2024/09/17 Bay Street Radio interview with Rodney Ireland and Ian C. Peres. Note that the Space was not recorded directly, but a third-party recording is available here: Recording

Note: the recording of the interview started late and missed the first minute or so of the interview.

Ian Peres

(I'm) actually quite a strong advocate of the green movement and green initiatives.

So in speaking with Frank, we talked a little bit about the battery recycling component of EVSX and I was immediately interested.

And I really believe that, you know, the industry is very nascent.

Battery waste is a serious growing problem, you know, especially given aggressive decarbonization targets

And, you know, I kind of come back to the notion of, you know, what's the very foundation of recycling, right?

It's to reduce, reuse, recycle. And recycling batteries just makes sense to me.

I think we have the opportunity to fully repurpose materials that are in the batteries as opposed to dropping them into landfills

With potential, you know, consequential soil contamination and water pollution and so on.

So why not distribute them right back into the supply chain? So EVSX is committed to, you know, this end-of-life battery processing

And it's very intriguing to me and that's why I'm here.

Rodney Ireland

Okay, well let's, let's take it back a step. I don't know very much about John Abbott College.

Could you tell us a little bit about that?

Ian Peres

So I grew up in Montréal. John Abbott College is sort of the two years that you spend as an intern before you go to university, unlike Ontario.

So just part of my formal academic training before I went on to Concordia University in Montréal

Where I did my Bachelor of Commerce and my diploma in public accountancy before becoming a chartered accountant, which is now of course a CPA.

Rodney Ireland

And it sounds like right out of school you went right into the deep end with one of the Big Five?

Ian Peres

Yeah, I was recruited by Deloitte.

The name was a little bit different in Québec just because of provincial disparities in the name, but it was effectively the umbrella of Deloitte.

I wanted to work for a Big Five because I really wanted to get a broad sense of the various industries that are out there.

My focus was on the financial sector, but I wanted to get a better sense of where I wanted to specialize.

And frankly one of the reasons why I became a CPA is because I wanted to have the flexibility of being able to do anything I want to do in virtually any industry.

And there's just a level of formal training being a CPA, given the broad sort of disciplines that you're exposed to, that permits you to do that.

Rodney Ireland

And then right around this time, uh, you probably got a little bit of the investing bug.

What was the was the first stock you ever bought?

Ian Peres

Ironically, the first one of consequence was actually Bre-X.

I ended up taking a trip out to Calgary and got a picture right in front of the building before it all went sort of, you know, to bust.

Very exciting play, obviously subject to fraud, and it was very exciting on the ride up

and I was one of the fortunate ones that actually crystallized the position and made some money,

unlike many others that lost quite a bit.

So it just gave me renewed sort of interest in making sure that, you know,

as fiduciaries of shareholder money, I the role very seriously.

And it may sound like I'm just, you know, sort of preaching, but I really like to think that I walk the talk as well.

Every time I cut a check, I cut a check as if, you know, it's Ian Perez cutting the check.

And I'm very, very conscious of any kind of spends, very, very cost-sensitive,

and I actually really drive any of our suppliers to give us the best possible value for shareholders.

Rodney Ireland

Certainly quite a way to be introduced to the capital markets through Bre-X. There's a lot of good war stories about that one.

So from there, you turned into a company founder, Energy Fuels being one of note.

Do you want to talk about how that company got off the ground?

Ian Peres

Sure. So at the time, I was actually working for a merchant bank here in Toronto.

And, you know, merchant banking portfolio had a series of assets that were not really going anywhere.

So kind of paused and looked at what looked good in the next few years.

And Uranium happened to be something that was quite top of mind and interesting.

So long story short, I assembled this basically inactive company in our portfolio to position it to become a Uranium exploration company.

So it was some heavy slogging to get somebody named George Glacier, who was the former marketing person responsible for battery–pardon me, for Uranium sales–

in a company at the time, which was called Energy Fuels, a private company back in the 80s that was second to Uranium production only to Cameco.

So through great strides, I was successful in getting George into the company.

He joined in March of 2008. Stock was at seven cents.

We quickly assembled just an absolutely formidable portfolio of Uranium assets because George knew where the assets were in the U.S. Midwest.

We acquired them very, very cheap and Uranium worked in our favour.

It actually ran to a high of $137.

We were able to have a $30 million bought-deal financing completed at the end of the year, and we hit, I believe, a high in the range of $550 per share.

And we were the number two returning investment on the TSX that year, second only to (Orillium? Orillion?), which is that South American gold play, if you remember.

So it was quite a great win for shareholders.

Rodney Ireland

Yeah, very good.

Yeah, and there was a pretty good time in the markets that first, well, the first one of my career, the Uranium run.

What are your thoughts on Energy Fuels currently?

Ian Peres

I think it's actually very well-run. Obviously, I haven't been involved for some time.

I still have a pretty significant investment in the company. They've actually obviously moved into rare earth metals.

I think the execution has been excellent. They're sitting at some $2 billion market cap at this point.

So, you know, I think Energy Fuels is a buy.

But again, I think anything that's actually properly executed in the green space right now is attracting attention.

And that's one of the main reasons why I've come into EVSX.

I think we're very well positioned to see significant returns for shareholders.

And all we have to do is kind of stick to our knitting and get the job done.

And Frank actually pulled me out of retirement.

I've been fortunate that I've had some successes in my past – I really feel blessed with that.

And I got involved because it was a deal to which I just could not say no.

It's an initiative that's right up my alley, and I think there's much more to come.

Rodney Ireland

So what's the current state of EVSX?

Ian Peres

So EVSX has three very highly automated processing lines. So what does that mean for your listeners?

It's a line that can actually process the recycling of batteries with very minimal labour.

And the batteries sort of drop into one section of the line.

They go through sort of a series of hammers and sort of shredders and, you know, shaking tables and so on, magnetic separation and so on.

And the paper is separated from the plastic, you know, from the metals, the steel, the aluminum, et cetera, and the battery metals.

So like the nickel, the cobalt, et cetera.

And what we do is we effectively repurpose all of those materials back into the supply (chain).

And what we're able to do, which is a little bit unique – and, you know, I really credit Enrico Di Cesare for this.

He's done a terrific job in terms of the overall design of this line, because we had to work with the manufacturer to get the specs we wanted.

And we're able to process well over 16 different types of battery chemistries,

you know, irregular batteries, batteries that are too small, batteries that are deemed to be too resource intensive by certain processors.

We can virtually do anything. So like alkaline, nickel-cadmium, lithium, lithium ion, EV batteries, the whole nine yards. So it's quite interesting.

And what's particularly interesting with the three lines that we have –

we actually have two lines sitting in our facility in the Niagara region, another one sitting in China and they're fully paid for in terms of capex.

So that's roughly a value of six million dollars that's been fully funded and ready for deployment.

Rodney Ireland

OK, so from a supply chain standpoint, it sounds like you've got some redundancy there that isn't– that you should be able to continuously operate with the second line

or are some of these parts difficult to get?

Are they pretty standardized, off-the-shelf sort of things?

Ian Peres

So what we actually did in terms of the design is we wanted to make sure that the manufacturing was to Western specs.

We didn't want to be in a situation where, you know, a part had failed and it would have to be manufactured abroad and come back in after some period of time.

So we've done that very successfully. So we can actually swap out parts with parts that are readily available in North America.

So that's, that's a huge sort of plus in terms of the overall sustaining operations.

The entire line is CSA certified, meaning from an electrical standpoint, it meets North American standards,

which is obviously critical in terms of just overall inspections and approvals.

So in terms of designs, we're very well positioned.

We actually have, as I mentioned, two lines in our warehouse in Niagara, and that's going to be important for commissioning because,

one thing I wanted to just leave with your listeners is that prior to coming to Canada, this line was fully commissioned, meaning it was fully operational.

We ran lithium batteries through it. We actually brought in our engineering partners, WSP, to supervise the commissioning.

They actually provided reporting in terms of how things were structured, any minor deficiencies in the line and so on.

So I have a very high level of confidence that the commissioning will be successful with minimal delays.

And what's really exciting is that, you know, let's say, for example, one of the parts are not working – well we've got two of everything sitting in the warehouse.

So I think we're very well positioned.

And, you know, in terms of the line installation, we've hired a very experienced team that we've worked with in the past.

Many of the modules that arrived for this 127-foot-line, if you can imagine that, arrived preassembled.

So it's not rocket science in terms of putting the line together. It's actually fairly straightforward.

And obviously the emissions and the electrical is a little bit of complexity, but I've got a team that I'm highly confident can get the job done.

Rodney Ireland

So these are fairly standard trades that– you don't need super specialized trades to keep this thing operational?

Ian Peres

100 percent. Yeah, very straightforward.

Just a basic electrician, basic millwright, and you're good to go.

Rodney Ireland

And battery supply– I mean, certainly in Ontario, waste management is highly political.

Is it difficult to obtain the supply of batteries? Is that an issue?

Ian Peres

That's actually a great question.

And you're right. It is very politically motivated, and for good reason.

Once we have the line fully commissioned, we will be having a ribbon cutting ceremony.

And, you know, I invite our shareholders to perhaps come out and try to attend that ceremony. It should be quite exciting.

But in terms of your more direct question about the battery supply, it's critical. It's absolutely critical.

There are a number of institutions that are actually collecting batteries in North America,

the largest being someone that we have a three year supply agreement with, which is called Call2Recycle.

So Call2Recycle probably controls about 80 percent, from my understanding, of the battery collection efforts in the northern states and Canada.

They've been in business for some 25 years, collected like 40 million kilograms of batteries.

And they actually offer like a turnkey battery collection and recycle program for retailers and agencies and governments and so on.

So what's really interesting about EVSX is that we have a three year supply agreement in place for alkaline and zinc carbon batteries.

We will be seeing volume increases, we believe, from that supply agreement as soon as we're commissioned.

And we're actually going to be looking at other battery chemistries being supplied from Call to Recycle.

But having that supply agreement is absolutely critical. We can have, you know, the permits in hand.

We have an environmental compliance approval in place. So we have the ECA in place.

We actually have a line which is technologically one of the most advanced lines in North America for processing.

But if you don't have the battery supply agreement, it doesn't matter. And we do have that.

Rodney Ireland

And with the end value of the product, the question becomes then, can you, can you pay for that supply?

Or does it go the other way? Are there tipping fees involved?

Ian Peres

Yeah. So the way it's structured is, the economics are that there is no cost to EVSX for the batteries coming into our facility.

In fact, we are paid tipping fees to process the batteries. So effectively, it's a quasi- sort of recycling fee.

We have access to potential sorting fees and the steel, aluminum, you know, the plastic that we convert into pellets.

Those are all things that belong to EVSX and can be repurposed down to the supply chain again.

So the battery metals, the black mass, as it were, is subject to resale.

And all of that is part of the revenue line that is generated in EVSX.

Rodney Ireland

Not sure how granular you want to get on this, but would more of the revenues be on the tipping fees or more on the on the sale of the end product?

Can you can we get that granular?

Ian Peres

Sure. So the tipping fees right now is the primarily motivated, the primary motivation to sort of, you know, get into this business, as it were.

Depending on the type of battery chemistries and obviously the content of the battery metals.

The resale of the black mass could be very, very interesting from the perspective of lithium. It's particularly interesting.

The issue is that when you're looking at, for example, these lithium button batteries that you use in your car remotes and in your watches,

there's only like something like two to seven percent maximum lithium in it.

So we're not sort of doing this right now for the battery metal revenue line.

I can tell you that as we move forward with EV recycling, the economics dramatically increase.

And what's particularly interesting about this play is that we have very minimal opex costs.

There's very minimal labour costs involved in running the line.

And we're able to ramp up volumes very easily without creating any significant increase in fixed costs.

So we're seeing solid EBITDA (earnings before interest, tax depreciation and amortization).

EBITDA– immediately given the technology and efficiency in the design.

And we're seeing that EBITDA positive in year one.

So it looks very interesting.

Rodney Ireland

So how many people are required to run the line?

Ian Peres

In the range of five. So, you know, five individuals.

I'm not at liberty to disclose how much those individuals would cost, but I can tell you that in terms of overall OPEX,

the numbers are, you know, call it 20 percent of the revenue line. It's very, very favourable.

It's quite interesting.

Rodney Ireland

So that five, you sort of have one master electrician and then maybe two electricians and two labourers sort of thing.

Is that (right)?

Ian Peres

Yes.

So we would need a maintenance person on site at all times.

We would need an electrical sort of background person available at all times.

And then we'd have two, three labourers.

That's in essence what it is.

Rodney Ireland

And would there be some remote monitoring as well?

Ian Peres

Yeah, that's a great question.

So the facility will be completely online.

We're in the process of actually installing the security system right now.

So, you know, full cameras, alarm system, etc.

I take health and safety very seriously.

So in terms of fire risk, we've got all the mitigation efforts in place for that as well.

All the reporting in terms of what's happening with the line in terms of any deficiencies, any maintenance issues, we're going to track that remotely.

So, yes, everything will be tracked remotely.

Rodney Ireland

So Canada is a large country.

Thorold isn't exactly on the tip of everybody's tongue as a place to go.

Why locate this in Thorold?

Ian Peres

It's a great question.

So I'll preface my response with: transportation costs are and I think will always be a real impediment to recycling.

It costs a lot of money to move batteries from one location.

At this point, we have batteries transported from B.C. into Ontario for recycling.

So that math doesn't sort of add up.

And it's the reason why we've actually acquired three lines, because the expectation is to install lines in strategic locations to address these transportation costs and obviously minimize them.

But the Thorold location that we have is, to me, probably one of the most ideal locations in Canada.

It's located in the Golden Horseshoe and it's in one of the most populated hubs in the country.

So, you know, we're centrally located in the largest automotive cluster in North America.

And we've got thirty five thousand square feet, which is right in, I think it's some four hundred acre multimodal industrial complex.

So we're adjacent to the Welland Canal. We have access to rail. It's quite intriguing.

So you're right. It would seem to be remote to one who's perhaps more of a city dweller.

But in terms of location to install a plant, I really don't think it gets better.

And proximity to the United States is also both an opportunity and a concern.

Rodney Ireland

Do you think tariff implementation is going to or potential tariff implementation could it could help or hinder the site?

Ian Peres

So our supplier right now, Call2Recycle, is actually Call2Recycle US and Call2Recycle Canada. They operate independently.

The supply and sort of processing efforts in Canada are really untouched from what's happening in the States.

There is some minor supply that we could see coming from the States and that could possibly be impacted.

With respect to the tariffs, I'm not sure I want to waste a lot of time there,

but I think the tariffs is, is a lot of bluster because I think that the tariffs directly impact the cost of many things like softwood lumber and meat costs and so on for Americans.

I'm not sure that it'll actually move forward.

We'll see what happens. But the short answer is I don't think it'll have significant implications of what we're doing here.

I think there's adequate capacity in Canada to continue operations and make money at it.

Rodney Ireland

And with waste management being such a politicized thing, I think that probably that's the more direct answer to the question is that the supply is already driven by politics.

So for the politics shouldn't, shouldn't hinder it too much.

Ian Peres

A hundred percent. Yes.

Rodney Ireland

And if I can get a comment in on tariffs, I don't think they're in the Koch Brothers' interest.

So I can't imagine they're going to be implemented.

Ian Peres

Exactly. Yeah, I share I share your sentiment.

Rodney Ireland

That's the way that I see that.

Yeah. We got a we got a question about a potential spinoff, which is maybe a little bit early for that, to spin EVSX out of St. Georges,

but perhaps there's some might be some revenue targets that when hit, It would make sense to take the plunge.

You have any thoughts on that? If you thought that far ahead?

Ian Peres

I think it's premature to make a comment on that.

I don't. Respectfully, I think we're kind of missing the point in terms of the spinoff.

I think what we should be focused on right now is bringing this line up to speed, fully commissioning it, proving to everyone that this line truly is industry leading in terms of the processing ability.

We've actually had significant discussions with auto manufacturers and other battery collectors.

And given the fact the line has been commissioned and some of the recovery rates that we're seeing like north of 93 percent, we're attracting a lot of attention.

So it's a very good question in terms of what do we do with it at some point.

My focus is exclusively on EVSX, making sure we get up and running, on track.

We've actually accomplished a significant amount of work in the last four weeks.

And I'm actually really proud of our team for getting it done.

And I don't really have any other comments in terms of whether it makes sense to spin it out.

Rodney Ireland

Yes. So maybe back to the timeline is somewhat of a dreaded question.

Anybody who's worked in the physical world knows that it's a guideline and subject to all sorts of things.

But it's the people that can work through that and get things done that are successful and make a lot of money.

Can you talk a little bit about timeline?

Maybe give us a blue sky picture with a few caveats.

Ian Peres

I'm not comfortable giving specific timelines, but I will give some overall direction in terms of what we're trying to achieve here.

In terms of the line installation, as we've press released, it's underway.

The team expects it to be done in due course.

I can tell you that we've got very aggressive targets in terms of what we want to hit to be fully commissioned.

That ribbon cutting ceremony that I alluded to earlier is something that's top priority because it just it brings awareness to what we're doing and how highly efficient our lines are operating.

So in terms of timing, what I would do is just ask your listeners to please pay attention to press releases. There will be some interesting press releases coming out.

And I can tell you there will be some very tangible updates within those press releases.

And as a consequence, I think it's probably a good idea to keep this top of mind.

Rodney Ireland

OK, yes. That's always a delicate question.

But curious minds want to know.

Ian Peres

Indeed.

Rodney Ireland

And where are you based out of? Are you close by to the plant? How often are you are you there?

Ian Peres

Good question. I'm actually based in Toronto. So roughly about an hour and a half from site.

And I have been there quite often, actually. I think it's essential that I'm there just to get everything under control.

We've actually got a couple of employees that are there that are highly competent and Enrico actually–Enrico Di Cesare, who's our metallurgist–actually has moved from Montréal to Thorold to support this initiative, which is really quite, quite impressive.

And we're grateful that he's done that for the company. So he's actually directly on site as well.

So while I want to be there as often as I can, we do have very good support with local talent.

Rodney Ireland

And also, that leaves you in close proximity to the finance people in Toronto.

So that should keep you in the loop that way as well.

Ian Peres

100 percent. You know, I see my role as more sort of bringing in the money, helping with execution, helping me to timelines and expanding volumes and advancing this initiative.

So in terms of the day to day operations, I think the team is very well equipped.

Rodney Ireland

Can we talk about your track record of raising capital, which has been significant in your career?

Ian Peres

So I worked at an investment bank in Toronto, as I mentioned, we used to do flow-through financings in the range of 100 million dollars a year.

The money went primarily into the mineral sector. I've actually sat on boards and I've run various public companies.

And I guess the way I would describe those are is sort of doubles, triples in terms of, you know, successes. They were actually quite successful.

Energy Fuels and Moneta being two that were particularly interesting because the Moneta Gold initiative, which is obviously now Stellar Gold, was an asset that I brought from virtually zero.

It was 142,000 ounces of gold to 9 million ounces.

So there's a considerable amount of money raised in Moneta as well.

But I think the numbers in the range of north of 500 million dollars.

So in terms of fundraising, it really is important to make sure that when you bring stories for funding, that they are tangible, they're real.

And EVSX is probably one of the most tangible and real stories that I've seen in my career.

Rodney Ireland

But certainly as you get the lines installed, I would think that would de-risk it and

change the cost of capital available.

If you were to raise money, having that line installed would go a long ways towards

making returns higher for existing shareholders.

Ian Peres

Yeah. So what's interesting about this is that the three lines are fully funded.

I think I mentioned that earlier in terms of CapEx.

So the capital has been fully paid for.

It's worth six million dollars.

And, you know, you look at EVSX in terms of where we are.

Right. So we've got the three lines.

One's being installed right now.

It's sufficient to absorb all of the capacity requirements of the Greater Horseshoe Region.

We've got two of the lines that will be installed in various locations that can add to the economics.

But what's really interesting about this is that we're going to be cashflow-positive very quickly.

And my analysis sort of leads me to the situation where we may not need funding again.

This is the situation where a lot of the heavy lifting has been done. The execution needs to happen now.

And as we get going here, we should be in a position where there will be adequate cashflow to self-fund any further operations or any other financing initiatives, I should say.

Rodney Ireland

OK. And/or raise growth capital at a relatively low cost of capital.

Ian Peres

Yes. 100 percent.

Rodney Ireland

Significant de-risking hopefully taking place.

Ian Peres

Yes.

Rodney Ireland

OK. Well, that's a that's a solid, concise half hour.

Why don't you give some closing comments and then I think we'll leave it at that.

Ian Peres

No, um, as I said, I'm really proud of the team.

We've accomplished much in one month.

I think there's lots more to come.

And in the very near future, I think St. Georges shareholders are going to be quite pleased with what we're seeing in EVSX.

And I would just tell your advisors, please stay tuned because lots of exciting things are coming down the pipe.

Rodney Ireland

All right.