Aqua Metals continues pursuing Sierra ARC financing

Lithium battery recycler Aqua Metals, based in Reno, Nevada, has provided an update on its progress and strategic initiatives.

Development of the company’s first commercial-scale black mass recycling facility, the Sierra AquaRefining Campus (ARC), has progressed throughout the second quarter, it says, including completion of a 5-megawatt upgrade of utility power; installation of switchgear, steel superstructures, an equipment platform with two overhead cranes; and equipment deliveries, including tanks, evaporation systems and controls systems.

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To complete the Sierra ARC, Aqua Metals says it will need additional financing.

In May, the company signed a nonbinding term sheet with an undisclosed privately held company for a loan of up to $33 million. However, Aqua Metals says that company recently was advised by the lender that it was suspending further activity with regard to the loan given continued high interest rates and recent declines in the market price for lithium-ion materials, including a more than 25 percent drop in lithium carbonate pricing since the signing of the term sheet. These factors raised concerns on the part of the lender regarding the ability of Aqua Metals to meet the lender’s proposed debt service agreements.

The decision follows two months of what Aqua Metals describes as rigorous due diligence by the lender, which management believes satisfied the lender’s inquiries into the company’s technology, processes, supply and offtake chain and overall effectiveness of the ability to recycle black mass. Aqua Metals says it intends to stay in touch with the lender in hopes of resuming negotiations in the event of declining interest rates and/or rising mineral prices.

At the same time, the battery recycler’s management says it will continue to pursue the required funding through other sources, including debt, project finance, joint venture and strategic investment options.

Aqua Metals also says that, because of the delay in funding, it has completed a reduction in personnel hired largely in expectation of securing the required funding for the completion of the Sierra ARC and the start of operations. The company does not expect the workforce reduction to materially impact its current pilot operations or continuing research and development.

Although the Sierra ARC continues to be at or under budget to date, the timeline is now shifting to 2025 compared with the previously planned late-2024 commissioning. Company management believes the reduction in workforce coupled with nonessential asset disposition, deferral of certain expenses and more standard equipment leasing will provide approximately one year of cash runway with no other sources of cash.

Aqua Metals' second-quarter highlights include advancements at the Sierra ARC, which it says has surpassed numerous milestones, including the completion of floor reinforcement, equipment foundations, electric utility and switchgear upgrades, as well as the installation of initial equipment, including tanks, chillers, evaporators and controls.

Additionally, the company’s pilot facility has operated consistently for 24 hours per day, five days per week, demonstrating the scalability and efficiency of its AquaRefining technology. During the quarter, the company completed a $7.3 million net funding round.

As the company moves into the latter half of this year, it says it is focused on achieving several objectives, including:

• Continued engagement with counterparties to finance the remainder of the Sierra ARC build in a way that does not require overburdened debt service. This includes project finance, strategic financial and/or industry investments.
• Continued equipment provisioning at the Sierra ARC. Upon successful completion of the financing efforts, the company says it is in a position to move quickly to complete the remaining mechanical, electrical, plumbing, process equipment installs within two to three quarters and begin commissioning and scaling.
• Continuing to explore and solidify partnerships that enhance its supply chain and expand its market presence. The company says partnerships with firms such as 6K Energy, Dragonfly Energy and Yulho Materials, as well as further developing unannounced partners are pivotal to its strategy.
• Continued operations of its pilot facility at the Innovation Center and the production of battery-grade materials for existing and prospective industry partners.

Aqua Metals believes that continued pilot operations also will serve as an ongoing operating showcase of low-cost, decarbonized, sodium sulfate-free, safe and clean working environment in contrast to smelting and other hydrometallurgical methods.