Aqua Metals Q3 2025: Contradictions Emerge in Partnership Strategy, Technology, and Facility Timelines

Guidance:

• Multiple quarters of operating runway following $17.1M in recent capital to support pilot operations and advance engineering, permitting, and site selection.
• Anticipate a modest increase in cash use as R&D, process optimization, and site-readiness ramp in support of commercialization.
• Continue disciplined spending; prioritize securing bankable feedstock and off-take before committing to commercial build.
• Expect to share business development/commercial updates as initiatives mature, potentially as early as this quarter.

Business Commentary:

• Capital Infusion and Financial Strength:
• Aqua Metals raised approximately $17.1 million in new funding, strengthening its balance sheet and providing multiple quarters of strategic runway.

• This proactive raise allows Aqua Metals to accelerate its plan and maintain strategic momentum, positioning the company for full commercialization.

• Technological Advancements and Market Validation:

• The company successfully processed one metric ton of lithium iron phosphate (LFP) cathode scrap at pilot scale, producing battery-grade lithium carbonate validated by OEMs and third-party testing.

• This achievement positions Aqua Metals as the only company to demonstrate an economically viable path for producing battery-grade lithium carbonate by recycling from LFP at commercially relevant scale.

• Cost Discipline and Operational Efficiency:

  

• Total operating costs decreased to approximately $2.7 million for the quarter, compared to $3 million in the prior year, reflecting continued cost discipline.

• The reduction in operating expenses also included a decrease in general administrative expenses to $2.1 million from $2.5 million last year.

• Strategic Partnerships and Market Expansions:

• MOU agreements with Mobi Robotics and Impossible Metals extend the AquaRefining platform into deep-sea mineral feedstocks, reinforcing Aqua Metals' role in sustainable critical mineral supply.

• An LOI agreement with Westwind Elements advances discussions for the potential supply of 500-1,000 metric tons of recycled nickel carbonate annually, with a value of approximately $12 million based on today's nickel prices.

• Regulatory Compliance and Market Engagement:

• Aqua Metals regained compliance with NASDAQ listing requirements, enhancing its market position as it advances towards commercial operations.

• The company actively engaged in industry events such as the Battery Show and the Battery Recycling Workshop in Kuzu, China, to strengthen its presence and partnerships.

  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management described the quarter as "a meaningful strengthening of Aqua Metals," highlighted a $17.1M capital raise providing "multiple quarters of strategic runway," and noted pilot success: "successfully processed one metric ton of LFP... producing battery-grade lithium carbonate," signaling technical validation and improved liquidity.

Q&A:

• Question from Nikki Legg (Benchmark Company): Hey, guys. Thanks for taking my questions and congrats on the quarter. I’d like to start with maybe what are a few of the biggest gating factors to securing first build, and if you were able to clear those, how long do you expect to get to commissioning from there? Thanks.
  Response: They will not build until demand, feedstock certainty and bankable off-take are in place—preference is to "build once and build right" to avoid dilution; timing tied to securing contracts, not immediate construction.

• Question from Nikki Legg (Benchmark Company): I was more talking about securing that partnership so that you feel comfortable with the timing of the build. What's keeping the partnership discussions? How are those going? Any color on those and how they’re progressing?
  Response: Inbound OEM and commercial interest has increased after the LFP pilot; product qualification and strengthened balance sheet are deepening engagement and should yield reports/announcements soon.

• Question from Nikki Legg (Benchmark Company): Maybe could you just talk about your comfortability there, specifically on the black mass front, and how secure you feel about locking that down in the near term, given a pretty volatile macro?
  Response: They are confident ample black mass exists and that Aqua can match current payables; focus is on securing bankable contracts before committing to a commercial build.

• Question from Nikki Legg (Benchmark Company): Can you give us maybe a little more color on the pathway for the nickel product and maybe just a runway there? Saw the LOI with Westwind, but that’s not delivery until 2027. Maybe just more near-term, what sort of demand you’re seeing on that front? Any particular directions that that demand is trending? Just curious.
  Response: Nickel is a longer-term opportunity pursued via partners like Westwind; Aqua can produce nickel/cobalt in marketable metal forms for US supply chains, with near-term focus remaining on black mass-to-lithium carbonate commercialization.

• Question from Investor (Submitted): Can you expand on your financial position and the runway that you see?
  Response: Recent ~$17M+ capital infusion (including $13M post-quarter) provides multiple quarters of runway to complete engineering, permitting and site selection while maintaining disciplined spending.

• Question from Investor (Submitted): How do you guys view the current consolidation that’s happening in the battery recycling industry today?
  Response: They view consolidation as market selection for technically validated, capital-strong operators; Aqua believes its technology, discipline and refreshed balance sheet position it to be a surviving, scaled player.

• Question from Investor (Submitted): You guys didn’t mention the specific site for your first commercial facility. Can you provide an update on where you are, the timeline, and some more information there?
  Response: Site evaluation and diligence (engineering, permitting, utilities) are well advanced and being aligned with strategic partners; management expects to provide more specifics potentially this quarter.

• Question from Investor (Submitted): Should investors expect more business development updates in the near term?
  Response: Yes—management will announce only when confident but expects to share additional commercial/business development updates as initiatives mature, possibly as early as this quarter.

Contradiction Point 1

Partnership Strategy and Timing

It involves the company's approach to partnerships and the perceived timeline for securing these partnerships, which can impact business development and investor confidence.

How are partnership discussions progressing? - Nikki Legg (Benchmark Company)

2025Q3: Interest in partnerships is increasing with positive results from pilot scale runs. Deep engagement with OEMs and potential partners. Strengthened balance sheet increases credibility. - Steve Cotton(CEO)

With no long-term debt, what flexibility do you have in structuring partnerships via equity or royalties, and what breathing room have you created? - Michael Frederick Legg (The Benchmark Company, LLC, Research Division)

2025Q2: Aqua Metals has a strong cash position, providing runway for strategic partnership discussions. The focus is on collaboration rather than going it alone. The company has time to establish strategic relationships and partners, which is essential for maintaining industry momentum. - Stephen Cotton(CEO)

Contradiction Point 2

Technology and Process Advancements

It highlights differing statements about the company's technological advancements and the competitive landscape, which can impact industry perception and investor confidence.

What are the major gating factors for securing the first build, and once cleared, how long until commissioning? - Nikki Legg (Benchmark Company)

2025Q3: Aqua Metals chooses a disciplined approach, building once and building right. Building is sequenced to align with market timing, feedstock certainty, and off-take. Maintaining strategic leverage and avoiding unnecessary dilution is key. - Steve Cotton(CEO)

What is the progress in technology and the breakdown of China's competition? How are potential customers perceiving these advancements and their implications? - Michael Frederick Legg (The Benchmark Company, LLC, Research Division)

2025Q2: The key technological achievement this quarter was reducing fluorine content in lithium carbonate to below 30 ppm, possibly a global best for recycled lithium. This exceeds the strict specifications of cathode-active material producers. Aqua Metals' recycling process is cost-competitive with Chinese hydrometallurgical recycling and operates at half the cost of traditional U.S. methods. Strategic partners are impressed with the quality of materials produced. - Stephen Cotton(CEO)

Contradiction Point 3

Feedstock and Market Timing for First Commercial Facility

It reflects differing priorities and strategies regarding the timing and conditions for building the first commercial facility, which is critical for Aqua Metals' growth and market positioning.

What are the key gating factors for securing the first build, and after addressing these, how long until commissioning? - Nikki Legg (Benchmark Company)

2025Q3: Aqua Metals chooses a disciplined approach, building once and building right. Building is sequenced to align with market timing, feedstock certainty, and off-take. Maintaining strategic leverage and avoiding unnecessary dilution is key. - Steve Cotton(CEO)

Could you explain the CRR sale process and how much runway this provides? Is there a focus on co-locating now? - Mickey Legg (Benchmark)

2025Q1: We're focusing on alternate locations for building the first ARC, which could reduce CapEx and OpEx. This approach aligns with adapting to current market conditions and building when customers come. - Steve Cotton(CEO)

Contradiction Point 4

Site Selection and Timeline for First Commercial Facility

It involves the strategy and timeline for establishing the first commercial facility, which is critical for production capacity and operational expansion.

Can you specify the location of your first commercial facility, provide an update on the timeline, and share additional details? - Rob Fink (Investor Relations)

2025Q3: Progress in site evaluation with diligence on key locations. Engineering, permitting, and utility access studies underway. Aim for capital-efficient and strategically advantageous path. - Steve Cotton(CEO)

Can you explain the updated plan for the Sierra facility and confirm if Phase One can be commissioned within the next couple of quarters? - Mickey Legg (The Benchmark Company)

2024Q4: The Sierra ARC is move-in ready, with most equipment ordered. - Steve Cotton(CEO)

Contradiction Point 5

Partnership and Offtake Discussions

It involves the progress and nature of partnership and offtake discussions, which are crucial for securing long-term contracts and market penetration.

Are partnership discussions progressing, and are there additional details available? - Nikki Legg (Benchmark Company)

2025Q3: Interest in partnerships is increasing with positive results from pilot scale runs. Deep engagement with OEMs and potential partners. Strengthened balance sheet increases credibility. - Steve Cotton(CEO)

Can you provide updates on discussions with customers regarding offtake agreements, colocations, or licensing opportunities? - Mickey Legg (The Benchmark Company)

2024Q4: We have a pilot plant that produces representative battery-grade materials, enabling engagement with off-takers and OEMs. We're solving the 'chicken and egg' factor by working on feedstock and offtake agreements alongside financing. - Steve Cotton(CEO)