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Actionable news in AQMS: Aqua Metals Inc,

Aqua Metals Up Over 100%, What Now?

Summary

Interstate Batteries’ strategic investment validates the technology, reduces supply and expansion risk, and removes financial viability questions.

Systematically replacing smelters with Aqua Metals facilities or by selling equipment is a huge worldwide opportunity.

Aqua Metals will disrupt and restructure the lead recycling value chain, by making possible smaller scale facilities and more local recycling & battery re-manufacturing.

In October 2015, I wrote about Aqua Metals. If you're unfamiliar with the story, Aqua Metals offers a clean way to purify lead for battery recycling, aiming to replace today's dirty smelters operating at temperatures of 1400 degrees with a room-temperature, water-based electrolysis process. It seems poised to take a big share of the global lead recycling market. My full thesis can be found in the October article.

The recent strategic partnership with Interstate Batteries -- the nation's largest battery recycler and replacement battery brand -- provides a big validation to the company. So I'd like to provide a recap of current events and a further breakout of the investment opportunity still available at this stage.

Aqua Metals (NASDAQ:AQMS) shares are up more than 100% since I first wrote on them, but since then, the management has executed remarkably well, building manufacturing facility, finding a strategic partner, securing feedstock for the plant in Nevada, and ready to start production next quarter. So I believe the stock still offers compelling upside, for these reasons:

  1. Interstate Batteries' Strategic Investment validates the technology, reduces supply and expansion risk, and removes financial viability questions. The new $15M fund raise enables Aqua Metals to execute beyond the 80 tons per day(tpd) manufacturing plant in Nevada.
  2. Taking share from Smelters. Systematically replacing smelters with their own facilities or by selling equipment is an huge worldwide opportunity. (original thesis)
  3. Disrupt the Industry. Aqua Metals will disrupt and restructure the lead recycling value chain, by making possible smaller scale facilities and more local recycling & battery re-manufacturing

1. Strategic Partnership with Interstate Batteries

There could not be a better partner than Interstate Batteries. Interstate is the best-selling replacement battery brand in the country, with the largest independent battery distribution and recycling collection network. The strategic partnership involves:

  • $15M of immediate investment capital ($10m from Interstate and $5m from other investors)
  • A supply agreement providing reliable supply and pricing of old batteries to Aqua Metals' factories
  • An opportunity for Interstate to make further investments, raising its ownership in Aqua Metals to nearly 20%

These are some of the implications of this deal:

  • Technology Validation: As outlined in my earlier...

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