Good morning, everyone. Thanks for joining us here at the Vail Summit, the 28th annual Vail Summit. I'm Maheep Mandloi. I lead the renewables and clean energy coverage here at Credit Suisse. With us, we have the honor of hosting Aqua Metals with us this morning. I have Steve Cotton, CEO of Aqua Metals, and Judd Merrill. He's the CFO of Aqua Metals. I'll let them talk more about Aqua Metals, but briefly, they have developed a technology, a different battery recycling technology, which in the past they've been using on the lead batteries and now moving on to the lithium-ion batteries. Just quick introduction on Steve and Judd here. Steve is a tech industry veteran. He has 30+ years of experience, and before joining Aqua Metals, he held executive roles at several tech companies, including ON Semiconductor and Cypress Semiconductor, and he has extensive experience in operations, supply chain management, and business development. He has a bachelor's degree in electrical engineering, which I'm stressing I also do, and he has also an MBA from UC Berkeley. I'm not from Berkeley, but I still did MBA. Thanks, Steve, for, you know, coming to the conference and doing this call with us. Thank you. Judd joined Aqua Metals in November 2018, right? Mm-hmm. From Klondex Mines, a Nevada-based, international mining company, where he was Director of Finance and Accounting. Judd was responsible for overseeing the SEC compliance and the management of the company's $200+ million budget over five subsidiaries. Welcome, Judd. Thank you. I briefly gave an introduction on Aqua Metals. Tried to, you know, frame it in as less words as I could. Yeah, would love to hear from you. I think you have this nice blue box over here where you kind of show what you do, or how you separate the different metals or elements from the battery materials. Yeah, would love to maybe give an introduction from where, you know, where does Aqua Metals fit into this broader battery supply chain and, you know, how do you compete with others in the market here? The world is very focused now on electrification and transition to new energy. A big part of that, of course, is the batteries that go into electric vehicles, as well as the batteries that go into energy storage systems, that we see in incarnations such as solar farms, wind farms, home energy storage, grid stabilization, and even data centers that have 100 MW+ of power in those facilities. Where are we gonna get all these batteries to manage this electrification and have all this battery energy storage, both in the electric vehicles as well as those other applications? That's really become the lithium-ion battery. There's different chemistries of lithium-ion batteries that are out there. The key to it is the multi-metal environment that goes into a lithium-ion battery is pretty significant. The common metals that are in there is, of course, lithium, and then there's cobalt, and then there's nickel and copper and manganese. They're pretty much the primary critical battery minerals, we'll call them. Today, those critical battery minerals are solely sourced from mining sources, and that's common when you're building a new industry. If you look as a student of history, as we are, because Aqua Metals also has a technology to cleanly recycle lead batteries, lead batteries have today 90% or so of the lead that's in those batteries came out of an old battery, got recycled in a closed loop. If you look at lithium batteries today, right around 0% of the metals that are in the new batteries came from an old battery, and that's what's gotta change to make this energy transition sustainable and worthwhile to address global climate change and all those things. What Aqua Metals is focused on is developing the cleanest way to recover all of these critical battery minerals and do urban mining as compared to earth mining. Ultimately, the earth mining, as the lithium battery industry matures, will feed the cumulative annual growth rate of these critical minerals. As students of history, again, if you look at the lead world, lead-acid batteries is still a $65 billion industry, and 99% of those materials are recycled. As I said before, 90% of the metal that's in those batteries came from another battery. How do we close that loop cleanly? What Aqua Metals has invented, and now is the only company in North America, that has a pilot plant that's continuously running that produces these critical battery minerals in a unique way. What's unique about our method is there's three ways to recycle batteries. One is called smelting, and that is where you use high-temperature furnaces, and you don't recover any of the lithium, for an example, and you put a lot of pollutive things in the air. Smelting is one of the top five most pollutive things that mankind does on Earth. With smelting, you know, you're kinda gonna end up moving a problem as we try to get off of fossil fuels and get towards battery energy storage, and you wanna really solve the problem. There's hydrometallurgical methods that talk about we take chemicals, we leach it through the broken apart batteries, and then we create various materials. There's challenges associated with that, both economically and environmentally. It's from the mining area, very common. You take ore, you put it on a pad, you leach chemicals through, and then you get the output, and then you have a bunch of waste streams. That's expensive and impactful to the environment. What AquaRefining from Aqua Metals is different is that we actually do electroplating, an electroplating coupled with a hydrometallurgical process that recycles the chemicals in a closed loop. We also extract the metals in metal form, and we're the only company in the world that does that. What I have in this blue box is this one example, like this is nickel, and this is cobalt I'm holding up here in metal form, and then copper. These are the three metals that we actually selectively plate, and we know that we can make new batteries from metals as a source because that's how we make lithium-ion batteries today. One of the key ingredients is lithium hydroxide. This is native to our process, and we pull out the lithium hydroxide, all at very high yields, so the economics are really good. The source for us, the input for the AquaRefining process is called black mass, which is what I'm holding in my hand now. It looks like black sand. That is industry in and of itself, where companies collect used and spent lithium-ion batteries. They store and transport them safely, and then they crush them, and they create this, which is the amalgam of all of those critical battery minerals that I was showing you and talking about earlier. Aqua Metals' pilot plant is operating today, and we've just announced a few weeks ago, a campus environment that's all taking place in the Tahoe Reno Industrial Center. That's about 30 minutes east of downtown Reno, Nevada, near the Tesla Gigafactory, and many others that are out there. That campus environment is going to take our pilot operations that we're currently running and getting learnings from and get that to a capacity ultimately of 10,000 tons per year, which means about 100,000 EVs worth of battery materials recycled out of that facility. Or another way to look at it is about 420,000 home energy storage systems. Think of a Tesla Powerwall. That'll be the initial capacity of that campus environment that we'll step function stage towards to get to that 10,000 tons over the next couple of years. It's a really exciting time for us at Aqua Metals as we embark upon really being in the lead, we believe, of creating all these minerals and building a campus environment that will allow us to scale to you know, $200 million+ worth of revenues in that timeframe. Gotcha. For those who obviously can't see what's in the blue box, I think on your slide deck, I think in one of the slides, I think Slide 11 on the latest one, yeah, you showed all these- The pictures. The pictures, right? Yeah. That's useful for anyone who wants to go on the ir.aquametals.com, right? But you talked about a lot of things there. Let's start picking out all of them. First one, the urban mining versus earth mining. Yeah. Right? That's definitely an important reason to kind of switch to recycling. What else is the driver out there for customers, like from a cost point of view or, you know, supply chain point of view or geopolitics point of view? Is there enough demand for recycling right now and also supply? Where do you get the feedstock of these batteries? Right. Right. On the, on the demand side of the equation, I would say, there's an insatiable demand for these minerals. It's not a day or a week goes by that you don't see an exciting product announcement of a new EV, a commitment by a major auto manufacturer to completely electrify by X year, as well as all the battery energy storage applications, drones, VTOLs. I see a picture of an interesting VTOL right in front of me. Yep. Those are lithium-powered. There's all kinds of cell makers and cell pack manufacturers, and then ultimately the end-use builders that are trying to find all these minerals, which are scarce. The demand curve is very rapid, and mining takes time to catch up. If you wanna open a new lithium mine, for example, you have to go through major permitting processes, and you have to go through probably five to 10 years timeframe to get to scale. How else do we get those minerals? Well, we reuse them after we dig them up out of the ground, and we find a way to redeploy those minerals back to the lead-acid battery world, where it's 90% of the minerals in those things have already come out of the earth and been used over and over and over in an infinite loop. The demand side is definitely strong and gonna continue to grow. There's debates about what the price point of cobalt and lithium hydroxide is gonna be in the future, and nickel, but we know it's not gonna probably go down a lot. It's probably gonna go up as that demand drives it. On the, on the supply side, it really is an interesting time where the supply today for new, for new batteries that are being made that are lithium-ion batteries is almost primarily 100% from the mining world. As the recycling capacities begin to grow, that is going to become more and more of a piece of that, of that supply equation. What's also interesting about the supply side and the recycling side is what does the world want to build the infrastructure of the future if we look out towards 2040 or something like that? Do we wanna build a bunch of smelters to move the problem of electrification from fossil fuels and still have a bunch of pollutive outputs? Do we wanna build the right infrastructure just back to solving the problem? That's why we're so focused on the environmental impact of the way that we do the recycling is 'cause we're trying to make sure that the world builds the right clean recycling infrastructure, so when this industry matures, we actually have really, solved the problem. Gotcha. As we think about the supply of the feedstock over here, where do you get most of it today? Is it the consumer electronics or do you have start seeing these bigger batteries that come in? And like what I'm trying to also get is, the closed loop requires a lot of effort from the industry to kind of make sure it's a closed loop, right? Yeah. To make sure things are recycled. Yeah. Does that take time to build up? It does. There's a tidal wave ultimately of spent EV battery packs that is coming. Already like the early Teslas and the Nissan LEAF and even hybrid, plug-in hybrid type vehicles, those packs are coming back. A big part of it today are things like the EGO leaf blowers and the cell phones that we all burn through a battery once a year. Amazingly, to get the highest performance, they have the most cobalt in them. For example, one iPhone battery has quite a bit of cobalt in it as compared to an EV battery, and about 147 iPhone batteries makes a whole EV battery when it comes to the cobalt ingredient. The lower tonnage of material that's coming back for the urban mining world is richer today than it will be in the future with the EV packs, but the EV packs will make up for that in just sheer volume and weight. It's a very healthy industry today, and our sources of this black mass material that I was holding up earlier, which is the input to our process, are multiple. Today that black mass, if it doesn't come to us, typically goes to smelters. When they smelt the black mass, they don't get any of the lithium out of it, but they do get some of the nickel and some of the cobalt and things like that. There is a supply, and it is growing and will continue growing. It's a kind of a space race, so to speak, of building the infrastructure and time to be ready to handle the higher volumes. Gotcha. I wanna touch about the smelting of the different technologies a brief over here in a brief here. Just on the previous point, in this race, like, do you need or what does the industry need either from the government or policies or regulations? Like, what kind of supercharge is this recycling going forward? Yeah, you know, that's a really good question because, never before in my lifetime, and probably in a couple of lifetimes, have we seen such government support for a transition like this. The electrification of the world is as big of a deal as, you know, bridges and railroads and the steel industry and, transportation to begin with. The government did plow into those types of things. Now with the Bipartisan Infrastructure Law and the IRA and the Defense Production Act and other activities that the government is getting involved with from the DOE's perspective, as well as, believe it or not, the USDA that supports the Rural Business Development Fund to create made-in-America plants that have American workers in rural areas, all looking at this space and applying loan programs as well as grants. That's an exciting thing for a company like us that's looking at how do we finance the build outs, because not only can we do that with capital markets and equity 'cause we are a publicly listed company on Nasdaq. One of the few companies, by the way, that you can actually expose to this space because of some of the other players are private. The government support of this industry is really underpinning the growth. If you look at the last round of grants, about $2.8 billion was handed out to most companies in the ecosystem by the DOE outside of the recycling space. This next round of funding opportunities that's happening this year is gonna be more focused on the recycling space. Of course, Aqua Metals is very interested in and very closely working with the DOE and these other organizations to help fund the growth of this. I don't think that the industry would be able to grow as fast without that funding. The other part of it is policy that you mentioned. That is key when you look at by 2028, the percentage of North American or NAFTA-sourced materials, such as all these metals, have to be in the new batteries that are produced, whether that's mined or recycled. If you recycle it, that's an even better story and a marketing angle for anyone that's wanting to talk about the recycled content of their batteries. Those policies are making a big difference. If anything, the U.S. is being viewed as being very dominant so far in government funding and policies to the point that the Europeans are saying, "Well, wait a minute, what about us? You guys are gonna try to become the next Saudi Arabia with the new energy world, et cetera." It's gonna be interesting to see what kinds of policies and funding we see from other countries. I hope that we see it all over the world because every part of the world needs to have access to their critical minerals, because if you don't, you are subject to what outside of your borders can do to control your market. Right. I think there was this news this morning on Bloomberg that China is clamping down on lithium production from one of its region in Jiangxi Province. Mm. That might take away 10% of global lithium, so probably needed more than ever, right? Yeah. Just going back to the technologies, smelting or the pyro technology, which is probably, as you said, mostly what everyone uses, so that's where the black mass goes to. They're also getting the at least so far, the DOE loan programs also, right? Could you just talk about like the difference in, I don't know how to even put it, but the technology or the scale of the technology between your technology and the pyro technology? Sure. Yeah. Today, about 5% of lithium-ion batteries are even recycled, but 95% go into the landfill. Mm. The 5% that are recycled are, at scale today, at any level of commercial scale, it has been, smelting. The challenge of the smelting is not only the environmental impact of the smelting itself, but also the transportation of these batteries to the smelters and the carbon impact of going across continents and oceans, and then back to, secondary processing of those materials. That's a definite challenge, in that capacitization part. We won't see likely a lot more smelters built because we're seeing policies again say, "You can only recycle unless you recover a certain percentage of the minerals." Smelting not recovering any of the lithium or ever being able to recover the lithium because it rather burns it and it goes into the atmosphere, which isn't a good environmental or economic outcome. That will be more difficult to permit and build and grow that capacity. Hydrometallurgical and then our method of AquaRefining are kind of gonna be taking over the capacity growth, and that's what we're seeing, you know, huge amounts of investments in those types of capacitizations. Starting with, you know, thousands of tons per year of output per plant, getting to tens of thousands of tons of year per output per plant. Gotcha. Then maybe the question for Judd probably, as you ran through this pilot factory here, going forward, how you think about your CapEx needs and, with all the incentives in the IRA, does that help with any of those, and how should we think about the profitability targets going forward? That's a good question. You know, we've pretty much funded the pilot operations with the cash that we have, and we've been able to maintain a healthy cash balance through all that. You know, as we looked forward to expanding and seeing the ROI and the higher revenues coming in from that investment, you know, we're looking at what are the sources to fund that CapEx expansion. Steve alluded to some of those when he talked about the different opportunities out there, the DOE loans and grants. The USDA provides a note for where we're located, that's up to $25 million. There's some different tax abatements that are offered in the state where we're located. So all these are things that we're looking at will be sufficient or more than sufficient to get us to that next stage, which is our demonstration facility. And so those are the things that we're looking at in terms of just expanding that growth. And once we reach that demonstration level, we'll start generating good revenues, we'll help fund additional growth. But the larger grants from the U.S. government are $50 million-$100 million+. We've seen some even larger than that. And those are things that we could see help us in that next stage, kind of that next phase of growth. Gotcha. I'll just briefly pause there to see if there's any questions from the audience. Else I can go in on my end. Okay. Sorry. just a broader question on, you know, we hear a lot about battery recycling here. The default then always seems to be scalability and understanding how to achieve that. Is there a path forward, like how do you achieve scale going forward? Just for the audience on the webcast, the question is on how to achieve scale for battery recycling. Yeah. We're students of our own history at Aqua Metals on that front. When we built the lead recycling technology that was the alternative to smelting, one thing that we learned was you shouldn't go from a bench scale or lab or bench scale to a full-sized plant. As I like to joke around and say is, "What could go wrong?" One of the lessons that I learned within Aqua Metals was our former Chairman of the Board was a high-level person at Chevron, Shariq Yosufzai, and he brought out a gentleman named Jeet Bindra, who is a former global manufacturing president for Chevron. This is an oil and gas plant, chemical plant, builder coming out to witness what we were doing. He said, at that point in time, he's like, "Next time around, you guys should really do lab scale to bench scale to pilot plant to demonstration commercial facility to modest commercial facility to the massive plant." That's truly how you scale and debottleneck and learn each step of the way. That allows us also, as a benefit, to be really good stewards of the capital and make sure that we get the TRL, the technology risk level, to where it needs to be at each stage gate. That's how we embarked upon the lithium program for lithium AquaRefining is to do that. What we've already accomplished is lab scale, bench scale, and now pilot scale, and we're the only company that's continuously operating a lithium-ion recycling facility. We, you know, feel like we're in a good position there. The next step is that 3,000 ton per year phase one of our campus environment, which would be what I would characterize as a commercial demonstration plant. That's worth $60 million+ of revenues, which would be great, as Judd was mentioning, to help fund future growth. The next step from that is to get to the 10,000 ton, which gets us to $200 million+ revenue opportunity, and then beyond. Other scaling opportunities for us include partnerships. As we begin to announce who and reveal who our commercial partners are, both from a feedstock perspective as well as an offtake perspective, there's a lot of black mass producers that are interested in monetizing the go forward to the cathode active materials that we could partner with and get synergies by co-locating our technology and scaling together at one of those facilities. On the back end of what comes out of our process, taking these metals and turning them into salts is interesting. Like I showed you the picture of the nickel and the cobalt earlier, this is nickel sulfate, and that's what's called a PCAM or a pre-cathode active material. This is a cobalt sulfate. that we have partners that we're looking at working with to take our metals and take these to the salts, and then ultimately make the brownie recipe for each individual battery cell manufacturer. That creates synergistic scaling opportunities, that also are really good for the climate, and the environment, because rather than ship all these materials around to certain specialists, there's gonna be some consolidation of where, all this kinda begins to take place. That reveals for us great opportunities in joint venture partnerships. No thanks. Can you talk about just how to think about the CapEx requirement of your technology versus the ones that currently exist in the market today? Also bring in the environmental footprint of your process and how. Basically, does your process cost more but more environmentally friendly? Just help us think about it. Sure. Yeah. That, I'm. So the- Oh, yeah. Just to rephrase the question. Rephrase the question. Rephrase the question. The question's on CapEx and environmental footprint versus other technologies. I'll start, and then pass it to Judd. The environmental benefits of our process, if you compare us to, a pyrometallurgical world, the carbon output, is, you know, infinitesimal compared to the smelting environment. The environmental impact is vastly reduced. If you compare Li AquaRefining to hydrometallurgical processes that are out there, we use about one two-hundredth of the chemicals, and create one two-hundredth of the waste streams because of that. That's carbon waste streams as well as, materials that go into the air, land, and sea. The environmental is what something we kind of Pareto charted out to begin with, is like, how do we solve for environmental and economics? Now, the benefit of not creating waste streams is that you don't have to manage the cost of disposal of those waste streams. Those were where the economic impact is really great. Hydrometallurgical creates a byproduct called sodium sulfate, and it's actually more than a ton of sodium sulfate per ton of materials that's produced. You could almost argue that they're pollution factories with a side stream of creating some valuable materials. What we do differently is not create those waste streams to begin with 'cause we recirculate within our process the chemicals that we do need in our own closed loop, and we don't have to spend the CapEx or the OpEx conversion cost to deal with all these chemicals one time use and waste streams one time dispose of. I'll ask Judd to comment on the CapEx and the OpEx differences compared to other ways of doing it. Yeah. No. When we're looking at the CapEx for a plant our size, you know, to generate $60 million in revenue, you know, the CapEx required to do that is probably about $25 million-$30 million. To generate about over $220 million of revenue, the CapEx would be an additional $70 million to do that. We can do that in a location as little as five acres. What we're seeing from others who are trying to do it at a different approach is, you know, more than $100 million to do something similar, you know, probably $200 million-$300 million or more just because of the footprint and the different things that they need. The other point, and I, and it kinda relates to the question earlier about scaling, is our process is modular. What we're doing at a pilot scale is something that we just, you know, modularly increase to do at a more of a demonstration scale. Once we've got the technology in our pilot scale proven out this year, we'll be able to put that and scale it into our new location. We're looking at, from a CapEx standpoint, just a lot lower CapEx that generates a good return on investment. Because, you know, we use less chemicals, our costs are significantly lower. There's some studies that were published by Goldman Sachs and others that talked about what they think that OpEx would be. We were significantly less than what they thought that it would be for the recyclers out there. All right. I guess we're running out of time here. Maybe one last question from me on the business model. You had a, you know, slightly different business model under the lead battery recycling, today, you know, could you just talk through like what lessons have you learned from there, or what changes have you made since then? Yeah. A lot of lessons we've learned from our venture in the lead recycling business, which is actually an equipment supply and licensing business today. Our first licensee happens to be in Taiwan, which was just deployed in the third generation of our lead AquaRefining business last October. That's a commercial visitable demonstration showcase facility for those that are considering, "Hey, maybe we shouldn't smelt lead anymore. Maybe we should do a cleaner way of recycling the lead-acid batteries. That business model was always intended to be a capital light model for Aqua Metals to get the product proven and then productize it and then license it, because that's an existing industry that needs to upgrade. Now when we look at the lithium industry for recycling, it's a brand new nascent industry that needs to be created. That's why we chose a different business model for the lithium space, which is to truly be an operator and a recycler at our core level of business. That said, as I was mentioning earlier with black mass supply partners, as well as offtake salts and cathode active material and cell manufacturer partners, et cetera, there's opportunities for the company to go beyond just input processing, output operating, but joint ventures, co-locations, a potential licensing of the technology in the areas that we think it makes sense to consider licensing. We've built that organizational capability in our past to be able to do those different types of business models. Our primary core is to be the recycler. Perfect. I know a couple of seconds left here, but anything, you know, the closing remarks for this energy audience on lithium-ion battery recycling industry? Yeah. I would say, you know, every time you wake up in the morning, you see a new story about the dance cards of who's partnering with who. I think there's gonna be a lot of continued investment in the private sector as well as the government sector, and a lot of consolidation ultimately in this industry. There's going to be technologies that are promising that don't work. There's gonna be companies that have technology that works that don't tend to their capital as well as they could. Ultimately we'll see consolidation. We're entering into an era right now with the electrification of more investment into infrastructure into a new industry than I think any of us have seen in our lifetimes. That's what makes it really exciting, for us and all the other players that are in this space. It's a space to watch and be a part of, and it touches all of us. I mean, how many lithium-ion batteries are we tending to and charging? I have to go remember to charge up my ski boots. Oh, wow! For my next ski trip, you know? It's like you gotta have your boot heaters, and you gotta have your cell phone, and you gotta have your leaf blower, et cetera. This whole electrification of the world is a space to watch. Absolutely. Well, now thanks a lot, Steve and Judd for coming over here and talking about lithium-ion batteries and recycling. Thanks for having us. Yeah. Thank you. Appreciate it. Thanks everyone over here.