Greetings and welcome to the American Resources Corporation Second Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host Mark LaVerghetta, Executive Vice President. Thank you, Mark. You may begin.

Thanks, Alicia, and good afternoon, everyone. On behalf of American Resources Corporation, I'd like to welcome everyone to our second quarter of 2024 conference call and business update. We always welcome this opportunity to provide an update on our businesses and discuss our accomplishments we've made over the past several months and how we're uniquely positioned within the markets that we serve for American Infrastructure, American Metals and ReElement Technologies divisions. Also on the call with me today is Mark Jensen, our Chairman and CEO; and Kirk Taylor, our Chief Financial Officer. We'll provide some prepared remarks and then we'll get into the Q&A part of the call. But before we kick it off, I'd like to remind everyone of our normal cautionary statement. Certain statements discussed on today's call could constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from the results discussed in the forward-looking statement. When considering forward-looking statements, you should keep in mind the risk factors, uncertainties and other cautionary statements, which are laid out in our press releases and SEC filings. We also do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Lastly, for anyone wanting to ask a question today, I believe you have to dial in by phone to get in the queue. First, on the prepared remarks. And before we get into that, I'd like to recognize our Chief Financial Officer, Kirk Taylor again, as we continue to work through our recent changes and upgrades in our new PCAOB, registered public accountants. As we continue to execute on our strategic plan of action of unbundling…

Thanks, Mark. I appreciate it. And thank you all for joining today. We'll go through this pretty quickly here, but really excited about the position of where each one of our asset bases and each one of our divisions are currently positioned and where they're going here in the future. As we have stated several times, we are extremely well positioned within the divisions to create value for our shareholders and ultimately unlocking that value through the separation of these divisions. So the management teams and the shareholders can drive value from their respective divisions. Over the course of the last six months, we have been putting the puzzle pieces together to capitalize on the opportunities and the momentum across each of these divisions with the respective management teams. And I can say today, we are in a position to unlock that value and drive value for the shareholders, while also reducing the risk profile of each one of those divisions. It's important to understand and to reiterate, as we continue to undergo a growth from a consolidator and restructure of carbon operations to focusing on monetizing and deploying that asset base for growth and for cash flow as well as developing a technology and innovation hub that is truly revolutionary in terms of how critical minerals and rare earth elements are refined today outside of China and a cost structure that is lower than China. The stock price today does not reflect what we believe the value of the company is. And ultimately, we also understand that it's probably confusing in the public market today of how to value our company because of the three different divisions as they have grown and as we have positioned those business lines to be standalone entities. We look to unlock that this…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Jesse Sobelson with EF Hutton. Please proceed with your question.

Hi, everyone. A lot going on, but very interesting story here. I just wanted to focus in on the ReElement piece of the business here. Firstly, in the press release, you mentioned demonstrating the purification of rare earth ores at 99.5% or magnet grade. Can you explain how this grade for rare earth ores is different from something in maybe refining lithium to be battery grade? And secondly, can you elaborate on this demonstration conducted and was it at a commercial scale? And if not, what was the scale demonstrated? And what is the timeline to build this out and prove out this technology at a commercial scale? Thanks.

Yeah. Thanks, Jesse. I appreciate that. So what we've seen within our technology, and I'll work my way backwards on that. And hopefully, if I miss a point, please jump in and correct me or re-ask the question again. But the uniqueness of our technology and what we've seen so far is we scaled it up well over 1000x from lab scale that was originally developed out of Purdue University and obviously then further developed by us was that the efficacy of our technology is better at higher volumes and that's due to the surface area interface of our resins that we utilize. So we've demonstrated at commercial scale, we've been through the qualification process on the battery side. The quality that we produce on the magnet side for rare earth oxides at 99.5% purity, which is really what the battery guys need as well, it's 99.5%, targeting on specific impurities. But what we've produced for our customer was they sent us a sample. So it wasn't, we weren't out there procuring the ores. They asked if we could process their ores and they wanted a sample sent back to them. So it was a lab scale process, that they asked us to perform. And that's just the volume of material they gave us. And they were very pleased with the results that we gave them back at greater than 99.5% for both the light rare earth as well as the heavy rare earth, which is really part of the major problem we have within our country and there is no heavy rare earth production and we can obviously solve that for them. But we delivered that customer. That was specifically for a customer that wanted us to process their ores. The attractiveness of our technology and the CapEx side of our business is the rare earth ores is actually lower CapEx than our even the rare earth magnet side, which is still a low CapEx model. So it's we're excited about the results and excited about the position of that. On the battery side, 99.5 is what most people produce. 99.9 is a very easy product for our team to produce from a lithium carbonate perspective. Now we will produce what the customer wants. If they want a 99.5, we'll produce them at 99.5. Did I address all your questions there?

Yes, essentially it sounds like the production was based on their sample. And just in terms of scaling, there isn't really a timeline there. It sounds like you guys are ready to go once maybe the partnerships are in place in order to build the facilities needed. Is that fair to say?

So we're starting. I was actually just at our facility today giving a lithium spodumene customer a tour of our facility. But we are currently identifying the equipment with the goal of, in the next 30, 60 days, to pull the trigger on the first equipment that will be going into the Marion facility specifically for rare earth oxide production. We have end of life magnet feedstock arrangements with large Detroit Automotive, with a number of wind turbine companies such as EDP Renewables as well as power tool companies that we recycle those rare earth oxides from that end of life magnets. And so we're not necessarily waiting on them. We're moving forward as we speak to procure that equipment and get producing. The margins on rare earth oxides for us is extremely attractive right now in the market. And so we're moving as aggressively as we possibly can.

Great. Just one quick follow-up just on the technology itself and this is more of a bigger picture thing. We talked a lot about recycling and refining there, but there is a big push to potentially start working with, you know, brine lithium. Is your technology as applicable there as it is to, you know, the recycling side of the business we see today?

Absolutely. So we've actually worked with I think two DLE companies today that direct lithium extraction companies for the brines. And we significantly simplified their flow sheet. We reduced we took six steps out of their flow sheet to get to battery grade materials by doing so. And that's really where Powered by ReElement comes in, right? That's going to be the DLE side will be pretty much specifically a Powered by ReElement piece of business for us where they use our separation purification equipment in their facilities. We charge them a service for that and we lower their cost of production dramatically. It takes out all that precipitation and all the water extraction side of what they're trying to do.

Right. Cool. Great. Well, thanks for the details here. I will let you guys take some of the questions, but I appreciate you taking the time today. Thanks again.

Excellent. Great questions. I appreciate it.

Thank you. Our next question comes from the line of Heiko Ihle with H.C. Wainwright. Please proceed with your question.

Hey, there. Thanks for taking my questions. I assume you can hear me okay?

Yes, I can. Good to hear from you.

Awesome, perfect. Hey, that fairness opinion you talked about earlier that 6x the value. Can you give us some of the input factors used to derive that value and then also really maybe just a little bit more color on the fairness opinion, please?

I wish I actually could. It was not a fairness opinion that we paid for. So that was a fairness opinion that the SPAC itself put together. So we're -- that was -- we obviously gave them a full data room access of the business and the opportunities and the partnerships we have in place under the American Metals business line and they conducted that fairness opinion without any involvement from us, which ultimately is what you're supposed to do. So I don't -- we don't have a lot of the details around it. We've just seen the language that will be included in the S-4, which we hope to get filed here once we get the quarterly numbers for American Metals completed here shortly.

Fair enough.

If we get access to it, obviously, we'll put that out in an 8-K if we can, if they.

Yes, I think, you should. Because I think it will make you look pretty good if the numbers you're talking about come in the way they are and if the input factors make sense. Cool.

Yes. I will work with our lawyers. If we can, we will. I assume in the S-4 that there will be language around that, but that's a lawyer question, which I'm not.

Yes. I'm not one of those either. Fair enough. So in all these spin offs and all the corporate M&A that's rather divestitures and everything that's going on with the company, can you walk us through item by item how much cash has actually been brought in the door and how much more you're trying or you're assuming you're going to be getting, call it, between now and the end of the year?

Yes, I will do my best. So at ReElement, we have credit facilities which we have been operating on, we have received some revenues from customers such as our Japanese partner. But the ReElement division, what we are talking to the Patriotic Capital Funds about is between the $10 million to $20 million raise of which a soft circle most of that already at a significant premium to the current market. The uniqueness of the ReElement model today combined with tax-exempt bond and/or debt financing as well as customer prepays, that could be the last amount of capital we need to raise at the ReElement level, with the focus of the business turning to Powered by ReElement. And so that puts us in a really attractive spot along with the tax-exempt bond we have for Kentucky, which we hope to unlock here shortly through the development of that facility as well as the opportunity to bring that production line online as well as we are pursuing a tax-exempt bond for our Marion facility, which is probably one of the most attractive opportunities I've ever seen given we already have all the infrastructure and spend all the money doing that to build that facility out and have it ready for prime time today. The American Carbon division, we obviously are developing our complex and it will be a state-of-the-art complex within our Wyoming County division. We are negotiating with a customer today that wants to come to the table with a very big order and prepay for all of that revenue as well. So hopefully here in the near-term, we can provide some updates on that if it comes to fruition or not. But then also credit facilities we've had on the equipment leasing side and the ability to draw additional…

That's pretty comprehensive. I appreciate it. Thank you very much.

Awesome. Thank you.

Thank you. Our next question comes from the line of Bobby Genovese with BG Capital Group. Please proceed with your question.

Thank you, Mark. Thanks for the time today. Just to follow-up on Michael's train of thought. If you added up and I'm glad you've got your accountant on the line as well. If you added up the value of the equipment, the value of what you believe American Element's fairness of opinion is and the rest of the properties minus the debt, could you give the shareholders on this call a rough idea of what that asset base is that would be in the next audited financials and then we would be able to take that number, put it in today's share price and figure out with 80 million shares of the equipment alone should be valuing this company at $1.50 plus With the fairness of opinion from American Element, it should be a multiple of that going forward. But I just like to hear your accountant sort of you must have those ballpark numbers and the research you've had done on the company, when do you anticipate that being updated as well? Thank you.

I'll take a quick stab at it and Kirk wants to interrupt me, he can. And I appreciate the question, Bobby. So if you look at our equipment, one, they don't show up in our GAAP financials and happy to give anybody a tour of any of our operations down in Kentucky and West Virginia to see the infrastructure and the equipment that we possess. But how we acquire these assets, they don't show up on our balance sheet, because we bought them mostly through 363 bankruptcy sales. So we bought the assets and we bought them timely. We bought them in 2016 when nobody else wanted to. But the replacement value of these assets would be roughly around $300 million that on the new equipment we've acquired and put in place for our Wyoming County division. Now we have about $55 million counting or about a little bit less than $52 million, $53 million counting tax-exempt bond, which we have substantial cash under still as well as which we're completing the Wyoming County complex as well as about $8 million of equipment leases that is going down substantially over time. So take that roughly $300 million of replacement value, $170 million is the fairness opinion under American Metals. And then as I stated on the ReElement side, a minimum of $150 million valuation is what we're working with the Patriotic Capital Funds, as the initial value, which we believe is substantially higher than that based on comps. That would put it at roughly $600 million minus the $50 million. Based on 80 million shares outstanding, I'm not saying that should be the stock price, I'm saying those are the numbers that we believe the assets are worth and that's the focus of unlocking that value in the public domain and separating these businesses. So they're more clearly easy to understand business line everybody to invest in. But we do believe based on those values that we're substantially undervalued and we're not just sitting here saying that, we're putting action into work, putting forth the effort to create the action to unlock that value and realize that value, which we believe would still undervalue our ReElement division based on the growth profile that we have within the marketplace.

Thank you.

Does that help you? Is that clear enough or need more clarification?

No, I think that's it. I'm just like I'm sure the rest of the shareholders are little shocked with the asset base alone of the company where the stock is trading. And I think when the next research report comes out of the clarity and the next sets of financials come out to show this thing is actually substantially undervalued, but we'll wait till that point. But thank you.

Yes, absolutely. And I think also the, I mean, if you look at the ReElement side, we didn't expect to generate revenues from Powered by ReElement this year. Yet we're bidding on two projects already and have a third in the works that can generate a couple of million dollars of revenue just on the upfront component of it. Based on the demand that the market needs and really honestly the downturn in lithium prices is a huge opportunity for us because everybody is realizing that our technology is what unlocks that. So signing the lease with our mining customer to get them into production, working on this project, which could be substantial revenue on Wyoming as well as the revenue generation that's kicking in on the ReElement side through Powered by ReElement as well as building out the facilities to generate our own internal revenues beyond Powered by ReElement is substantial. And I think that's where we're focused on keeping our head down to drive this value for our investors and keep costs extremely low so that falls to the bottom line.

Thank you. Our next question comes from the line of Kyle Gallagher with Merrill Lynch. Please proceed with your question.

Hey, Mark. Good to talk to you again. Just wanted to kind of continue down that path of revenues on the rare earth side. You had mentioned, I think, in the call, you had said you were through the qualification process with some of your customers and entering into contracts for purchases, it sound like. Is part of you expanding the Noblesville location to be able to like fill orders and start realizing revenue? Or is Noblesville simply a qualification that really won't be revenue generating and it's going to be kind of all run through Marion?

Yes. Good question, Kyle, and I appreciate it. So, correct. The reason why we're expanding Noblesville is the sheer amount of volume of material that we're getting asked to test and also because we're getting POs from our customers that they want us to deliver product on. So we're expanding that to be able to deliver that product faster to expand our revenue base. Now the way to -- I wouldn't look at Noblesville as the focus for revenue generation for ourselves. The big return on capital we get is in our Marion facility. But if you look at the CapEx of a lithium refinery or a rare earth refinery, most of it's in the separation purification step, but ultimately for us, a majority of that's in the building and infrastructure because our separation purification step is very low CapEx. And so our goal with the attractiveness of Marion today is we have all of our natural gas finally installed, we have our water, we have our utilities installed, which could be a really long lead time item for most. But we've got renovated this building. We're finishing the roof here in the next few weeks, but that doesn't hold us back from ordering equipment from the section that we're moving into. That's where the revenues really kick in. If you look at the rare earth oxide line, we have, we're looking at building this out at a 2,000 metric ton a year rare earth oxide line with a payback period post start up commencement of operation in about two years. Today, based on average price, I would put it at about $160 million in revenue. And the only producer in the country that produces dysprosium as well as terbium from these products, which is in strong demand, let alone the neodymium and praseodymium that we produce from both ores as well as magnet material. That's where the revenue is really going to come from. But more importantly, I would also say Powered by ReElement. Most people are realizing that HydroMet doesn't work and the change in chemistry of batteries as well as magnets and everything else is creating a huge problem within the industry. And so a lot of people were scoping out building a HydroMet plant and now they realize they can't do that because chemistries are changing and now they're coming to us to help them design that process in a partnership way and to truly optimize everybody's flow sheets and make it simpler and better. And with that, we get near term revenue generation for ReElement and a very low risk way for us, low CapEx model for us. And we look forward to talking a lot more about Powered by ReElement over the next few months.

Yes. Are you able to give any sort of color or information kind of on kind of general size of some of the purchase orders? Like, I mean, is it a scenario where they just say, hey, we'll pay x per ton up to 1,000 tons or whatever the number is. How are generally those structured? And is there anything you can kind of give us more detail on what those look like generally speaking?

.:

Great. And then just lastly, I just want to make sure I heard you correctly. Were you saying that you expect to start having Marion up and running and product going out the door in 2024?

Not Marion in 2024. We're starting to buy equipment for Marion now. We just got the facility rebuilt and renovated. Noblesville will, but then Powered by ReElement, we also believe we'll be starting to generate revenue in 2024, which is really the core focus of the business going forward. It's just coming together a little bit faster than we thought on the Powered by ReElement side. Marion will take a little bit of time to build out, but we'll start doing preprocessing in Marion and then build into full processing that could feed, the preprocessing could feed Noblesville in the meantime. But we're going to -- we're building it out pretty quickly and we'll get with the operational team and provide guidance on that once we get a little bit more clarity on it on the timeframe for Marion.

Great. Thanks a lot, Mark. I'll jump back in queue.

Excellent. Thank you.

Thank you. Our next question comes from the line of Mark Sloan as a Private Investor. Please proceed with your question.

Thank you. How does the American Metals back deal flow through to American Resources shareholders?

Yeah. So American Metals is 100% owned by American Resources today. Once we get a little bit further down with the -- once we get a little bit further down the path on the S-4, getting through effectiveness, we will distribute a portion of those shares to our underlying investors, which they will own, which will be a separate standalone public company. But the majority of that is currently or all of it is currently held by American Resources today.

What percentage are you expecting to be distributed to the shareholders?

I'm not exactly sure yet. I don't have to meet with the Board on that. I don't think the Board has dictated the amount of the percentage that's going to be distributed to date yet. But obviously, it'll be either have we'll either hold the value in American Resources or it'll be distributed. But once we get -- once the Board makes that determination of how much we're going to distribute, that'll be communicated through public press release as well as an 8-K.

How much of the total value of the SPAC is actually going to American Resources? So forget about the distribution. So how much is going to American Resources versus how much is going to the other side of the SPAC deal?

So they valued American Metals at $170 million. It ultimately depends on how much capital stays in trust. The sponsor will get a piece of the equity and then if the full $62 million stays in trust, then it'd be $170 million plus $62 million plus the sponsor shares. So roughly a $240 million, $250 million all in value roughly estimating. But American Resources alone, that $170 million value.

$172 million American Resources is humanized value.

That is the value that they have proposed to us and was in the definitive agreements.

Okay. So one other separate question. What is the time line on completing your 10-Q?

10-Q for American Resources?

For American Resources, yes, since there was a notice filed last week about a delay.

Yeah. It was filed today. Our audit chair was traveling, unfortunately, out of the country and we needed him to sign the -- our internal management team does not sign off on the quarterly reports. You need your audit chair to do that. He was unfortunately traveling overseas, so he was unable to do that. So we had to file the NT. Until he gets back.

All right. Thank you for answering my questions.

Excellent. Thank you.

Thank you. Our next question comes from the line of Keith Goodman with Maxim Group. Please proceed with your question.

Hi, guys. Most of my questions are answered. I just had a question about the Patriotic Capital as you called it or the I guess the potential of raising some money from Patriotic Capital Funds, I think is the way you described it. What is that capital going to be used for? That's directly for ReElement?

Yes, that would be that's a private so we're not raising as we stated publicly, we're not diluting our investors at the American Resources level. We would be doing subsidiary based financings for the division if we pursue capital. We have had a number of Patriotic Capital Funds, express interest in a structure that would value the business substantially higher than where it's at today. And we are working through that with them as we speak. But a Patriotic Capital Fund is a -- and there's three or four of them that have approached us that we've known in the industry that are trying to develop the national security supply chain and investing along that path. And so that capital will go directly into ReElement. The attractiveness of it is some of that will go into the Marion facility to buy equipment in the near-term, but most of it will be just working capital that sits on the balance sheet, add the cushion of capital on the balance sheet of ReElement as we pursue the spin off and get the company in its own separate public company. But there's the good thing about the business today, other than ordering equipment, there's not a huge need for capital at the ReElement level other than expanding the existing facilities?

So right now, you're doing testing. Thanks for that. So right now, you're doing testing on in Noblesville. And you're shipping at some point, you're going to ship you're obviously not charging for the testing that you're doing there. But if I'm not mistaken, you said you have a purchase order. That's changing. Okay. So you have purchase order or purchase orders, I think you indicated. I'm not sure. But that you're producing in Noblesville, obviously, it's a small facility. The goal is to get Marion up and running so you could produce larger volumes and charge for delivery of that or you're going to pivot and everything's going to become Powered by ReElement.

Yes. We're still building out.

Is it a hybrid? You're going to produce some and you're going to do Powered by ReElement?

That's correct. It's a hybrid. So we will -- so when we initially developed the model, and we moved towards the Powered by ReElement business offering, which we believe has huge merit and I can walk through that briefly here again. We initially said we're going to build our commercial facilities in Marion and Kentucky and that will be the ability to showcase the low cost, low CapEx scalability of our technology in a commercial environment to generate substantial revenues and cash flow to our investors. But more importantly from there is if we build additional production lines, we'll either do it with joint venture partners, we'll do it through Powered by ReElement or our customers will CapEx the additional production lines in Marion. And so our model is not to constantly go out every element of our model is not and any of our business lines for that matter is not constantly go out and raise capital to incur the CapEx risk. Our model is to deploy the uniquenesses of our technologies and let other people CapEx it because they need what we offer. And I will say that the interest level we're getting on that front from big multinational corporations to smaller players that are building out their flow sheets is substantial. So today, historically, we have never charged for testing. We are now charging for testing. We are now in a position of strength and more importantly, a position of collaboration with our partners and customers that we will start testing. If they want us to test and develop flow sheets for them, we will charge for that. And we're excited about the revenue potential of that, of monetizing our lab and monetizing our Noblesville facility in a very, very attractive way to be cash flow positive and not incur that OpEx cost ourselves going forward, unless it's a very unique circumstance. But also the ability to utilize Powered by ReElement as a way of supplementing and reducing people's CapEx on facilities they've already announced. And most people today most HydroMet facilities for lithium spodumene as well as recycled materials, HydroMet doesn't make any sense right now. One, you can't recover all the materials and two, it's really expensive to build and it's not flexible or versatile. Our technology is. And it's low CapEx, low OpEx. So we can step in and deploy our technology and their facilities, replace components of their flow sheet and make it more viable for them to be successful. So truly developing a collaborative environment to utilize our technology to unlock the national supply chain, but also the global supply chain. There's no reason our technology shouldn't be the refining technology within everybody's facilities and through Powered by ReElement, we can make that happen.

And you have indications from partners and customers that they're sort of on board with that?

Yes. And that's an outcome partners. I think that's the exciting thing about it is, it's not we're helping people want to do business with us because we can save them money. And people will do business with us because we can either save them or make them more money and get permits on what we're trying to accomplish where other technologies are pretty hard to do. So we're chemical light. But the interest level we've had since we've announced Powered by ReElement is amazing. And I will say the team, Chris Moorman and our team, Shane Tragethon, Jeff Peterson, Yi Ding have done absolutely phenomenal job of getting back to these partners that need a solution and working with them on developing the flow sheet to deploy our technology in their facilities.

Does it matter which political party gets into office in November?

No, not really. This is commercial. We don't rely upon we qualify for 45x. In this round of applications, we did apply for 48C. If Trump wins, he's probably going to kill the IRA. It doesn't really matter. We don't put that in our models. We don't I think it's a kiss of death to build a business based on subsidies, so we don't do that. We don't need it from a cost structure perspective. The we try to stay out of politics the best we can, and build a commercial enterprise that survives any administration. And I will say that no matter who wins, we need a strong national security supply chain. We don't have one at all today. From zirconium to niobium to rare earth elements to battery materials, we need to unlock the supply chain and make sure we have the materials here to defend our nation. And I think both parties recognize the importance of that.

So this isn't just about electric vehicles and demand being less, this is for Department of Defense equipment as well?

Yes. And energy storage, I would say, energy storage, given we are probably the only player in the space that can recycle LFP batteries profitably, which is what predominantly energy storages are provided by. We destroyed our energy grid in this country. We created huge variability, huge swings, which create high pricing pressure for utility customers, which is the individuals on taxpayers. We need to build out -- one way we could balance the disruption we created within the grid is energy storage. You could actually use it as peaking, nonpeaking, cut the top off the spikes in the energy prices. So the growth of energy storage, I think, is going to be robust, and that's LFP, which is really the heart of our battery recycling technology given we're one of the few, if not the only players in the space that can recycle on LFP battery very, very profitably even in today's environment.

Okay. Thank you. That's all for me. Appreciate it.

Excellent. Thank you.

Thank you. Our next question comes from the line of Steven Segal with KBB Asset Management. Please proceed with your question.

Hi, Mark. Thanks for taking the call. You've explained the ReElement a lot. I had one other question about it. Should we think of ReElement as like an asset light, it's just it would be your employees and you're just going out to different sites all around the world and licensing ReElement chemical processes and gaining some type of return on that? Will there be upfront fees and royalties for what's produced, do you think?

Yes. Thanks. That's, I mean, I will say if you asked me two years ago, when we first developed, and not first developed, but when we started commercializing ReElement Technology, we initially said broad ambitions of being the largest refinery in the world of rare earth elements and critical minerals. Not to say we don't have up there, but it's more through the Powered by ReElement component of it. And there's no reason for us to go replicate other people's flow sheets when we can supplement them. And in that process, we reduced our CapEx requirement, and we reduced the need to hire thousands and thousands of people. If people are already building the front-end processing from lithium spodumene or from rare earth ores or rare earth oxides, we can help supplement their flow sheet, deploy our technology and charge a service fee, not necessarily a license fee but a service fee to operate our technology within their flow sheets. That's really the focus of the business. Now in the near term, and the focus is getting our Kentucky lithium site up and running, which is very economic in today's markets still where most lithium processing are getting hurt by current pricing. We still have a very good cost structure and a lot of room given our processing cost as well as the -- on the rare earth oxide side in our Marion facility, very, very high margin, still at today's pricing. So it is a hybrid model. Our focus is on building these facilities out, making money, letting people come in and see them operate and then deploy our technology in their facilities thereafter. But it's becoming more of an asset light business over time.

Right. And then just a curious question, the Kentucky facility that you have the bond on and Marion, will they be kind of competing for the same material eventually? Or there will be different, won't be?

So Kentucky is focused on lithium spodumene, which we have a number of partners -- supply partnerships sits on that from all throughout the world. And then our Marion facility is focused on rare earth ores, rare earth magnets, feedstock as well as recycled battery materials. So they both will produce lithium carbonate but they're from different feedstocks. And the uniqueness is the contribution of assets, which we're doing in appraisal on our Kentucky infrastructure as we speak, that is being contributed to this project is substantial and enables this project to move a lot quicker from an empowerment, from piping, from infrastructure, from rail load out and all that stuff that we're able to utilize in our -- from our Kentucky site, to get that project up and running in a low cost way without respending that money again.

Got you. And then the magnets will be in Marion then, right?

Yes. Rare earth oxides from end of life magnets as well as from rare earth ores in Marion.

Okay, great. Thank you very much.

Excellent. Thank you, Steve.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mark for closing comments.

Excellent. Well, one, I want to thank you all for joining today. I understand we have a lot of moving parts within the business. We hope to continue to streamline and clarify the objectives of the business of unlocking value through the separation of the division. Ultimately, we are very thankful for the efforts of our team and for our external partners as well that have helped us position the assets to where they're at today to unlock this value start to drive near-term revenue generation as well as to build the future of the businesses by creating business models that make a ton of sense in any economic environment, regardless if we hit a recession or don't hit a recession, we are very well suited to continue to grow the business and generate value for our shareholders. Please follow us over the next few months, we have a lot going on. We look to continue to provide transparency and communication to the investor base to help showcase what we're doing in positioning and growth of where the business is going. But I thank you all for joining today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.