Electra Battery Materials Corporation (ELBM) on Q2 2022 Results - Earnings Call Transcript
Operator: Thank you for standing by. This is the conference operator. Welcome to the Electra Battery Materials Corporation Q2 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. I would now like to hand the conference over to Joe Racanelli, Vice President, Investor Relations with Electra Battery Materials Corporation. Please go ahead.
Joe Racanelli: Thank you, operator and good morning everyone. This is Electra's first conference call and will be making this a regular occurrence, and it's a reflection of how we continue on growing as a company. Before we begin and turn the call over to Trent Mell, Electra CEO, I want point out that we filed our materials in their available both on SEDAR, EDGAR as well as our website. Today we will be using a presentation that presentation is also available on our website for those who called -- who dialed in under the Events Section of our website at electrabmc.com. We will be making forward-looking statements in the Safe Harbor provisions of those are outlined in our presentation on Page 2. At the end of today's call, we will have a Q&A session for analyst with accredited firms and for investors who do want to have follow-up questions return to myself, please let us know, we'll be happy to reply afterwards. So with me today are Trent. As you can see on Slide 3, He is Trent Mell, company's CEO. We have Mark Trevisiol, who is VP of Project Development, Craig Cunningham who recently joined us as a Chief Financial Officer, and in Idaho today is Dan Pace, our Principal Geologist. Mark is at the refinery and Trent, Craig and I are here in Toronto, so we've got indication of how we are growing and how we are spread out as a company. So with that, Trent takeover, please.
Trent Mell: Thank you, Joe, and good morning everybody. Thanks for joining our call today before we open the call up to questions from the analyst community. I do want to highlight here on Page 4, some of our highlights and then we'll do a round-robin with the people the Joe has introduced. So some key developments for us listed here, it's been a busy one we've hired four new executives to the senior leadership team, many, many more through the ranks particularly under Mark's watch building out the refinery and obviously commissioning of the refinery project has remained the big focus, and the primary focus of our cash resources as well. In tandem with that - there are other developments that are outlined on the next slide, in Slide 5, I'll cover in a moment, our ESG strategy that's come to the floor for us and it's also worth noting the exploration work that we've been doing at Idaho which is finally getting the attention it deserves. In addition to that we've got developments on recycling at the same net site at the cobalt plant. We've got news on our nickel study and of course potential expansions, expected expansion to my opinion in Becancour, Quebec. So I think this progress. You can see here in the summary makes it pretty clear we're executing against the strategy as laid out and let's get into it a little bit further. So Slide 5, if we may ESG, it's got to be part of our D&A right. We're making zero emission vehicles and it's our duty, it's our imperative to make the production process as low carbon as possible. And so we've hired Renata Cardoso. She was the sustainability leader at Vale known around the world as she you joined us as VP Sustainability Low Carbon in Q2, and she has already implemented quite a few initiatives for us working currently on the sustainability report it will be our report first and we'll have that towards the end of the year and I think towards the end of the year, you're also see a little bit of a roadmap for us on how we expect to attain net zero ourselves. Other achievements the signing of a benefits agreement with the Metis Nation of Ontario, one of our neighbors up near the refinery I hope and expect that's the first of many. And then the point of these benefit agreements is to ensure mutually beneficial opportunities there is development jobs contracting and the alike. And we've also got a new suite of the ESG policies that can be found on our website. So if we turn to year overview on Slide 6. I'm going to. There is just a picture of the refinery. Mark Trevisiol, VP Project Development is now going to take the call and lead you through the status of that project.
Mark Trevisiol: Very good thanks, Trent Slide 7. I'll just highlight some points and our progress at the refinery. For those of you who been up there. There is an existing footprint there that has over 64 vessels. So this refinery operated in its past history. And we're utilizing a lot of those vessels and our new process and about 80% of that Brownfield equipment has now been re-commissioned and it's been a pleasant story commissioning the vessels and the pumps that are there, we've had very few surprises, and so that brought a lot of smiles to us, and with that there is also about 80% of our procurement that has been completed and about 80%, 85% of our detailed engineering. The main activities at site and we're not only commissioning the Brownfield equipment, the solvent extraction plant. Construction continues. We have a picture of that in the next couple of slides. And we've had a zero loss time incidents and that's not only in 2022, that's going back to when we started construction and started building our team back in April of 2021. So well over 12 months without a lost time incident, which is again part of something that is our culture that we're trying to cultivate and work with every employee who gets hired and every contractor, who comes on site. And most recently we've launched our operational and commercial readiness which focuses on how we're going to start to operate this plant. It's going to be a different mode then construction and you know the key performance indicators that you're measuring during construction are not the same ones for the most part that you're running when you're in an operating plant, I mean you're looking at uptime when you're operating. You're looking at recoveries certainly health, safety and environment follow suit, but there is a number of other key metrics that we have to develop and for that matter, a little bit different roles on the senior executive team. When you have an operational facility versus one that you're in the building up - and the operational readiness plan captures all of these tasks that have to be done and puts a schedule to completing them. And this is, this is a picture of our existing refinery footprint, you can see, number of filter presses and tanks there, as I alluded to and generally, what you're seeing there is in fairly good condition there was and is some refinements that we're making into some of these vessels, but having a footprint that we have here, not only saves us on capital, but it was an operating facility at one point, and that in itself. I mean something in terms of being able to move fluids around and vessels operating and performing leaching functions like what we're going to do in the future. And this is a picture of the construction of the steel works for our solvent extraction facility, you've got two base being constructed here if you would visit the site today all 10 base have been constructed, and they're actually starting to put on the outside sheeting of the shell of the plant. So a lot of work has been done over the last few months. With that some of the challenges that we've had to navigate I mean, we're not in any way immune to what's been going on in the world. The issues, the geopolitical issues in Europe, the supply chain issues out of Asia, direct result of having a domino effect on prices and pricing pressures, for us. We've seen a number of items that last year when we did the final budget for this project. Nobody saw $100 oil price and the effect that that would have throughout the world and throughout transportation and materials acquisitions. So those things coupled with some supply chain issues that we're seeing out of Asia have certainly been a challenge to work and manage, but our team has reacted fairly, quickly to these. And we've been able to work with our suppliers to try to reroute things where we can and sort of getting it made in a certain country can we make them somewhere else, can we make components source components from somewhere else. So our people have been on top of it. Most recently we've seen a delivery delay from some of our tanks that were being manufactured something that, it was a quality inspection by the manufacturer that caught a problem with the tanks being manufactured and the number of these tanks had to be scrapped unfortunately, I mean it's a good thing that we caught it but the downside is that, it has resulted in a delay and these tanks were on our critical path. So we're now expecting a project completion in the spring of 2023 I know probably - some announcements that we last discussed and talk to investors on we're looking at starting commissioning in December of this year. That isn't impossible, given the delay with some of these OEM components. And our project costs again, we talked about the inflationary pressures something that certainly wasn't, we're seeing Canadian inflation rate of over 7% announcements in the US, several were 8% then 9%. So these, these costs were not in our original budget, and at $67 million, which was our original budget. We're now seeing a final completion costs in the range of $76 million to $80 million. Some other initiatives that we are working on as I mentioned, we're continuing to work on the commercial and operational readiness. We've also are working on a nickel study with our partners at Talon Metals and Glencore that's study is looking at producing nickel sulfate product, again, another key component in the battery supply chain and producing that here in Ontario at our sites up North. And as well in parallel, we're doing a pre-feasibility study on a potential plant in Becancour, Quebec and at that plant would be similar to the one that we're currently building. So maybe a lot of the heavy lifting, so to speak, to be done by that time on our current process and cobalt sulfate facility. And hopefully it's more of a twin to what we currently have. So there is some synergies there with going into Quebec and building something similar. And this is getting a lot of attention recently our black mass recycling demonstration is also planned the next few months, we are looking to
Joe Racanelli: That's on slide 12.
Mark Trevisiol: Okay, we're looking to make several products from black mass including nickel cobalt and lithium. This is a high level process flow sheet on Slide 12, so this is black mass is a recycled material taken from electric vehicle batteries and other electric batteries and we plan to put them through our leaching process similar to what we're doing with the cobalt sulphate plant. But instead of just having the one product out of the cobalt sulphate plants, we would have several in terms of nickel cobalt lithium and potentially copper. And with that I'm going to turn it over to Craig Cunningham, our CFO who will go through the Q2 financials.
Craig Cunningham: Thanks Mark good morning, everyone. As many of you will - know I joined Electra in Q2. After spending more than 10 years in the gold industry with Kinross Gold in various roles in various locations around the world and I look forward to meeting our shareholders and various members of the investment community. As a pre-production company, we don't yet have revenue and we aren't yet in operations. We did, however, generate a net income of $7.5 million or approximately $0.23 per share in Q2 as you'll note in Slide 14. That is primarily driven from the $12.7 million fair value adjustment on the embedded derivative liability that exists on our convertible debt. We closed Q1 at $5.47 which was and we closed Q2 at $3.60, which is caused the valuation of the derivative liability to go down with the resulting adjustment running through income. This was a non-cash adjustment which means you don't see any change in our actual cash position related from this. However, if you look at our current share price, we may see a reversal of this in the future as that liability is sensitive to the share price. At June 30, our cash and marketable securities position combined was $41.8 million, which was down from $51.9 million at the end of Q1. This is primarily from the drawn funds as we continue to advance construction and exploration, as well as G&A throughout the company. As Mark noted, we are in a inflationary price period with a number of pressures on the cost of our capital projects for the refinery. We have revised our previous estimates for approximately USD67 million to between USD67 million and USD80 million for the refinery and we see that as a CAD100 million to CAD105 million as a result of that development. We're going to be continuing to explore ways of strengthening our balance sheet and meeting the funding needs for that project as we go forward. Given our extended timeline and if you see on Page 15 for the completion refinery project as well as the volatility of the cost inputs and uncertainty around inputs into the refinery-related to the global supply chain difficulties that we see, we've updated our guidance and we now believe. So we're providing for 2023, we have however removed guidance for EBITDA from 2024 and 2025. Our range for EBITDA for 2023 is expected to be $9.5 million to $10.5 million with the production range of 1,800 tonnes to 2,100 tonnes. Our production ramp-up will continue through 2023 and we anticipate steady state production of 5,000 tonnes to be achieved in 2024. The retraction of our EBITDA guidance for years beyond 2023 reflects the volatility that we're seeing as Mark mentioned earlier. Additionally, we're focused on the construction and completion of the refinery and the near-term ramp-up of the operations, which we have adjusted our guidance to match that focus, we do anticipate providing updated guidance when that's appropriate. I'd also like to point out that our EBITDA forecast on Page 15 is based solely on the sale of cobalt sulfate and does not consider any potential income from our black mass recycling projects. That concludes my comments and I will turn it back over to Trent.
Trent Mell: Thanks for that Craig. And yes just on the, the guidance. Those of you who follow the commodity will know that currently cobalt price is lower than in our forecast, but important to point out that the cobalt product that we sell, the sulfate and the cobalt hydroxide that we buy, they do tend to move in tandem. And so our guidance is reflected at a view of a prevailing price, but that margin is fairly - somewhat fairly insulated over time by virtue of this the other correlation between the two prices. All right let's turn to Slide 16, just the Becancour expansion in my home province of Quebec and exciting development early days, but very exciting development for us frankly to be approached given our expertise we're building. I believe, what is the very first cobalt, battery grade cobalt refinery outside of China in some 30 years and so Mark and his team having gone down this path now for the last couple of years. We put together a collection of people and a knowledge base and a flow sheet that puts us in a really good position to be replicated. This is the first and maybe not the last, such instance of being able to try to leverage that. So Page 17, you can see a picture of the Brownfield site the deepwater port. A lot of industry there just a lot of rail, hydroelectricity, gas lines in your about hour and half from Montreal and or Quebec City on the St. Lawrence River. So a really, really good location for us and for the battery, supply chain, and it is developing very quickly as an important hub for the North American onshore and that's a theme that we are seeing the chemical process. So that that midstream between mining and cell production is drawing a lot of attention in Canada as a location for these facilities, including refiners such as us and the reason for that is just our permitting regime and our mining know how we're one step removed in a lot of the permitting and technical know-how that comes with refining it's really a minimal to the Canadian regulatory regime. So if you look at Becancour proper it's attracted thus far more than $400 million of announced investments from a number of companies that you would know, BASF with the cathode plant, GM and POSCO within another cathode plant Vale pursuing nickel wouldn't be surprised to see another chemical company coming into play there and eventually probably some precursor production as well, so the co-location for us, it makes a lot of sense. As Mark indicated and by starting a new it might give us some flexibility as well, not just to leverage what we have. But to bring in some flexibility in how we design it and the type of fees we may want to bring in. And it's location in Montreal that is great - for workforce logistics shipping and whatnot. Part of the success here frankly has been some really strong investment support both by Government of Canada and the Government of Quebec and I would say the tenor of these investments across the country has picked up over the last 24 months since we started down our endeavor and it's something we're actively looking at ourselves for own expansion plan so very excited. Next steps for us are going to be led by Dave Marshall, Dave joined us as VP of Engineering, but a month ago, he spent 29 years at Vale project I guess project execution, project lead kind of being as expertise strong base in nickel as well. He will be leading this pre-feasibility for us and we'll anticipate to, give you an update by the end of the year not the final study. We'll let you know where we're at, but where we're at on that. So next slide over exploration update, I'm going to turn the floor over to our, Principal Geologist, Dan Pace as I said earlier, we had a lot of attention on the refinery Idaho and things are looking exciting for me at least that Idaho is what we're seeing, not just at Iron Creek but it Ruby and sometimes I think in the last couple of years, this asset has been a little bit overlooked. But I would put forward that there is a strong renewed interest in what we're doing there as the onshoring movement picks up steam. There is a, growing interest grow in a domestic supply minerals and there are few places in the world. You can find cobalt, Idaho I think hold a special place for the North American strategy. So with that, I'll hand it over to you Dan.
Dan Pace: Thanks, Trent. Yes, so we recently provided an update on our exploration program that summarize there on Slide 19, highlights of that program included a really strong open-ended chargeability anomaly that was defined by an IP survey we ran late in the spring. That geophysical technique is really effective in identifying sulfide minerals in the subsurface. And anomaly you see here is similar in size and strength to the Iron Creek deposit, which is located about 1.5 kilometers to the Northwest of Ruby. Drilling on the Eastern Margin of the Ruby target intercepted pyrite mineralization and that pyrite mineralization is textually similar to the cobalt mineralization that we see in the resource at Iron Creek. Additional drilling is ongoing on the project testing the Western strongest portion of that geophysical anomaly and we're looking forward to the results of those next holes. We have - drill samples from the first two holes to third-party lab and expect those results before the end of Q3, 2022. Although as Trent said this is still the early days for Ruby the first drill holes that we've put into and the first drill holes, quite a long time. The similarities to our Iron Creek, copper and cobalt deposit validate our view that Electra is large land package and the Idaho cobalt belt overall remain really under explored and there's a lot of prospective opportunities for new discoveries within this belt. As we continue to work through those projects in those targets. We believe that Idaho could play an important role in the on-shoring of the EV battery supply chain by providing a domestic supply of cobalt in America. With that, I'll turn it back over to Trent to discuss the outlook in near term milestones.
Joe Racanelli: Trent, you may be on mute.
Trent Mell: Indeed I was thanks for pointing that out Joe. Yes, thanks Dan. Before I move, I do want to congratulate the Idaho team in the very first hole they put into that Ruby target hit mineralization exactly where they predicted it would be, that's not an easy feat in Greenfields second hole the same. So this will be an evolving story. We don't have answers yet, so we can't say more but stay tuned it's an encouraging development in a belt that I think remains very perspective. So if we go to Page 21, let's talk a little bit about the market outlook kind of with large lots going on, and I think the exciting one in the news today exciting for us and for any of our shareholders will be the Inflation Reduction Act, which is expected to pass through the House tomorrow $400 million - $1 billion going towards climate and energy programs, including the $7,500 tax credit and it includes vehicles that are manufactured components manufactured here in Canada as well. So our cross-border North American strategy plays perfectly into this, and clearly this bill is only going to ignite further interest in the onshoring strategy and our recent travels to potential downstream clients across North America tell us that the onshoring strategy is on. It doesn't stop itself, it doesn't stop at camp they want to go all the way up the supply chain and it's a marked change in tone from two years ago where it was a step approach, it's all hands on deck and this bill is only going to help further amongst other regulatory changes that we've seen out there. So - commodity prices nickel, cobalt there has been some softness in Q2 I mean the entire NASDAQ was down in Q2 we don't worry too much. It's a transitory issue, it is commodities, there will be some volatility the COVID lockdown in China, which is one of many factors outlook supply demand particularly in our industry, the EV industry remains strong and we think that's going to butter us some strong prospects in our part of the market. And then equally encouraging of course of the EV sales in addition to that credit projections are for 27% growth per year through 2026 and if you translate that by and if you look at Bernstein another analyst we've got projections of 27 million cars, electric cars being sold by 2030 and that's up from 6.8 million in 2021. So going to ForEx again there is a lot to be done, the supply chain has got to keep up. We heard the CEO of Ford talk about his expectations that commodity prices are not going to drop in the near term given that bullish backdrop. And then to tie it all up - what it all means to us is where are, we on the commercial side, we're getting close to production and we're starting to. I'll start that we've been working at this for a while, but the efforts of our commercial endeavors led by Michael Insulan or VP Commercial are starting to bear fruit. We did sign two commercial MOUs they not bindings so we're not going to say more about it today. But I would say we've got others in queue and certainly selling our products both Ontario and future projections of Becancour production is not going to be difficult for me and CEO though there is a strategic advantage to looking at what a bigger relationship might look like beyond cobalt to include recycling and nickel as part of a North American strategy. So stay tuned, we'll provide more details as the negotiations events. And then last, I think this is our last slide here upcoming milestones on Page 22. So starting with I mentioned in our D&A has to be ESG. So we already now, believe that we're going to have the lowest carbon footprint of all the cobalt sulfate producers in the world and that's going to be backed by sustainable initiatives across social health, safety and an ongoing journey to always work at lowering our carbon evermore more. And I think that's something we can replicate across our battery materials plant, not just the cobalt. So we're still commissioning the Brownfield plant. We've got recycling upcoming and an important note, even with the delay in the spring. Mark and his team are going to be running that recycling facility in the fall and that's going to entail commissioning of a number of circuits that are going to comprise the cobalt facility. He is handling leach neutralization and so you'll see more of that as the year progresses that they're going to be construction and yet commissioning that - just the nature of a Brownfield operation. So lots of milestones coming up as you can see here in this list. I won't go through them because we already have. And with our new NASDAQ listing I think we can leverage that to bring our story to a larger shareholder base, we are in North American story after all, and it's bringing more attention to who we are and what it is we're doing. So we look forward to providing more updates through the course of the quarter, again at the end of Q3. And at that point, I will turn it back to Joe and the operator to see if there are any questions from our analysts.
Operator: The first question comes from Matthew O'Keefe with Cantor Fitzgerald. Please go ahead.
Matthew O'Keefe: Thanks, operator. Hi everyone, welcome. Craig, just I guess the big question here would be focused on your CapEx increase for the refinery. Can you just tell us sort of where you stand with respect to costs - gone it already sort of an outstanding budget over the next, I guess, six or nine months?
Trent Mell: Sure, thanks for that, Matt. Good to hear your voice. Craig, why don't you take the first stab at that and walking through the - where we are in our spend and then I can just follow-up and give you my thought.
Craig Cunningham: Okay, so we've spend at Q3 we spent about CAD21.3 million out of the revised Canadian range, which is a CAD100 million to CAD105 million, which leaves us between CAD79 million and CAD84 million left to spend on at June 30 we had commitments related to the refinery of approximately CAD30 million.
Matthew O'Keefe: Okay, so and you have CAD40 odd million in cash, plus additional funds coming. I mean are you, how comfortable are you - how comfortable are you with your balance sheet at this stage?
Trent Mell: Yes - I thought you're Matt I feel I look, I feel very comfortable right if you look at the replacement value of what we're building. We haven't had it officially audited, but it's going to be up CAD200 million, CAD250 million facility. And so we've got funds available to us the federal government has got another $300,000 the province I think it's 4.8. We've got a couple of million in HST refunds. We've got $17.5 million available on our ATM, our convertible debt that we raised last year as kind of the base funding for the project. We've had early conversions, so it went from USD45 million down to USD36 million and there may be an opportunity to bring that back up. So when I look at sources of funding available to us potential strategic investor can't say too much about that potential government support for recycling and some projects we've got the ATM. We've got the debt our debt providers and then we do have a $50 million base shelf prospectus available to us as well.
Matthew O'Keefe: Okay, thank you that's helpful to clarify that. If I could ask another question before I pulled the floor here that would be great. Just on the other initiatives, the battery recycling, I might have missed it, you might have mentioned, I missed that. So can you just remind us sort of where we are in that process and what kind of news in the timing of news will get on that?
Trent Mell: Sure I'll hand that over to Mark.
Mark Trevisiol: Yes hi Matthew. Yes, so we are currently making some modifications to some of the vessels that we use in the battery recycling demonstration plant the whole purpose is to prove out the process, which we've developed through SGS, SGS labs in Peterborough and to show that we can recover the metals from black mass and can make a decent profit of it. And at this point, we're probably about 75% to 80% there. There is a few reagents that we have yet to procure and the equipment for that, but suppliers have been identified and were close to awarding those orders a from an execution point of view, we're not very far away, maybe two or three months and looking forward to making our first products. Now, this isn't going to be a facility that's going to at this point. And will deliver so many tonnes a day for the next 365 day. This is demonstrating our process and I mean we're going to pivot from there. So we demonstrate it if you look at opportunities to improve it, you look at opportunities where we can accelerate the production rate and then come back to you guys and say okay this is what we've done in this and these are our next steps. So that's where we're at right now.
Trent Mell: That's good summary. Mark, maybe I'll just add to that Matt for the benefit of our investors. Keep in mind that the recycling is really two steps right to recycling spent battery, whether it'd be a phone or a car. The first step is the logistics of collecting and disassembling the battery. And then, crushing it's content into the powder into the black mass. I think we've got 31 different potential partners that Michael has been in touch with they could provide the black mass. A lot of private companies and a lot of companies that been doing it well for many years. And so our focus is on the next step, because most of that black mass in North America today, almost all of it. Those two are a single processor and it's a metallurgical processor, which is based bigger carbon footprint. You don't get the lithium you don't get the graphite we want to be the first to do lithium sorry to do the hydro met processing on a commercial scale and as Mark said our focus is not to do it at scale it's to do it well. Right if we can demonstrate the process be early and do it well, then we can scale up there from there. So as you'll see. I know you're coming on the at end of the month the focus is going to be on producing a top product that we can market to end users.
Mark Trevisiol: Okay, that was useful and thanks. So I just want to hit on with what - Trent just said and reinforce that there is nobody currently in North America. That is producing a lithium product a graphite products, the nickel product, cobalt product and a copper product so the full gamut of recycling from a black mass feed source, they may be doing one or two but not the full spectrum and that's going to be a first for North America.
Matthew O'Keefe: All right, okay no thank you that's definitely something to look forward to. And if I could just ask one more, quick question and I apologize, I think I missed it when you when you're speaking about some that concur and your potential nickel sorry your second cobalt refinery there. You said there was about $400 million of investment, what kind of the company are or investment is that in precursor manufacturing or battery plants, I didn't quite get all that?
Trent Mell: Yes thus far, what's been announced formally has been two cathode plant and that would be POSCO and GM being one of them the other BASF and then Vale with their nickel now going to be close. I know there's a lot more going on. So expect more maybe more of the same and more upstream, because of course of the next up from the CAM would be the PCAM the precursor which ultimately is where our product goes. And so our discussions with Quebec in our interest presupposes that is, that is in queue.
Operator: The next question comes from Jake Sekelsky with Alliance Global Partners. Please go ahead.
Jake Sekelsky: Yes hey Trent and team. Thanks for taking my questions. Just building off one of Matt's to questions a bit. Can you just provide any color on what percentage of that CAD79 million to CAD84 million left to be spent at the refinery is locked in. I'm just trying to get a handle on any potential for further cost escalation?
Trent Mell: I know that's Mark or Craig, do you want Mark do you want to talk about where we are in on our commitments for the residual yes?
Mark Trevisiol: Yes so we're switching between CAD and the U.S., I mean, we've got about roughly CAD50 million that is committed. So the remaining is yet to be yet to be committed, but, and most of that is with two big contracts that we see coming up and it was in discussions with third parties yesterday and that is the piping contract significant amount of piping is over like 12 kilometers of pipe in going into our facility. So lots of piping and then the other one is the electrical and instrumentation contract. So we're reviewing those right now. But the big spend items outside of that have been solvent extraction cells and the crystallizer plant those two big spend items are our in our commitments, because some of them, some of the items have been received as yet. But they've been in the works and in manufacturing for over three quarters almost a full year of manufacturing. So that's where we're at.
Jake Sekelsky: Okay, that's helpful. And then just looking at Iron Creek, I mean you guys have announced and strong exploration results at Ruby in particular. I'm just curious, do you have any plans to work toward a scoping study or PEA over the next year or is exploration really the focus over the medium term?
Trent Mell: Yes, good question Jake. Maybe I'll grab that, Dan you can jump in if you'd like my view of Iron Creek if I look at Iron Creek proper. So we've obviously got a bigger package and the resources what we refer to as Iron Creek although Ruby fingers crossed it becomes potential new target area for us. Iron Creek has been, it's been a bit of start-stop. As explores you drill when the commodity prices are strong and when the market interest is strong. I see that changing a bit. I see a more steady spend on Iron Creek in a more steady focus because our partners frankly want us to do that. And so we've got a lot of, we've got a number of opportunities before us in terms of how we advance that whether it's alone or in partnership with an ally and we'll see how that, how that nets out. So I guess where I'm going with this is more steady spend we should be working our way to at least a PEA my view of Iron Creek 5 million tonnes of mineralized material. Given what we see open - to the East open at West not only open at depth. But it seems to get better in grade. I wanted to try to double that before we did a PEA, but we may do something a little bit sooner. And so, we've got internal models and internal views. And I think it would only be fair to the market, it may be give them a glimpse as to what we're seeing there, but it might be still another year before we can do some drilling and - at the tonnage. We think the asset can get before we wrap economics around it. Dan anything you want to add there?
Dan Pace: No, I mean just following up from the exploration side, it's a large land package and the vast majority of drilling has been done on the Iron Creek resource in the near area. So there are also just a lot of really good targets there, so are we dealing with how many Iron Creek could exists within that land package. I think is still an open question. As we want to push both together kind of in parallel, just to see how much cobalt could be within that impact.
Jake Sekelsky: Okay that's fair actually. And then just lastly, Trent you mentioned the Inflation Reduction Act, and I'm just curious announcements like that are starting to push OEMs and potential partners to look further down the supply chain to the mine level. I mean, obviously Iron Creek in the portfolio. And I think that might be attractive to some of the partners you are in discussions with.
Trent Mell: Yes, I think what it does I mean I think the talks were already happening but - I guess the impact we'll see with Reg say the but the impact of that $7500 credit on a parts and materials sourced out of China is going to act as a lightning rod and to the extent OEMs. We're already thinking we got to onshore those supply chains. I'll tell you there are teams of people going to Korea and Japan and their partners, saying, hey where are you on your plans because we can't be sacrificing these credit opportunity with an over-reliance on China, which has been hall market, EV market from day one. So yes I think, it's helped as it could be - the intensity of the discussions have picked up but what's interesting Jake because it's. I would say the conversations we're having with some of the OEMs and their partners is not just about a supply contract, it's about a more strategic longer-term vision of how many ways we can work together and where we put the supply chain recall our vision is our lane if you will is refining and recycling. And so for our domestic facility to be complete, we would want to attract a precursor manufacturer then basically co-locate where we're producing nickel cobalt and recycling. And so, I think yeah Inflation Reduction Act and some of the measures we are seeing is just shining a bit of a light that might accelerate some of these decisions.
Operator: The next question comes from Gordon Lawson with Paradigm Capital. Please go ahead.
Gordon Lawson: Hello, everyone, and thank you for taking my question. Can you further comment on your capabilities or flexibility to produce various end products for nickel and any associated OpEx adjustments are constraints related to these items?
Trent Mell: Good morning Gordon. You want to talk specifically about nickel or about cobalt. Just to be just to clear.
Gordon Lawson: Well start with nickel, but I am also curious about cobalt.
Trent Mell: So I guess and maybe, sorry, one more question for you Gord recycling or primary feeds?
Gordon Lawson: Primary feeds.
Trent Mell: Primary feeds yes okay, so thank you, we are nearing completion of that I need not to talk about t much on this call that you'll hear shortly nearing completion of Phase 1 of the joint study that we undertook with both Talon Metals and Glencore just as steady partners. We want to understand what a nickel sulfate would look like adjacent our cobalt plant as part of this integrated facility CapEx permitting OpEx and whatnot and moreover, where is the nickel coming from. We know that 811 or even 622 cathode with EV projections entail. We're going to need a lot more nickel supply North America has got a lot of it, but a lot of it remains undeveloped underground and so the first phase of the scoping study just about done so will have news on that pretty shortly. In terms of final products Mark, I know we've got. Dave leading that study, but him not being on the line, do you want to talk about where the study is pointing?
Mark Trevisiol: I guess at a high level, we're looking at different options of supplying nickel feed to produce a nickel products nickel sulfate in this, in this case the next phase. If I can jump to that would be, need to sort of a PCAM facility at our site so that - we're not crystallizing the nickel sulfate nor crystallizing the cobalt sulfate we're feeding directly into our facility that will make a PCAM product. But as far as the nickel sulfate product independent of having of a PCAM plant, it will be similar to what we're doing with cobalt sulfate, and you will have and if that's solvent extraction facility and you will most likely have a crystallization plant, which makes the nickel sulfate powder that's kind of the design for it.
Trent Mell: And I'd add Gord to we'll have a scoping study out soon and then move to pre-feas and go back to the point about with Jake about strategic discuss our strategic relationships our long-term relationships. This is where - this is we're having our partnerships outline becomes really important because we could maybe manage on our own to build a certain size of a nickel plant to support a certain quantity of PCAM the industry needs a lot more than we can produce on our own. And that's going to entail a bigger discussion around partnerships and new sources of supply and so that is an important kind of pushed off behind the strategic component of our strategy that we're pursuing through at the balance of the year.
Gordon Lawson: Okay, thank you. So I mean that is completely rules, I would like a Class 2 nickel. I mean pig iron ore ferronickel anything like that, but that's off the books right?
Trent Mell: We look at it and you can look at all the supplies. The challenge you have with the ferronickel of course is the carbon footprint is huge, right. I mean a product out of Indonesia has got a carbon footprint. It's about seven times higher than product produced from a sulfide in North America. So it's not ideal, but we are seeing some tough decisions being made in the sake short-term supply to turn to Indonesia. So certainly not my preference and it's something that we may roll out, but I would say we haven't yet.
Gordon Lawson: Okay, thank you very much, that's it from me.
Trent Mell: Thanks Gordon.
Operator: That is all the time that we have for questions today. And this concludes the question-and-answer session. I would like to turn the conference back over to Joe Racanelli for any closing remarks.
Joe Racanelli: Thank you, everyone for joining us today. And as mentioned, we will be following up on regular basis with quarterly calls and in the interim we will providing updates on the progress of our efforts. If you do have any further questions, please reach out to us we'll happy to respond to you directly. But thank you everybody for joining us and we look forward to providing updates on an ongoing basis.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
