Good afternoon and welcome to the Aqua Metals' First Quarter Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference call over to our host Bob Meyers of FNK IR. 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 first quarter ended March 31st, 2025. This release is available in the Investor Relations section on the company's website at aquametals.com. 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-Q filed today May 8th 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 on the call from analysts and all other investors can submit a question using the 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 thank you all for joining us today. I'm pleased to report on what has been an important first quarter for Aqua Metals as we continue to execute on our mission to build a low-cost resilient domestic battery materials supply chain. It's been just over a month since our last call but there are some important updates that we'll discuss today. Joining me today are Judd Merrill, our Chief Financial Officer; and Eric West, our incoming CFO. Judd will be making remarks on our Q1 results and answering questions today and then we'll begin transitioning from his role to Eric later this month and will continue as a consultant through August. We'll speak more on that shortly. So, let's begin with our operational updates, starting with what we have accomplished to build an adaptive platform for critical minerals recovery. In Q1, we achieved three key technical and operational milestones that position us at the forefront of battery recycling innovation. First, our product line expansion. We produced initial samples of nickel carbonate and mixed hydroxide precipitate, or MHP, which align with our developing downstream partners' needs. These are not just technical wins; they unlock new revenue opportunities and enhance our developing customer and partner value proposition. Second, our LFP recycling breakthrough. We completed a successful engineering analysis and then lab and bench scale demonstration for lithium recovery from LFP batteries. As many of you know, LFP or lithium iron phosphate is poised to dominate both EV and stationary storage markets. Importantly, our process can handle a blend of 50% NMC or nickel manganese cobalt and 50% LFP input, effectively doubling our lithium carbonate output and improving project economics. Third, our purity and performance advancements. We have continued to improve our battery-grade lithium carbonate assays to meet specific and stringent potential customer specifications, which further strengthens our position as a trusted domestic supplier. So in short, as market needs evolve, so does Aqua Metals. We are continuously advancing our technology and adjusting our overall business and commercialization strategy to meet the challenges and seize the opportunities that we see ahead. So now turning to our site strategy. We have entered into an agreement to sell the Sierra ARC property. This strategic move allows us to retire all of our debt, generate meaningful cash reserves and reduce our holding costs by approximately $100,000 per month. This decision is about resilience and flexibility. We are aligning our capital deployment with today's market environment, characterized by lower lithium prices, uncertainty in our industry and the tighter capital markets. By lightening our footprint now, we gain the freedom to evaluate more cost-efficient locations ideally near the feedstock and offtake sources for which we are developing, which could both lower CapEx and introduce meaningful OpEx efficiencies as we advance towards commercial deployment. We remain fully committed to building our first commercial arc, and we're actively engaged with our potential supply, offtake and funding partners to determine the best path forward. Switching now to the leadership front. As I mentioned earlier, Judd Merrill will transition from CFO on May 16 after several years of dedicated service. Judd, we really sincerely thank you for all of your commitment and leadership through the transformative times, and we all wish you the best on your next venture. And directly related to Judd's departure, we are pleased to welcome Eric West as our incoming CFO effective May 19. As many of you listening already know, Eric has six years of experience with Aqua Metals through his prior role, including VP of Finance. And we are also grateful that he has agreed to return to the company in the CFO role and have every confidence in his ability to help lead us into this next phase. Judd will also ask Eric to introduce himself in a moment. So to summarize my comments, as we look ahead, Aqua Metals is, first, expanding and adapting its product portfolio and commercial plant economic model to match market conditions and where the critical minerals market is headed. Second, managing capital prudently and adapting our strategy to strengthen our already well-proven resilience as a company; and third, aligning the right leadership to deliver on our goals, including the previously announced recent additions to our Board of Directors, adding key commercial and financial market expertise. We are operating with a clear eye on long-term value creation, making the right moves at the right times to build a flexible, high-performance business and maintain that resilience as we have to date. So with that, I'll turn it over to Judd to walk through the financials. After that, we'll open the call for Q&A.

Thanks, Steve. First, this being my last call as the CFO of the company, I want to take a moment to thank the shareholders, stakeholders, my colleagues, the Board and Steve for the trust and support in my role here over the last 6.5 years. Sometimes though, opportunity knocks, and I have taken a new role in a competitive company to be announced soon. While I leave the role of CFO here in very capable guardianship of Eric West, Eric and I have known each other and worked together for many years, including here at Aqua Metals, and I am providing consultancy to the company and to Eric through August for a seamless transition. I thought I'd ask Eric to introduce himself briefly on this call. Eric, go ahead.

Thanks, Judd and Steve and to the Board for giving me the opportunity to smoothly take the helm from Judd and help drive forward our future. I'm returning to Aqua Metals to take this role because I believe in the company's value proposition, the strength of the team and in my abilities to make a positive impact on the company's future. I will leave it at that for now and look forward to engaging with shareholders and stakeholders directly in the near future. I'll turn it back over to Judd now to cover the Q1 financials and Q&A.

Thanks Eric. Let me start my comments with our balance sheet. We ended the quarter with total cash of approximately $1.6 million. As we have reported, we have listed the Sierra ARC asset for sale. The sale will result in the retirement of all debt and produce cash proceeds while also reducing holding costs by approximately $100,000 per month. This decision adds cash runway allowing the company to evaluate more cost-effective locations for future development. The Sierra ARC facility includes the building structure, the underlying land and various permanent improvements that were previously classified as construction in progress within the plant property and equipment on the company's consolidated balance sheet. The total carrying value of the asset group was approximately $9.3 million net of depreciation. An impairment charge of approximately $5.2 million was recorded during the three months ended March 31, 2025. The company anticipates the sale will be completed during the second quarter of 2025. I will move now to the income statement. Plant operations decreased approximately $1.5 million or 67.2% for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The decrease was primarily driven by a reduction in payroll and related costs of approximately $786,000 resulting from workforce reductions implemented in August 2024 and continued reductions during the first quarter of 2025. Additionally, professional fees decreased by approximately $390,000 and supplies materials inventory adjustments and other overhead-related expenses decreased by $309,000. General and administrative expense decreased $619,000 or approximately 20.7% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily due to a reduction in payroll and related costs of approximately $737,000 and a $49,000 decrease in Directors' fees. These decreases were partially offset by an increase of $41,000 in professional fees and $126,000 in supplies materials and other overhead expenses. For the three months ended March 31, 2025, the company recognized a non-cash impairment of approximately $5.2 million related to construction in progress for the facility. The impairment was the result of a strategic shift and revised capital allocation priorities which led management to discontinue development of the facility for its originally intended use. As a result, the carrying amount of the facility was reduced to reflect its estimated recoverable value. Our net loss for the three months ended March 31 2025 was approximately $8.3 million or a negative $1.03 per basic and diluted share compared to a net loss of $5.5 million or a negative $1.05 per basic and diluted share for the three months ended March 31, 2024. Now moving to the cash flow statement. Net cash used in operating activities during this period consisted primarily of our net loss adjusted for noncash items such as depreciation, amortization and stock-based compensation charges as well as net changes in working capital. Net changes in investing activities primarily included minor previously committed fixed asset acquisitions. Net cash provided by financing activities was $638,000 for the three months ended March 31, 2025, consisting of $1.2 million net proceeds from the sale of Aqua Metals shares pursuant to the at-the-market offering, offset by $66,000 related to tax withholdings to cover RSU vesting and a $500,000 principal payment made on notes payable. We are actively engaging with potential and strategic financial partners aligned with our long-term strategy. That concludes my remarks on the company's financials. I will now turn it back over to the moderator for Q&A.

Thank you. Ladies and gentlemen, the floor is now open for questions. And we'll take our first question from Mickey Legg from Benchmark. Please go ahead, Mickey.

Hey, guys. Thanks for taking my question and congrats on making it through another quarter. Judd, congrats on your new role, too. I wish you the best. And Eric, it's nice to meet you over the phone and congrats on the new role as well. So I guess just to start, I have to ask on the CRR sale, kudos to find yourself some breathing room there. Could you just walk me through that process, your thought process with that and exactly how much runway does this give you? And it seems like if I can read into this a little bit, there's more of a focus on co-locating now. Could you just correct me there if that's right and walk me through that? Thanks.

Mickey, yeah, this is Steve. Thanks for the question. And I'll start with the Sierra ARC and kind of my view of the industry as a whole. As everyone is looking at the critical minerals industry, there are companies that have had to effectively cease operations due to large initial outlays in building what we would characterize as really large plants. We've always been market-aware and willing to pivot and adapt to current conditions early enough, and that gives us kind of that pragmatic and survivor instinct that we've demonstrated in the past for those of you that have known us for a long time. Along with our own belief, most analysts and players in this industry do believe that it's going to thrive for those that survive. Selling the Sierra ARC now gives us that $100,000 a month savings in carrying costs and gets us that meaningful cash runway to continue to develop our commercial relationships with that pragmatic and what I would say is a resilient shift in focus to build it when they come compared to what the industry has been doing, which has been to build it and then they will come. We're fully committed to building the first ARC once we finalize the offtake and supply financing for the entire project and our commercial discussions have led us to alternate locations. That could improve the CapEx, OpEx and other efficiencies, especially needed in the current market conditions to produce EBITDA that is bankable. And that's really what we believe is the best approach, given the current difficult market conditions and public policy shift, et cetera, is to do what we've done and to partner and go where the materials are versus bring the materials to us and not carry the load in the meantime.

Hi, Mickey. And thanks for your comments and your questions. So the Sierra ARC, we owe about $3 million on that. That's the only debt the company has left. So anything that we sell above and beyond that price will add to our cash balance. In the past and we're still kind of in the same area of about $500,000 a month burn. That's just our base, like, holding costs associated with being publicly traded and employees and all that and even some of the costs related to the work that's still ongoing at our innovation center which we still are operating and running on an ongoing basis. We anticipate that we'll be over that debt price quite a bit and that will just add to our cash balance and help with the runway.

Got it. Okay, okay. That’s clear. All right. And yes, that kind of segues into my next question, which is related to the macro and how things have been so dynamic I guess you could put it. Has there been an uptick in customer inbounds, given all the tariff announcements and discussions there? It seems like OEMs don't really have a choice but to go domestic now for their lithium but there's clearly not a lot of domestic products. So I'm just curious what sort of conversations you're having there?

Yes. It's an interesting time in the industry for sure. Everybody is trying to figure out what the public policy moving forward is going to be and how that translates to government support from a policy perspective from a loan guarantee perspective and from a grant perspective even grants that were previously issued or in question. That coupled with the drop in lithium prices that are really frankly below any project financeable number for a mine to consider opening up a new lithium mine has got most analysts—and we agree with those analysts—believing that this is a temporary bump in the road so to speak. We will see those lithium prices come up because it has to in order for the industry to really work. Think of it like what the minimum price of a barrel of oil has to be; it's the same type of scenario. The industry is looking not only at their own capabilities but looking at each other. This is common when an industry is new, maturing, and hits a bump in the road where you see a phase of consolidation and a phase of more open-armed partnerships. That's what we've been experiencing: the activity level of engaging with not only the large players but the medium and small players has really gone through the roof, which is a positive thing because now everybody is talking and trying to collectively figure out how to build this industry from the ground up in the US. We're really encouraged by that. As I said in my earlier comments, it is the game of survivor. In order to thrive, you have to survive. We are very situationally aware of making sure that we continue to survive and be there for when this industry really starts to thrive.

Got it. Okay. Understood. I thought the product line expansion and the LFP recycling was an interesting development, and it's another example of how you guys are able to be nimble in this rapidly evolving industry. It seems like that's being driven by some of these customer discussions you're having and some of the offtake products that they're looking for to meet some of their specifications. Could you just talk about the opportunity there and what the thought process is with that?

Yes. Great. That’s a great question. I'd love to talk about that. Our advancements that we've announced this quarter are really two-pronged. Firstly, we're oriented to market and partner responsiveness by our nature. Think of that as having it your way. That means making materials that fit as best as possible as the input for our downstream partners' processes. That greatly enhances and improves our offtake opportunities and engagements with those customers since we're going to give it to them their way. Secondly, we're really driving hard for optimization to improve plant economics iteratively. Our process continues to be one, if not the only one, that can actually produce positive EBITDA, particularly with the suppressed metals prices and current marketplace conditions. Our focus on that optimization strongly suggests that our operating costs at commercial scale can be much lower than other processes. That eliminates the need for massive amounts of onetime use chemical costs, transport costs, processing costs, and costly and harmful waste streams arising from the methodology used previously. We believe that optimization improves our margin profile at scale and provides a prospect for a bankable plant build in the future that can be debt or project financed. This key work allows us to advance discussions we've been having with adjacent players in the critical minerals space for Aqua Metals to also be an enabler in the form of licensing or joint ventures or other win-win arrangements because we have the IP, we've demonstrated Lithium AquaRefining that have produced battery-grade materials, and we have proof of the economic, environmental and worker safety advantages. We believe that's what positions us at the largest scale of battery-grade materials production from recycling by us thus far in the US.

Great. And then lastly, I just have to throw in one about the government discussions and the White House. I know I asked last call, and you said it might take a couple of months for those to progress and to gain a clearer line of sight into how those may go. Is there anything more you could tell us? Are those active? I see your mission at creating domestically produced product that's very aligned with this administration's desire to create this supply chain locally here in the US. Thanks.

Yes. On the government side, as we discussed on the last conference call, we've been engaging with various stakeholder agencies that includes departments like the DOD, the DOE, etc. We're taking full advantage of the opportunity, but we don't have specific feedback yet. We've been advised by our well-respected D.C.-based government relations partner that it will likely take a few more months to gain more clarity on what the go-forward policy and subsequently the funding support will or won't be for the industry. That said, we align with the administration's interest in securing the domestic supply chain and keeping all these critical and valuable materials in the U.S. where they can be reintroduced into U.S. manufacturing operations. This creates manufacturing jobs rather than the current condition where the US is a net exporter of critical materials in the form of black mass that goes to Asia and an importer of battery cells and systems returning as a net importer. Everyone agrees that's a major problem and a priority to address. We remain hopeful and active in trying to affect outcomes to see government support really kick in in this space again later this year.

Got it. Okay. That's all for me. Thanks, guys.

Thanks, Mickey.

Thank you. Ladies and gentlemen, the floor is now open for additional questions.

Yes. Thank you. We have received a few questions. First question, are potential partners testing the quality of your more recent material that you're producing?

Yes, that's a good question. So yes, the primary focus of our pilot demonstration plant operations continues today and beyond in our innovation center here in Tahoe Reno Industrial Center producing and assaying product samples. We're sending those samples to test varying feedstock sources to create those samples and getting those materials into the hands of all these potential offtakers that we've been talking to. We've continued doing this in Q1 through now, and those commercial relationships really underpin the financing of moving forward with that commercial scale facility.

Great. The next question is similar. With the appropriate financing for an arc, how quickly can these new initiatives translate into revenues?

Yes. Even with the Sierra ARC, we would need to build an additional building. We believe that we could potentially improve time to market by taking a suitable building or buildings that already exist, such as a brownfield sitting somewhere else in the country, closer to supply and offtake partners we're talking to. This could be better suited to our new plant layout process flows. These improvements allow us to produce EBITDA at the maximum level. We're currently involved in discussions with adjacent players in the industry that already have facilities, and we can be an enabler for them.

Got it. Thank you. Pivoting a little to the financials and Judd in particular, can Judd tell us a little bit more about his departure?

Yes. Sure, Bob. This decision was based on a long-term opportunity that advances my career in a non-competitive opportunity and it's not related to Aqua Metals. It's really been a pleasure, and seriously, being here at Aqua Metals and being the CFO, and I wish the best for the team. That’s why I'm available during a transition period. We've worked out a 90-day-plus consulting period where I can help smoothly transition my role to Eric, the incoming CFO. I've worked with Eric for quite a bit of time, not only here at Aqua Metals but in a prior role. I have full confidence in him and the go-forward plan with that.

Great. Thank you. And we have, I think, one more question for you. Can you expand a little bit on your earlier remarks around near-term and long-term financing opportunities?

Yeah. We'll start with the near-term. That's been driven by our desire to retire some existing debt by the end of this quarter that we're in now and that's going to reduce burn. We'll be making interest payments and other holding costs, which helps with our cash runway. Also, near-term financing has included the judicious use of the ATM and potential asset disposition of like fungible equipment, and as we announced today, real estate that we don't need to bear the cost for at this time. On the long-term, a lot of this has remained the same, just trying to find the right partner for project financing. There’s still in debt-based capital. We're continuing discussions to advance that. There are some opportunities there that we're pursuing. We're also discussing feedstock and offtake partnerships that make the financing of the first ARC bankable.

Excellent, thank you, and that's all the time we have for questions. I'll now turn the floor back to Steve Cotton for closing remarks.

Great. Well, thank you, operator. I'll just close by saying, this is consolidation time for players in critical minerals, for sure, and consolidation also means partnerships. We've seen, for example—in one instance—Lyten acquired many of Northvolt's assets, and many other instances of consolidation and partnering. This is common with the development of any industry that hits a bump in the road. We're definitely paying attention and engaging with all the opportunities with all the parties that are out there. Where it makes sense, we'll explore a better way forward on that front. In the meantime, we're adding to the resilience and the runway of the company with the courageous decisions we've made as a management team to date. I feel very confident in our ability to continue to survive and to make the day that we shall thrive. I thank everybody for your support and continued confidence in Aqua Metals. We will see you soon.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.