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

I'm Jim Goddard. My guest is Zarko Meseldzija, Chief Executive Officer of RecycLiCo. Zarko, welcome back to your first company showcase of the new year.

Thank you, Jim.

So obviously, you are very optimistic going into the new year. What do you have planned?

Well, I am definitely optimistic going into the new year. I don't think markets are as some news outlets are because lately, there's been a lot of negative news about the future of electric vehicles, which just sounds ridiculous to me. A lot of EV and battery companies are dealing with sort of commodity price pressures, supply chain issues and a tough economy. So a slowdown in production and deliveries compared to their previous year's production is expected, but by no means is I mean, this is a signal king of an end to electric vehicles. These kind of times create better companies in my mind. And just kind of take a look at the investments being made into the electric vehicle future, right? This week, it was Honda that reported -- well, it wasn't Honda that reported but it was reported that Honda is considering an $18.4 billion electric vehicle and battery plants in Canada and just add that on top of the other multiple other billion-dollar investments announced in Canada alone, so I'm optimistic, right? You kind of look at things day to day, you have to look at things long term. And some things may seem to slow down now, but the future is a lot brighter. And then on another note, I don't think the markets don't seem to think so, but our latest press release, where our lithium carbonate was successfully tested in LFP battery cells, was excellent news in my mind, and I want to demonstrate our technical capabilities. There are a lot of recycling companies out there, but you don't hear about battery-grade quality or cell testing or successful cell testing often. And I know many of our listeners are always curious of who the companies we are working with are, but I think the key takeaways, sometimes the press releases like these should be our technical capabilities and the fact that companies are working with us because just kind of -- I know we all want to know where is the potential business, but kind of put yourself in the shoes of the other companies and if you were them, would you want to publicly disclose that you are working with the recycling company or investigating recycling technologies to -- which would then [indiscernible] the interest of your competitors and maybe lose an advantage that you've been working on, right? So when you look at these perspectives, I think it's harder to argue why some of these decisions are made. And I think what we're really trying to showcase in our press release is the technical capability. But I think also with that press release, testing LFP battery cells is also a very relevant topic as many companies are opting to use LFP cells in their EVs due to their lower cost. But from a recyclers' point of view, there's no nickel, cobalt and manganese value to recover. So as a recycler, your process needs to be even more efficient to extract as much lithium and as high of a quality as possible with the lowest possible cost. Now couple that with lower commodity prices that we've been experiencing this past year and I think with time, the market naturally sidelines less efficient technologies. The inevitable future is that we will need battery recycling. So that's not going to go away. But the market shifts and battery chemistry for lower commodity prices will only act as a filter. So we keep adding on top of our technical capabilities, being -- having our lithium carbonate used in LFP cells is great because LFP cells are increasing market share, they'll be used first. And then there's a lot of lithium in there to recycle for value as well, but we'll be -- we're looking at it as well. But when it comes to our technology, I think what really proves the strong technology and what really makes it evident is when multiple patent offices also recognize the novelty of your invention. And it was great capping off the end of the year in 2023 with an official communication from the European patent office, indicating their intention to grant our patent. So to date, we have patent issues in the U.S., Canada, South Korea, Japan, China, India and Australia, with Europe being the last one from our original application. I know many listeners were kind of asking a few months ago why we haven't gone in Europe yet. But really, the timing of each offices review is different and to be honest, out of our control. We can only just help with answering any questions that they may have. But now the next step is to select individual countries in Europe for validation, which will be strategic, given how much news there is in Europe on investments in battery plants and just making sure we protect our patents in those regions. But it is moving on. I think it's one thing to have a great technology, but the next step is going to be commercialization. And on that note, work is underway, as we've reported before in the past with our RecycLiCo and Zenith JV in Taiwan, and the work is underway on multiple fronts. First, there's the planning for the modular construction while -- and while we're doing this work, we're already having conversations with potential commercial partners in the short and long term for that Taiwan operation. I think we meet on quite a regular basis. We as in RecycLiCo and Zenith, we meet on a regular basis and our plant -- commercial plant has been very well received, I would say, in the Asia market, which I believe can open up many more doors as well for us. And I think I have some other questions here. But one I wanted to also address is a very frequent question on revenue. And I think just to be straightforward on revenue that we are a pre-revenue company now and revenue is projected from commercial operations with our first commercial operation in the Taiwan JV, which we don't expect to be in operation this year or we should not be in operation this year. When we do begin to commission our commercial operation in Taiwan and come closer to that operational point, we will have a better sense of timing of revenue, right? That's also going to be dependent on commodity prices and a lot of different factors as well closer to that time. But what to expect from us as we work on that first JV in Taiwan is that we are actively seeking other suitable JV partners in Europe and North America as well. So it's not just going to be one JV and then sign a second JV, but in parallel, we are looking at multiple JVs to begin working on. And finally, as another piece of kind of industry news, I know this was in the last month, going into the holidays, but China announced export restrictions and control on critical minerals that are making it difficult for EV manufacturers. So for example, China announced they'll require a special export license for battery-grade graphite. And for example, I mean, we always talk about capital material, precursor lithium, that's all on the capital side. But on the anode side, it's dominantly graphite, right? And then in black mass which is the product of end-of-life batteries, you also get those anode components in there. So there's about 40% roughly, in graphite carbon content in black mass from our analysis of multiple samples of black mass that we've tested. So it is an important piece in the fully closed loop. And RecycLiCo's patented process does separate graphite and carbon from black mass. However, to unlock the maximum value of that black mass, we are looking at investigating opportunities of upcycling the graphite as well into high purity products that could be usable in new batteries and which, I think, became a lot more relevant with China's recent export restrictions. So we are aware of geopolitical situations going on. We are aware of new technologies, kind of always staying on top of that, right? I think even with Nanoramic, right? And then the news we had there, we talked about Nanoramic as an advanced technology. So we're kind of always staying that one step ahead of the industry and making sure we're paving the way for recycling and know what's going on in the industry. So there's always tons of news to read. And to me, it's more positive than negative. That's all I have for listeners today, Jim.

Zarko, for people new to RecycLiCo, what does the company do? And where are you trading?

Yes. I mean, I guess if you can tell from the long discussion, RecycLiCo is all about lithium-ion battery recycling and upcycling. So taking away lithium-ion batteries, especially electric vehicles now that we're seeing more on the road and recovering the lithium, cobalt, nickel and manganese and looking at graphite from those waste batteries and promoting a circular economy. You can always find out more on our website on www.recyclico.com, and we are a publicly traded company. So you can find more information on us there and follow our tickers, which are AMY on the TSXV, AMYZF on OTCQB, and we are ID4 on the Frankfurt Stock Exchange.

Zarko, thank you so much for the update.

Thanks, Jim. Talk to you next time.

This was Zarko Meseldzija, Chief Executive Officer of RecycLiCo. I'm Jim Goddard. Our conversation took place on January 12. Comments made on company showcase are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell any financial instrument at any time. Achieved, online at howestreet.com, Company Showcase is a production of Howe Street Media Incorporated.