S2 BONUS: Industry: Insights from David Wilcox of EM&T

Dustin Olsen (00:40)
Hey everyone, welcome back to the Rare Earth Exchanges podcast. I'm Dustin, your host joined by my cohost Daniel. And today our guest is David Wilcox, the CEO of Evolution Metals and Technologies, also known as ⁓ &T. David, welcome to the show. How are you doing?

David Wilcox (00:58)
I'm doing great Dustin and Daniel and just one point of clarification, I'm the executive chairman. Frank Moon is the CEO of ⁓ &T. Yeah, no problem.

Dustin Olsen (01:07)
⁓ thank you. Sorry about that. Thanks for the correction. ⁓

David, we're excited to have you here to help us introduce you to our audience. Can you give us a quick summary of your background, kind of the journey that led you to ⁓ &T?

David Wilcox (01:23)
Yeah, so.

I used to work for a bank. was in the derivative space and I saw something unique happening throughout continental Africa. ⁓ The Chinese were coming in in droves. They were super sacking material, not processing it there within Africa and moving it all over to China. And I saw this opportunity that was extremely unique where as electrification was growing, the demand for high technologies

⁓ It was

Daniel O'Connor (01:56)
Okay.

David Wilcox (01:57)
very apparent to me we were going to have a dependency ⁓ for just about everything that we use in our life ⁓ by China. They've now executed on their plan and are using it as a geopolitical tool, whether it's mirrors or battery materials that are key inputs for Western OEMs.

Dustin Olsen (02:17)
interesting about how long ago was that when you started to realize something was going on?

Daniel O'Connor (02:21)
you

David Wilcox (02:22)
Yeah, about 10 years ago, ⁓ a little over a decade ago. And it became more and more obvious. I started my journey ⁓ with Evolution around 2019. So we formally incorporated January of 2020. And we've been building the business and building our capabilities, our technology stack, and our distribution of ⁓

Daniel O'Connor (02:26)
Okay.

David Wilcox (02:47)
commercial material since then.

Dustin Olsen (02:50)
Awesome. Yeah, I think very few people are seeing what you were seeing 10 years ago, right? It's probably becoming more apparent. ⁓ But let's talk about EMNT. What high level, what is your company about and where do you guys slot into the supply chain?

Daniel O'Connor (02:50)
. Okay.

David Wilcox (03:10)
Yeah, so ⁓ &T's commercial capabilities today are midstream processing, so separation and refining to downstream magnet production, so both centered and bonded magnets, right? So we look at high grade concentrates or end of life materials. We are not a mining company. We're a midstream processing and downstream materials producer. So what does that mean? Right? So if you're a mining company, you know, you're mining company A, you've got to take a

a backhoe, a caterpillar into the ground, you've got to scoop out ore, you've got to begin that concentration process. And for us to take that material, you would have to get it up to a 90 % plus concentrate. That doesn't really exist in the market today, primarily due to the thorium issue. Where do rare earths come from? Almost predominantly from monazite. Monazite's radioactive, right? So to concentrate thorium, ⁓ you can't do it in the public and private sector.

Daniel O'Connor (03:56)
.

David Wilcox (04:09)
under the Atomic Energy Act or the Nuclear Proliferation Act. ⁓ So we started downstream and came into the midstream and are looking for the upstream to mature, right, and be able to feed that material. So, you know, when you're a mining company that's attempting to become a midstream materials processing company and a downstream magnet producer, that's a fundamentally different business than, you know, the primary business that they're in, which is a mining business. So where does this stuff come

from. So if you look at the world's production of cobalt, it's coming from primarily one country in the world, in one area, it's called Lumbashi. So they're producing, some will say 70%, but I truly believe it's around 90 % plus of the world's cobalt. So you're dealing as an American company, number one with a sanction country. ⁓ Then you've got to take that hydroxide, right? You've got to transit that hydroxide somewhere to a port, whether it be down in Durban or Tanzania.

Daniel O'Connor (04:55)
you

David Wilcox (05:09)
or wherever, and then you've got to move that into a port and you still got residual, right? So you've got to put those tails back into the ground somewhere. ⁓

You know, Montana doesn't want Idaho dirt. Idaho doesn't want Montana dirt, much less Congolese dirt, you know, and that's something that the market hasn't really addressed. And you know, your cobalt hydroxide might not be radioactive. You add that layer into moving monazite rock around the world. It's a whole nother game of cracking and leaching, right? To get that material to a point where it can be used in hydrometallurgy and pyrometallurgy to produce an oxide, ultimately a metal, you

Daniel O'Connor (05:39)
.

David Wilcox (05:47)
an alloy, a metallic, and finally a downstream magnet, so a center of a bonded magnet. So we're fundamentally in the midstream space, processing high-grade ore and high-grade concentrates or end-of-life materials. I truly believe that the only place or the only near-term solution of solving the critical materials or strategic metals or rare earth crisis in the short term is recycling, because there's lots of mountains to be moved to be able to

Daniel O'Connor (06:06)
.

David Wilcox (06:15)
upgrade

that ore and that concentrate into a place that's usable, right, for a secondary metals business. And that's how I look at our business. 98 % of the world's copper that's ever been mined is still in circulation today. Why aren't we doing that with magnets, with batteries, with electronics and e-waste? And that's where our business model differs from others. We're saying, hey, as the upstream matures more, we're going to be recycling and we're building

the largest urban recycling facility in the world right here in the United States, replicating our operations in Korea right here in the homeland. And so we're all a closed loop. not a mining company. We're a secondary metals business. We're reintroducing those materials that have gone end of life for whatever reason back into the ecosystem. If you want to build a battery, you don't just need cobalt or nickel or lithium. You need manganese. You need graphene. You need graphite.

for gold, et cetera. So if you take a battery that's at its end of life or at the point that it should be recycled, whichever one of those that it is, you're gonna get all of that material without your residual material that comes along with new ore. I'm a big proponent that we're gonna need new ore as well too, and there's many companies that are focusing on that in the United States and outside of the United States, but the near term solution, if you wanna turn key tomorrow, you're gonna have to look at ⁓ end of life material and recycle.

Daniel O'Connor (07:26)
.

David Wilcox (07:43)
Bye.

Daniel O'Connor (07:44)
David, I'll just chime in. And we first looked into your company. And so we agree, first of all, that

You you have these mined magnet projects. There's different sort of ecosystems that are being funded by the government or supported in some way. And we need all of it. And a lot of that's going to take time, right? ⁓ Three, four, five years, if not more. So I agree that, you know, focusing on the midstream, you know, the refining and the magnet making, which we'll get into. I know you all have a magnet producer in Korea, so I think you've

You've zeroed in on where the talent is and the know-how to do these things. ⁓ So I think that's really interesting, what you've done. Now, can we talk about recycling? I mean, we've sort of scanned the world. We've spoken with some companies in India that have some pretty interesting models. A few companies over here trying to innovate. Why is recycling so hard at a high level?

David Wilcox (08:43)
Well, because I think the capital raising aspect of a recycling business. you look at

⁓ Black mass producers in the past. So there's a couple of big ones in the United States and ⁓ you know, what was their business plan or how are they going to return value to shareholders? And that's what matters in the capital markets, right? Like it or love it, hate it, whatever it is, that's what matters. And if you're producing a black mass, which is nothing more than a mixed metal concentrate, right? You're crushing and shredding ⁓ and you have this concentrate, right?

If you don't have a hydro metallurgy facility, you can't further beneficiate it to then make a salt, right? And if you can't make a salt, you don't have an input to a gigafactory, right? So it's the key component that I believe that the market or the investors missed ⁓ years ago. And it's no shame on companies that were working so hard and diligently to get to the next place is who are the people that you're going to invest in to run and build a hydro metallurgy facility?

are big capex requirements and you need to be able to unlock capital ⁓ by proof of concept, by history, by operational history, right? People that have done this before. know, China has about 17 hydros. We have zero. And there's a reason why, because why are you going to put billions of dollars up in capex and you don't know if it's going to work or not because there's no history of those operations. So where did

Daniel O'Connor (10:11)
.

Right.

David Wilcox (10:17)
all the black mass end up. It ended up back in China because they have the hydros and all of sudden they suppress the prices very similar in the rare space of those specific battery materials, right? And there's no market. And all of a sudden the only buyer for those types of facilities are the Chinese. ⁓ It's very similar in the rare space, whether it's, you know, very specific ⁓ battery metals or battery materials that the Chinese have targeted and they make it impossible

for you to further succeed in your beneficiation plan. I'm a big believer of, you know, not green energy, but electrification. Why do gigafactories not work? Because you couldn't get any input or feed material at the stage that was required for the gigafactories. It's not because they weren't spun up properly. It's because the Chinese wouldn't sell that amount of material and hardly any material at all to support those gigafactories for building batteries. You look at the battery market,

Daniel O'Connor (10:48)
.

David Wilcox (11:15)
You know in 23 to 24 right lithium-ion battery production was up nearly 40 % EV production was massively down. So how are those two things correlated whatsoever? know lithium-ion batteries, know people want to talk LFP and this and that but lithium-ion batteries are here to stay right and they're used in almost every single application of an electronic that we use today and That is the reason I believe that that was

unsuccessful and just like in the rear space I mean how are you going to be a mining company and address the heavy rear earth problem heavy rear earths are in monazite and if you can't crack and leech because you're concentrating thorium well what's your business plan you're going to be able to make a you know a low touch commodity magnet you know a bonded magnet we need those as well too right but we you need both and so where do you get both out of the

Daniel O'Connor (12:11)
Yeah.

David Wilcox (12:15)
The

Chinese have already produced the magnets for us. Don't send them back over to China. Keep that material right here in the US and our friendly allies and reintroduce it through beneficiation and build that hydro in the United States of size and scale.

Daniel O'Connor (12:31)
So you

said a couple things. I just want to drill into one thing. It's a very important topic, and ⁓ it raises a question. ⁓ You had mentioned that it's hard to get the heavies out ⁓ because of the thorium. Now, I'm assuming the players, and we won't mention names, but the players that are

are working on, you know, mind and magnet and refining heavy, rare earths, that they have the permits and everything else to do that. Is that correct or is that a faulty assumption?

David Wilcox (13:01)
I don't know what they have. I haven't seen it, right? But you would, yeah, you would need to address the concentration of thorium. ⁓ That's just a fact. And I don't know who, you know, we spend a lot of time on Capitol Hill. We've spent a lot of time with legislatures, with the administration, with, ⁓ you know, I haven't heard that. So if it's true, that's wonderful, but I haven't heard it yet.

Daniel O'Connor (13:29)
Yeah, no, I don't think we're there yet, but what's interesting is that, you know, based on permitting and various laws, can we even get there in the short run? that's a different topic. Now, another just clarification. You had said there were 17 hydro, what were the 17 plants in China and zero here? Just so we can break it down. Okay.

David Wilcox (13:51)
I, I'm from metallurgy plants, so.

And that's the process of your separation and your refining, right? That's how you're going to move into an oxide, right? Your separated oxides. for your viewers, I'm sure they're highly educated. There's 17 mirrors. I believe there's really 16. But I've make up about 95 % of the economic value chain. So two lights, Neo and Prezo, and three heavies, terbium, dysrosium, and homeium, which homeium's not used a lot. But those three are interchangeable as well,

got your curing point of a magnet, if you don't dope that magnet with heavies, you know, you can't get the curing point up. That's how it works. So you've got to have ⁓ access to your heavies to build a high, high performance magnet. Where are you going to get those in the near term? I don't see another solution besides recycling. So taking that end of life material and you can't just say, I'm going to recycle the magnets, right? You know, what's the weight and the grade in an old school spinning hard drive of, you

⁓ some high temperature magnets, ⁓ you know, very small. You've got to make money off the aluminum. You've got to make money off the poly, you've got to make money off the whole end of life electronic. And that's where our business model, there's a diversified smelter market that's out there for base and precious metals. So anything that we don't need in the beginning stages of pulverizing, crushing and shredding, right, that is immediately sold out to a diversified marketplace. We keep what we

need, right? And those are neopresso, homeium, dysprosium, terbium, know, the cobalt, the nickel, the lithium. And actually lithium fluoride is an integral part in your hydrometallurgy process to producing a magnet, right? You need a lot of lithium fluoride. So it makes sense that your midstream business is actually connected between batteries and magnets.

Daniel O'Connor (15:28)
.

So on that note, I think this is an important point. ⁓ Based on our modeling simulation, we're headed towards a sort crisis point.

and ⁓ we don't try to sugarcoat it. We hope we're wrong. Could it be that the business that you've architected so far could literally become a stockpile by itself? For example, for heavies, if you can figure out how to recycle that, you own some magnet plants, I believe, in Korea. We can talk about that. could it be?

from the recycling, can you pull that separate the heavies out at a somewhat predictable rate and therefore accumulate those very needed substances?

David Wilcox (16:33)
Absolutely. mean, now to predict in an exact formula would be difficult because, you know, what low touch or bonded type magnets have heavies in them?

barely, barely any, right? All your high performance magnets that are out there, whether they're in wind turbines or EVs or guidance system applications for military, they're going to have heavies in them. So we just assayed quite a large stockpile that we've been working on with a partner and it came back one and a half percent, right? So you're looking at about 2,500 tons, 37 and a half tons.

or terbium dysprosium homeium. You know, that's a good starting place, right? It's not, you know, a perfect all-in solution, but those materials and I know we'll get to the factories and the commercial capability. Where did we get this stuff historically? China.

Daniel O'Connor (17:16)
Yeah.

David Wilcox (17:28)
I mean, there's no other way for you to get heavies in today with the legislation within China that came through in October of 2025. You can't export anything with heavies in it greater than 0.1 % that are heavies. And no one wants to talk about that. if you're planning a mine to magnet facility and you can't separate the thorium, you can't access the heavies, where else are you going to get it from?

Daniel O'Connor (17:44)
Yeah.

David Wilcox (17:57)
won't sell it to you and they're the only producer of it.

Daniel O'Connor (18:01)
You know, Dave, we ask ourselves that every day. No.

Dustin Olsen (18:04)
You

David Wilcox (18:05)
I don't know, maybe I just live in a real world. I just, I don't understand. not,

I don't claim to be the smartest person in the world and whatnot. We're just, you know, commercial operators. And when they stopped, you know, the sale of the material, we've had this plan.

You know, for a number of years, we've been executing on our plan. And it's like all of a sudden, now how we built the businesses was obviously buying oxide, buying metal, buying alloy, buying powders, buying metallics. That's how we did it. And all of a sudden, China cuts it all off. Well, you better have a residual plan or your OPEX is gonna shut you down pretty quickly and you're gonna lose all your staff and you're gonna lose all the know-how. You know, this isn't some,

capability that you read a textbook and you start understanding if you don't do it it took us two and a half years to make our first center magnet that's a long time right

Daniel O'Connor (18:58)
Wow. Yeah.

Yeah. Yeah.

David Wilcox (19:00)
And

you have to go through all sorts of certifications with the OEM that, the design of the magnet, pull the application is different almost every time. And, you know, we got there, you know, and it was, it was capital intensive. ⁓ it was, it was difficult. And, you know, our guys, you mentioned, you know, where did, where did you go to go find someone that knew how to make a magnet? Well, you were going to China. So that was off limits really, cause we knew it was all coming and you're going to Japan or Korea.

And we found a wonderful magnet business that had been operating for nearly 20 years at the time ⁓ We acquired that business. We're building a centered magnet business We acquired a oxide to metal producer bolted on all the metallics and the powder and flake right and I said we're gonna smash these all together because an oxide guy or an investor in an oxide guy An investor that invest into an oxide facility is not the same guy

that's

investing in mining or investing in magnets. They're different stacks of the vertical. So we worked backwards. We said we've got to figure out how to make a magnet. Bonded magnets are easier, but they're also required. There's one company in the world that's over 90 % of production of all bonded magnets. It's MagnaQuench. This was a GM, a General Motors spin out that was then sold to China. And it's shocking.

Daniel O'Connor (20:18)
That's right. ⁓

David Wilcox (20:26)
People

go why would you want to be in that business? I'm like have you ever gotten in an elevator? Do you do you use your car seat your mirror your emission sensor? Those are all bonded magnets, right? So there it's not that they're less important. They're equally as important You know your on off start switch and a petroleum based ⁓ Combustible engine is almost guaranteed. That's a magnet. It's a bonded magnet. It's not a key anymore You know So ⁓ I think they're they're both equally important ⁓

Daniel O'Connor (20:32)
Huh.

Yeah.

David Wilcox (20:55)
and building the capability out within Korea was how you found the operators and the capability to replicate that business within the United States. It doesn't exist here today. So we went with building commercial operations and now ⁓ our plans, which are all public, are to replicate and scale those existing operations here in the United States.

Daniel O'Connor (21:18)
So, you know, we reviewed, we thought that was really smart because, you know, the deep

knowledge base that you need to access. You all found the company, ⁓ incorporated it into your platform. I think, you know, again, your background, not only as a businessman, but also as ⁓ a financial ⁓ services ⁓ expert, derivatives, etc., you know, the commodities, ⁓ I think gave you a unique perspective to look at things holistically, right? ⁓

Now, with that being said, ⁓ where are we at in the process? Again, we're getting close to crunch time potentially. November is another deadline for the current reprieve, which isn't a good deal, by the way. We don't have a good deal with China right now, as you just said. we're a high level. Where are we at in the life cycle of the company and what do we need to get to be able to actually

execute and start doing commercial contracts for the recycled goods.

David Wilcox (22:26)
Yeah, so although we're, you know, small relative to the…

global markets. if you look at you guys know high performance magnets, you know about 300,000 ton per annum. So you know, we're under a thousand ton, but who else is doing it? China's nearly all of that, right? So, you you look at a couple of products, you look at like the Apple iPhone, or you look at the Tesla Model 3, like two products unique, and two major highly successful companies, that's nearly 10,000 tons of high performance magnets. So if you want to bring

the cycle, you've got to be able to service an entire OEM of that size, not just one specific product, right? So, you know, our plan, which is 55,000 ton of magnets in phase one in the United States, is all about replication, modular builds, right? Doing what we know, what we can do and what we've commercially proven. And your question is, is there going to be enough feed material to feed those machines? Well, we're working on it

day in and day out. ⁓ We're working with ⁓ different collectors, know, recyclers or separators of, you know, they used to call it junkyard guys. And then it was, ⁓ you know, a new name and now it's recycling, whatever it is, it's collection of end of life materials, being able to purchase those materials at the right strike price, and being able to make a profit. We're not asking for a, you know, a price floor. ⁓ We believe capital markets always win and they have always

one for the United States. We don't need that. Perhaps a mining company needs it, but a midstream company doesn't need it and a downstream magnet producer doesn't need it. ⁓ So we're in the life cycle of it. Our operations are funded and have enough ⁓ juice in them from ⁓ feed material to last over two years. So we did everything that we needed to do before the storm came because we saw the storm coming.

saw what China was going to do. so we positioned ourselves really well. But that doesn't mean that we can scale to that size overnight with the input feed material. And like I said, we're not a mining company. We are a high grade concentrate processor or an end of life materials because we don't have a tailings lake. We're entirely closed loop in the system. So we're not putting anything back into the ground. And we have no intention of entering the upstream mining business as well.

Although we've spent a lot of time ⁓ in the upstream space. ⁓ Specifically, you guys are probably aware, we were partners within VTRE. ⁓ And that was somewhere where you could reprocess sands and do things and process thorium. And ⁓ it was working, but unfortunately, ⁓ that facility was ultimately shut down, neither here nor there, through, I believe, ⁓ political hacks.

leading back to China.

Daniel O'Connor (25:29)
⁓ So

basically what it sounds like ⁓ is that the template is there. I mean, I think you all know what to do. ⁓ You you're at a thousand ⁓ tons today and you have 55,000 ton target, which is ambitious, but I feel like, you have a model. You've been spending the last years refining, ⁓ testing, validating.

So now is it just a function of capital? Is it a function of just capital and facility? Is ⁓ it a function of more recycled feedstock? What are the critical next steps that will make the company pop?

David Wilcox (26:12)
Yeah, so ⁓ we have a philosophy in the company. You build it, they will come. For the upstream market to mature and these policies to change, well, they need to change so very quickly you can move that feed material, whether it's coming out of the Congo or Zambia, wherever it is.

dealing with OFAC, dealing with commerce, dealing with all sorts of different agencies. I mean, there's practically all of them that are involved in this space. But for them to take action, they have to have a home for that material. So what are you doing stockpiling, bringing stuff over? As you guys know, a high grade rear earth deposit is 5%, right? So you've got 95 % of other stuff that you need to do something with, or you're just going to be dumping it in the backyard.

somewhere within a state in United States. could be federal land according to an executive order that was put out by the current administration. But what are you really doing? You can't use that material in any way, shape or form during a time of war, during a time of, as you said, the crunch time when we run out of this material. So build it and they will come, right? How do you raise the capital to build it and they will come? You have existing commercial operations that, by the way, produce cash. You know, these aren't just,

It's not some lab experiment or something in someone's mind or behind a keyboard. This is what we do day in and day out. And you build it. We will sort the feed material, I think, through policy. I think through the capital markets, through commercial attrition of ⁓ keeping that material here in the homeland. And it will solve itself. But we're going to continue to go on our journey. The country has to have it. Our allies have to have it.

We know we're correct that we need to build it and we need to build it at scale. Right? Like I said, you don't start with 50,000 plus tons. I don't know who's going to be your customer, you know, because if China says, Hey, you start buying magnets from company X and you can't fulfill all their requirements. They can turn around and say, I'm not going to sell you a single other magnet. And all of sudden your production of, know, your defense goods manufacturer, your, ⁓ your, your car company, your, ⁓

Your MRI machines, right? You can't actually produce enough product, right? So the Chinese actually are controlling what the Western OEMs are doing today and it's not their fault But you've got to be able to service their entire needs and that's what we started with 55,000 tons of Magnets 78,000 tons precursor cathodactive material

Daniel O'Connor (28:29)
.

And that's real quickly, that's fascinating because we have David more and more corporations across multiple verticals, both.

defense related and not trying to figure out what to do. They're coming to rare earth exchanges because they don't know what to do because they hear certain things in the news or from the administration and then they read our stuff and they're kind of confused. like, what's really going on here? So I think there's a lot of companies right now that are starting to look into, they want to plan the next three, five, seven years, you know, what to do. So,

Very fascinating. mean, the way you all have done this is really almost the exact opposite of everybody else. And it makes sense. mean, based on what we've learned, there's a lot of sense in what you're talking about. So Dustin, I have a few more questions, but do you want to jump in with a few questions?

Dustin Olsen (29:42)
Yeah, so one of the questions that comes to my mind is if I was to be an OEM or a defense contractor, why would I choose ⁓ &T over some of the other existing suppliers or emerging competitors?

David Wilcox (29:58)
so you wouldn't be able to choose human tea.

If China wanted to do something about it, exactly what I mentioned before, you have to have so much scale and size. So you're talking the largest defense contractors, the largest automobile manufacturers, et cetera. So you've got to look at what your demand is versus your product output, which they're all doing. We're in dialogue with almost all of them. Right. And the message is very simple. We want out and you've got to be able to service us a hundred percent if we make that change.

So you go back upstream and you go, hey, there's some big companies in the mining space that aren't Chinese. One's a lithium production company that's an American company. They're massive. Why didn't they build a hydro? Well, the answer might be because if they started doing that, the revenues would go to zero because the Chinese would quit buying their spodumene or brine. And so how could they support their existing OPEX?

you know, and and and continue to survive, they would have to have such a large capital injection, right? Wait a period of time. Be unsure if that business model is going to work from them over what their bread and butter is, what their core competency is as a business. So that question, you know, is out there. That's ⁓ that's the risk trade. Right. For our investors and and people that come into our capital stack, we're a public company now. You know, are we going to be able to service the large

Daniel O'Connor (30:58)
Okay.

David Wilcox (31:27)
OEMs on the planet I can tell you some of the largest OEMs on the planet are already our customers So it gets white labeled. We don't make noise about it We don't go and tell everyone in the world and brag about it, but it's already happening They're begging to have non Chinese processed magnets magnet material and battery material to be able to Number one policy is shifting very very quickly in the DOW as you guys are probably familiar with you under the current policy by

2027 I believe you're not going to be able to have a Chinese computer Chinese material, right? Yeah.

Daniel O'Connor (31:57)
January 1, 2027.

David Wilcox (32:04)
So what how are they going to do that? I'm not critical of the government. They're doing everything that they can I just go I don't know if i'm the chinese and i'm just having a laugh right, but it's pushing people like us Right to go actually build things that are commercially viable for whether it's you know usg or whether it's You know gm ford samsung hunday whoever it is right to provide an alternative To the current control in the midstream and the down

stream that China has.

Dustin Olsen (32:35)
So let's, I want to talk just super quick about what is the market underestimating right now about this supply outside of China or the difficulty of creating this? Like what, what are we not grabbing? You're talking about the, I think the reality of it, but where are we still underestimating how we move forward from here?

David Wilcox (32:55)
Yeah, I think it's the separation, right? This is not an easy business. And to bring in big dollars, which is what the market needs, you need proven commercial capabilities. That's what big investors want to see. So, you know, like I said, we started small. We did everything that lots of these companies are doing. just a few years ahead of them.

You know, that's the difference where our business model is more mature. It produces today, right? And so there's execution certainty ⁓ on what we're doing in the future because we're not trying to do something outside of our wheelhouse. We've proven it. We're doing it today and we're going to continue to do it and just scale and size as the market is there for an alternative to China.

Daniel O'Connor (33:43)
The market is there, David, and this isn't a challenge. This is just ⁓ a topic for us to discuss as people that are interested in this space. ⁓

The competition is a monopoly. There's a few state-backed companies. We study it. We talk to people over there. ⁓ They've got ⁓ enormous—they have the Chinese Treasury behind them. ⁓ China already controls about 40 % of the world's manufacturing.

Is there not an argument to be made that we need to subsidize with our treasury ⁓ the middle stream, the midstream?

David Wilcox (34:21)
For the midstream, you can always make the argument that you need to subsidize. For the upstream, I think you mentioned at the beginning of the podcast, it's not three or five years to spin up a mine. It's about 17. And we've got one great one.

already in production in the United States. It's the only one when it comes to rearers. We all know who it is. They're a great company, right? They've had price floors and things that are probably very applicable, you know, to their side of the process. We're buying feed material at a certain price, knowing our OPEX for processing that material, and then selling that material at a certain price.

Daniel O'Connor (35:01)
Right.

David Wilcox (35:01)
I'm

not so sure that we need subsidies maybe to accelerate at speed to buying more feed material. Perhaps that's a conversation to be had in the midstream. But an outright subsidy or a price floor, et cetera, I'm not sure makes sense for the midstream.

Daniel O'Connor (35:21)
Well, I think you hit the nail on the head is that, you know, if this crunch is coming, you know, there aren't many choices and, you know, it's much like what happened during the cold war where, you know, ⁓ during President Reagan, there's, there's basically subsidies for high tech weaponry, you know, against the, you know, the Soviet and think about COVID and Operation Warp Speed, you know.

⁓ probably over $100 billion was spent to rapidly generate vaccines that we could try to transcend the current situation. I think there is an argument to be made that ⁓ public capital needs to be directed into groups like yourself ⁓ to help accelerate this process. we don't catch ourselves, let's say, in this next 36 months is a very dangerous time.

extremely dangerous. you agree with that?

David Wilcox (36:17)
100 % and I agree with you on your comparison or your analogy with vaccines. That's what I said, if you want to do it faster, right, always, and I wouldn't consider it a subsidy perhaps alone, right, you know, to build faster. And that's something we're talking with the US government about right now. just, all of the complications that come around

know, grants and loans today, ⁓ if it's national security, it's national security.

If it's not, and it's a profit center, well then you clearly don't have a crisis on your hands. know, pick a lane, and this has been done before. So the beryllium copper industry, right? There's a little company that trades on the New York Stock Exchange, I think still today it's called Materion, ⁓ M-E-T-E-R-I-O-N. You know, they got a loan grant provision, I think it was about $85 million, right, to solve this beryllium copper issue in Ohio.

They solved it, right? And they ultimately took the company public and it's profitable, et cetera. I haven't looked at their performance lately, but this has happened. There is precedence in the market. As you mentioned for a time of war using Title III, there's lots of levers out there. I believe it's the execution risk. Where are the dollars going and how are they being spent? If you're just injecting capital into a company that doesn't give you the

execution certainty of what you need to be solving for for a time of crisis. That's not a plan, right? A plan is I know that if I put these dollars in this amount of dollars can go to feed material per se, right? This is the amount of dollars to build a facility. I want you to build a hundred thousand ton facility instead of, you know, a fifty five thousand tons specific for magnets because we're about one hundred and twenty five in phase one anyways. But say you want to build two hundred thousand tons. What's great in the midstream is

Daniel O'Connor (37:53)
Yeah.

David Wilcox (38:15)
You can have some of the lines running cobalt, some of them running nickels, some of them running terbium, etc. They're interchangeable, right? Because it's relatively the same process. You're just using different reagents to extract the specific metal or the mineral that you want.

Daniel O'Connor (38:32)
Makes a complete sense and completely agree with you one quick follow-on question Do you have a business development operation that is being very? ⁓ Directed and precise with how you're doing business with whom and your deal flow Or is it just is it is it more of a organic? Reactionary process in that you know that all the space is sort of unfolding in other words

Is it more inbound and you kind of qualify, or is it more you guys saying, these are the types of things we could do best in the next 24 months, and you're going after that? Just out of curiosity, I'm always fascinated.

David Wilcox (39:10)
Yeah, it's the latter, right? We know the market. We know, like I mentioned, 300,000 ton of high-performance magnets. We know where we want to be. And we know if we build it, those customers will come because they're dying. So that's our, they're dying for an alternative is what I mean. The customers aren't dying, but they're dying for an alternative. ⁓ sorry. And so you, ⁓

Daniel O'Connor (39:31)
Yeah, yeah.

David Wilcox (39:36)
Yeah, you build it. Our business strategy is very simple. Continue to do what we do well, what we've proven was commercially viable and continue to make money. Right. There will be a time period where we will be non-profitable spending this amount of cash. But very, very quickly, if we're correct and the alternative pricing that's out there in the market, it doesn't matter anymore if China tries to suppress the prices again. It doesn't matter.

Everyone is now aware, whether tariffs come in or all sorts of different levers that the United States government has, we're never going to be in this situation again. And that's very clear from the administration. It's nonpartisan, it's across the aisle. We've got to be able to support our own industry and build back up our industrial base in the United States.

Daniel O'Connor (40:25)
Absolutely. And that's what's exciting about what you all are doing. It's a very clear case of some very smart seasoned people coming together, seeing the crisis from you, you know, in Africa, actually watching groups bag up stuff and bring it back to China, you know, in the financial markets to starting the company to buying magnet producers.

It's a really, really exciting ⁓ vision that you have. Dustin, any last minute thoughts?

Dustin Olsen (41:00)
Yeah, I got just one more question before we sign off from the show here. And for those that are watching our investor minded audience, right? There's a lot of announcements that go out, but fewer actual outputs of what's being shared, right? So from an investor perspective, what milestones should we be looking for that validates your model to know that?

We're moving in the right direction.

David Wilcox (41:29)
Yeah, so it's going to be a continued throughput in our existing commercial operations. So that's,

anything from high grade concentrates into life material all the way through to bonded and center magnets, what we do today. Right. And so those numbers will continue to be disclosed in our public filings. ⁓ Then it's how fast where do you scale the fastest? Well, where you're actually where you're actually producing today. So we're scaling our Korean operations as we're building our U.S. operations. So

these different milestones you'll see site selection very, soon. You you have to have ⁓ a great labor force ⁓ with ⁓ a great state that's forward thinking in this space. You've got to have low cost energy and you need to be geographically located to bring that end of life material. Every mile you move costs something, right? When you're moving around material. So you don't want to be in New York. You can't run a hydro in New York. Someone tried.

right, or they were going to try to build it, they couldn't get a permit, right? And if they could get a permit, what are you going to do? Pay 15 cents a kilowatt if you can get the energy? That doesn't work, right? So you've got to have efficient energy. You've got to have the right land facility space that's supported by the local government, the state government, and the federal government support is already there. Those states are out there. They're actively marketing. We are in our final site selection. We've got a few

more that we're analyzing all those different factors around and then we're going to, you know, start building and replicating what we have in Korea as we're continuing to scale in Korea as well. Our goal is to be by 2027 in Korea, 20,000 ton of throughput of magnets and that's just Korea alone and we believe that we're going to hit that target at least in the capability. Now where we will get that amount of feed material, we're still working on that, right?

Daniel O'Connor (43:24)
Well.

David Wilcox (43:34)
and it's going to come, we're getting the message out to those recyclers or separators of, know, whether it's a, you know, a motor in a washing machine or a refrigerator, et cetera, these things have magnets in them. And if we can take those magnets and re-put them back to the system, we're going to be highly successful and profitable.

Daniel O'Connor (43:55)
.

Dustin Olsen (43:55)
That's great, David.

⁓ Sounds like you guys are on track for a lot of great success and we will be watching anxiously to see you guys all the way through to that. ⁓ And hopefully in the future, we'll have you back on the show to give us an update on where things are at as you guys continue to source and create relationships and connections and ⁓ validate your model. ⁓

With that said, for those who are watching, if you liked this episode, found it educational, helpful, please give us a thumbs up. It'll help expose the show to other people who might also find it helpful. ⁓ If you do want to miss a future episode, subscribe. David, thanks so much for being here. Again, hopefully we'll see you again to get an update, but we'll talk to you soon.

David Wilcox (44:44)
Thank you.