Li-Cycle Holdings Corp. (NYSE:LICY) Q2 2023 Earnings Call Transcript

Li-Cycle Holdings Corp. (NYSE:LICY) Q2 2023 Earnings Call Transcript August 14, 2023

Li-Cycle Holdings Corp. misses on earnings expectations. Reported EPS is $-0.2 EPS, expectations were $0.2.

Operator: Good day, everyone. My name is Todd, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2023 Li-Cycle Holdings Earnings Call and Webcast. [Operator Instructions] Thank you. I will now turn the call over to Nahla Azmy, Head of Investor Relations. Please go ahead.

Nahla Azmy: Thank you. Good morning, and thank you, everyone, for joining us today for Li-Cycle’s review of our business and financial results ended June 30, 2023. We will start today with formal remarks from Ajay Kochhar, Co-Founder, President and Chief Executive Officer; Tim Johnston, Co-Founder and Executive Chairman; and Debbie Simpson, Chief Financial Officer. We will then follow with the Q&A session. Ahead of this call, Li-Cycle issued a press release and a presentation, which can be found on the Investor Relations section of our website at investors.li-cycle.com. On this call, management will be making statements based on current expectations, plans, estimates and assumptions, which are subject to significant risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Li-Cycle.

Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect, including because of factors discussed in today’s press release, during this conference call and in our past reports and filings with the U.S. Securities and Exchange Commission and the Ontario Securities Commission in Canada. These documents can be found on our website at investors.li-cycle.com. We do not undertake any duty to update any forward-looking statements, whether written or oral, made during this call or from time-to-time to reflect new information, future events or otherwise, except as required. With that, I’m pleased to turn the call to Ajay.

Ajay Kochhar: Thank you, Nahla, and good morning, everyone. I’m excited to discuss the progress our team has made during the second quarter as we continue to advance the implementation of our Spoke & Hub network strategy. Li-Cycle continues to capitalize on strong secular trends and supportive government policy. Our plans to grow our network will position Li-Cycle to become the top global recycling producer of lithium carbonate and key battery-grade materials establishing Li-Cycle in a leading role in the electrification ecosystem. Beginning with Slide 3, I would like to cover some of the key highlights of our progress, which we’ll discuss in greater detail on this call. On the commercial front, we signed a memorandum of understanding to collaborate and explore lithium-ion battery recycling solutions with EVE Energy, one of the world’s largest lithium-ion battery cell manufacturers.

From an operational perspective, we continue to build strong momentum for our Spoke & Hub business. At our Rochester Hub in North America, we significantly advanced construction with continued expectation of the start of commissioning in late 2023. For the development of the Portovesme Hub, our first in Europe, we progressed the work on the definitive feasibility study with Glencore and expected to be completed by mid-2024. And our first European Spoke began operations with the startup of line one in August with line two expected to follow in late 2023. Finally, on the financial front. We’re also pleased to report that we are at the final stages of completing our process with the DOE loan programs office or LPO and expect to close the $375 million loan in September 2023.

Turning to Slide 4. I’ll discuss Li-Cycle’s global Spoke & Hub portfolio and our continued progress in executing on our global network growth strategy. As illustrated on the left of this slide, with significant gigafactory capacity projected to come online, we expect to see meaningful demand growth for recycling of all forms of lithium-ion batteries in both North America and Europe. Aligning with key battery supply chain customers, we’re expanding our global commercial footprint by strategically localizing our network close to demand centers and customers. Based on the current portfolio, we expect to achieve pre-processing capacity in excess of 100,000 tons of lithium-ion battery covalent and post-processing capacity of 85,000 tons to 105,000 tons of black mass per year.

Importantly, and to put it into context, once the Rochester and Portovesme Hubs are in full operation, these facilities will have total lithium carbonate production capacity of up to 25,000 tons per year. With this first-mover advantage, Li-Cycle is uniquely positioned to become a leading global and sustainable producer of lithium carbonate and other key battery-grade materials. Turning to Slide 5, for a discussion on the EVE MOU and Hungary Spoke site selection. EVE is one of the world’s largest lithium-ion battery cell manufacturers with global facilities and customers that include major OEMs such as BMW and Bosch. In July, we entered into an MOU for global sustainable recycling solutions for EVE’s lithium-ion battery materials. Consistent with our Spoke strategy, capital investments are underpinned by multiyear commercial contracting combined with accelerating local market demand.

Accordingly, we’re excited to be exploring site selection in Hungary with expected scope, scale and timing to be completed by early 2024. EVE with its recently announced plans to build its first European battery manufacturing facility in Hungary will serve as an anchor customer. Additionally, we expect to add OEM customers in the region, given Hungary is projected to be one of the largest battery cell manufacturing markets in Europe by the end of the decade. Let me now turn it over to Tim for a more detailed update on our Spoke & Hub network.

Tim Johnston: Thanks, Ajay. Turning to Slide 6, we are thrilled to share an updated aerial view of the Rochester Hub. This image illustrates a significant construction progress that has been made since our first quarter call in May. Our continued execution on the Rochester Hub project is a testament to the talent, expertise and commitment of the Li-Cycle team. I’ll provide a more detailed perspective on the next few slides. Turning to Slide 7. We are nearing completion of our major process buildings for nickel, cobalt and manganese. Within the cobalt building, mechanical equipment has now started to be set. The warehouse building, which was completed in May, has received the certificate of occupancy. Our operations team have moved into the building, and we are prepping the storage area to start receiving black mass as part of our inventory build plan.

Turning to Slide 8, to discuss our major construction achievements. As displayed in the photos going clockwise, we are pouring concrete foundations for tanks, installing the main flat track, which is a critical activity for the plant commissioning as it is the main artery of the plant, building the finished products building where we will bag key end products before moving them to the warehouse for transport to customers. And finally, and importantly, the lithium building foundations are now well underway. Turning to Slide 9. We cover the procurement of our long-lead process equipment and bulk materials. To recap, early on, we indicated that a key aspect of our construction strategy was to accelerate the procurement of long-lead equipment and construction materials such that they would arrive on site well ahead of when they were needed.

Ultimately, this has proven to be a significant advantage in terms of our ability to execute on major construction milestones and maintain our project schedule. Displayed on this slide going clockwise, our solvent extraction equipment and crystallizers are now on site at the Rochester Hub. Additional key equipment and bulk materials are also on site and ready for installation. And finally, you see an impressive image of the largest piece of equipment being installed. Critical for the Hub operations, the crystallizer is part of the sodium sulfate production process critical for the recovery of lithium carbonate. Turning to Slide 10 for closing comments on the Rochester Hub. With detailed engineering and procurement activities near complete, our main near-term priority is the continued ramping up of the construction labor to support the remaining inflation activities.

As we stated on prior calls, we are focused on actively managing the construction labor in order to continue to execute relative to the construction budget of $560 million. With expected annual production of 7,500 tons to 8,500 tons of lithium carbonate, 42,000 tons to 48,000 tons of nickel sulfate and 6,500 tons to 7,500 tons of cobalt sulfate, the Rochester Hub will be a leading source of battery-grade materials in North America. Turning to Slide 11, I’ll provide an update on the Portovesme Hub. Together with our partner Glencore, we are repurposing part of Glencore’s existing hydrometallurgical site in Portovesme, Italy. Once operational, this facility is expected to be one of the largest producers of battery-grade lithium carbonate in Europe.

We are actively progressing the scope on the DFS, which is anticipated to be completed by mid-2024. Portovesme side is a strong fit with Li-Cycle’s proprietary black mass refining process for the recovery of lithium and battery-grade materials. There are a number of benefits for executing this project at this site, including the use of existing infrastructure an equipment that can be repurposed for black mass processing. Optimization of an existing workforce with experience in metallurgical operations and access to logistics infrastructure that will facilitate the movement of large volumes of black mass and end products. As shown on the left of the slide, I’ll touch briefly on the proposed process at the Portovesme Hub site. We have an expedited flow sheet that requires fewer processing steps to produce lithium carbonate and mixed metal product of nickel and cobalt.

At a high level, at the beginning of the process, we start with black mass leaching to dissolve metals into solution. Following impurity removal for aluminum, the next step is the removal of manganese followed by the production of a mixed hydroxide product, or MHP, containing nickel and cobalt. The final key step involves the recovery of battery-grade lithium carbonate. This flow sheet differs from our processing approach at the Rochester Hub, where we’ll produce battery-grade nickel and cobalt products, i.e., nickel and cobalt sulfates, which attract a higher value for battery manufacturing. The MHP process for the Portovesme Hub allows an accelerated path to production and provides additional flexibility for use within Glencore’s existing refining assets or precursor producers for battery manufacturing.

The Portovesme Hub is expected to have an annual processing capacity of up to 70,000 tons of black mass, producing up to 15,000 tons of lithium carbonate, 18,000 tons of nickel and 2,250 tons of cobalt contained in MHP. To reiterate, once both the Rochester and Portovesme Hubs are fully operational, these facilities will have a total combined lithium carbonate production capacity of up to 25,000 tons per year, making us a top global and sustainable producer of lithium carbonate and other key battery-grade materials. Turning to Slide 12 for an update on our European Spoke. In early August, we announced the startup of line one at our Germany Spoke. This Spoke utilizes Li-Cycle’s patented and environmentally friendly Generation 3 technology to directly process all forms of lithium-ion battery materials, including full electric vehicle battery packs without the need for discharging, dismantling or thermal processing.

As a reminder, Germany represents the largest market for both battery manufacturing scrap and end-of-life lithium-ion batteries in Europe. Supported by multiple commercial contracts with battery and EV manufacturers, we are targeting commissioning of line 2 in late 2023. I would like now to hand it over to Debbie for a financial review.

Debbie Simpson: Thank you, Tim. Turning to Slide 13 for a discussion on our second quarter results. As seen on the top left of the chart, we produced 1,719 tons of black mass, more than double the level achieved in the prior year driven by the start-up of operations at our Arizona and Alabama Spokes and the upgrade of our New York Spoke. Sales of black mass were 2,093 tons, 2.5x more than the 832 tons in the prior year. Moving to revenue for the period. As a reminder, our revenues are influenced by market prices of metals contained in our products, notably cobalt and nickel, with no value attributed to lithium content at this time as we continue to sell black mass as an intermediate product. Revenue from product sales and recycling services before non-cash fair market value adjustments increased to $5.5 million from $4.7 million in the prior year.

While we deliver higher product sales volume from our expanding days of operations, these results were impacted by a decline in metal prices, namely cobalt and nickel. Total revenue was $3.6 million compared to nil in the prior year. Total revenue included an unfavorable non-cash fair market value adjustment of $1.9 million in the quarter compared to $4.7 million in the prior year period, which took the total sales value for second quarter 2022 to nil. The main purpose of our black mass production is to utilize a feedstock for our Hubs, which produce lithium cobalt and nickel products, unlocking significant incremental value. As such, the sale of black mass is an interim strategy in the lead-up to the start of operations at our Hubs. The operationalization of our Rochester Hub will represent a significant inflection point in Li-Cycle’s revenue and financial profile.

Turning to Slide 14 for an update on our progress on the DOE loan. We continue to build on our track record of timing strategic and competitive financing in support of our network expansion plan. As you know, in late February, we announced a conditional loan commitment of $375 million from the Department of Energy, further validating our position as a domestic supplier of battery-grade materials in the U.S. The loan will be for a term of 12 years and will be based on the applicable 10-year treasury rate with no spread. As Ajay noted earlier, we made great strides and advanced the loan documentation to final stages, depicted here at Stage 5 in the DOE LPO process. We are excited to share that our loan agreement is now working its way through the DOE’s intra-agency process.

We’re expecting to close the transaction in September 2023. Turning to Slide 15 for an update on our cash flow and a review of the strength of our balance sheet. During the second quarter, we invested $78 million in our network growth focused on the Rochester Hub ending the period with nearly $290 million of cash on hand. Adding the loan commitment of $375 million from the Department of Energy will take our current pro forma cash balance to more than $650 million. Turning to Slide 16 to reaffirm our 2023 business outlook metrics. For our production of black mass, with our year-to-date results, we are well on track for our targeted annual production pacing with market and customer needs. To reiterate, we are looking to optimize their future black mass production to meet fleet stock needs for the start-up of our Rochester Hub, unlocking future value of lithium carbonate and other battery grade materials.

As a result, we intend to start building black mass inventory in the second half of 2023. Regarding capital investment, we expect to allocate a total of $285 million to $345 million for the development of the Spoke & Hub network. Due to the timing of construction of the Rochester Hub, this will be more heavily weighted to the second half of 2023. And finally, we are working closely with the DOE LPO team for a targeted close of $375 million loan this September. Turning to Slide 17 for closing. We remain focused on continued optimization of our Spoke & Hub strategy, prudently aligning with commercial demand. We remain focused on continued execution completing the Rochester Hub with commencing late 2023, growing our global Spoke & Hub network specifically exploring in new Spoke site in Hungary and progressing the Portovesme Hub, setting us up to be a leading global and sustainable lithium carbonate producer with capacity of up to 25,000 tons per year, expanding and diversifying commercial relationships with key global battery supply chain participants such as with EVE Energy and increasing financial flexibility for our network growth plans with the DOE loan expected to close in September.

That concludes our formal remarks. Operator, we are ready to take questions.

Q&A Session

Operator: [Operator Instructions] And we’ll take our first question from Brian Dobson with Chardan Capital Markets.

Brian Dobson: Hi, good morning.

Ajay Kochhar: Hey, Brian. Good morning.

Brian Dobson: Hey, good morning. So as we near the completion of the Rochester Hub facility, do you think you could give us a little bit of color on what that build up ramp our earnings will look like once the facility opens its doors to process buybacks?

Ajay Kochhar: Yes. So I think there’s a couple of phases here, and we’ve communicated a couple of these things. So the first is commissioning. So also good news today and as we continue is reiterating the start of commissioning end of this year. And certainly, as we get through that and close to that, that’s going to be an important topic, both the commissioning phase and the ramp-up phase. So suffice to say more to come. I will say that it is something that we can – could chat about. There are industry benchmarks for the style of facilities for metallurgical coal facilities. Just one thing to keep in mind is obviously where resource recovery recycling facility leveraging a lot of those off-the-shelf unit operations.

We extensively piloted, but obviously at a much smaller scale versus say a mining. So a lot of those benchmarks are for mining projects, definitely caution associated with taking it verbatim, but in any term, there are these benchmarks that you can look at to get a sense of directionally the ramp-up style. So happy to chat about that more, just as a general reference.

Brian Dobson: Yes, very good. And then as you are thinking about Italy, certainly in Rochester, you still have a positive local and national government support about developing that facility in the region. How is your relationship with local authorities in Italy and do you see similar support?

Ajay Kochhar: Yes. At a high level, yes, I mean, this is in collaboration with the Glencore. So they have always been operating in Sardinia location and Portovesme for a long time. And public – for the background, they were on a track to transition the site, and this is a great transition. It’s really turning in old assets, recycling an old asset into a new one, parts of it into our Hub, our next Hub, which is going to be in Europe. And that strikes a couple of key high notes for both locally and also broadly for Europe. One locally, and this is important, they have a very skilled workforce that exists there, and this is an opportunity to transition that workforce. And that’s the metallurgical workforce. So it’s not very often that you get that opportunity and for us a much more efficient, faster, capital efficient, more operational efficiency.

That’s the local view. And then from a broader European view, what’s very strategic here and we were very intentional with this statement around us being on track to produce up to 25,000 tons per year of lithium carbonate. I don’t think folks have really taken that in terms of our significance over time. And from that angle domestically and broadly for Europe, this is very strategic right down the fairway from angle of the European battery regulation from the angle of minimum recycled content and really being first to market there with larger scale resource recovery for black mass to produce refined end products. So yes, that’s the color behind it.

Brian Dobson: I just want to thanks for the color and appreciate that. Thanks very much.

Ajay Kochhar: Thanks Brian.

Operator: Thank you. We will take our next question from Ben Kallo with Baird. Please go ahead.

Ben Kallo: Hey, guys. Good morning and congratulations on the progress. Maybe if you could just talk about – I know you said in your prepared remarks about the differences in the Hub and why you are making those differences. I heard time to market, but anything else from Europe to Rochester? And then just how do we think about how many Spokes you want to match with the Hub because you guys have balanced a lot or built a lot, made a lot of progress on the Spoke part. So I’m just wondering that’s more to come after Hungary or how we should think about that? Thank you.

Ajay Kochhar: Yes, for sure. Hey, Ben. Yes, so on the first part around the flow sheet and the way to think about this and wanted to sort of introduce this to explain. It’s interesting and I will back up a little bit for our Rochester plant. So Rochester, of course, is going to be pretty same, lithium carbonate, nickel sulfate, cobalt sulfate. And the core difference here is really around the nickel and the cobalt. So at Rochester, we are going to sulfates, which go into precursor, certainly the right battery manufacturing industry and they garner higher value as you can imagine, because it’s added form of the product for say even the metal. We actually have looked at this other path. There is just common intermediate, which we have shown here on Page 11, which is called mixed hydroxide precipitate, MHP.

So, it’s a common product from primary, meaning mining and refining. And why we didn’t go that path to Rochester is actually in North America, there is no real captive refining asset to take that product, so, technically economically made a lot more sense for us to go the path of the sulfate at Rochester. In the case of Europe, Glencore actually has a refining facility in Norway, [indiscernible]. So that facility can take in intermediates and then refine it further. So it’s a bit of a case-by-case choice. In this case, that’s a very efficient path, both in terms of the speed, but also building off one other point on that is we actually piloted both flow sheet that you see for Portovesme and the flow sheet for Rochester extensively getting back 5 years ago.

So effectively, we are just leveraging the work that we have already done in the collaboration with Glencore. So that’s the first part around the Hub. And then on the Spoke side, yes, you saw today that we indicated and announced that we are looking at site selection for a Spoke in Hungary. Hungary is a rising star in terms of the profile of battery manufacturing in Europe. It has been actually for a while. That’s on the back of also our collaboration with EVE with the top 5, 10 lithium battery manufacturers. In terms of growth from there and how you folks look to model that and their incentive [ph], I would say a good roadmap is, for example, what we have done in Germany. So, our moat here is really looking to first and foremost, I nearly double up lines where we already have a presence because you can imagine it’s going to be much more capital efficient, faster, operationally efficient, right, from a people perspective.

That would be probably a first approach for some of our existing sites. But then second and alongside that, it’s where we have the need to be closer to our customers, and that’s the Spoke model, obviously. Then we will look at new additional sites as well, for example, like Hungary. So, it’s been both as you think about how we are going to continue to expand and lock step with customers.

Ben Kallo: Thank you. And if I could just add one more, just how do we think about the building up of black mass inventory just going forward since you are getting close to commissioning in Rochester? How should we think about that affecting sales and…?

Ajay Kochhar: For sure. And I will start, and then Debbie can add on as needed. So, yes, we are going to say that we are on track to start that inventory build in the second half year. And obviously, we have also reiterated the start of commissioning of the Hub towards the end of this year. So, those really go together, right, at the end of the day. And vis-à-vis how it affects our profile on sales and what’s to come, I will turn it over to Debbie.

Debbie Simpson: So Ben, it’s something we are super keen to get underway. And it’s just a question of timing. Our warehouse is ready. So, we have got space to step down the inventory. And it’s just a case of working through our business plan, but you should expect that somewhere in this back half that we would begin to set down some inventory in preparation for the commissioning and ramp up of the Hub. So, what you see, once we do that is we will still continue to record around our black mass production, which will be a good indication of use to how we are operating in our Spoke network. But clearly, that will have some kind of impact as we start the ramp up of inventory through our revenue line is we won’t be selling it anymore.

But – and we will go 100% right out of the gate. It will be a gradual buildup of this inventory. So, there will be a mix of inventory build in revenue. There are implications for the revenue line. But just as a reminder, it makes great economic sense for us because right now, we do not capture any lithium value in selling this black mass product. So, better to set it down in inventory with the opportunity to capture that value once we have got the Hub operating.

Ben Kallo: Thank you.

Ajay Kochhar: Thanks Ben.

Debbie Simpson: Thank you.

Operator: Thank you. We will take our next question from Matthew O’Keefe with Cantor Fitzgerald.

Matthew O’Keefe: Hi. Good morning. Just a question for me on the DOE loan, just start with that. The – what kind of covenants are around that? And when you do get that, specifically when you do get that approved, will it be applicable to your build-out in Europe, or will it have to be only in domestic build-out in the United States?

Ajay Kochhar: Hey Matthew good morning. I will start and then Debbie can add on as needed. So, yes, so these really dealt part of these proceeds. So, it does have to be for the build-out in actually our U.S. business. So, the key to process there is actually the Hub. Now, a bit of a dynamic there at a high level is the eligible cost of this program is really the capital cost. And obviously, folks are tracking with spend. A lot of that capital costs and more to come. So, the way it’s going to work is we can actually draw against eligible cost, and then there is more to come. We can continue to draw essentially against that. And then that can go towards as you can imagine as we get through the next best, of course there is no on capital cost, you are right.

So, there is ramp-up of working capital, etcetera. So, that’s where that can be used for, but it’s being drawn against eligible AKA capital cost. But what that does for us is obviously at a top co level, that would have been money that would use for top co level to fund that build at the U.S. level. So, it opens up that they go do. The next thing and obviously, we have been looking at the next thing, it’s really around Europe and our site. And Debbie can also add anything, comments or in general?

Debbie Simpson: Yes. Good morning Matt.

Matthew O’Keefe: Good morning.

Debbie Simpson: So, I think our preference would be to get this bond fully closed, and then we can talk about the structuring it versus now before we have finalized the documentation, albeit that from our perspective, we have pretty much signed up on all the documentation. But I think if you are looking for a guide, you can really think along a typical project financing structure. Those are the types of covenants that this goes with that type of structure that you can expect in this arrangement, albeit it is with the U.S. government. And the one beautiful thing that’s very different from that and a commercial bank project financing secured is that it’s priced at U.S. treasuries, and there is no spreads. So, with the degree of flexibility, it has a long life for paying back, which gives us a lot of flexibility.

And then the other piece for that I think we have mentioned this before, but I would share right now is it is secured around those assets that we are building, right. So, it is secured against that Hub asset, but not the entire company.

Matthew O’Keefe: Right. Okay. Thanks. I just wonder – that’s great because it just does seem like it provides you with a great deal of flexibility. I guess that’s a particular way on this. And the mechanics around it, as you have explained. I appreciate that. If I could just ask one more question on the technical side. We have seen an uptick in LFP battery chemistry going into EVs. There is – is their LFP plants being built up and down the U.S. Are you guys can accept LFP, correct?

Ajay Kochhar: Correct, Matt, yes.

Matthew O’Keefe: Yes. Okay. So, that doesn’t really affect any – I guess there is plenty of nickel-based batteries as well to satisfy for the – at least for the next decade?

Ajay Kochhar: Yes. So, for sure, and this is something very close to our hearts. So, we say, as you said, and I just mentioned briefly, we accept a lithium ion phosphate batteries, LFP batteries commercially. So, I will walk through it on the way-in and the way-out. So, on the way-in from our Spoke, as you can imagine their mechanical processing facilities, so they are agnostic to the chemistry. And as for a Hub, of course we have nickel and cobalt, manganese production capability, but also looking some Hubs in the Rochester can take LFP. And we are looking at a similar thing for our Portovesme Hub. One other aspect there on the way-out is the whole discussion around lithium carbonate or sodium hydroxide. So, we have begun the path of producing lithium carbonate, which was a technical and risk-adjusted choice, not adding too much complexity, but lithium hydroxide off the path.

But if there were to be – and we do continue to see growth in LFP in North America and Europe, then that’s good, too, from angle of lithium carbonate demand, [indiscernible] is not. As we look at the gigafactories that are online, coming online and the pipeline for North America and Europe, it is still dominated by higher nickel chemistries. So, we see LFP coming in, but it’s gradual. And even when we sensitize that to a very aggressive case, there is still quite a bit of high nickel chemistry. So, that’s from the aspect of our customers and the feed for our Hubs, we don’t see that as a concern. But our key venture [ph] is going to continue to be able to take battery chemistry.

Matthew O’Keefe: Great. Thanks so much. Appreciate it.

Ajay Kochhar: Thanks Matt.

Operator: [Operator Instructions] We will take our next question from Jeff Osborne with TD Cowen.

Jeff Osborne: Hey. Good morning. I got a couple of questions on my side. Debbie, I was wondering if you could just opine on the operating expense level. It seems like it’s crept up, and I was thinking it would be a bit more flattish. If you could just talk about what the outlook is for the second half of the year as you move into commissioning would be helpful.

Debbie Simpson: Hi Jeff, no problem. Yes. I am not really sure that I follow your math, it creeping up. It is a little bit complicated in the income statement. And what you really need to do is back out some non-cash expenses. I think Q1 and Q2 of this year are a good indicator for the balance of the year for 2023, and you should expect it to be on or around that same level.

Jeff Osborne: Got it. And then for Ajay, maybe on the Italy facility with the different scope, which you touched on, if we were stuck in an elevator and you were trying to pitch me this ahead of the feasibility study, is there sort of a rule of thumb in terms of time to market, you could do it x percent faster and then what the financial ramifications are in terms of EBITDA per ton as well as CapEx per ton just in terms of the difference in scope? It would be helpful if you could just articulate that with a bit more precision.

Ajay Kochhar: Sure. Hey Jeff. And of course, we may not going to get that probably good time to elaborate on that. I would say, look, the bottom line is faster, it’s a more streamlined flow sheet. Of course, the impact of that, it’s not making a higher value nickel cobalt sulfate. But at the same time, we have provided up to contain of nickel and cobalt to get a bit of sense the rough revenue range. MHP, by the way, is a pretty common intermediate. It has indexes like – indices actually from numerous reporting agencies to give a sense of the payables on the nickel and cobalt. Just to keep in mind, again, it’s not exactly the same as mining product. So, bottom line, it’s faster, it’s tailored for Europe in terms of the collaboration with Glencore, I talked about around the refining facility in Norway.

And then the capital intensity, we would expect a lower capital intensity versus Rochester. So, that’s qualitatively. Obviously, the full elevator pitch will be able to be enabled on the back of the full DFS results, which we are looking forward to sharing.

Jeff Osborne: Got it. And then I didn’t see any reference to the production tax credit in the presentation. Have you been able to confirm that you will be eligible for the 10% PTC and what the expectation is the timing of that?

Ajay Kochhar: Yes. So, we do continue to think and based on engagement that we are eligible for the 10% BTCU [ph]. It does seem like the guidance that continues to get. We said that the latest that we have on that is likely this fall to understand specific guidance, but based on our engagement today, yes, we do look to be eligible for the 10% BTCU.

Jeff Osborne: Great. Thank you.

Ajay Kochhar: Thanks Jeff.

Operator: Thank you. At this time, it appears we have no further questions. I will now turn the call back to Ajay Kochhar for any additional or closing remarks.

Ajay Kochhar: Thank you, John. , looking back, it’s actually down the 2-year anniversary since Li-Cycle became a public company. And during that time, we delivered on our strategic plan to become the leading innovative and sustainable pure-play lithium ion battery materials recycler and supplier of key battery-grade materials. By closing loop from the domestic supply chain in North America and Europe, we are enabling the electrification ecosystem. And to recap our significant achievements which validate our first-mover business model, we have built an unparalleled global integrated pre and post processing network or Spoke & Hub network that positions Li-Cycle to be a leading supplier of battery-grade materials, including lithium carbonate.

We have entered into strategic long-term commercial arrangements with leading global players in the battery supply chain, including Glencore, Traxys, KION, VinES, EVE, LG in addition to other OEMs. And since being public, we have achieved competitive financing totaling $725 million with strategic partners and government support, including Coke, LG, Glencore and the DOE. So, in summary, we are extremely proud of our team with industry-leading expertise, continued execution and focus on driving significant value for our shareholders. And we look forward to demonstrating further progress in the coming quarters that puts Li-Cycle on a path to become a top global producer of key battery-grade materials with a leading sustainable technology and strategic partnerships.

So, thanks for your time, interest and support for Li-Cycle.

Operator: This does conclude today’s Li-Cycle second quarter 2023 earnings call and webcast. You may disconnect your line at this time and have a wonderful day.