Afternoon, and thank you for joining us for this WTR Insights conference session featuring Comstock Inc, which trades on the NYSE American under the ticker LODE. I'm Peter Gastreich, Managing Director of Energy Transition and Sustainable Investing at Water Tower Research. It is always a pleasure to welcome Corrado De Gasperis, Chief Executive Officer of Comstock Inc. Corrado, thanks so much for being with us today.
Hey, Peter. Thank you for your interest in Comstock and also just for having me here again. It's a pleasure.
So we'll have just a few housekeeping items here, so just bear with me before we begin. First off, Comstock's safe harbor statements can be found on the investor relations tab of the company's website. Second, investor questions are welcome throughout, so please submit them in the chat box and we'll be sure that those are delivered to Corrado and his team during and after the fireside chat. Finally, and most importantly, anyone wishing to request a meeting with Comstock management can do so through the conference portal. With that, let's get started. Corrado, could we start with a high-level overview of the company as it stands today, and how your constraint-based systems approach shapes your decision processes and where you put capital and your attention?
Yeah, absolutely. At the highest level, Comstock Inc is really supporting renewable technologies, breakthrough renewable technologies, and really the flagship of that is the renewable metals and solar recycling activity that I'm happy to say today that we've exited what most startup technology companies would call, I guess, the valley of death, right? That difficult stretch between early-stage technology readiness is anywhere from TRL3 to TRL6, or even TRL7, where many companies fail to truly commercialize and truly scale to an industrial level, or we call it industrial scale. Because today we're now operating that industrial-scale facility at what we would say is the inception of TRL8. Our solar panel recycling is operating continuously.
It's 24 hours a day, seven days a week, with our first-of-a-kind, zero waste, zero landfill, high-speed processing that can ultimately handle, just from the one production line that's been put in place, 3.3 million panels per year. I guess I emphasize that it is a first of its kind. It is doing what we don't see anyone else currently able to do today. We're operating, we're leading, and we're really looking to make renewable metals the backbone, and I guess I would say frankly the focus, of the whole enterprise. Our view of the system is logically and practically constraint-based, right? We define the system holistically, which means we don't define Comstock Metals, for example, as a one-site production facility. We don't define it even within the meaning of the four walls of our company. We really look at the entire supply chain.
We look at the entire problem that the industry is facing and that others have not yet been able to solve, right? That's the basis of how we approach the industry, how we approach the supply chain, and how we approach what we prioritize a breakthrough in. In this case, the problem is this just very significant and rapidly growing wave of either damaged or end-of-life panels that have really no safe or efficient disposal solution. That number is growing from millions a year to tens of millions a year, and that's what we've prioritized the allocation of our capital for. We're prioritizing the allocation of capital to this industrial supply chain, because we believe it's not only the most enabling thing, it's the most valuable thing, and that's what for our company and our investors would position the highest return on capital.
At the end of the day, if you summarize it, the industry's problem is that there is a growing environmental liability, a massive environmental liability for our customer. Our solution provides the capacity, the scale, the effectiveness, the efficiency of solving that problem, that environmental liability problem for our customer. That's really foundationally where we are, state of the union, and how we approach and where we come from.
You describe this wave of upcoming end-of-life solar panels with nowhere to go. How would you frame the size and timing of that wave for investors, and what is making this problem so urgent for the panel owners right now?
Yeah. We see the size of the problem in two ways. Currently, easily 4+ million panels coming to end of life in a year, this year. We've also seen some very bad practices, like stockpiling or improperly storing or scrapping, in some cases the landfilling, and delays even in repowering, that sort of shifts the liability of this material, but never really eliminates it. These numbers are increasing by potentially 5x- 10x over the next 5- 10 years. You say, "Well, those are two big ranges." It's definitely increasing every year. It's definitely increasing over the next five years, 10 years, 20 years, 30 years. The real question, though, Peter, is the estimated end of life. What we do know is the original estimates of 25- 30 years were remarkably overstated. We are seeing panels come out a full decade sooner than anyone thought.
But if they come out in 15 years or 17 years or 20 years, makes a very big impact on ultimately how many are coming out in 2028, 2030, 2032. But they're coming, right? For us, it's really not a question of if. We know it's not if, right? It's when. The urgency for panel owners around the magnitude of the problem has gone from curious to problematic to extremely difficult. Shortly, it becomes unmanageable if there isn't the capacity, either for storage or for processing, to dispose of them. Right? With this emerging situation, with electricity demands growing, with repowering growing, with even in some cases deferrals or stockpiles growing, there's limits on all of that. We feel very good about it. Our strategy around it is to focus first.
Look, we can take any type of panel in any type of condition, in almost any type of scenario. That's really a positive thing. But we focus on the key accounts because the utility scale, the high scale utility scale customers, the RWEs, the NextEra Energy, they are 80%+ of the market. We're tackling it from every known posture, but with the biggest, largest, and fastest-growing in the whole industry.
In our conversations, you've said that you don't see a competing system that can do what Comstock Metals can do. Where do you see the real kind of technical gap between Comstock and others that are working in the space, and how durable do you view that gap?
Yeah, that's a good question. I think I don't want to dismiss the difficulty, the complexity of building a national or even ultimately global supply chain. The things that come with decommissioning, with storing, with processing, with upgrading, et cetera, they're all relevant, and we spend quite a bit of time on all of it. PV panels, and frankly, most other electrification products, have heavy lamination. They're laminated, and these laminates, plastics, and glues are the nasty contaminants when you're deconstructing, when you're destroying the materials that have to be effectively eliminated. Frankly, they have to be effectively and efficiently eliminated. There's extremely high variation in the nature and material compositions of these panels. Our process simultaneously eliminates those contaminants, and the liability completely while producing clean, salable materials. If you're not simultaneously eliminating the contaminants, producing salable materials, then you're simply generating hazardous waste.
We really think the biggest competing gap is our ability in our process to eliminate those contaminants at high speed and high efficiency and high scale. I don't know. I would predict there's at least two to three years before anyone has truly the capability to deploy that kind of process. We're not aware of anyone that's frankly developing and taking that approach, the approach that we've taken to doing that. It could be longer, could be shorter, but I think that's probably a reasonable estimate of the gap.
Then, turning back to your first industry scale facility, that's now running. You mentioned running solar panels 24/7, and you talked about ramping towards your initial utilization target. Where does that ramp stand today, and what is operating steadily at that level kind of prove to your customers and to investors?
It's a major milestone. I couldn't tell you how rewarding it is, right, to see the operation doing that. We've moved from TRL7, as I said earlier, to now effectively operating at a TRL8 scale, 24/7. It's a first of a kind system. I'm pretty certain the market, it's news, right? In fairness, it's probably not fully digested, or people don't fully truly understand the magnitude of what this achievement is, while we're building and integrating the whole supply chain around that capability. With, like I just mentioned, the largest renewable energy companies in the country, plus some of the largest mineral and material-consuming companies for the aluminum and for the glass. We've said ramping up to a 25% utilization rate during this upcoming months in the fourth quarter. What that shows, what that demonstrates, is that the system is fully operational.
Even at a lower utilization rate, every step of the process is operating continuously. We're able to then prove the unit economics at scale. We're also able to showcase these proven abilities to our customers. Our customers have been great because they've been on site. They've gone through and tested the demo facility. They've seen the larger system developing and coming online. Now it's continuously operating, and that can be showcased, and frankly brings Comstock Metals operations at that utilization rate, 25%, to a positive source of cash versus of use of cash from the operation, from the plant. That's a lot. That is a major achievement. It should really appease the minds of all the rational people who should. Anyone rational would say it's first of a kind. We actually want to see it operating before we truly believe it. That's beyond fair.
Our view would be just, with that stability, just grow the system steadily up to higher and higher utilization with, of course, the ultimate intent of running it full, which, for most people's definition, running a heavier manufacturing process full means something north of 90%. We're excited about all of that.
You've talked about panel flow, not machine capacity itself, being the near-term constraint. What does it take, ultimately, to convert a Master Service Agreement with a large utility or an OEM into real sustained tonnage? How is that ability to show a running system change those conversations that you're having?
Yeah. I would say we have already converted major customers, OEM, and utility into sustained tonnage. Yeah, it's obviously nascent, right? But it's already happening. Right? Those volumes are steadily increasing. I think our new ability to now more expediently issue these certificates of destruction is very key because our best customers are demanding expediency there. This is a very serious environmental liability to them, and that certificate of destruction eliminates the liability. We've had, and we have quite a few scheduled visits to the site, and with the system running continuously, processing out of the backlog of the panels that we've accumulated over the last 12 months and beyond, that's critical. That is demonstrating and certifying the clean destruction of the panels. That is clearly seeing. It's nice to walk into a plant that's not operating, it looks very clean.
You walk into a plant that's operating continuously, and it's very clean. It's pretty quick to appreciate there's no waste being generated, right? That's what it's always been about for us, moving the conversation from guiding or promising to now delivering.
Beyond the clean aluminum and upgraded glass, you're currently developing a pilot for downstream metal recovery from your own tailings, right? With the extraction of silver as the first stage of recovery, what do you need to prove technically and economically before scaling that technology?
Yeah. Our extended teams are working on the silver extraction pilot that we plan to have hard evidence ultimately about our preferred ability to extract silver, and hopefully before the end of this year. The bench and pilot work is designed to answer the question, is really designed to achieve 1 ton a day of taking our tailings, process tailings from the recycling facility, and show both technically that we can extract high yields of silver, and of course, the mechanism, the process, we need to have a sense that it's economically feasible as well. The first objective is absolutely technical ability to do so at a pilot scale. A high enough pilot scale, we would say 1 ton a day would be high enough to discern economics, discern unit economics, and to discern what those unit economics with capital would look like at scale. Right?
To be really clear, this is a development effort. It's certainly not complete. It is not certain. However, we feel having this capability is critical for ultimately closing the loop on the renewable processes and would add another material differentiation to our capability over all others.
How about building out that national network? You've been site selecting in Ohio, Texas, Nevada, and the East Coast, while being clear that the site selection is not the same as deploying the production capital. How are you thinking about sequencing and phasing that network, and what discipline kind of governs when you commit capital to the second site?
Great question. Yeah, that is accurate. Our last capital raise, we had really three objectives in mind for the money. One was to allow us to, as you said, let's site select, let's have a national capability, both for sales and marketing, for site selecting, and for permitting. That was the first thing. The second thing was bridging us to ensuring that site number one could be up and running continuously, and that's been really, really effective to date and continues. Then the third thing would be funding the second site. I guess the real answer to the question is, the market should pull us, should direct us in terms of priorities and sequences.
The regions that you named are really the right geocentric locations relative to where we know the long-term market sits, we know where the panel deployments are, and those regions were defined really to ensure optimal logistics. The closer we are in proximity to those customers, the more effective we are at minimizing the logistics and the logistics cost. I think it's more than that. Logistics and minimization of cost ensures that we're differentiated in every single way relative to any potential alternative. But being in that closer proximity has an even more meaningful impact on our customers. Some are regional, some are national. But ultimately back to the question, the market should tell us. We've always had a view, and we still do, that California, Arizona, and Nevada are the biggest market, the Southwest region of the U.S.
Starting in Nevada with large capacity was very, very critical. We're very happy about that. We were looking at sort of southern Nevada, Texas, Ohio, and ultimately an East Coast site, as you mentioned, somewhere between North Carolina and Florida. There's a couple of really good options there. But interestingly, because of the success we've had with some of our national customers and because of some of the success we've had with our OEMs, Ohio has sort of surfaced as the next place where the market is there for us most meaningfully. We're thrilled with that. The evolution of a market other than the ones that we had prioritized, which are still priority. It's all relative. But for let's say a secondary or tertiary option moving up, that means we're winning. That means we're succeeding in getting those customers.
And so what we want to see, obviously, is stability with our existing operation. That is, of course, a prerequisite. So far, really so good on that front. And then the market pulling us stronger, more panels, more flow, more orders, more MSAs. So it looks like Ohio is really moving into the pole position for that.
Okay. That is great. Moving on to asset monetization, this has really been front and center for a lot of investors. I know we hosted you on a fireside chat recently, and that was the highest concentration of questions I think were coming related to that. So many that we had to bring you back for a podcast to answer more of those questions. But starting with Sierra Springs has really become a powered land story as much as a simple land story, and you have been considering acreage, water, and power ahead of going to market. What are the most sophisticated counterparties looking for, and how do you expect that process to kind of unfold from here?
Yeah. No, it is a great question. It is a big asset. It has got the potential for a remarkable amount of value. Really the market has evolved significantly here over the past 12 months, and I would say even recently. Just to be clear, what I mean about that is that demand is increasing. We have seen demand increase, not decrease, despite some of the controversy over data centers and even AI in general. Demand has increased. The demand on the ground has increased. The supply apparently seems to be decreasing.
Where there are certain oppositions and things. That is not the case in ours, and I will expand on that in a minute. Power and the timing of power generation remains the most critical constraint. Our ability to position material, future energy infrastructure here in Northern Nevada is significant. The energy infrastructure and megawatts to gigawatt projects, those specific prerequisites are, people are looking for entitled land suitable for expansion, suitable for expanded infrastructure, suitable for that infrastructure to ensure growth in power, water, fiber. The existence of fiber in our territory is remarkable. People do not talk about that as much. Then now more meaningfully, having favorable regulatory and even favorable local political community support. Ironically, this has caused us a lot of additional work effort, but it also positions us extremely well for providing the suitable platform for those sophisticated counterparties.
I would say that, if we felt any change meaningfully is rather than people coming to you bushy-eyed and all positive, they may be coming with a little bit more skeptical eye. Do you have that? Do you have that entitlement? Do you have that power? Do you have that fiber? Is there support? Ironically, despite the opposition tone, that's been a positive for us. It's been a really good positive. We're very excited. We've taken a little more time, in part because of the things that we just talked about. We want to make sure we're ready. When these parties are sophisticated, then you need to counter that with thoroughness and sophistication and readiness is a good word.
I think this is a generational opportunity for these communities, and these opportunities bring extraordinary capital and infrastructure that sets these communities up for decades of economic expansion. Somehow we're right in the middle of all of this, and we're deeply engaged with the communities, and now we're engaging with sophisticated advisors, with partners, and we're getting to those counterparties. I think, the next three or four months, we've got a lot of work to do, but it feels very good.
Okay, that's great. Corrado, we are running close on time here. Is there anything we missed today, or would you like to leave investors with closing remarks or maybe mention a few of the key signposts that you might have ahead?
Yeah, just obviously operating continuously is now happening. We're very excited about that. Ramping it up to 25%, exiting 2026 at that rate, and then growing from there, piloting the extraction of silver, as we talked about, but also the other silica, the glass and other metals that come from those tailings, and then launching this marketing effort with SSOF and defining the true range of options that will result in the most meaningful value and opportunity for us. Just, I guess in closing, we're building not just a first of a kind industrial plant, we're building a first of a kind industrial renewable metal and material supply chain, and that's with some of the largest renewable energy providers and larger material users in the world, certainly in our country. For us, whenever these types of achievements progress, you get meaningful obstacles, right?
The obstacles surface, but I feel like our team addresses them, engages them properly, and overcomes them. Maybe more than anything, in both the things we've talked about today, we haven't encountered any fatal flaws. Sometimes little obstacles, sometimes big obstacles, but we're getting through them very well, and we really appreciate everyone's interest, your constituents' interest, and the support of all of our investors, and we look forward to even more significant achievements now coming forward.
Okay, Corrado, well, thanks for your time today. This has been a great discussion.
My pleasure. It's always my pleasure. Thank you for having me.
Thank you to everyone who joined for this session. If we did not get to your question or you'd like to arrange a meeting with Comstock management, please indicate that through the conference portal. Additional research and content on Comstock is available on our website at watertowerresearch.com and on major research aggregators like Bloomberg and FactSet. You'll also find our financial forecast and a due diligence package that will help you get up to speed on Comstock. WTR's platform is entirely open to all investors and easy to access, so please have a look. We have another session beginning shortly, so stay right here. Thank you.
Thank you.