Aqua Metals (NASDAQ:AQMS) said it continued to advance plans for its first commercial lithium battery recycling facility during the first quarter of 2026, while reporting a narrower year-over-year net loss and confirming it will not proceed with a previously contemplated acquisition of Lion Energy under the terms outlined earlier this year.
On the company’s earnings call, President and Chief Executive Officer Steve Cotton said Aqua Metals is evaluating a shortlist of U.S. locations for its first commercial lithium battery recycling facility, with selection criteria focused on feedstock access, logistics, strategic relationships and long-term operating economics.
Company Highlights Technical Progress at Reno Facility
Cotton said Aqua Metals has surpassed 5,000 cumulative operating hours at its innovation center across extended multi-feedstock campaigns. He said the work continues to validate the company’s AquaRefining platform and its broader commercialization pathway.
During the quarter, Aqua Metals produced battery-grade lithium carbonate from multiple recycled feedstocks, including nickel manganese cobalt, or NMC, and lithium iron phosphate, or LFP, materials. Cotton said independent validation confirmed industry-grade specifications from the company’s processes.
The company also reported manganese sulfate production purity of approximately 99.8%, which Cotton said demonstrates the applicability of AquaRefining across additional critical minerals and battery precursor markets. Aqua Metals also continued work on iron phosphate recovery from LFP materials.
Cotton pointed to growing LFP adoption in electric vehicles and stationary energy storage as a meaningful opportunity for the company. “With LFP continuing to grow its share across both electric vehicles and stationary storage applications, we believe our demonstrated ability to recycle it economically strengthens our competitive position and expands our addressable feedstock opportunity,” he said.
Management Says Downturn Shaped Commercialization Strategy
Cotton said the battery materials sector experienced a significant downturn over the past two years, noting that battery-grade lithium carbonate pricing, which had generally remained above roughly $20,000 per metric ton, fell below $10,000 per ton during portions of 2024 and 2025. He said projects across the industry were delayed or canceled and some companies faced restructurings or insolvencies.
According to Cotton, Aqua Metals responded by preserving capital, maintaining core technical capabilities and continuing operations at its innovation center and demonstration plant in Reno. He said those actions position the company differently from firms that paused development or scaled back operations during the downturn.
Looking ahead, Cotton said the company’s priorities for the rest of 2026 include advancing site selection, continuing engineering and technical validation, expanding commercial engagement and evaluating strategic opportunities that could support long-term value creation.
Aqua Metals Steps Back From Lion Energy Acquisition Structure
A major update on the call was Aqua Metals’ decision not to proceed with the acquisition of Lion Energy under the structure contemplated in a previously announced non-binding term sheet.
“Following detailed diligence, we have determined not to proceed with the acquisition under the structure contemplated in the previously announced non-binding term sheet,” Cotton said. He added that Aqua Metals continues to see long-term strategic value in integrating energy storage solutions with domestic battery materials infrastructure, but is evaluating alternative structures that may be more capital-efficient.
In response to a question from Benchmark analyst Mickey Legg, Cotton said the originally contemplated structure “no longer aligned with our capital discipline, risk profile, or shareholder value objectives.” He said Aqua Metals is evaluating alternatives that could allow the company to participate in selected assets, technologies, customer relationships or customer channels in a more capital-efficient and risk-balanced manner.
Chief Financial Officer Eric West said Aqua Metals’ total exposure associated with Lion Energy financing activities was approximately $4.1 million at quarter end. He said the company recorded a partial reserve during the quarter because of increased uncertainty and expected recovery assumptions.
West said Aqua Metals’ position remains senior secured, behind Lion Energy’s current asset-based lender, which holds first position. “We’re actively monitoring developments and evaluating a range of potential recovery outcomes tied to the collateral base and, of course, any future restructuring scenarios,” he said.
Quarterly Loss Narrows From Prior Year
For the first quarter of 2026, Aqua Metals reported a net loss of approximately $4 million, or $1.22 per basic and diluted share. That compared with a net loss of approximately $8.3 million, or $10.27 per basic and diluted share, in the first quarter of 2025.
West said the year-over-year improvement was primarily driven by non-cash impairment charges recorded in the prior-year period that did not repeat in the first quarter of 2026. Total operating expenses were approximately $4.1 million, down from approximately $8.7 million in the first quarter of 2025.
The company ended the quarter with approximately $6.8 million in cash and cash equivalents and working capital of approximately $7.5 million. Cash used in operating activities was approximately $3.8 million during the quarter.
Aqua Metals raised approximately $1.3 million in net proceeds under its at-the-market program during the quarter. West said approximately $48.6 million remained available under the ATM program as of quarter end.
Commercial Partnerships Continue as Site Work Advances
Aqua Metals said it continues to pursue commercial relationships with companies including 6K Energy, Westwin Elements, Impossible Metals, Mobi Robotics and American Battery Factory.
In response to an online question about whether any of those relationships had moved from memorandum of understanding or letter-of-intent status to binding agreements, Cotton said several relationships are continuing to deepen technically and commercially. However, he said many discussions are evolving alongside commercialization timing, site selection, qualification work and project structure.
“It’s a sequencing thing that’s really important to converting those to full force commercial agreements because you really have to have the site secured and line that out before you finalize everything else,” Cotton said.
Cotton said the company’s remaining technical milestones are now less about proving the core chemistry and process flow and more about optimization, integration, throughput validation and commercial configuration. He said Aqua Metals is continuing to refine impurity management, reagent efficiency, operational stability and process economics.
On the company’s commercialization timeline, Cotton said site selection for the first commercial ARC facility is “very far along and underway,” adding that members of the team were returning from visits to shortlisted sites. He said Aqua Metals expects to proceed with site selection “in a reasonable timeframe,” while continuing to evaluate potential energy storage initiatives and alternative structures related to Lion Energy.
About Aqua Metals (NASDAQ:AQMS)
Aqua Metals Inc (NASDAQ: AQMS) is a technology-driven environmental company pioneering sustainable battery recycling solutions. The company’s core offering, branded as AquaRefining, utilizes an electrochemical process to recover lead, silver, and plastic components from spent lead-acid batteries without the need for high-temperature smelting. This water-based approach aims to eliminate air emissions and reduce energy consumption compared to conventional recycling methods.
Based in Reno, Nevada, Aqua Metals develops, manufactures, and licenses its proprietary modular recycling systems to industrial battery recyclers and battery manufacturers.
