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Aqua Metals (AQMS) Q4 2020 Earnings Call Transcript

By Motley Fool Transcribing - Feb 26, 2021 at 2:32PM

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AQMS earnings call for the period ending December 31, 2020.

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Aqua Metals (AQMS 7.81%)
Q4 2020 Earnings Call
Feb 25, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for standing by and welcome to the Aqua Metals full-year 2020 results earnings call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Glen Akselrod, investor relations. Thank you. Please go ahead, sir.

Glen Akselrod -- Investor Relations

Thank you, Christine, and thank you, everybody, for joining our call today. I want to welcome you to Aqua Metals' fourth quarter and year-end 2020 conference Call. Earlier today, Aqua Metals released financial results for the quarter ended December 31, 2020. This release is available on the Investors section of the company's website at www.aquametals.com.

Joining us for today's call from management is Steve Cotton, president, and CEO; as well as Judd Merrill, the company's chief financial officer. Today's call will also include a PowerPoint presentation, which is available via the webitUp portal on the link provided in today's and last week's press release. If you are not logged in and want to follow the slides along with management's formal comments, please log into that portal now. During today's call, management will be making forward-looking statements.

Please refer to the company's report on Form 10-K filed today, February 25, 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 disclaim any obligation to update or revise its statements to reflect new circumstances or unanticipated events as they occur, except as required by law. And as a reminder, after Steve's and Jeff's formal comments, we're going to be taking questions.

Questions will be accepted over the telephone from analysts and all other investors who want to submit a question, please do so using the online webitUp portal provided in today's and last week's press releases. We will take as many questions as we can in our available time. With that said, I'd like to turn the call over to Steve Cotton, CEO of Aqua Metals. Steve, please go ahead.

Steve Cotton -- President and Chief Executive Officer

Thank you, Glen. I appreciate that. So, here's the safe harbor that Glen was referring to for those of you that are following us with the deck. And I'm going to move on to the first slide, which is a slide about our mission as a company.

And that is to provide sustainable metals recycling for metals that are strategic to the energy storage applications out there in the world. And our proven breakthrough technology called AquaRefining delivers raw materials right back into the manufacturing supply chain in a clean and economical way that's going to reduce the overreliance on mining to meet demand. So, I'm going to take everybody through horizon one and horizon two views of our climate-friendly methodology that we see to meet the rapidly growing energy storage and strategic metals demand associated with that rapidly growing energy storage market. On horizon one, the backdrop is, is that the recycled lead market is slated to surpass $19 billion by the year 2026.

More than 6 million tons of lead collected for reuse each year is a large volume that's going to continue to increase. Lead batteries power 1.4 billion automobiles worldwide. And take note that many automobiles that are put on the road today have two lead-acid batteries in them if they have an internal combustion engine, which is the start-stop for the stop signs and stoplights. So, there's more lead in cars that are being produced as well as in electric vehicles, there are lead batteries in most electric vehicles that are produced as well, and that's feeding the growth of the market.

Over 80% of lead in every new lead-acid battery is secondary or also known as the recycled lead. It's an amazing circular economy story that the lead recycling industry has achieved by being able to put most of the lead in the old batteries back into the new ones and supplement the market growth, that 20% or so, with the mining to feed that market growth. But if you look at horizon two, in addition to the lead market, last year, lithium-ion batteries containing nearly $1 billion in multiple strategic metals, not just lead as a singular metal like for the lead-acid industry but multiple metals, which we'll go through as we talk through the deck today, are being landfilled. If this continues, by the year 2025, that's $12 billion with the growth of the lithium-ion market that would be landfilled of all those strategic metals, not only the loss of the strategic metals but not a great environmental solution.

30 million EVs are expected to be produced annually by the year 2027. That's going to require 1.8 million metric tons of lithium, which is five times what is already mined today, let alone the other metals. So, let's talk about Aqua Metals at a glance as a company that's going to be addressing all these things. We've developed AquaRefining already, which is a commercially available and commercially ready, sustainable battery recycling technology.

AquaRefining uses water instead of fire and organic acids that are biodegradable to create a very ultra-pure lead, in our case, 99.996%, one atom at a time. So, we actually refine the lead as it comes right off of the machines, rather than have to refine it in a refiner. And that feeds into the $20 billion lead recycling industry that we've been talking about earlier. Seeking on our part to extend AquaRefining into the multiple metal environment of lithium-ion batteries.

And we're doing that through prosecution of intellectual property, through strategic investment, and through research and development, which we intend to continue to accelerate. We have a transformative technology that really does benefit both industry and the Earth. It benefits the environment. It greatly benefits worker safety, which we'll talk about, it benefits battery performance and battery life and benefits the economics of the entire supply chain and value proposition, which we'll also speak about.

Our ticker, as most of you know, is AQMS, we're on the NASDAQ. We are headquartered here in Tahoe Reno Industrial Center in about 30 minutes east of Reno, Nevada. The company is not terribly old. It was incorporated in 2014.

And we have a strong balance sheet with no debt, which we'll talk about as we go through the financials as well. So, this slide talks about the existing way for lead recycling versus AquaRefining. On the left, you see what smelting is, and that is the current method and incumbent method of acid battery recycling. At best, it's a dirty process.

It uses fire, as you can see, and it can be dangerous, and it can impact worker safety. AquaRefining, as you see on the right, is building the lead, one atom at a time. Behind that mound of lead, you see the rotating disks, which are called our cathodes that are in our Aqualyzers that manufactures lead at room temperature with water right before your eyes, and it's clean. It uses water that is a not -- net water producer because we get water from the batteries that come in.

And it's very safe for workers because it's contained in tanks, pipes, and pumps versus being concerned about huge emissions. The great story about lead is that 99-plus percent of all lead-acid batteries are already recycled, unlike lithium, which is close to zero, and 80% plus of all those recycled batteries that are put out in the marketplace in the secondary market use that recycled lead, as I was describing earlier. So now, we're going to talk about our report card for 2020 and the beginning of 2021. We really outperformed our 2020 guidance that we provided to our shareholders, and we'll take you through each and every measure.

First off, as we strengthened the balance sheet and achieved overall debt-free status, which was our initial goal. And we have built a very sophisticated pipeline with multiple candidates in our sales funnel, and we are seeking to announce our site number one for AquaRefining for the lead recycling industry in Q1 or Q2 of this year. We completed production and the productization of the first version of 1.25L electrolyzers, which we call Aqualyzer and we achieved two times the throughput. Our goal was to achieve a 20% improvement from the learnings of our operations in 2018 and 2019 when we embarked on this program, and we got 500% of the result of the plan, which is a direct impact on our value proposition from the capital expenditure value proposition to our clientele and also the operating cost because if you need fewer electrolyzers, you should need fewer people, and you need not spend as much money on the operations of the machines.

We also established a global deal with BASF, which is the world's largest chemical company, to sell the electrolyte and include the BASF produced electrolyte in our system fills when we deploy AquaRefining with our first licensee and beyond. And then co-market because BASF has many relationships with existing battery recyclers, where they sell them chemicals to do the refining post furnaces and in the environment of the kettles and things like that where they refine the lead, you don't need to do that with AquaRefining. And there's an additional chemical opportunity for BASF to sell obviously, the key ingredient of the AquaRefining electrolyte. And there's a co-marketing opportunity where we're working together to try to access the market through introductions made on both sides.

And we also agreed that we're going to work to improve AquaRefining. BASF's mantra is about that, and I'll talk about that more a little bit later. We also completed the transition to capital-light, very recently, with LiNiCo, which stands for lithium nickel cobalt, lithium-ion recycler company in a lease to buy deal for our existing AquaRefinery, and we'll take you through some of the details of what that is. But we are now officially achieving the capital-light model.

We expanded research and development and invested in the lithium-ion battery recycling opportunities through battery manufacturing streamlining with our AquaRefined briquettes, which can go now direct to battery production, which I'll talk about in a subsequent slide. We made a $2 million investment into LiNiCo and that pursues the formation of a lithium-ion recycling eco network. We think that no one company can solve the puzzle of the great challenge of lithium-ion recycling and great opportunity by going it alone, and we believe it's going to take the great minds of multiple companies together to make it work, and that's our goal is to form this eco network and talk more about that soon. We also filed a provisional patent very recently for the lithium-ion metals recovery using a leveraged technology of the AquaRefining technology and making that extensible on the IP front as well.

Our go-forward business model is enhanced by a major increase in the total addressable market. Very recently, we were talking about the lead recycling market, which we continue to talk about achieving about a $19 billion size by the year 2026. It's an existing, very large, very mature market that's ripe for an upgrade for AquaRefining, with a cumulative annual growth rate of 3.5%. So, it's growing at a nice clip.

The lithium industry is nascent and new, but is expected, in dollar value, to reach the value of the same metal as lead, or more, by that year 2026, but at a much faster cumulative annual growth rate. So, both industries are growing. But by getting into the multiple metals in the lithium-ion recycling area, the total addressable market opportunity for Aqua Metals equipment, licensing, and services have just doubled. So, let's move on to what does equipment supply and licensing look like.

Our funnel has increased to span three continents, and we are working diligently with our sales and detailed proposals and technical proposals and negotiations. And as I said before, expect to announce our first licensee partnership. In the long term, let's talk about what licensing looks like. The model is built, and that pipeline is strong and more robust than it's ever been.

We are seeking engineering revenues, much like you hire an architect to design a building or an expansion of your house, which would be six to seven figures of revenue per project. And then possible equipment supply revenue of over $10 million per project. For a project of significant size, it could be much larger than that into the tens of millions, and it could be smaller than that if it's a trial or a pilot type of site. Then once the equipment is deployed and commissioned, witnesses test, and goes into production at the licensee's facility, the recurring revenue for the company of Aqua Metals comes from running royalties.

And we believe we can achieve a strong running royalty because already, we've achieved a 10% rough premium on the lead that we sold when we were producing lead, proving the technology, manufacturing 35,000 ingots in the years 2018 and 2019, and we believe that, that premium could be shared with licensees. And that is a very interesting premium value because the demand for premium leads is going up rapidly. As I said before, the second battery in internal combustion engines, as an example, is an advanced lead-acid battery, much like what you see in the data center batteries. And those require more of a pure lead, and there's very strong growth in demand for ultra-pure lead.

And we see a great opportunity to share that premium with our customers. And we think 10% could be a starting point and that there might be an upside in that premium value as AquaRefined lead proves itself out in the marketplace further and further. Additional millions of dollars of revenues could take place after this equipment is sold and deployed and can potentially be generated for maintenance and upgrades over the plant lifetime. It's the beginning of the customer journey with Aqua Metals, once they turn on their first set of Aqualyzer, new sites, expansions of existing sites, equipment upgrades, maintenance programs, feature bidding of capabilities through our pure metrics platform, etc.

So now, moving on to what AquaRefining looks like in three scenarios. This slide covers two of them. One is the bolt-on to an existing facility that's already been depreciated and amortized. And the goal there could be to increase the production without increasing the emissions by adding the AquaRefining, but keeping the same furnace capacity and running those furnaces much more efficiently.

In fact, when you divert the paste, which is about 50% of lead through the AquaRefining process, the furnaces in the smelting process become more melters at lower temperatures that run much more efficiently and are much more cost-effective to operate and much safer for the workers because you're really melting instead of smelting. Another scenario No.2 is to keep the total production the same by adding AquaRefining and reducing the furnace usage, while reducing emissions. And that provides the ultra-pure lead metal opportunity and provides for the environmental bragging rights and the sustainability factors, the friendly relationships with the increasingly scrutinizing regulators in the court of public opinion that would like to see a change in the existing smelting industry. There's a third model, which we're gaining quite a bit of momentum on, and that is designing AquaRefining into greenfield builds.

If you look at the India market and the Asia Pacific market, in particular, that is where a lot of high-growth in automobile deployment and battery manufacturing, and battery recycling is taking place. And there are government-sponsored efforts to make sure that those new battery manufacturing facilities and recycling facilities that are to be built are built with state-of-the-art, best available technologies. When you're designing AquaRefining in, you're not remodeling your kitchen, you're designing the new kitchen into the new home, and there are some additional benefits that can be achieved. And we're seeing great opportunities with greenfield builds in the regions I referenced just a moment ago, in particular, but also in South America.

So now let's talk about some of our recent announcements. For those of you that haven't heard the details. We just announced on January 25, the BASF relationship. I did take you through that a little bit earlier, but again, the companies will cooperate to offer the AquaRefining to the battery recyclers.

The companies will explore, enhance BASF-made electrolyte as an additive to this AquaRefined. Think of Techron for Chevron gas. Think of an additive that improves the performance of AquaRefining and extends the life of AquaRefining equipment and allows for us to put a lower cost bill of materials into the equipment to increase the value proposition because we are, after all, running acid through our equipment. And if we can use the proper chemistry upgrades and additives, we can improve and make AquaRefining better, which is right BASF's wheelhouse.

Aqua Metals will supply the BASF electrolyte for AquaRefining and get an additional system fill revenue component. And that's a really positive thing for us with the global relationship with BASF to be able to offer that and help our customers to enjoy those benefits on the economic side. And then collaborating on sustainability through improving the chemistry is really the overall goal. We also announced on January 27, the new process that replaces a traditional process as an alternative from taking the briquettes that come out of the AquaRefining process that you see on the left with the gloved hand holding the AquaRefined briquette, which is the compressed spongy lead that you see in the very left and putting that directly into the battery manufacturing process.

Anytime you can streamline the production of a commodity, that's big news. And the battery industry is quite excited about this. Our customer engagements this has enhanced greatly because the value of putting in AquaRefining now allows two products to come out of AquaRefining for lead, which is the ingots that you see in the upper right, which is the traditional process, we are bypassing that all together and going straight to a metal oxide type production, and going right into battery manufacturing. It's particularly useful when the battery recycling is adjacent to the battery manufacturing facility, which we see in many instances, with vertically integrated companies.

Or down the road even because you can transport those briquettes in situ and get them into that new process. So, we see that as a very promising opportunity with our prospective client base in the industry. We also announced on February 16 and 17, the sale of the AquaRefining in the form of a lease-to-buy agreement. And that's actually a real positive for Aqua Metals for a bunch of reasons that we'll talk about.

The company's name is LiNiCo, again, lithium, nickel-cobalt, and they will begin converting the AquaRefinery to be purpose fit for lithium-ion recycling. Some of the equipment in the plant will be purchased as part of the purchase of the building. And some of it, we will sell in the third-party market to existing lead-acid battery operators because, for example, the breaking and separation system is different. So, we'll have a breaker and separation system for sale.

Aqua Metals retains access to the ongoing Aqualyzer research and development program for 18 to 24 months now with no overhead. Aqua Metals avoids the carrying costs and overhead associated with the building, and we'll ultimately receive $14 million to $15 million and change, proceeds from the sale of the building, inclusive of non-refundable initial material, amounts of deposits, and step-ups some deposits throughout the time cycle. Aqua Metals gets that capital access to the feedstock in the facility for ongoing product development as we venture into the lithium space. And that's actually really important as we collaborate with the eco network that we've proposed forming with LiNiCo, Green Li-ion, and Comstock to collaborate together to really provide the best-in-class technologies.

And really together, solve the lithium-ion recycling challenge from an overall mass balance of the facility from input to processing to output. So, it's a very exciting opportunity for us to facilitate getting in the market and fast-track it for us because we don't have to buy land. We don't have to build a building. We don't have to feed the capital heavy, and we're already in a partnership with entities with the physical facilities ready to go.

Talking about our IP, we've got $200 million invested in setting up our equipment supply and global licensing opportunity. Our IP strategy is broad and deep and very sophisticated. And we have, as you can see in the math, covered for most of the globe, any areas that we intend to deploy AquaRefining, and it's very important if you're going to be a technology and licensing company to secure your intellectual property. And also trade secrets and know what to put into your patents and what to keep out of them.

And we have 51 patents issued and allowed and 62 more applications that are pending. And the significant investment that we've made to date really does allow and secure that future growth and opportunity. We will continue to take our patent portfolio very seriously and invest a significant amount of time, effort, and dollars into this stable of patents. Our experienced management team and engaged board are really focused on execution.

This is an execution play. And the execution play associated with Aqua Metals is an important stage of the company, and the team is there really needs to be strong in our ability to execute the business plan. I, myself, have a lot of experience in growing businesses in the lead-acid battery industry space. And Judd Merrill, our CFO, has a lot of experience in the mining and metals and process space.

Ben Taecker, our Vice President of Engineering and Operations comes from Clarios, the world's largest battery manufacturer, an investor in Aqua Metals, and partner of Aqua Metals. And was on the launch team of a very large smelter and operations team and understood and picked up and moved to family out to the Tahoe Reno area to help us build and grow Aqua Metals. Our Independent Directors, we have our non-Executive Chairman of the Board, Shariq Yosufzai, who had numerous positions at very high levels within Chevron for over 20 years and has brought a great set of governance to the company. And Vinnie DiVito is a very solid chair of our Audit Committee.

And has been with Aqua Metals as long as I have, from the get-go, right around the IPO time frame. Stay tuned for more information, as we continue to grow the Board and enhance the management team. And it will all be about execution and execution focus. With that, I'm going to turn it over to Judd for the financial overview.

Go ahead, Judd.

Judd Merrill -- Chief Financial Officer

All right. Thanks, Steve. I'm going to go through some financial slides and make a few comments. So, on the balance sheet, as of December 31, 2020, the cash and working capital balances were $6.5 million and $4.9 million, respectively.

I will report that as of today, our unaudited cash balance is approximately $11.4 million. Fixed assets on our balance sheet, as of December 31, 2020, totaled approximately $25 million in net book value. And as a reminder, that includes the building and the land, and other miscellaneous assets that were entered into a lease agreement for sale. And also the battery breaker, melting kettles, the kiln, the filter presses, and the mixing and storage tanks.

We evaluate the need to record impairments during each reporting period. And with the company's go-forward capital-light strategy taking shape and with the lease to purchase of the building, we determined that the remaining useful lives of the equipment have decreased. And as a result, we recognized an impairment of $11.7 million with respect to the writedown of equipment to fair values. Our $25 million fixed asset balance is after we take into account that impairment writedown and also represents potential cash inflows once we sell those assets.

Also noted on the balance sheet is a decrease in notes payable, both current and long term. On December 10, 2020, we announced that we retired the loan with Veritex Community Bank. We did that with some insurance proceeds that we held in an escrow account at Veritex, as well as the $1 million certificate of deposit held by Veritex as collateral for the note to pay the balance of the loan. And as part of the loan payoff, we expensed the remaining unamortized cost of $0.6 million.

In addition, we incurred a prepayment penalty of $0.4 million, which we included in interest expense. The last item I will note on the balance sheet is the reduction in the asset retirement obligation, and this is due to the change in the primary use of the company's facility. So, the written determination issued to the company requiring the facility closure trust's deposit was terminated by In-depth, and that was on December 9, 2020, and thus retirement obligation was terminated as well. I'm going to move now to the income statement.

Our lead, as we've discussed all year, our lead recycling facility was not in production during 2020 as a result of the fire that happened in 2019. And as part of our acceleration to our licensing strategy. So, during the year any revenue that resulted was from the sale of inventory that consisted of lead compounds that were generated during the pre-fire operations, and we still have some more of that inventory. Cost of product sales includes raw materials and supplies and other related costs, it's about salaries and benefits and consulting and outside services.

This, of course, decreased by 78% for the 12 months ended December 31, 2020, as compared to the 12 months ended December 31, 2019. Of course, this was -- decrease was due to the discontinuation of commercial production at the AquaRefinery. You will also see the other big item on the income statement is the impairment loss that I discussed through the fixed assets; it is reported as another expense on the income statement. Including the impairment loss, the company had a net loss of $24.7 million or a negative $0.41 per basic and diluted share compared to a net loss of $44.8 million or a negative $0.86 per basic and diluted share for the year ended December 31, 2019.

If you refer to our press release that came out, our earnings release that came out today, we provided a non-GAAP adjustment, adjusted net loss that excludes the effect of the fixed asset impairment expense and also the prior period effects of the non-cash earlier payments. Based on this reconciliation, again, non-GAAP, we show an adjusted net loss of $13.4 million or a negative $0.22 per basic and diluted share for the year ended December 31, 2020. Now, I'll move to the cash flow statement. Net cash used in operating activities for the year -- for the years ended December 31, 2020, and December 31, 2019, was $11.0 million and 22 -- or $25.2 million, respectively, net cash used in operating activities during each of these periods consisted primarily of our net loss adjusted for non-cash items, such as depreciation and activation of stock-based comp charges as well as the net change in working capital.

And also note that the net cash provided by financing activities for the year ended December 31, 2020, consisted of payments of $9.3 million for the retirement of the Veritex loan. And that was partially offset by the insurance-related escrow and certificate of deposit funds that totaled approximately $8.7 million that was used to extinguish the note. In addition, the company received $3.7 million net proceeds from ATM share sales. If you look at our monthly basic burn rate during the year, which includes basic monthly plan expenses and corporate overhead.

It was approximately $730,000 per month in 2020 as compared to $2 million per month in 2019. We anticipate starting in April this year, 2021 with the lease-purchase option of the plant, and our monthly -- our monthly cash needs are estimated to be between $600,000 to $650,000 per month. These payments and anticipated shared service since the revenue issue reduce our go-forward cash needs even further. Since we still have access to the building, the lab, and some office space, the company will also realize some savings by not having to move quickly out of the building.

If I will comment on the cash flow that we raised approximately totaled $10.7 million through opportunistic share sales under our aftermarket issued sales agreement. They stayed a little over $3 million last year and the remainder of this year. We also announced last week, we established a second ATM for up to $30 million. The use of the ATM in the prior months was used as an insurance policy to strengthen the company's balance sheet and to secure our transition to licensing.

And also, our decision to defer immediate cash flow from an outright plant sale in favor of the strategic relationship with LiNiCo. The company has adopted a policy of [indiscernible] in place as a go-forward approach to ensure that we are prepared to take advantage of strategic opportunities that we may have over licensing and lithium recycling goals. The ATM, in our opinion, has the lowest cost of capital and most flexible terms, meaning we don't have to use it unless there is a reason to. Just a few other updates in the financial area of information.

As of December 31, 2020, we reported that we received approximately $23.4 million of insurance proceeds from insurance carriers. Just last week, we received a small progress payment of $100,000. We continue to believe, based on our estimates. And as of today, the date of this report, we believe that additional payments will be made.

This is going to be related to our clean-up cost, engineering work, and building repair. We're getting very close. We've also submitted a significant claim on our business interruption cost recovery. As we stated in the past, we intend to vigorously pursue receipt of remaining insurance proceeds to satisfy all of our property, casualty, and business interruption losses subject to those coverage limits.

As Steve mentioned and as we announced last week, we released an agreement to lease with additional purchase deposits the McCarran, Nevada plant. This non-core asset disposition was driven by our accelerated focus on our capital-light equipment supply and licensing strategy. The agreement was reached with LiNiCo. As Steve mentioned, an entity that we're very excited about and it's focused on sustainable lithium-ion battery recycling.

On the lease, the lease commences April 1 and expires -- April 1 of this year and expires on March 31, 2023. And during this lease term, LiNiCo has the option to purchase the land and facilities at a purchase price of $14.25 million if the option is exercised and the sales completed by October 1, 2022. And if not it's $15.25 million, if the option is exercised and the sales completed after October 1, 2022, but prior to March 31, 2023. As we mentioned, the purchase option is subject to LiNiCo's payment of a non-refundable deposit totaling $3.25 million.

The lease agreement is a triple net lease. And LiNiCo will be responsible for costs, including maintenance of the utility, insurance, and property tax. The lease payment started in April. We started at $68,000 per month, increasing to $100.6 thousand in the last six months of the lease.

If it goes for the full two-year term, the lease payments applied to the purchase price, the total that doesn't -- if the lease payments are not applied to the purchase price it will total up to $1.9 million during that contract term. Again, the deposits are non-refundable. The lease to buy the structure is beneficial to Aqua Metals from both a financial and operational perspective as it allows the company to continue to utilize these facilities, for our research and development activities, including the lab and office space. We've also signed a shared services agreement with LiNiCo that will pay Aqua Metals for services to assist LiNiCo in its initial start-up and progression.

These services may include some HR, and IT, accounting, drafting, lab, and engineering services. The lease-purchase of the plant facilities is really part of our long-term business strategy, which includes monetization of non-core assets with the sale of the plant as a means of financing, as we talked about, our continued acceleration of our core business of becoming an equipment supplier and a licensor of AquaRefining technologies. Additional plant assets that were not included in the lease to purchase, total up to about $7 million that we could sell over the coming months. In closing, I wanted to state that we ended the year with a strong cash balance, and no debt.

We began this year with a path to sell the building, collect additional remaining insurance proceeds, collect lease revenue, and sell additional assets, and we're anticipating soon we'll have revenues from licensing. We've executed several financial-related goals, which have put us in a strong economic position to ensure that we bridge to the licensing goals that we expect to achieve this year. And with that, those are the final comments on the finance slides, and I'll turn the time over to Glen, I think we're -- for questions and discussion.

Glen Akselrod -- Investor Relations

Perfect. Thanks, Judd. Just as a reminder to our audience, we're going to be taking questions from analysts and institutional investors of their own and everybody else via the web portal. So, if you haven't logged in yet and you have a question, please do so.

We do have a number of questions in the queue. Christine, I'm going to go to you first to take the phone questions.

Questions & Answers:


Operator

[Operator Instructions] Your first question comes from the line of Colin Rusch from Oppenheimer. Your line is open.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Can you just give us a sense of the development timeline on the lithium side? What are you expecting in terms of when you're going to be able to start showing some results of those efforts?

Steve Cotton -- President and Chief Executive Officer

Yeah. Thanks, Colin. So, on the lithium development timeline, we've already done some work, and that fed into the provisional patent filings. And we believe that by having access to the facility and getting the LiNiCo breaker and shredder system and Green Li-ion technology in there, in a relatively near-term this year, we will have an opportunity to have a really great place to continue that research and development in the lithium-ion and going after the multiple metals.

And so, we see a significant scale-up of activity as we get toward the end of this year in the physical work and as we get into next year. So, it's not so far off. And there's a lot of work we can do between now in that physical work with the mass balances and the chemistry and the chemical engineering and the design of what an Aqualyzer going after one metal versus another, be it lithium, nickel, cobalt, manganese, copper, other things that would come out of that facility. So, we see a relatively quick timeline for us to be able to get into space much more quickly than some of the other folks that are out there that are trying to find land, build a building, and get things going.

We already have some of that physicality that we've sold to LiNiCo through the lease.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

And then can you remind us how many folks you're talking to in and around the lead opportunity? I know we've got one customer that's got a timeline on when they need to take advantage of first-mover. But how many other folks are you talking to at this point?

Steve Cotton -- President and Chief Executive Officer

Yeah. So, we have a robust sales funnel, and it spans a few continents, and it's inclusive of Clarios. So, we're talking to Clarios all the time in addition to the prospective other clients. And the sales funnel is progressing, both in volume and quality really of the sales funnel, but also in the maturity of each engagement in the sales funnel.

What I mean by that is now that we have the finalized specs of 1.25 and some other anticipated improvements that we expect, we definitely have been able to hone in on the final configurations of what each one of those would look like and the particular sites. And feel really good about that sales funnel. I think that as we're guiding here, Q1, Q2 time frame is when we expect that we can inform the market, how we've chosen to move forward.

Glen Akselrod -- Investor Relations

Christine maybe polls for questions on the phone again, and then we'll go to some online questions.

Operator

[Operator Instructions]

Glen Akselrod -- Investor Relations

Ok. And as those are coming in, Steve, we've got a bunch of questions here online. And a lot of them sort of we've edited. So, I'll try to do my best to summarize it.

I think a lot of this was answered earlier, but we'll just kick it into some of this in a little bit more detail. So, can you explain the Aqua Metals road LiNiCo Green Li-ion relationship? And why you chose to go this partnership road versus do it alone strategy when it comes to lithium-ion?

Steve Cotton -- President and Chief Executive Officer

Yeah. So, it's really -- Aqua Metals has migrated to a capital-light philosophy and business model. And so, this partnership and group of companies create a great opportunity for really all parties involved, inclusive of Aqua Metals to work together. As we stand here today, no single entity has fully sold end to end what a clean hydrometallurgical, environmentally safe, and worker-safe lithium-ion recycling world is going to look like in the future.

But we've got the land. We've got the AquaRefinery building. We've got LiNiCo who is the aggregator of the technologies from Green Li-ion and Aqua Metals potentially as well as other suppliers. And we've got Comstock, who has provided quite a bit of capital to LiNiCo to stand up the facility and has a lot of great experience in mining and metals.

I'll also note that Green Li-ion has a technology base in lithium-ion recycling from battery manufacturing of lithium-ion. We have strong lithium experience in our science and technology organization with great experience in the lithium space in the past. And so, by combining the forces and specialties and areas of focus of each company, we believe collectively that, that would create the best outcome. And that's the approach that we've chosen to take, and that's why we've defined it as an eco network.

And we'll be talking more about what that eco network means and other companies that potentially would be folding into the eco network to help stand up lithium recycling in a clean way once and for all.

Glen Akselrod -- Investor Relations

Next question. Can you provide a little bit more color around the progress of discussions you've had around your first licensing lead recycling customer? And maybe remind people about the exclusive relationship that's in place currently and how you're dealing with it.

Steve Cotton -- President and Chief Executive Officer

Sure. So, the exclusive relationship that is probably being referred to as Clarios' investment in Aqua Metals that took place in 2017. Clarios, at that time, we announced invested $10 million in Aqua Metals. At the time they were Johnson Controls' Power Systems division.

They're now called Clarios. And that investment included, in addition to all the lead 35,000 ingots they purchased from us at a premium in 2018 and 2019, access to the AquaRefining technology to deploy in there or some of their partners' facilities in a first mover's advantage scenario. That portion of the agreement does come to a close in June of 2021, so June of this year. And that's good natural timing because as we declared in December of last year, we're product ready with our version 1.25L electrolyzers, which is the productized version of what we operated in 2018 and 2019.

And so, Clarios is evaluating and looking at the best option to look at deploying AquaRefining technology in the way they'd like to do it. And in the meantime, we're talking to many others that are in -- spanning those three continents, ranging from greenfield builds to bolt-on type scenarios. And that spans, again, the Asia Pacific and North America, and India and South America for that matter. So, there's quite a great sales funnel that's in there, and it's up to Aqua Metals ultimately to work out what the best deal is for the company and for the shareholders.

And we're hopeful that we'll be able to work out a deal with everybody in that sales funnel and put that into the right serial order. And that's our plan.

Glen Akselrod -- Investor Relations

Next question, what kind of protection and/or heads do the provisional patents you've recently filed give you against the possible competition?

Steve Cotton -- President and Chief Executive Officer

So the IP around lithium recycling is getting further along across the board everywhere you look right now. Fortunately, AquaRefining IP from that bevy of patents that I was mentioning in the presentation, some of those processes and things like that can apply. But the lithium provisional patent allows us to put into place the way provisional patents work as you have up to a year to enhance that. And we'll be working with the eco network that we're forming with these companies to identify how best we work together and what Aqua Metals can continue to pursue.

We've laid down some particular things around how we plate metals with the Aqualyzers. And again, right now, we see them plating lead, but they can plate all these various metals and potentially even get those into a metal oxide form. But we want to focus on where we're going to add the most value, and we're working to team up with our partners that we've already established and announced. So together, we're collectively offering the best solution for the planet and the industry.

Glen Akselrod -- Investor Relations

I think you touched a little bit on this point during your formal comments. But the specific question, does the BASF partnership agreement provide any exclusivity to either party?

Steve Cotton -- President and Chief Executive Officer

So there's not really an exclusivity element of it other than the BASF made electrolyte will be included with Aqua Metals system fills. And that's really to the advantage of the licensee for surety of supply, but also from a cost perspective, we do have a global supply arrangement with BASF, and we can get the best price for the client. Ultimately, when the client begins operating, they have the option to continue to purchase BASF electrolyte or shop around if they so choose. But as we continue to work with BASF with additives and specializing that electrolyte, there could be some advantages of putting in a BASF made enhanced electrolyte solution for the Equalizer.

Think of that as like the electrolyte with the Techron or the higher octane for our engines, but the clients can put other stuff in there if they so choose.

Glen Akselrod -- Investor Relations

The next question deals with cash and cash flow. Judd provided some commentary regarding how he sees the burn rate at the company changing over the next little while. When it comes to your decision to lease the building versus to given an outright sale, what was the primary driver for that given your low cash position? And how did you sort of think about strategically to offset that?

Judd Merrill -- Chief Financial Officer

Yes. A great question, Glen. A lot of what drove me is, there's a strategic opportunity to work with the lithium recycler that we wanted to invest in that we did. And so that was a big consideration.

The other piece is, we are still doing some of our own additional R&D and work on our lead process. And this arrangement allows us to stay in the building and still work on those processes. So that was very attractive as well. We're still doing some cleanup and repair that needs to be done, and we'll be collecting lease payments this year, even while that work is being done.

So that was very attractive. We felt like there was a win-win situation for both us and LiNiCo, which allows them to get in and start doing some things that they need to do and allows us to remain. The structure of the lease payments and the deposits and the shared services and then just some cost savings in not having to move. We started adding up all those economic benefits.

It looked good and it fits into our model. So those were some of the reasons why we took a look at it that way.

Glen Akselrod -- Investor Relations

There are two questions in the queue that really haven't been addressed on the call yet. So, after the next two questions, unless there are any others that come in, we'll end the call. But the next question is, given the Biden administration's push for the U.S. to be more self-sustaining with regard to supply chains for vital materials as well as their push for more green options.

Do you expect any help from the government? Or what do you see the government's role as it pertains to Aqua Metals?

Steve Cotton -- President and Chief Executive Officer

Yeah, that's a great question. And we agree that the current administration's view on green technology and also keeping jobs in the U.S. is going to be very helpful for Aqua Metals. And it's not lost on us that interaction with the various government institutions like DOE and DARPA and others that can really help from a -- not only just a grant and funding perspective, but from a policy perspective, to make sure that the existing battery recycling facilities in the U.S.

get the upgrades, so they can continue to operate and create jobs and keep jobs. And the concept of build back better does fit because those are depreciated, amortized facilities that could potentially be aqua fit and really breathe new life into the future of their contribution, not only to the environment but to the economy in the U.S. So, we see a great opportunity there. And also, just from a set-the-tone perspective on a global stage.

I think that from a global perspective, the world is more and more in recognition that we have climate change, and we don't have much time. And we do need to make some changes in the way that we handle our industrial processes. And stored energy is right in the middle of that. And so, I think that policies, as well as grants and support from government institutions, are things that we welcome, and will seek.

So hopefully, that answers the question.

Glen Akselrod -- Investor Relations

And then your last question, Steven, Judd, is given the great momentum you've had in 2020 and now 2021, what would you consider your biggest obstacle or challenge that you see in front of you in terms of executing your plan for this year?

Steve Cotton -- President and Chief Executive Officer

Really, it is -- the answer is almost in the question, which is execution. The technology is de-risked. We've proven the technology in an operating commercial environment and produce those 35,000 ingots. And we've now enhanced the technology with our version 1.25 with more enhancements to come.

And so now it's about execution. And some companies fail not because of technology, but because of execution. So that's when it boils down to your team and your team's structure and what's your culture. And we believe that we have the team to take this forward to execute both from a managerial perspective, all the way through individual contributors that are pulling us through.

And I'll get -- cite one specific example, which is that the team that we selected to do the 1.25 Aqualyzer program is especially fit team for not only running that program and being able to produce electrolyzers, Aqualyzer but be able to go out in the field and be customer-facing types of individuals that have had experience in that arena. And that's really important when you're executing. And you have to think about those things ahead of time, so you're ready when the time comes. And so that's what we're really focused on.

And the risk really is, can we execute. But the answer to that risk is, look at our team and decide if you think we've got the team.

Glen Akselrod -- Investor Relations

There are no further questions in the queue that have not yet been answered. So, I'm going to ask you for some closing remarks, and then we'll end the call.

Steve Cotton -- President and Chief Executive Officer

Well, great. Well, thanks, Glen, for that, and thanks to everybody. And I guess, to conclude, I'm going to take everybody back to our mission and remind everybody that we're striving for licensed AquaRefining technology, equipment, and services that are going to play a critical part in the sustainable metals recycling world to get critical metals, raw materials right back into the manufacturing chain in a clean and economically advantageous way. That's also going to help reduce overreliance on mining to meet the growing demand.

And we are very close to completing the commercialization of AquaRefining by way of our first deal, and we continue to offer clean capacity and expansion upgrades to build cleaner net new infrastructure, really, in the multibillion-dollar and growing lead battery marketplace. By seeking to extend AquaRefining into other critical levels in energy storage, we see the opportunity to more than double the total addressable market for our offerings of the licensed technology, equipment, services to the lithium-ion marketplace. As the world accelerates its move toward sustainable energy storage, supporting sustainable energy production, and creating new energy, a closed-loop, which is really going to be important and have a direct positive impact on global climate change. Our success to date and our team and our growing partnerships and our strong balance sheet, all, in my view, support our efforts, and I look forward to reporting to everybody the continued updates as they develop and obviously, through our next calls.

And thank you, everyone, for attending and for the support and the interest.

Glen Akselrod -- Investor Relations

Thanks, Steve. Thanks, Judd. Thanks to our audience. And this concludes the call.

Steve Cotton -- President and Chief Executive Officer

Thanks, everybody.

Operator

[Operator signoff]

Duration: 55 minutes

Call participants:

Glen Akselrod -- Investor Relations

Steve Cotton -- President and Chief Executive Officer

Judd Merrill -- Chief Financial Officer

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

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