but we're really excited with what's going on.

Yes, it is. It has been busy, like you even said in podcast that given the market conditions, yes, it does. Those are macro events. But as far as the company goes, we have been actively marketing. And what has changed is that we have been more directly marketing. What I'm trying to say is more active rather than passive in the sense that we have been going to these trade shows. We have been going and meeting with investment bankers when they put out their events. We were there in May. We visited 2 places in May. Last month, we were in DC. We have one coming up in July, through virtual, where we will be talking directly to potential investors into the company next month. We are at [indiscernible]. Actually, Zarko will be at [indiscernible], I won't be there. I'm on vacation at that time. So we had [indiscernible] where they're doing a forum on recycling. September, we again on the road, and in November, again, in L.A. with the benchmark talking to people in cathode industry. So rest assured that sometimes people do send us e-mails, information, did you know about this, did you know about this. we do get overwhelmed with suggestions, advices. Thank you very much. Keep it coming. But rest assured, like I said, the fact that we are doing -- building our demonstration plant. At the same time, we are not sitting idle here. We have been very proactive and basically taking bulls by the horns and taking the responsibility to ensure that shareholder value is maintained. As far as market goes, I cannot handle the inflation, it's out of my control. They say its [ stagflation ]. I cannot handle what's happening in Europe. Are companies reassessing their priorities? Yes. So are we quickly adjusting, such as the person who commented on the business plan? We are. We have a business plan to guide us as a vision. Larry has laid out a good footprint for us to say. He has been mentoring us for over the years with his experiences. He has seen many market cycles. So learning from the master at our house over here is -- we are quickly adjusting. If something is going out of the budget, we quickly address it. We don't leave it to last minute [indiscernible]. If somebody comes and calls us that we need to talk, we sit down and talk? We do. Do we have options? Are we looking at somebody had -- I see in the chat that somebody says, are you looking at partnerships, M&A and all the stuff? All options on the table, but it takes time to roll out some of those options. Some are opportunities in situations given the market conditions. So -- but at the same time, we are not there to give our house away for nothing. It has to be of value for our shareholders.

Well said. I think we're going to wrap it up for now. I, of course, encourage all of you, to contact the team after the meeting, if you do have additional questions. They're always happy to answer it. One of my other clients have said, like it is a bad time for the markets and to just turn off your screens from now and then and take a breath, deep breath. These things happened, downturns do happen, but also it could quickly come back, right? Just hold tight and keep your faith. We certainly are. And thank you very much, everyone, for attending today. There was a great attendance and a great turnout for the vote as well. We thank you for doing that. And so I will be implementing the name change, as I said. And if you have any further questions for Zarko and Shaheem, please e-mail or call them, and they will be happy to take your questions. Thank you, everyone, and I hope you enjoy your summer.

And I would say calling is easier, I'll be in the lab and maybe not as frequent on my e-mail, so calling, I have no problem, having a chat and explaining everything in detail. Sometimes e-mail can -- you miss out on many of the details just from keeping it short or brief, so feel free.

Fantastic. Okay, everyone. Thank you very much. I'm going to sign off here.

Thank you.