Steve Cotton: Yeah, absolutely. Aside from the non-recurring engineering that we’ve already received from 6K Energy to develop the nitration technology which we’re going to be finalizing that whole project in a matter of a few weeks. The pilot plant output really serves more strategic purposes as providing samples to our partners and that has been really going well where we provided the lithium and the nickel and the cobalt to various partners that are out there. Some of that material, of course, has gone through 6K where they’ve taken that material and produced cathode-act material to get that into the hands of cell manufacturers and automakers and the like. So the Sierra-ARC is really what’s commercially focused to grow revenues and drive profitability for the company, starting with that Phase 1 at that 3,000 tons per year.
We expect we’ll be able to produce materials from black mass that we introduced this summer in 2024, and the production ramp to saleable quantities late 2024, but certainly as we get into Q1 of 2025 and work through revenue recognition. But production is still slated to commence as we get into the latter part of the year after this commissioning is complete.
Bob Meyers: Thank you. Now the next question. On the funding side, can you offer an update on your capital needs and funding and the status of the USDA in particular and other options, as you talked about on the prepared remarks?
Judd Merrill: Okay, Bob, I’ll take that question. As we’ve discussed, the USDA or another lending mechanism is important for us to finish the buildout of the Phase I Sierra-ARC. On the USDA, the application has been filed and submitted and from our understanding has gone through the initial review process on their side. So I think there’s a final committee that has to still meet and review. So we should be hearing back soon on that. Now the government kind of takes longer than we’d like it to, but I think we’re very close to hearing back. And we like the USDA loan because the debt service is pretty good. Just the terms make the debt service good. Cost of capital is a little better than some of the other options out there. But we have been talking to other lenders because the USDA has really kind of meant for funding that Phase 1 and there’s this opportunity to not only fund Phase 1, but think about how we contemplate Phase 1 and Phase 2 through a funding mechanism through additional debt lending.
And so those discussions are ongoing. We’re having some meaningful discussions with some potential partners that we really, really like and think will be a good fit. So even if we didn’t get the USDA, we could use those guys to fund Phase 1, potentially Phase 2. If we do get the USDA in place, we can use these guys to fund Phase 2 starting next year. So there’s a lot of groundwork being done to make sure that we protect our ability to move forward.
Bob Meyers: Thank you. Moving back to some partners on Yulho, when do we expect to get closer to an agreement and more updates on that partnership?
Steve Cotton: Yeah, so I’ll take that one, Bob. So the productive trip we had late last year to South Korea, seeing Yulho’s black mask facility really made a lot of proof to us that they’re on the precipice of turning that facility on. And in fact, it was materially complete at the end of last year, and initial commissioning and things like that have been happening subsequently. And it’s an impressive brand new facility with state-of-the-art technology where the crushing technology, etc. Is actually developed and — designed and developed in South Korea. So they’re not importing stuff to do that. They’re developing that technology right there. And they’re currently working on permits, the final environmental permits to operate and start putting batteries through.
And one of our team members is actually over there right now witnessing some of the initial activities associated with preparing to do that. And then we’ll be working with Han Yang University there to evaluate those materials and provide assays and things like that. So that’s really the setup for us to continue our conversations in the coming months where we work out what the licensing agreement looks like with them on a final negotiation. And pending the success of those final negotiations, they would begin building what looks a lot like the Sierra-ARC Phase 1. So the engineering package is already complete and it can move very quickly to put up a process that looks an awful lot like Sierra-ARC Phase 1. So as we have those conversations and material items developed, we’ll continue to provide updates, but we’re very excited about the opportunity that we have still with our partner and investor with Yulho Materials.
Bob Meyers: Great, thank you. Related to ACME Metals, you indicated earlier there were some non-cash impairment charges. Can you review that in a bit more detail?
Steve Cotton: Yeah, so it’s really a GAAP accounting exercise when you look at assets. We’ve been pretty clear that our focus and our, a lot of our capacity and time and efforts related to the lithium side of the business. And that doesn’t mean that things aren’t going on the lead side, but when you look at the assets specifically sitting over there in Taiwan that we had listed on our balance sheet, we kind of went through that GAAP checklist of items and just concluded that it would be better off and more appropriate for the accounting to just write those down. But at the same time, the statement that we made that it’s still available, it’s still operational, it’s still a showcase, it’s still optional to advance the led side of the business, it’s still intact.
