Greetings and welcome to the Aqua Metals Q4 and Full Year Investor Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. You can submit questions via the web at any time by using the Ask a Question field on the left side of your screen. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to Bob Meyers, Investor Relations. Thank you. You may begin.

Thank you, operator, and thank you, everybody for joining. Earlier today, Aqua Metals issued a press release providing an operational update and discussing financial results for the fourth quarter and full year ended December 31st, 2024. This release is available in the Investor Relations section on the company's website at aquametals.com. Hosting the call today are Steve Cotton, President and Chief Executive Officer; and Judd Merrill, Chief Financial Officer. Before we begin, I would like to remind participants that during the call, management will be making forward-looking statements. Please refer to the company's report on Form 10-K filed today March 31st for a summary of the forward-looking statements and the risks, uncertainties, and other factors that could cause actual results to differ materially from those forward-looking statements. Aqua Metals cautions investors not to place undue reliance on any forward-looking statements. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law. As a reminder, after the formal remarks, we will be taking questions. Questions will be accepted over the phone from analysts and all other investors can submit a question using the online webcast portal provided in today's and earlier press releases. We will take as many questions as we can in our available time slot. And with that I'd like to turn the call over to Steve Cotton, CEO of Aqua Metals. Steve, the call is yours.

Thank you, Bob, and good afternoon, everyone. I appreciate you joining Aqua Metals fourth quarter and full year 2024 earnings call. I'm Steve Cotton, President and CEO of Aqua Metals. Today, I'll provide a detailed update on our operations, strategic progress and how we are positioning Aqua Metals for meaningful advancement in 2025. These remarks will cover our technology validation, product milestones, commercialization strategy, financial positioning and our broader vision for scaling critical battery material production right here in the US. 2024 was a year marked by resilience, focus and adaptation. In a macroeconomic environment challenged by falling battery metal prices and tight capital markets, we took proactive steps to conserve cash, validate our technology, engage potential partners and refine our strategy for scalable capital efficient deployment. We set out with three primary goals this year. First, to prove the repeatability and reliability of our Lithium AquaRefining technology. Second, deepen and expand commercial partnerships that will support long-term operations and third, lay the groundwork for scaling operations through flexible, partner centric models that minimize our capital intensity while maximizing impact. We successfully operated our Lithium AquaRefining pilot plant for over the whole year, including a three week continuous 24/7 endurance run completed in December. This operational milestone further demonstrated the reliability and efficiency of our process at the pilot scale. The system was consistently delivering impressive recovery rates and high purity for lithium, cobalt and nickel for which we have provided the samples to potential partners and customers globally. In addition, independent analysts have shown that our patented AquaRefining process produces 83% less CO2 than traditional hydrometallurgical recycling methods. During our December endurance run, we produced more than 600 pounds of battery grade lithium carbonate at purity levels exceeding 99.5%. That's not just lab scale production, it's represented product at…

Thanks, Steve. Let me start my comments with our balance sheet. We ended the quarter with total cash of approximately $4.1 million higher than the previous quarter and an indication of management's focus on maintaining our cash position. Subsequent to year end, we received the remaining $100,000 from LiNiCo related to the year end receivable. CapEx was largely unchanged from the prior quarter. Towards the end of 2024, we shifted our strategic focus to prioritizing lithium carbonate production alongside mixed hydroxide precipitate. This decision aimed to reduce capital and operational intensity while enabling a larger scale facility with higher revenue and improved margins than the previous design. As a result of this strategic shift at December 31st, 2024, the company recognized an impairment of approximately $2.6 million related to vendor equipment deposits for equipment that was initially required for Phase One of the recycling campus at the Sierra ARC, but is no longer needed under the revised plan. Finally, on the balance sheet, we recognize the warrant liability related to warrants issued last year. The warrant liability was initially recorded at a fair value of $986,000 and subsequently remeasured to $1.5 million as of December 31st, 2024. The change in fair value of $507,000 was recognized as a noncash expense with an interest expense in the income statement for the year ended December 31st, 2024. I will now move on to the income statement. Plant operations increased approximately $931,000 or 15% for the 12 months ended December 31st, 2024, as compared to the 12 months ended December 31st, 2023. This increase was primarily driven by approximately $758,000 rise in payroll and related fees as we hired additional staff to operate the pilot facility process black mass and build out our commercial facility during the first seven months of the year.…

Thank you. And at this time, we'll conduct our question-and-answer session. [Operator Instructions] Our first question comes from Mickey Legg with The Benchmark Company. Please state your question.

Hey, guys. Thanks for taking my questions. I know you were just giving some comments on this, Judd, but if there's any other additional comments or color you could provide on your plans for long-term financing and the options you're considering, if there's anything you could tell us just about how those discussions are progressing or what stage they're in that would be helpful. Thanks.

Yes. Thanks, Mickey, for your question. And as I said kind of in my prepared remarks, we are focused on what we think is the best for Aqua Metals and what we're trying to do and to build out the Sierra ARC facility, which is project financing and debt financing. We do have lenders who fit that criteria that we're engaged with and talking with. Terms have been discussed. There's certain things that we need to do to bring those funds in and we're working towards those. I can't really give a timeline on it just yet but those discussions are happening.

Okay. Yes. That's helpful. Yes. I'm not going to ask you for a timeline. I understand you can't give that out. And then yes so that that's all really relating to this updated plan for the Sierra facility. And so I just wanted to check in on that if you could unpack the updated plan a little bit and just remind us, if you're still able to reach, let's say, a commissioning point for Phase One within a couple quarters. I think on the last call, you mentioned two to three quarters subject to receiving financing, of course, if you could just get into that a little bit? Thanks.

Yes, Mickey. Good question. This is Steve. So, yes, the Sierra ARC is definitely -- it's the land is there, the building is there, the upfit is complete. Think of it as basically move in ready. A lot of the equipment is already ordered. And we just have decided to be careful to spend that remaining capital until we have that capital financed. And think of it as like a move in ready facility for the main building. Now with our recent change to improve our value proposition as we talk to these project finance and debtors that are out there, we will, put together an additional building that will take care of the feedstock processing as well as the lithium carbonation and some things along those lines. So there is now a building that would get built while we've completed the move in of the existing building. That's kind of like what we characterize as an outbuilding. And it's not going to be that complex of a build, but it will allow us to get to from the 3,000 tons of black mass processing up to the 7,000 tons. So with our kind of industry, what we believe industry low cost conversion cost, low cost leading process coupled with the high value product of battery grade lithium carbonate and the MHP is the two primary products at that higher volume. That's what we've been talking to these various project finance and debtors about is that value proposition. It's about the same amount of remaining CapEx that we need to complete it, but it does throw off some plant level EBITDA that we believe sets the company up to be able to service debt or any project financing arrangement. So that's hopefully answering your question.

Yes. Definitely. That's very helpful. And, yes, it seems like you're being smart with this reevaluation of how you're scaling up that plant to make sure you're allocating capital as efficiently as possible. The next one I have is you've mentioned a lot of discussions with customers for offtake agreements, colocations or potential licensing opportunities. Just curious if you could give us any more details on those discussions, how they're trending given everything that's been going on in the macro. Are people still hungry for some of this domestically produced product?

Yes, for sure. So, fortunately, because we have the pilot plant that's been operating for well over a year, but effectively two years now, we've been able to produce representative battery grade examples of those materials and engage with those off takers and OEMs that are out there. There is a little bit of chicken and the egg factor, which is, build it and then they will come or get them to come so you can build it. And that's what we're balancing is those feedstock and offtake agreements, particularly the way that the metals markets are gyrating, not even gyrating as they come down and they're expected to go up, as we get towards the end of this year and into next year with a little bit of analyst consensus. They're not going to shoot, to the moon, but they're going to get to more reasonable levels. And so those feedstock and offtake agreements go hand in glove with the financing of the build out of that facility. And because we've got that pilot, that's produced, as I mentioned 600 pounds just in December of battery grade lithium carbonate that we think is the most recycled battery grade lithium carbonate that's been ever produced in North America let alone the US that is what's really enabling these conversations to continue to mature. So these things take time and we're just being very careful with our cash on hand and management of CapEx and not get out over our skis by investing further into the completion of that Sierra ARC and that outbuilding until we have all these contracts locked and loaded.

Right. Got it. Okay. Yes, that's helpful and sounds smart. Last one I have here is you mentioned previously some visits from industry leaders and government agencies. We're just curious if there's anything else you could tell us there. How are the -- have those discussions been ongoing and if they went anywhere meaningful?

Yes. So we hosted quite a few US government folks last year as well as international. You can look at our social feed and see some of that inclusive of big Dutch contingent that came out. And those conversations continue. Of course there's been a change in administration. And the interesting news is of late is that there's been an executive order written regarding the urgency of producing critical minerals in the US that we believe that we obviously believe that we're a perfect fit for. And so we're engaging with the new administration officials on how to have Aqua Metals participate and try to get funds through that mechanism. So that would be in addition to a project finance or a debt based deal is that we still see a great opportunity on government dollars. But with the change of administration, these things take time. And we think it's about one to two quarters for us to really get to some level of resolution. We're encouraged that the tone of the executive order seems to impart urgency and we're pleased to see that because we think it's urgent as well that the US begins to be able to produce these materials and not only Aqua Metals, but many companies could certainly use some additional help from the government to affect that end.

Great. Yes, I agree. And I think that's all very understandable. That's all I have. So thanks guys.

Thanks.

Yes. Thanks, Mickey.

Thank you. And we'll now transition over to Bob Myers for some additional remarks. Thank you.

Yes. Thank you. There's a few questions. First question, as a recap of the last year, how would you summarize the current state of Aqua Metals and the potential the company has?

Okay, thanks. That's a good broad question. So I'll just do my best to summarize my view on the current state of affairs for Aqua Metals. We've had an interesting and yet very productive year in the past year. We've made really good progress across key strategic priorities that we outlined on our technology and our processes and our commercial partnerships and partnership developments as well as ongoing initiatives overall for the company. We've achieved milestones that we think strengthens the company's future. That includes demonstrating those high recovery rates and purity levels that meet not exceed the needs of potential partners for battery grade materials. And also and this is really important to emphasize at what we believe is to be the lowest cost for processing those materials. Oftentimes in the commodities market low cost leader wins, we think because our process doesn't consume all these one-time use chemicals and have all these waste streams that have to be managed and additional labor that we don't need because of the automation and controls with really clean energy jobs for those that are working and we have that cost advantage and we've confirmed that. And we have the data to back that from the operations of our actual pilot plant. We converted recycled domestic nickel into cathode active material with a downstream partner and that material is literally being tested by top-tier battery manufacturers and vehicle OEMs. These are large global organizations that are also looking to create a domestic supply chain. We continue to strengthen and expand our partnership opportunities and collaborate with other organizations to find new ways to work together. This industry is certainly in a consolidation phase. We see opportunities out in the marketplace for us to partner in different ways than we might have even seen a year before. We can't control this uncertainty and the current market dynamics and overall uncertainty as the administration has changed or what folks might or might not be missing when it comes to Aqua Metals value proposition, but we can control is that we can adapt and optimize the company's strategy. And that's why we chose to simplify our product set to the battery grade lithium carbonate and the MHP to get a quicker time to market at a lower cost at a higher volume and better EBITDA margins at the plant level. And for those corners that we turn, the things change, we may be adept and make more adjustments because we are a dynamic and case hardened company that has that survival and growth instinct incorporated into our own DNA.

Great. Thank you. The next question. Your recent announcement discussed the change in production and you talked a little bit about this in your prepared remarks focused on lithium carbonate and MHP. Can you expand on that a bit?

Yes, sure. So I'll expand further on that happily. So our competitive advantage is our technology and our know-how as inclusive of which is our IP, which as a reminder to everybody, we have over 70 global patents issued, 40 plus patents pending. And we continue to expand what we see as really strong advantage there. And our focus on the battery grade lithium carbonate, which is truly unique to us to not just make technical grade, but actual battery grade lithium carbonate as well as a really nickel rich and clean MHP. We see a faster path to get to revenue with less capital requirements, higher profitability as I was mentioning at the plant level and particularly by being able to upsize the amount of black mass material input by more than double from 3,000 tons to a planned 7,000 tons in the Sierra ARC configuration. We view it's much more of it as a stepped approach as the production is part of our technical process and we were essentially already doing all this and we also are pursuing full metals recycling ultimately as a Phase Two as the market grows. So it's really an adjustment to the near-term approach for the company and giving the market what the market needs and wants today, which is that battery grade lithium carbonate as well as that MHP which trades globally kind of as a Class I nickel type of material.

Great. Thank you. Next question. The company added two new Board members recently. Can you offer some insights in how those executives have helped with strategic objectives?

Yes, certainly. So both of the leaders are talented, experienced executives with great track records of strengthening organizations and growing them with emerging technologies. Eric Gangloff has a really strong financing background. He was in the financing business and debt business for most of his career and he's brought a lot of new perspectives and opportunities for the company. And Steve Henderson's industry connections are really helping to open doors and certainly adds further credibility to our value proposition as we engage with automotive and battery related OEMs for which he has relationships with many of them at a very high level with his track record. And both Eric and Steve have already been extremely helpful in supporting some of the recent innovations and the strategic plans for the company and even the tactical plans. So we're really glad to have them.

Thank you. And that's all the time we have for questions. I will now hand the floor over to Steve Cotton for closing remarks.

Great. Well, really appreciate everybody's time and continued interest in Aqua Metals and we'll continue to keep you guys updated. Stay tuned for updates on our social and other developments between our calls. And if you have any questions, please contact our IR partner FNK and or us directly. We look forward to continued engagement and everybody have a great rest of the day. We'll talk soon.

Thank you. And with that we conclude today's conference. All parties may disconnect.