Release Date: September 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Battery Technology Co (NASDAQ:ABAT) has successfully transitioned from bench scale to commercial operations for its lithium-ion battery recycling system.
• The company has secured significant government grants, including a recent $150 million federal grant, which will support future projects.
• ABAT has generated its first revenue from the sale of recycled metals, marking a significant milestone in its commercial journey.
• The company has increased its cash balance to $7 million as of the end of June, reflecting improved financial stability.
• ABAT has established strategic partnerships with major industry players, including BASF and various automotive OEMs, enhancing its market position.

Negative Points

• The company faces substantial risks and uncertainties, including fluctuating mineral and commodity prices and the ability to obtain necessary financing.
• ABAT has incurred significant expenses related to ramping up operations, including increased operating expenses and the cost of a convertible note option.
• The company is still in the early stages of commercializing its technologies, which may pose challenges in scaling up operations efficiently.
• There is a heavy reliance on government grants and tax credits for funding, which may not be sustainable in the long term.
• The company has yet to fully draw down on several large grants, indicating potential delays in project execution and cash flow realization.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Signs with ABAT.

Q: Can you provide more details on the financial performance for the fiscal year 2024? A: Ryan Melsert, CEO: Over the past fiscal year, we have moved from bench scale development to commercial operations for our battery recycling system and primary lithium business. We sold our first set of products and generated initial revenue. We also secured about $3.3 million from government grants and increased our cash balance to $7 million as of June 30, 2024.

Q: What are the future funding opportunities for American Battery Technology Co? A: Ryan Melsert, CEO: We have over $67 million in government grants already contracted and recently won a $150 million federal grant, expected to start in early 2025. Additionally, we have almost $60 million in tax credits from the Department of Energy and the IRS, which we have yet to draw down on.

Q: What progress has been made with the battery recycling plant? A: Ryan Melsert, CEO: We purchased an existing building last spring, which accelerated our time to market. We have been ramping up throughput, adding shifts, and increasing personnel. We have sold the first commercial quantities of recycled products and are now focusing on increasing operational efficiencies.

Q: Can you elaborate on the strategic partnerships and their impact? A: Ryan Melsert, CEO: We have strong relationships with BASF and several automotive OEMs and battery manufacturers. We are negotiating multi-year contracts for large amounts of material to be recycled. Some OEMs have requested us to build new recycling plants near their facilities, leading to site selections and negotiations for property and infrastructure.

Q: What are the plans for the second battery recycling plant? A: Ryan Melsert, CEO: We have been awarded a $40 million allocation from the IRS to support the construction of the second recycling plant. We are also targeting the Southeast US for this plant, which will be about five times the size of our current Reno plant. This plant will be designed to match the throughput of our strategic partners.

Q: What advancements have been made in the clay stone to lithium hydroxide business? A: Ryan Melsert, CEO: We completed a third drill program, upgraded the resource classification, and constructed and commissioned a pilot plant. We made our first battery-grade material and received a visit from the US Secretary of Energy. We are now designing a commercial-scale refinery and are in discussions with strategic OEMs for long-term offtake agreements.

Q: How are the government grants being utilized? A: Ryan Melsert, CEO: We have several government grants supporting various projects. For example, a $57.7 million grant is being used to build a commercial-scale refinery. We have drawn down $1.7 million so far, with $56 million remaining. These grants support payroll, equipment purchases, and engineering services.

Q: What are the key financial highlights for the fiscal year 2024? A: Ryan Melsert, CEO: We generated initial revenue from product sales, secured significant government grants, and increased our cash balance. We have also reduced cash used in investing activities and are near the end of paying off a $25 million convertible note. Our contracted grants and tax credits will be monetized in the near term, providing non-dilutive funding for future operations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.