American Resources Corporation (NASDAQ:AREC) Q4 2023 Earnings Call Transcript

American Resources Corporation (NASDAQ:AREC) Q4 2023 Earnings Call Transcript March 28, 2024

American Resources Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the American Resources Corporation Fourth Quarter and Year-End 2023 conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark LaVerghetta, Vice President, Corporate Finance and Communications. Thank you. You may begin.

Mark LaVerghetta: Thank you and good afternoon, everyone. On behalf of American Resources Corporation, I’d like to welcome everyone to our fourth quarter and full year 2023 conference call and business update. We always welcome this opportunity to provide an update on our businesses and discuss our accomplishments we made over the past several months and how we are uniquely positioned within the end markets that we serve for our American Carbon, American Metals, and ReElement Technologies divisions. On the call today is Mark Jensen, our CEO, Kirk Taylor, our Chief Financial Officer, and Tom Salve, our President. We will provide some prepared remarks today and then we’ll go into some questions and answers. Before we kick it off, I’d like to remind everyone of our normal cautionary statement.

Certain statements discussed on today’s call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risk uncertainties and other factors which could cause actual results to differ materially from the results discussed in the forward-looking statements. Considering forward-looking statements, you should keep in mind the risk factors, uncertainties, and other cautionary statements which are laid out in our press releases and SEC filings. We also do not undertake any obligation to update, revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Lastly, for anyone wanting to ask a question today, I believe you will need to dial in by phone to get into the queue.

We’re going to begin today with a few comments from our Chief Financial Officer, Kirk Taylor. Kirk?

Kirk Taylor: Thank you, Mark, and thank you, everyone, for taking a few minutes out of your day to listen to our fourth quarter earnings call. Over the past several months, we’ve continued our execution on solidifying our strategic positioning within our adjustable markets, which we believe positions ourselves and our company for attractive long-term value creation. In doing so, and in conjunction with the directive of our Strategic Committee from our Board of Directors, we’ve embarked on several initiatives to unbundle our unique platform of assets to better unlock value for all of our shareholders and position each entity as a standalone company. Much of our focus over the past several months has been to position and prepare both American Carbon, as well as ReElement Technologies as a standalone public companies.

These efforts include securing growth capital, such as a $45 million tax industrial bond for our Wyoming County Coal Complex, and our recently announced, or as of today, announced securing a $150 million net-of-fees industrial development bond to develop what we believe is the nation’s first of its kind lithium and critical mining mineral refinery in Kentucky. Both of these examples show that we have successfully capitalized near-term and intermediate-term growth plans for both American Carbon, as well as ReElement Technologies. Today’s closing of our second tax-exempt bond is another tremendous milestone for our company, as we continue to put the necessary pieces in place to execute on our mission. This is another monumental moment for our ReElement Technologies division, and for our country.

Our Kentucky lithium project is such a great example of how we can efficiently execute on our nation’s energy transition goals. The planned transformation of our Knott County facility enables us to utilize controlled land, resources, and already-in-place infrastructure, and a tremendously skilled workforce to quickly meet the needs of the rapidly growing energy storage market, along with utilizing our groundbreaking refining process to produce ultra-pure battery-grade products in an environmentally safe and low-cost process. This region of the country is well-positioned geographically within the developing battery belt and comes with a long standing history of pride and know-how in the raw material commodity processing industry. We appreciate the leadership of Knott County, Kentucky in working with us and sharing in our vision, and again, working with Hilltop Securities in their exceptional execution throughout this process.

We’re also in the process of working to secure additional sources of project development and growth capital through the tax and bond market government incentives and grants, as well as bringing in strong equity partners, both strategic and financial, that is across both American carbon, American metals, and ReElement Technologies. I’ll briefly go over year-end American resources consolidated summary. Over the past year, we have showcased our operational flexibility while also prioritizing the most accretive use of the capital and securing additional non-dilutive capital to position our unique set of assets and execute on our value creating initiatives. Our full year 2023 revenues of $16.7 million, which is a decline from 2022, are attributed to our decision to allocate capital to the most accretive uses throughout all of our businesses, ReElement, American Metals, and American Carbon.

As such, our management and Board chose to aggressively advance the development of ReElement Technologies, which include operating and expanding our Noblesville facility for customer qualification and validation, large-scale domestic project development, which includes the Marion Super Campus, as well as the Kentucky Lithium Project, international expansion, adding to what we feel is a world-class team, and procuring feedstock and off-take agreements. Now, additionally, while we’ve also been focusing on streamlining our balance sheet and continuing to reduce our bonding costs, our long-term environmental liability at the corporate level and at the operating subsidiary level. As such, we chose to keep our metallurgical carbon extraction processing activities idle and in the development stage while working aggressively to mitigate ongoing environmental liabilities attached to the permits that we acquired through previous bankruptcies of prior legacy producers.

Throughout the year, we did not take on any meaningful new operational debt, and the only new project debt we took on was associated with the issuance of a tax-exempt bond for the development of our Wyoming County and West Virginia mining complex. As of today, our current shares outstanding are just over 79.1 million Class A common shares. Cash on hand at the end of 2023, including funds held for development of Wyoming County Coal Complex, is $37.3 million. And again, as a reminder, all of our excess cash is held in FDIC limits at a top-tier U.S.-based bank. Our unique platform of assets is in a tremendous position to deliver attractive returns and value to our shareholders. I’d like to now turn the call back over to Mark LaVerghetta for some additional comments.

Mark?

Mark LaVerghetta: Thanks, Kirk. I’m going to make a few comments on ReElement Technologies. As we frequently state, our ReElement Technologies division represents an incredibly exciting and very strategic opportunity for us. We’ve never been involved with an entity that, in our opinion, has as much upside than ReElement. Our mission has always been focused on how to most efficiently and effectively deploy critical mineral refining outside of China. And it had always been our belief that attempting to deploy legacy Chinese refining technologies in the U.S. or Europe, really any other part of the industrialized world, would pose real challenges. Those types of facilities and technologies are extremely expensive to build and operate due to the harsh chemicals, waste output, and maintenance at large scale, and are not sustainable outside of China.

Given the projected growth and demand, the geopolitical landscape, the monopolistic position China has facilitated over the past couple of decades, and the rapid execution we’ve achieved to date, ReElement is uniquely positioned to solve complicated and pressing problems that exist today. As such, we sit at where I say is the intersection of critical mineral supply chain health and resiliency and national security interests. As we continue to strategically position ourselves in the global supply chain for critical minerals, it is becoming more and more evident that we are separating ourselves from the pack as the preeminent refining solution outside of China, and the most efficient critical mineral refining platform in the world. Our ability to produce high purity lithium products, battery elements, rare earth oxides, and critical defense elements for both recycled feedstocks as well as from natural feedstocks showcases our platform’s flexibility, and certainly differentiates us from anyone else out there.

While our platform’s flexibility uniquely positions us across multiple supply chains, we also have to stay focused on our particular end markets we serve and as we continue to execute and scale. Those end markets are, the production of rare earth oxides that are predominantly used for the manufacturing of permanent magnets, which are critical components within high efficiency motors in applications such as electric vehicles, windmill turbines, power tools, as well as critical defense technologies. Also the production of either ultra-pure lithium carbonate or lithium hydroxide, which are precursors for battery cathode that are used in a variety of lithium ion battery technologies. And then as well, another end market is critical defense elements.

These are highly unique for certain defense or military applications. The feedstocks that we’re currently most focused on are both primary ores as well as recycled feedstocks, which again, you know, contributes to the unique aspect and our unique positioning throughout the global marketplace. These feedstocks include end of life rare earth permanent magnets, which can come to us as magnets themselves or part of decommissioned wind turbines, electric vehicle rotors and motors, or any other consumer goods such as power tools and other e-waste. This is really where we cut our teeth and how we began ReElement Technologies with our partners at Purdue University in extracting the rare earth elements from the magnets and refining them back into magnet grade rare earth oxides.

Another key feedstock for us is black mass, which is shredded cathode material from lithium, excuse me, lithium ion batteries and lithium ion battery waste or scrap. Not all black mass is the same. There is very wide range of qualities and a variety of different battery chemistries that have different inherent elements and minerals. We’ve taken in black mass from well over a dozen producers worldwide and validated the efficacy of our technology. It is important to note that the battery recycling industry’s competency is really in the collection and aggregation of batteries and shredding them to produce a black mass material. Black mass cannot be used in the manufacturing of new cathode or batteries and requires further refinement of the material to produce battery grade precursor products.

The competency of those platforms is not in separating the high value elements in black mass and refining them back into battery grade precursor products. That is where we step in. Additionally, our ability to handle different types of black mass chemistries is another distinct differentiator of ours. Typically, battery shredders require NMC or nickel manganese cobalt type battery chemistries in order to monetize the inherent nickel cobalt value. While most, if not all, of the lithium is either lost or wasted. A lot of NMC black mass is sold today into China for refinement, which we believe will eventually be restricted or banned. And we are having success as a value added partner to separate and refine NMC based elements for certain recycling platforms all over the world.

However, our ability to economically refine LFP or lithium iron phosphate black mass is extremely unique. And we believe we are the only ones in the world that can economically extract the lithium and refine it back to battery grade products. LFP chemistry is the largest sub-segment of lithium ion battery chemistry today in the world and growing. It also sets us apart from any other critical mineral refining platform and showcases the value of our platform to the recycling industry. Our value added position in the recycling market and a sustainable supplier of critical minerals is strategically important as we move towards a highly mineral dependent electrified economy. And from our perspective, traditional solvent based processing methods don’t work efficiently within the recycling industry for a variety of reasons, including performance, CapEx and OpEx fundamentals.

Those challenges are beginning to manifest themselves in a big way across the recycling industry. Our powered by ReElement product offering, which is a collaborative and flexible refining service within the recycling industry, has tremendous growth opportunities to efficiently scale alongside the growth of the recycling industry while also being able to adapt to different and evolving battery chemistries. And we are beginning to see the success with some early adopters and partners. While recycling feedstocks are important from a sustainability perspective and provide us a tremendous opportunity, natural ores will allow us to move the needle faster to meet the rapidly growing demand of the energy storage market. Our current focus is mainly hard rock lithium bearing ores.

Given the efficiency of our process and technology to refine lithium very cost effectively. However, we also currently are working on different ores types, including cobalt and nickel bearing ores, unique and specific critical mineral defense minerals. And we are also in the early stages of incorporating rare earth ores into our development platform. Our commercial qualification plant in Noblesville, Indiana, has been extremely busy taking in these different feedstocks and validating our process and products with a variety of existing and potential partners in a variety of industries, including the renewable energy space, automobile OEMs, battery recycling, consumer power tools, and miners of minerals and ores from across the globe. These customer qualification and validation processes have sometimes been lengthy, sometimes taking over a year.

But they have also been successful in showcasing our distinct advantages. Additionally, our Noblesville facility has been hard at work utilizing these feedstocks to validate and design our process at larger commercial scale. For our two U.S.-based large-scale projects in Knott County, Kentucky, and Marion, Indiana, while also other co-located facilities in the United States and abroad. Our two large-scale U.S.-based critical mineral refining projects exemplify how we are leading the charge and are uniquely equipped to address probably the largest choke point in the critical mineral supply chain, which we believe is midstream processing in refining. Our Kentucky Lithium project is upcycling one of our carbon processing facilities in eastern Kentucky and transforming it into a large-scale critical mineral refinery with initial focus on hard rock lithium ores as its primary feedstock.

It is currently being designed with an initial capacity to produce 15,000 tons per year of battery-grade lithium, and will have the ability to incrementally add modular capacity beyond that. As previously discussed, this project is now funded with the closing of our tax-exempt bond we announced today, and I cannot think of another project that defines energy transition better. Our Marion, Indiana, Supersite project is converting what was once a beacon of U.S. innovation in manufacturing, it was once the largest television manufacturing facility in the world and is transforming it into a first-of-its-kind critical and rare-earth mineral refining campus with a focus on recycled feedstocks. This facility has been undergoing renovations and is being designed with initial capacity to produce 5,000 metric tons of battery-grade lithium and 1,000 tons of rare-earth oxides per year.

I cannot think of another project that defines the reshoring of U.S. manufacturing better than this project. Our innovative and advanced separation and purification methods using chromatography replace the guts within a typical hydrometallurgical process. In essence, we use a modified version of hydromet, but without the harsh solvents and acids that are typically used in the separation phase of refinement. This allows us to displace the toxic conventional methods used in China and what many are trying to attempt to deploy outside of China. We are lower cost and more efficient because we utilize a smaller footprint, we don’t use harsh chemicals, meaning our OpEx is much lower and our environmental footprint is much cleaner. Our process is modularly scalable, contributing to a meaningfully lower CapEx. Also, our speed to market is faster than anyone else.

Disruptive technologies comes down, in my opinion, to cost and know-how, and we are in a unique and fortunate position to have both. Our intellectual property has been developed and commercialized with approximately 40 years and over $40 million invested across multiple industries. Our best-in-class team leverages the know-how from the research and development, the commercialization, and operational expertise coupled with our asset base and relationships to execute on our mission. And we are able to produce high-demand products cost-competitively, if not lower than China. We believe our platform technology is an important linchpin in making the United States competitive within the electrified economy, as well as for national security objectives.

The value proposition for ReElement is, the world needs advancements in refining these raw materials that power our modern-day technologies, and we believe we provide the most efficient solution while also being in the lead position to do so. We truly believe ReElement has the opportunity to create substantial and meaningful value for our shareholders, and the decisions we make and the time associated around the entire process, while sometimes certain things being out of our control, are based on maximizing that value the very best that we can. I’d like to now turn it over to Mark Jensen for some additional comments. Mark?

Mark Jensen : Thanks, Mark, and thanks, everyone, for joining. I would also like to applaud our entire team for their efforts, their diligent planning, and their positioning of all of our assets. We’re a unique company. We have three platforms underneath one umbrella. Those assets aren’t being fairly valued. And more importantly, we recognize that. So what we’re focused on doing today is positioning our assets to unlock that value, to give our team members the tools that they need to execute upon that plan, to drive value for our shareholders through individualized entities upon the separation of what they’re able to accomplish. The past several months have been highly focused on preparing for this positioning of these businesses for the separation and operation of stand-alone companies.

That involves having board members in place for corporate governance, having the team members in place for execution, and giving them the tools that they need to take these businesses to the next level. Thankfully, we are very well suited to do that today. We have boards in place for each one of our divisions. We have teams in place for each one of our divisions. And we have the assets in place and technology in place to absolutely crush it. We have focused on driving the highest value aspects of our business forward for the long term. We have shared and communicated a number of very significant milestones that we’ve been able to achieve. And we have a number of significant milestones yet to come. But we are in a very favorable position within the marketplace, not only at the American Carbon Division where we have some nameplate assets that are some of the lowest cost mining operations that are getting ready to ramp up production aggressively between our Wyoming and McCoy complexes, as well as our ReElement Technologies Division, which Mark and Kirk had the luxury of sharing some of the opportunities that we have in front of ourselves.

We’re extremely excited about these entities, and we’re extremely excited about where they can go upon the separation of the businesses so that they have their core focus and their ability to focus solely on their operations. Over the course of the last quarter, we have been investing heavily into the businesses. Wyoming has been developing from the tax-exempt bond. McCoy has been positioning the ramp up of our Carnegie mines. And ReElement has been focused on proving out and running production in our Noblesville facility, but developing our Kentucky Lithium site, our Marion site, as well as our international opportunities that we have made significant milestones on. The world of critical minerals, the supply chains are broken. We rely upon China for 95% of everything we do.

Our military, our commercial enterprises. And the only thing they all care about is cost. We can provide products at the same cost, if not better than what China can do today. That’s a game changer. We’re going to break the monopoly, we’re going to bring technology to the forefront, and we’re going to execute upon our mission. And we’re going to do that in a very rewarding way to our shareholders. We’ve been laying the groundwork for that. We’ve put the assets in place. We’ve proven that the technology works and works extremely well. And our operational team has done a phenomenal job at that. Now we’re putting the financing in place with the $150 million tax-exempt bond we closed today and another tax-exempt bond we’re working on as we speak.

We’ve applied for government grants, we’ll see if we get them. We also have a significant number of international financing operations that are in place that can unlock our international efforts, especially in Africa. They need what we offer. We offer refining solutions that they can’t get anywhere else other than China, and that product goes to China. It doesn’t develop a manufacturing society. It’s exploitation where we’re focused on developing economic relationships. Our technology enables that, developed out of Purdue University here in Indiana. We’re extremely proud of that. We’re extremely proud of the efforts that our Purdue team has put in place and the support that they’ve given our operational team to drive our technology forward.

Our team has worked countless hours to be where we’re at today. Today it’s about running production every day in our Noblesville facility and gearing up for our Kentucky site as well as our Marion site. Our team has been working countless hours over in Africa, and traveling numerous times over there to develop the relationships and share what we bring differently to the table to drive economic value for our shareholders. Turles Thompson has been leading our American Carbon Division to position these assets to light the fire of production at low cost. It’s everybody wants revenue on a daily basis. We care about long-term value. We care about making sure we turn these mines on to optimize them. We’ve reduced environmental liability significantly over the course of the last year, including over the last quarter.

And we’ll showcase that here shortly. Our intent is to spin these assets off and ramp up production at all divisions. And we’re going to do that. And we’re going to share that news here very, very shortly. I’ll talk about that a little further here later on during this call. As Kirk mentioned, we have not taken our foot off the gas. We’ve been aggressively planning, working, positioning to execute upon the strategy. We’ve spun off our Nova Stare asset, a phenomenal business. We’ve gotten one contract with the Air Force and the Army through Kenai Defense. Working on getting through their S-1 process to IPO later this year. We will very shortly here next week announce when we’re spinning off our American Carbon Division so that we can ramp our production there.

And the team can focus solely on being the lowest cost producer of MET coal to the steel industry. And we’ll then shortly thereafter announce where we’re spinning off ReElement into its own standalone platform so it has a clean focus on being the world supplier of refining solutions for critical minerals beyond China. And I truly believe we will be the only solution that works economically in this country as well as in others for that separation purification step, which is really the heart of what we do. We’ve also been focused on putting these non-dilutive capital financings in place to protect our shareholders. We can hit the easy button tomorrow, easily. We can go out and raise equity capital and do what every other company does, but we actually care, our team actually cares.

Our team is motivated by the shares in equity that we all own and that our families own. That’s important to us. So we don’t hit the easy button. We fight the hard fight to put our businesses in place to be successful. We’ve closed a $45 million tax-exempt bond in one of the most challenging markets you could find with a phenomenal investor. And that capital is being used to develop the Wyoming County complex to be an absolutely phenomenal complex. It’s a focus on producing met coal and then a byproduct of producing concentrates of rare earth elements, of which we’ll share those results very shortly, which are better than one of the largest mining operations that have announced rare earth elements to date on a parts per million basis. Absolutely phenomenal results.

We’ve announced that we’ve had offers to sell the coal business. And the numbers, the values were good. We’re okay with them. The concern was around structure. We’re not going to put our investors at risk of not getting paid the full consideration of what those assets are worth. So our focus next week will announce the record date and the payment date of when we’re going to spin American Carbon Off. Now, we are focused on still monetizing the assets, and we’re still going to evaluate opportunities to monetize those assets. We have signed agreements, binding agreements to sell the Deane Complex, but they didn’t pay us. It’s unfortunate. That being said, they owe us a lot of money, and we’re pursuing that in court as we speak. And I think we’ll get it.

I feel very confident about that. Feel very confident about our position to make sure we get that money for our shareholders. We also have other interests and other buyers that are interested in some of the non-core, non-focus assets for the quality of production that we’re looking at targeting. And then post-spinoff, we are looking at further expanding American Carbon, and the American Carbon executive team has presented a plan of growth to the division organically, as well as acquisitions in the West Virginia region, as well as in other materials. During the course of the last short period of time, we acquired an iron ore asset, which is a phenomenal asset. We’re doing a ton of work there right now on evaluating the reserve and sending actually a few team members out to that region here very shortly, to further look at how we bring that into production and look at technologies to monetize that most economically.

So it’s not only looking at the Met Carbon division, but looking at the entire infrastructure landscape of how do we produce products to monetize that division and expand that division. The American Carbon division, as I mentioned, we will announce next week the date. We’ll provide clarity of when we’re going to dividend it out to our underlying shareholders. And then we’ll share the growth curve of how we anticipate that. We have equity interest. We have debt interest to further finance and expand that division. And we’re going to focus on growing that division to make sure that the shareholders receive the entire reward of what it’s worth. ReElement, same thing. We filed a Form 10 for both of these divisions. We’re going to push that through.

We’re working on closing the financing that was previously announced. We have great interest in it. We don’t need a lot of that with the tax-exempt bonds we just closed. So we’re going to try to focus on minimizing dilution, but bringing in the necessary capital to continue to move the business forward as quickly as we possibly can. The opportunity today at ReElement has had us focusing on allocating capital to make sure that we’re allocating it in the most accretive way. Our Marion facility is going through certificate of occupancy in the next few weeks, and we believe we’ll get it. Our ability to finalize the renovations there over the next few months to start deploying equipment there will enable us to expand our production in Marion as well as expand our refining capacity in Noblesville.

And that’s a beautiful thing for us. We are the only refining facility in the United States that can perform at the purity levels that we’re able to achieve that are necessary to build a domestic battery industry. Internationally, we’ve made huge strides within our international footprint for ReElement. We’ve had conversations with groups out of Canada, Australia, numerous groups out of Africa. Some of our largest sourcing of materials are coming out of Germany that we’re refining, that we’ll be refining in our Noblesville and Marion facilities. Establishing those international relationships takes time. That being said, we’ve been putting a lot of groundwork there, and I think we’ve collapsed that time significantly due to the efforts of our team members and the willingness and passion to travel to spend time away from their families, to build a team and build a platform that can help us grow to that next level very, very quickly.

Ultimately, it’s about partnerships. We’ve announced numerous partnerships over the course of the last year. We’ve announced EDP. We have numerous partnerships, we’re not allowed to mention their name. That’s unfortunate. That being said, they’re great partners, and ultimately, we’re getting calls from numerous other partners that need these solutions that we provide. Over the course of the next year, we’ll be able to talk much more openly about who these partners are, we hope, as we continue to expand the relationships with them, not only from feedstocks but also the sales side. And we also look to continue to expand all of our platforms on the international footprint. In closing, we remain very confident in the positioning of all of our assets and the long-term value that they provide to our shareholders.

We remain hyper-focused on unlocking that value. That’s why we’re focused on these distributions. That’s why we’re focused on spinning them off. A microcap conglomerate doesn’t make sense. We’re fortunate that we built a microcap conglomerate. We did it based on effort. We did it based on we put ourselves out there. The technologies worked, the platform worked. The platform is positioned, and now it’s time to let them go off on their own and be successful. And we have the teams to be able to do that. These milestones were the distribution of Novusterra shares over the course of the last quarter, closing of our tax-exempt bond to finance both our carbon division as well as our ReElement division, and our ability to showcase the results of what our technology can produce.

We have ample liquidity on our balance sheet. We do not foresee us needing to issue equity at the AREC level to raise additional capital. We do want to position the individual entities to do their finances on the American carbon side and the ReElement side. American resources post-distribution of these assets will expand aggressively into the critical mineral space on the mining front. We have numerous opportunities in front of us as well as on the utilizations of the products that we produce through very good partnerships that we’ve been working on for numerous months, if not years now. Just to reiterate, the management and the families of our management are some of the largest shareholders of American Resources. Our management team is committed to maximizing the value of all of our businesses and believe our continued execution and unbundling of these assets will help us achieve this.

I thank you for all your time and I’d like to turn it back over to the moderator for some Q&A.

See also Top 10 Dividend Aristocrats by Yield: April 2024 and 12 Oversold Dividend Stocks To Buy Now.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Heiko Ihle with HC Wainwright. Please state your question.

Heiko Ihle : Hey, Mark. Can you hear me all right?

Mark Jensen : I can.

Heiko Ihle: Perfect. Excellent. Hey, you’ve got these executed MOUs with the German battery recycling platforms at Duesenfeld Deal and the Battery Damage Service MOU. Obviously, arguably a very big market opportunity there, but can you maybe give some figures of what you internally think, how big of a market opportunity there might be in your collaboration going forward?

Mark Jensen : Yes, absolutely. So Duesenfeld, a phenomenal partner, same as Battery Damage Services. Duesenfeld actually just, I think it’s putting on a boat one of our containers, I think a 53-foot container or a 40-foot container with some black mass as we speak. The attractiveness about the partnerships and what we do, we’re one of the few players, if not the only, that can recycle LFP batteries profitably, and that’s due to the technology, the process flow of how we extract lithium out of it. The size and scale of what that means, so Duesenfeld’s a phenomenal company, phenomenal technology, and their business model is to operate their existing recycling footprint, but also license it out. And what’s great about that is we got to really fund collaborative relationship with them where they refer us to their partners that are also buying their shredders.

So this could be pretty substantial. Our goal right now — I mean, we’re in Noblesville, small footprint, 7,000 square feet. Our Marion facility is 400,000 square feet. So getting certification of occupancy there is obviously quite important for us to rapidly expand our production. But the meaningful nature of it is, one, obviously, domestically, there’s a lot of black mass today that goes to China from the U.S., unfortunately. That’s going to stop, I think, soon, and we’ll be the solution here for that. We are the solution for refining here domestically. In Europe, I believe it’s the same thing. We’re getting beyond relationships there, but also helping them source product as well. And those relationships could be very meaningful for us from a revenue basis going in for the next 12, 24 months.

Heiko Ihle: That’s very helpful. Also, your royalty income in 2023 was quite strong, just looking over the income statement. Can you provide some longer-term guidance on where we should model royalty income going forward in ’24 and after that? And speaking of longer-term modeling, where should you think we should see G&A in 2024, please?

Mark Jensen : So that’s a good question. So I mean, G&A — so you got to understand where we’re at in the platform right now. So I’ll answer your last question first. It’s going to change pretty dramatically because the divisions are going to separate. So each division will have their own G&A, but there will be a fraction of what the obviously holding company is today. So our G&A overall, though, will, I think, stay pretty consistently where it’s at today. It’s not going to rise a substantial amount. Obviously, with revenue increase, that will. And we’re getting ready to do that. So we’re obviously getting ready to expand our revenue base on the ReElement side. We’re getting ready very quickly here to expand our revenue base on the mining side with the spin-off announcement next week and then also the ramp-up production.

The — so G&A will be — I would say, on a whole, if you look across the entire platform will be pretty consistent where it’s at today. It’s not going to expand a lot if any. The royalty income, I would also say, is pretty consistent. It will be — I think it will be pretty consistent going forward based on where it’s at right now.

Heiko Ihle: Fair enough. Appreciate, I’ll get back in queue. Thanks guys.

Operator: And our next question comes from Mike Niehuser with ROTH Capital Partners. Please state your question. Mike Niehuser, your line is open, go ahead.

Mike Niehuser : Yes, you can hear me okay?

Operator: Yes, coming through, go ahead.

Mike Niehuser: Yes, thank you. Sorry about that. You mentioned that your very bold statements about breaking the monopoly with China, and I have to get you to explore that a little bit more. And I think that hinges on costs. And as you look at costs, when you — when you make that statement comparing yourself to China and having lower costs, is that on a — like a currency basis? Or does that impute an environmental savings? Because I get the feeling that both China and you are the other ends of the spectrum as far as the environmental impact where they’ve tortured some areas in China and you’re nothing burger in the environmental footprint. So are you figuring that into breaking the monopoly? Or are you just looking at cold hard dollars?

Mark Jensen : Yes. That’s a great question, Mike. Nobody cares, nobody in reality, about non-cash costs, meaning that you could have the best environmental footprint in the world, but if you’re 50% more expenses, nobody is going to buy it. You have to compete head-to-head on cost. Now thankfully, we do that because we have a great environmental process. Our technology is environmentally sound. We don’t use harsh chemicals. It’s closed loop systems. We don’t discharge elements in the waterways. We use columns and resins versus emulsion and chemicals. So we compete on cost because of our environmental footprint, but we compete head-to-head on cost. That’s the only thing that matters when it comes to commodities. And I don’t care what anybody says.