Evolution Metals & Technologies Corp. (EMAT) Earnings Call Transcript

Good morning, everyone, and thank you all for joining us. I'd like to welcome you to the Evolution Metals & Technologies Corp. Investor and Analyst Webinar. I'm Georg Venturatos, Managing Director at Gateway Group. I'd like to introduce you to Mr. David Wilcox, who will be presenting today. Mr. Wilcox is the founder and visionary behind Evolution Metals & Technologies Corp. Mr. Wilcox is also EM&T's largest shareholder and EM&T's Executive Chairman. Following Mr. Wilcox's presentation, we will have a question-and-answer session. [Operator Instructions] A recording of today's webinar will be available on the EM&T website following the event. The EM&T management presentation has been filed with the SEC, is available on the EM&T website and is also posted on the webinar portal. Please go through at your leisure. Before we begin, please note that statements made during this presentation that state the company's or management's intentions, beliefs, expectations, plans, goals, opinions or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in our filings with the SEC. These filings include, but are not limited to, risk factors contained in our definitive proxy statement and prospectus filed with the SEC on August 11, 2025, and subsequent SEC filings. A copy of the presentation materials can be found under the Presentation and Events subsection of the Investor Relations section at evolution-metals.com. With that out of the way, David, the floor is yours.

Thank you, Georg, and thank you all for joining the webinar today. I'd like to start with who is Evolution. Evolution is a midstream materials and downstream magnet producer today and in the future, will be a precursor cathode active materials producer. We have operations in the Republic of Korea. We are scaling and expanding into the United States into a single industrial campus. We listed formally on January 6 on to NASDAQ, and we have been trading ever since then. With our management presentation, what Georg said, it is listed on our website under the Investor Relations tab. It's also filed with the SEC, and I'm going to walk through some highlights of that today. So what I want to start with is what the current market situation or global situation is in the midstream. Feedstock and mining are not the issue, but processing of these materials in a hydrometallurgy facility and a pyrometallurgy facility are the issues. Why are they the issues? If you look at the rare earth business, most of rare earth today comes from monazite rock. Monazite is radioactive. Under the Nuclear Proliferation Act, under the Atomic Act and others, we are not able to process and concentrate that material because it contains thorium. Thorium is radioactive. Although in the '60s, there was an attempt to make a thorium bomb, it has never been successful to our knowledge. Who processes all this material today that are non-signers, China predominantly over 90%. So how will we get that material back into key industrial companies, key companies around the world in the Western Hemisphere? Our flow sheet starts in high-grade concentrates and in recycled materials. We're building the largest urban mining company that the world has ever seen, and we're doing it right here in the United States with proven technologies, proven commercial operations, proven operators, nonacademic keyboard warriors. So with that said, I want to go to how do we fix it. In the immediate, we start treating critical and strategic metals, the same as we do with base and precious metals. The secondary metals business exists today for those materials. 98% of the world's copper that's ever been mined is still in circulation today. When you have an end-of-life electronic, when you have an end-of-life battery or a battery itself, the cell depletes, but you don't lose the manganese, you don't lose the graphene, you don't lose the graphite, you don't lose the lithium, the cobalt, the nickel, et cetera. The same goes for a laptop, a cell phone, a server rack, et cetera. Our flow sheet grinds, crushes, polarizes, separates into a nonferrous and ferrous polymer powder, polymer material and then further beneficiates that material into oxides, further downstream into metals, salts for batteries and into downstream magnet making. In the very near future, we'll be expanding within the United States, and we'll have a Phase 1 capacity of 55,000 tons of downstream magnet-making capability and magnet materials and 78,000 tons of salts and precursor materials. We're actively in negotiations or discussions with where that location will be here in the United States. We'll use our operators and our operating capability today to quickly scale and replicate in a modular way the capabilities that are contained in the Republic of Korea today. Our execution risk, we feel is minimal because of the operations that we have today. Historically, to get your hands on these materials, you're buying from China in a form of a high-grade concentrate, an oxide, a metal and alloy, a powder or a flake and then you're converting it into your downstream product. And just as recent as October 2025 to make a high-performance magnet has been ultimately almost entirely restricted by China. So in October of 2025, terbium and dysprosium or materials that contain terbium and dysprosium greater than 0.1% have been banned for export from China. What does that mean? You can make a low-temperature magnet, you can make a magnet that works in an elevator shaft or a magnet that works in your sunroof for your car seat, et cetera, but you can't make a high-performance traction motor magnet. So how do we solve that? We solve that through recycling, as I mentioned before. Anything from a Seagate hard drive from an electronic and EV that is spent and is going from recycling, we keep that material here, we keep it above ground. We keep it through our flow sheet in a secondary closed metals business. We're not a mining company. And we expect that as the mining industry in rare earths and critical materials has a maturity through policy that we will be there ready and able to take that material and put it through our hydrometallurgy and our pyrometallurgy facility, ultimately producing our salts and our magnet materials and magnet production. How do we compete with China? So China has the processing capability today. China is well over 90% of most of these materials and processing the control with artificial price, with policy procedures, export bans, export controls. How do we compete? We are not subjected to the 13% VAT, keeping this material within the United States, keeping it within our allied nations. If you buy oxide today, if they allow you to buy oxide, so not terbium or dysprosium, but neodymium or praseodymium that are contained within a magnet, you're subjected to a 13% VAT tax. Out of the gates, you have a disadvantage to everyone within China. The President of the United States has been addressing this with executive orders, with Congress, et cetera, on how to compete with China. But because we're in a singular industrial campus contained within the United States, we've put a list of the 45 years that China has monopolized this specific industry and one of the slides in the management presentation. I want to say from a policy perspective, a lot of people ask, is this going to work? I believe it is. I believe our policymakers, bipartisan, both sides of the aisle are actively addressing the geopolitical tensions between China and the United States. But in the interim, the short-term and near-term solution is building the midstream in the United States where new feed material as China brings it on, whether that be in the Democratic Republic of the Congo, Zambia and other places in the world that could or could not be sanctioned, have a tremendous amount of policy and procedural changes that will need to happen as that upstream market matures and is able to replicate the China control model to decouple ourselves from China. With that, I'd like to turn it over to Frank Moon in the Republic of Korea, who is our CEO. He is an operator. He leads a team of 42 engineers, including 11 PhDs and leads our operations in Korea today and will lead the development and build-out in the United States with his team of non-keyboard warriors. These are real operators in the world that produce material, produce magnets, produce midstream material today. With that, I'm going to turn it over to you, Frank.

Thank you, David. So, yes, as been mentioned by Mr. Wilcox, so I would like to give you a rundown of our design concept and the actual plan forward in terms of having the plant established over in the United States. So jumping to a conceptualization of what we are trying to do. Obviously, we are starting off with a feed material, which is going to be predominantly e-scrap generated or the actual e-waste or the actual spent magnet generated feedstocks. Now conventionally speaking, when you talk about e-scrap recycling, then probably people will be thinking, oh, yes, I mean, it's going to be based on printed circuit board and then going forward from there. But then again, our concept really start from the bulk original material downward. So obviously, the actual design is actually divided into -- largely into 4 different sections. So we have the physical separation portion in the beginning and then you will have the hydro and pyro process to follow behind that. And then at the end of the day, the purification process, which will actually have the product either into a pCAM or either into an end product as being a magnet, right? So to start with the actual physical process, then obviously, we're going to be having a size reduction process, having to reduce the actual sizes and each stage by stage, there will be a lot of robotics and pneumatics and also gravity based and then visual recognition, a separation technology involved in actually reducing the sizes. And during reducing stages, then you will be separating predominantly the actual ferrous lines and nonferrous lines with the PCBs. And then from there on, on the ferrous side, you will be actually concentrating the actual magnet proportion, which will be then leached out into an oxide that can be recycled back into a fresh new magnet going forward, right? And then along with that, the actual nonferrous line and the actual PCB lines and plastic line will actually follow through a further size reduction that will end up becoming a large proportion of the base material, base metals such as copper and then aluminum and gold and silver and so forth. And the other portion of the actual product will be separated into plastics kind of product. In doing that, then you will obviously end up having a high amount of the actual copper bearing product, which will be then sent up to further refining stages either as a mixture or we can actually go further downstream in order to make it purified into each individual product. But then again, our process for the e-scrap will be ending in such a manner that we will be focusing on capturing those magnet proportion and then really converting that into an oxide. And then once it's an oxide, it will either be purely NdPr based or it could actually contain NdPr and then the heavies, the actual terbium and dysprosium in such a case that it will have to go through a further processing of the hydrometallurgy, the solvent extraction, having about 50 to 100 mix, et cetera, depending upon the situation to actually separate out the heavies and the lights. So that will be actual -- the line of the actual process for the magnet side of the deal. And then whatever has actually been recouped at the end of the day through this size reduction process, you will have the actual high copper containing material that will be distributed out to a refining process going forward. So that will be one part of the deal. But then at the same time, because you will be receiving devices such as cell phones and also the laptops and things like that, which will also contain a small lithium-ion batteries, but those batteries then will actually go through its own unique process to be processed into a black mass along with our activity to actually introduce further black mass purchase from outside that will then actually go into a hydrometallurgy process to actually separate out the actual battery [indiscernible] material ultimately by turning into carbonate and then into a sulfide and force, which will have a staged approach such that we -- first target to actually produce the chemical grade at 3-Nines and then we will go into a further cleaning process to go into a 6-Nines containing the pCAM grade, which then will be actually crystallized and then will be actually made available to the actual customer. So those are the actual pretty much the concept in terms of actually battery material. In terms of the battery materials and then it will be then has an option to actually go as a pCAM or the chemical grade product, but also the actual option to actually turn it into a high-purity electrometallic product being a nickel, cobalt containing alloy or individual high-purity metal as itself, depending upon the actual type of the actual feedstock that we have in terms of the battery material. At the same time, the magnet material that is actually attained. So the actual oxide that we obtain out of the process will then go through the actual conversion process into a power process to make it into the actual NdPr metals or the actual heavy metals, which then will be then going into an alloy making process. And then eventually, then it will be actually fed into the actual system where it can be actually made into sintered or the bonded magnet going forward. Overall process is actually well proven. In terms of making the bonded and sintered magnet, we've got the actual companies in Korea, including the gentleman over here who've been actually doing that for a number of years and over the decade in terms of making alloys and so forth. In terms of the actual hydrometallurgy side of it, we've been working very closely with institution in Korea called KIGAM, who's been crucial in terms of establishing the actual battery-related hydrometallurgy as well as the actual rare earth-required the hydrometallurgy side of it. And then we've been working with various organization for the actual pyrometallurgy side of it as well. And then the people over here has been actually quite experienced for the last 6 or 7 years in terms of making the metals and alloys and so forth. So the process is a proven process. We're not actually looking at the new science or new technology. We are actually more focused on actually doing the actual process, utilizing the actual known and the stable process that we have. And then obviously, the actual plan forward is highly automating the process such that we could actually have a less of an impact in terms of the human input to it. And obviously, from the actual training and then getting the actual plants ready and ready to go in the United States based concept base. Because we have the operation in Korea, we plan to actually bring the people over here to Korea before -- or while we actually preparing the plant over in the United States to have the people readily trained and then be ready to be actually incorporated when the actual plant is up and running over in the United States. So having said that, I just want to emphasize the fact that -- the overall process is very large input of bulky product. But then again, of that bulky product, you say of the end product we are generating, we're not actually just generating the actual magnet material or the battery material, but then we are actually producing a large and wide and broad spectrum of product and that also contains a lot of base material generation like copper and like the actual aluminum and so forth. So if you look at our revenue projections, there is a large portion of the actual businesses generated out of that copper and aluminum and other base material generation process as such. So therefore, we are actually aiming to be broad and wide in the spectrum, but at the same time, very flexible such that we could actually produce a product that is actually attuned to the market rather than actually depending upon one single source of a material and one single type of product to be produced with. So we'll have a lot of flexibility going forward. And then in terms of the plant readiness in the United States, the actual physical part is going to be available much quicker than the actual hydromet or the pyromet process. In other words, we would be actually having the actual physical separation part ready and operable a lot sooner than the actual hydrometallurgical part, albeit we are starting at the same starting point. But then again, that means that we are actually generating revenue-generating items earlier with the actual base metals and the other precious metal that can be generated out of the actual recycling process, meaning that we can actually look at actual business activity being more productive from an earlier stage than waiting for the whole thing to be completely commissioned and then optimized. So I think that will actually give us a much better flexibility in terms of reacting to the actual market situation as such. So that's pretty much of the actual introduction of the concept of the actual plant that we're actually planning over in the state. So thank you. And then I would like to actually hand over the mic over to Georg. Thank you.

Georg, could I make a few more comments before we take questions that came to mind. So I think there's going to be a question if there's not already. Look at our peers in the market, plans of 2,000 tons or 10,000 tons of magnet production, et cetera, plans to build within the United States. Why build so big? Why build 55,000 tons of magnet material or magnet production? Why build 78,000 tons of precursor salts? And there's a reason why. If you look at 2 products, you look at the Tesla Model 3 in 2024 and you look at the Apple iPhone in 2024, those 2 products, so 2 products within 2 companies, not across the spectrum of Apple or Tesla, you're looking at nearly 10,000 tons of high-performance magnets. So if you can only produce 10,000 tons, that would just be 2 products. What would happen? The Chinese would say, well, I'm just not going to sell you the rest of what you need. It would be detrimental to those companies, right? And that is exactly what Congress POTUS, the executive branch, the national security adviser, everyone is looking at with a microscope on, is that you need to be able to produce enough to compete with China. And so you look at the market of magnets in 2024, the known market was around 300,000 tons. So at 55,000 tons, we're a significant player within the United States today. The execution risk is key. So we're about 700 tons of magnets today. We produce those magnets and we sell them to real OEMs. So we can replicate and not scale in terms of building huge, massive runs, but building modular runs, flexible runs, as Frank is mentioning because this is the metals business. You have issues when you're separating, you're refining, you're turning into powder alloy and flake. So it's not always the best thing to do to build the biggest building ever, but build continuous known replicable process and flow, right, in scale in that manner. But out of the gates, will be about 125,000 tons of throughput in a hydrometallurgy facility in the United States, and that is what is key. That is the missing piece. That is the piece that's needed to process new ore, albeit it would need to be a high-grade concentrate because we are a closed loop. We are a secondary metals business. So it would have to be a 90% plus concentrate coming through end-of-life materials, batteries, whether those are spent batteries or not even at the end of their life quite yet, but maybe the vehicle is or the battery that's captured in that phone or that laptop. So I just want to make that very clear to the analysts, the market that there is a reason and rationale why you need to build the scale and the size and you need to build it within the United States. You need to have low-cost energy. You need to have low-cost labor, lots of automation that we've been doing with our partners in Korea who have been automating what we've been doing so far as much as possible, right, because that increases efficiency and turns the economics better with less human interaction. The slide I was mentioning was Slide 23 that we laid out in the management deck. China's 45-year monopoly. And then the last thing that I want to say is how do we ultimately compete as a business with China from a new ore material perspective. When this supply chain starts to open up within the United States, there are many things that are going to have to be addressed. If you're taking Congolese cobalt hydroxide and bringing that into the United States, you're going to have tails. Where do you put those tails? If you're in Montana, they might not want Colorado or vice versa. There's upstream issues around sanction countries this material comes from and the supply chain that ultimately beneficiates into China. So that near-term solution for recycling using all of the materials that you recycle, as Mr. Moon mentioned, you can't just focus on a spent magnet within a hard drive. You've got to get the aluminum, the casting, the polymer. You've got to make money on all of it because there is a market for this material, this end-of-life material. And historically, you look at a battery and you're only producing a black mass. Well, if you're only producing a black mass, there's only one buyer of that material. And it's the Chinese. It might go through different traders, et cetera. But ultimately, you've got to beneficiate that into a hydrometallurgy facility. That is the missing piece. You've got to do it at scale. You've got to do it with real-world operators, commercially proven and commercially viable technologies, not someone with an idea that's never done it before. There's a big room of just a few of our operators in Korea. And as Frank mentioned -- Mr. Moon mentioned, those individuals are key to running, building, designing and operating a scaled and sized facility like this in the United States. So Georg, I'll pass it back over to you for questions.

Great. Thank you, David. Well, that concludes our prepared remarks. As David mentioned, we'll move into a Q&A session now with the team. I will pause just a moment to compile, but we do have some questions in. First one, dovetailing off of David's comments, do you expect the Chinese to retaliate? And if so, how?

I'll handle that. John Arrastia, I'm the Chief Legal Officer. Now even if we were to take, as a company, 15% of the market in rare earths, there's a possibility and some people might think that People's Republic of China, the PRC, will conclude a fight is unnecessary with Evolution because PRC would still control 75% to 80% of the market. But we view that as an unlikely scenario. In my personal experience, the more aligned the PRC's geopolitical goals are with commercial marketplace, the more dogged they become. So for the PRC control of the rare earth element marketplace is an essential tool in advancing its long-term geopolitical goals. So while I might not consider it retaliation, we have considered a range of basically 5 reactions that we would anticipate from the PRC. The first is they could cut off the feedstock and other materials necessary to make a magnet. It's already happened. There's been severe restrictions by the PRC on the export of technology. The feedstock with more than a trace of heavy rare earth elements can't be exported and persons knowledgeable and the manufacturer of rare earth magnets aren't permitted to travel outside of the PRC. For us, that's not a real concern. Our model untethers us from reliance on the PRC as a supplier of feedstock through the urban mining of end-of-life materials. The second is the PRC could undercut pricing in a purely commercial marketplace. Again, we've already seen it. This is -- first of all, this isn't sustainable over the long term and would drain the PRC's limited resources from other geopolitical projects. But more importantly, the marketplace is speaking. Given the growth in demand, we believe that the PRC cannot satisfy the entire marketplace without expanding its production capability. That leaves room for other players, notably Evolution. But most importantly, we've contemplated this and we've addressed it even on the short and intermediate term. Our model has various revenue streams other than just making magnets. We can recycle end-of-life components and sell the component elements like gold. We could manufacture and sell precursor elements, materials to other people or we could use it internally in our own production on a cost basis, which would make us even more competitive. The third thing that we've considered is they could, and Mr. Wilcox spoke to this, [indiscernible] customers by saying, sure, you could purchase from Evolution, but then we won't sell you the rest. And that is the reason, as Mr. Wilcox explained in detail that we have to have a certain scale. We need to be able to take out entire product takeout, satisfy entire product lines and entire commercial needs in order to address that issue. That's why it's such an intrinsic part of our plan. The fourth is government influence. In my experience, I've seen the [ PRC ] influence governments on one spectrum through legitimate government affairs and lobbying and in other instances in foreign countries just throughout right bribery. That's been my experience. That's one of the reasons that we are U.S.-centric because we believe in the transparency, the strength of the United States government and doing business here. This -- that is the simplest way for us to address that issue. And we have every confidence in our government vis-à-vis much of the rest of the world and the way they operate. The fifth is a question of, well, the Belt and Road Initiative, which has been so successful for the PRC. Is there a possibility that the PRC would piggyback on that -- piggyback the rare earth element aspect on the Belt and Road Initiative. And by that, I mean, perhaps building other facilities in other countries, inserting them in there and having that country become even more reliant on the PRC. Instead of building trains, roads, ports and strategic locations, why wouldn't they just build an industrial campus? At first blush, that seems practical. And yes, it's possible, but we've concluded that, that's just not probable. And it's not probable because it would be inconsistent with the type export controls that the PRC has on material, technology and personnel related to the rare earth element space. This would be radically different, creating a hydromet, pyromet or any sort of industrial campus that has this tightly controlled technology and personnel in another country. That would be radically different from operating the Port of Darwin, the Panama Canal or real -- or building rail stations in Kenya. It would be radically different because the technology transfer and Belt and Road initiative aspects is limited. This would be basically exposing some of the crown jewels of the PRC's geopolitical strategy to other foreign countries and other commercial marketplaces. So those are the 5 major aspects. And of course, this is like fitting 2 pounds of sausage in a 1-pound casing. It's not very easy, and it's not exhaustive. But this is a brief overview of our considerations and our thought process as we've developed this model. Thank you.

Great. Appreciate that. Next question was, it was mentioned that you plan to primarily source classified e-scrap from U.S. DOW. Have you secured these types of contracts before? And if so, please provide some context as to how it is done? And what is the expected timing to do so?

I'll take that one. I'm Andrew Knaggs, I'm the President of the company. So as a starting point, we need to understand that in order for this company to be able to even compete for secure contracts, we need to have a secured facility, and that requires a facility's security clearance. We've already started that process. We've already started leaning forward in terms of considering what will be required for us to secure that processing facility just from the -- from a design -- initial design standpoint. Oftentimes, what you see with companies is that they establish their operations and then there's a classified contract that becomes available and then they sort of back track and have to retrofit their facility or their operations in order to meet those requirements. We are designing our plan, our processing facility from the ground up to be able to satisfy the stringent requirements that are going to be necessary to manage classified material at scale. So given that, our first step is, again, at the design level and that runs along at its own cadence and then identifying those contracts is something that is already a problem set that we are aware of. The federal government already recognizes the processing of its classified e-scraps as a significant pain point. Right now, the Department of Water is relying on a number of 2 to 3 incinerators that have extremely limited throughput. What we intend to do is bring to market a fully baked solution that is available for the federal government that ends up becoming an EDS. What that opens the door to is not only making us competitive for openly competed contracts, but also sole-source opportunities as well. And that is really what the key is here because in order for us to secure our facilities clearance, we have to have a government sponsor or prime contracting sponsor who already has one of these contracts. But since we are going directly to intend to engage directly with the federal government, it would be the Department of Water who would be directly sponsoring us. And going through that process, that could be anywhere from a 45- to 90-day process in terms of securing the FCL -- facilities clearance. But in terms of crafting and competing for those contracts, that could be anywhere from a 30-day to a 90-day process once we are in -- once we get that started. But the good thing, though, is that once we have the facilities clearance in hand, we're able to roll that into future opportunities as well. So -- and from -- in terms of context, these opportunities can go in a number of different directions. I've not only secured similar contracts in the past, but I've also managed the awarding and the oversight of federal contracts as a federal civilian inside the government, both as a GS civilian and as a presidential appointee. So there are some nuance that we certainly can't get into detail on here on this call, but we have identified what those pain points are, what the need is and what that solution looks like, presenting that to the federal government and to DOW in particular, that opens the door to access to this existing trove of e-scraps that we should have the prime opportunity to process and move into our system. So that's the best way to look at that opportunity.

Great. Appreciate that detail, Andrew. The following question was submitted by Tim Moore, research analyst from Clear Street. Question is, can you elaborate on your engineering and procurement plan for sourcing the custom equipment for the U.S. operations and how quickly you can place orders after receiving some of the financing?

Okay. So let me handle that question. So jumping to the conclusion, yes, we can actually place the order today. In other words, we are ready to actually place the orders. We identify the actual long lead items and then also the standard items and also the modularization process that's required. When I mentioned the modularization, what we're actually trying to do is to make the actual modules and those modules can be dispatched over to the United States and then to be intertwined into the actual overall process. So for example, if you're going to go ultimately a 50,000 tons processing plant, then you're looking at a 10,000 tons module for each. So you'll have the duplication of 10,000 multiplied by 5x. So obviously, in actually having those modules available, there are certain long lead items that need to be handled before anything else because some of the items can actually take up to a year before it can be actually delivered. And then some of the items can be a few months and some may be like 10 months. So therefore, we have to identify those. And then that process has already been identified and then defined in terms of the action plan. And then we've been in touch with the actual suppliers from Japan, also from Korea and from Europe and so forth. So we are all ready to go once we actually finance to actually do that. In terms of the actual -- the engineering side of it, I mean, obviously, we've been working with the actual recognizable Korean EPC provider who has a track record of actually providing those hydrometallurgical process in terms of the actual track record, they're quite elaborate in terms of the actual -- the things they've done in the past. So therefore, we are at a stage where the actual conceptual front-end engineering is already done. But then again, we still need to elaborate once we actually have the location finalized such that we can actually go into the final phase of the actual design process. But that also has been in dialogue and in discussion, technical dialogue for the last practically about 10 months to a year. And then we are ready to actually move on to that. So there's no -- an item that will actually need to be freshly revised into in terms of actual readiness going forward. So those are pretty much ready from the Korean side of the deal, right? If that answers the question. Thank you, Georg.

Thank you, Frank. Moving on to the next question was submitted by James Zimbardi from Zynergy Investments. How should investors think about gross margins at scale?

Okay. Maybe also I would need to actually answer that question, Georg. So the gross margin at scale, obviously, if I just want to give you an analogy in terms of operation, say, for example, in Korea, we talk about a producer having to produce 400 tons or 600 tons. But then again, usually, the actual production equipment would be able to handle much better, much more throughput than that individual machine. And why -- in that case, why are we only producing less of a quantity. That's because there's a bottleneck in terms of identifiable feed material. And there is a bottleneck of how small you can actually go in terms of the equipment. So obviously, from the economy of scale basis, you need to actually maximize your output, meaning that you need to have enough material to actually maximize the actual utilization of the equipment, right? So from that perspective, if we have enough of the material to put it into an existing machine, that will actually provide us with better return. That's for sure. But then again, at the same time, if you can actually increase that specific target items that you're actually aiming for, but at the same time, being able to generate much higher volume of a byproduct, let's call it that way, that can be actually marketed separately, then obviously, it's going to actually add to your bottom line much better than just targeting on a single item. So therefore, for us, the actual scale factor is not just based on being able to utilize a magnet production machine to its fullest extent. But then again, by going to a high volume, then it means that we are also generating higher volume of marketable -- readily revenue-generatable product that comes as a byproduct. So therefore, that actually adds to your bottom line, meaning scale is very important going forward in our margin generation. Thank you.

Thank you, Frank. Next question we have. Please provide clarity on your sintered magnet capability. Which grades do you produce? Which grades have cleared your customers' QC programs? Which have not yet? How do you plan to replicate your sintered magnet production equipment in the U.S.?

I'm Andy Chun. I'm the CEO at [ K&MI ]. We do manufacture sintered magnet. And also, we do produce injection molded bonded magnet as well. So I'm going to talk about the bonded magnet. We've been producing this material, this product for over 10 years, and we are supplying this material to major automotive manufacturers in Korea and also other various customers. And we have -- we do manufacture 4 different grades for the bonded magnet. And the most important grade is NS760. So we've been selling this product for over -- just like I told you earlier, more than 10 years, and we have a lot of opportunity to grow and expand our grades in Korean market and also in the overseas market as well. Now I'm going to talk about the sintered magnet. We currently produce 9 different center magnet grades ranging from N42 to N48SH, which are primarily used in automotive and industrial applications. At present, most of our sintered magnets grade have already complied with the quality control requirements of our potential customers. And we are currently completing the final approval process for the grade N48SH with several customers. We plan to commence sales starting in April. In addition, we have already initiated procurement arrangements for sintered magnet equipment with several prospective suppliers. So our company possess the technical expertise and operational experience and skill specialists required to manufacture a wide range of sintered magnet grades. Therefore, we have the capability to replicate and install sintered magnet production equipment in our U.S. location. Thank you.

Thank you, Andy. Next question, what are the key bottlenecks to scaling production?

Okay. So let me answer that. So in terms of the bottleneck, I think we can identify generally speaking, about 3 different bottleneck that we can identify. One is obviously the [indiscernible] material. And the second one is the actual the equipment provider and third is obviously the actual level of the skill that's available to operate the plant. Then we knew this from very different angle from the onset of business in Korea, and from our past experiences. So we actually see this as a very important aspect of the business from the very early stage of the business conceptualization. So in terms of the actual [indiscernible] material and as Mr. Wilcox already actually emphasized, that's why we look at actually sourcing these materials independent of the conventional or incumbent sources from China, right? So our source material is very important. And then we actually are identifying the source material to be coming from a certain stable source such that we can actually eliminate the bottleneck. In terms of the actually the equipment risk side, and as already mentioned, there's a lot of restriction and the future restriction potential restrictions that will be coming for any kind of the equipment that would be available from PRC that would actually become harder to actually obtain as we go further downstream. So therefore, the risk side of the bottleneck is how can we get this equipment and can we get them to expand our business. So therefore, it has been very important for our business venture to actually identify where and how and alternatives of the equipment availability away from the PRC. And then we've been working very diligently on that side of it, and then we can be very proud that we have found solutions in terms of where we can actually find the alternative or a replacement equipment suppliers that could actually cater for our needs when the actual pressure comes along. In terms of the actual risk in bottleneck of the actual people, and that's why we are actually very active in terms of the actual AI robotics and also having a remote-based control of the actual system and so forth. We've been working very hard on that concept for the last 3 years. And then we've successfully implemented certain robotics into the actual manufacturing of the magnets, but we're going to be expanding that into the actual batteries and other things. But at the same time, we have a plan to actually bring the actual technicians and engineers from the United States over to Korea, while we are building the actual plant over in the United States, we will be actually giving the on-hand training for those people in Korea where we have the actual production and the actual -- and the facilities available such that they will be ready when -- they will be ready when the actual plant is up and running in the United States rather than having to wait for the plant to be established and then having to identify the actual people to operate it. So I guess I'm just giving you the actual -- my view of the bottleneck as well as the actual remedies that we're actually planning to go forward to eliminate that, right? Thank you, Georg.