Aqua Metals (AQMS, NASDAQ)

78 cents | $60 million (U.S.) market cap

This stock has been bouncing along the 75-cent support area since May, and appears ready for a late 2022/early 2023 breakout.

“To date Aqua Refining is the only (recycling) solution that’s recovered high-grade pure Lithium hydroxide, Cobalt, Nickel, and Copper (in pure metal form), Manganese dioxide, cost effectively in a closed-loop clean system” – Steve Cotton, CEO.

With Lithium selling for $80,000 per metric ton, the business and economics of recycling are great. Clean and green is a good bonus. They’ll have the wind at their back via government support, maybe even environmentalists (who could be against it). The Department of Energy has $2+ billion in critical metals grant money to give away. I expect Aqua Metals will get some of that money next year.

This could be the world’s most valuable junk, more profitable than even Lithium, Nickel, or Gold mining!

Since May AQMS has been a boring stock, working sideways between 70 cents and $1.10 trying to find a bottom. Assuming it has, this will be a new higher low, up from 35 cents in March 2020. Upside potential is many multiples because I believe AQMS will eventually revisit all-time highs from early 2021, when it spiked to $8 per share.

Said differently, with a purchase price in the 70’s or 80’s risk should be limited to 10 cents. Potential reward can be measured in dollars.

The problem of what to do with Lithium-ion (Tesla) batteries is solved – it just hasn’t hit mainline commercialization yet. Yesterday’s method of recycling (smelting) is still being widely used today. Smelting recovers 0% Lithium and only a fraction of other metals (Nickel, Copper, Cobalt, and Manganese). Smelting is also done outside with intense heat, pushing hazardous materials into the environment.

Aqua Refining is a closed-loop clean method. Recycling happens indoors while recovering up to 96% Lithium! Versus 0% with smelting!

I see AQMS as a monster opportunity as they will be the first non-mining source of Lithium, which can command between $40,000and $80,000 per ton (although about $17,000 has been a historic average).

Silly valuations are being bestowed on Lithium explorers, a vast majority of which will never produce Lithium. AQMS is also an obvious way to express a bet, via recycling batteries, and odds of AQMS making a living with Lithium (even flourishing) are orders of magnitude better.

After many years of R&D, as they move toward mass commercialization, Aqua Metals is now opening their plant. Potential partners can now visit and do a walkthrough. Investor tours are on deck for 2023.

Given news flow of new partnerships, production revenues, and DOE grant money, I expect 2023 will be a breakout year for AQMS.

Aqua Metals announced yesterday that management will participate in the following investor conferences during December:

• The Benchmark Company Discovery Conference, December 1, 2022, New York: Steve Cotton, President and CEO, will conduct in-person, 1-on-1 meetings with investors. All meetings will take place at the New York Athletic Club. To register for the conference and schedule a meeting with management, please visit https://tinyurl.com/4rjwfce2.
• Credit Suisse Climate Tech Conference, December 6, 2022, Virtual: Cotton and CFO Judd Merrill will host virtual, 1-on-1meetings with investors.

Investors interested in learning more about these conference events can contact FNK IR at aqms@fnkir.com. Attending investors interested in meeting with Aqua Metals’ management at either conference can also contact their Benchmark or Credit Suisserepresentative.