Transcript: Hyperion Metals (HYM) - Entrepreneur Shaking Up the Metals Sector

Morgan Leighton
October 5, 2021

Hyperion Metals' mission is to develop zero carbon, sustainable critical minerals in the U.S. for industries driving our modern world, from space exploration and electric vehicles, through to glass, paints and pigments.

We Discuss:

0:00 – Company Overview

4:08 – Opportunity & Potential to be Global Titanium Metal Supplier

6:01 – Technology: Critical Scientific Research, Low-cost development, & Expansion

9:20 – Big Picture: Audience’s Application, Current Revenue Potential, Market Comparisons

10:55 – Unique Selling Point, Funding, Advancement, Optimisation & Recyclability

15:47 – Listing, Aggressive Timeline, Scale, Exploration, Feasibility, Expertise & Consolidation

19:52 – Valuation, MOUs, Loose Agreements, Nasdaq Listing

24:44 – Future Deliverables: Scoping Study, Metallurgical Tests, Land Acquisition & Further Drilling

25:34 – Technology Side: Prototyping, MOU with EOS, Deals with Machine Makers

27:21 – Outro

Anastasios Arima: Hi everyone, my name is Anastasios Arima, but Taso for short. I am the managing director, CEO, and one of the co-founders of Hyperion Metals Limited. We are a company developing sustainable critical minerals and metals for the US where we can. We want to be low to zero carbon; we believe we can be in all the minerals and metals we produce. We have secured our foundational in Tennessee just west of Nashville, between Nashville and Memphis, which we believe will be one of the most significant Titanium and Rare Earth containing deposits in the US, and globally significant as well over time, and we are then leveraging that deposit and combing it and integrating it with break-through technology, which was developed by the Department of Energy with funding from the Department of Energy by Professor Zak Fang out of the University of Utah, and in conjunction with Boeing and Arconic, which can take those minerals or Titanium metal scrap and produce very low-cost Titanium metal. With that, we want to reshore key critical minerals and metals, especially Titanium metal and Rare Earths, and we believe we can do this really well and if we do it, we create a lot of value - when we do it, we create a lot of value, and we are really excited about it. That’s a quick overview of what we’re doing.

Matthew Gordon: Good man. Taso, lovely to see you again. Just to let people know, you came onto our private investment platform educating some family offices about the world of Titanium opportunities therein, and we’re going to talk about one of them today with Hyperion, but I guess we’d better start off, for people new to you and Hyperion, with a. little bit of background about you. What’s your story?

Anastasios Arima: Yes, absolutely. I’ve been involved in the metals and mining space for 15-years. I started off on the financing side, although I have an engineering and business background. Then I was heavily involved in the Fossil Fuel industry starting a few Coal companies. We had a very successful Coal company in one of the first Coal booms from 2008 - 2011. We sold out of that at about $1.2Bn valuation. That started from a Starbucks in the middle of Kalgoorlie. That has now been built, it went through ups and downs but it’s now being built and is one of the largest export thermal Coal mines here in North America. With today’s prices, they’re making a lot of money. We then stayed in the Fossil Fuel industry for a few more years and then I moved to the United States and started an outpost in the United States for our group here. Once I moved to the United States, I realised I wanted to get out of the Fossil Fuel industry, and so my team and I redirected and started looking towards critical minerals and metals of the US. We started off founding a company called Piedmont Lithium, which eventually was called Piedmont Lithium. Again, started off with nothing, just an idea and a meeting in a Starbucks in North Carolina. I’m sitting in my Charlotte, North Carolina office today, and we moved that through from the 2016 period; we were able to hire an outstanding CEO who many of you have probably heard, Keith Phillips, and then we helped to build that up to what it is today. I recently stepped off the board 3-months ago, but over the past 2-years, as the team became very strong in southeast developments, the core team that founded Piedmont got together again and we decided, okay what now should we tackle? As critical mineral or critical metal issues within the US, we had learned a lot from Piedmont, we had learned a lot about developments. We had learned a lot about what the industry needs as well and the downstream requirements for the industry. We wanted to tackle at that point Titanium metal. We’ve done this before. It by no means means we’re going to be hugely successful again, but at the same time, we believe it will be.

Matthew Gordon: Right, you had your drop the mic moment with a contract with Tesla, and then left. I like it. What I get out of that is the importance of having a big idea. What’s the big idea here with Hyperion? What do you see in front of you? What’s the opportunity?

Anastasios Arima: Hyperion Metals is a little bit different to what we’ve seen historically in projects. Instead of being a part of the supply chain, with Hyperion Metals we can be the complete supply chain. Hyperion has the potential to be a complete monopoly in the supply of zero carbon, low-cost, sustainable Titanium metal with a view that as we build out our operations, we actually gain a complete monopoly over those lightweight structural markets, which are dominated by Aluminium and Stainless Steels today. An example would be Stainless Steel use and high-strength Steel use in the electric vehicle battery industry. Titanium would be used but has not been used because it is an expensive metal. It’s also very Carbon intensive. What we have with our technology is the ability to make it cheap. What we have with our deposit is the ability to integrate and supply as much of it as is needed for American and eventually European industries. It’s a little bit different. In the other industries we’ve looked at, we’ve always been a strong participator. Piedmont, for instance, will be a major in my opinion, a major Lithium supplier in the industry. Fantastic company, fantastic management. Here, with Hyperion Metals, we have the ability to be the global Titanium metal supplier for-

Matthew Gordon: Okay, let’s break that down. You’ve got a deposit; people can look that up on your PowerPoint. I want to focus on the 2 aspects that could make the difference, which are: the technology, I want you to explain what that is; and what precisely you’re talking about in terms of the market. Stainless Steel wouldn’t use battery metals. What does that mean? It could mean a whole bunch of stuff. I’ve seen some other applications mentioned in your press releases and also your presentations. Can we focus on the technology? What is it that you’ve got? Is it proprietary to you? Is it unique to you?

Anastasios Arima: Yeah, so the technology is proprietary; it was developed by funding from the Advanced Research Projects Agency within the Department of Energy. Similar to what DARPA is for the Ministry of Defence, ARPA is for the Department of Energy, set up by the Obama administration, funded heavily. Funds early-stage critical research taking it from laboratory to pilot scale, so it was approximately $7M of funding that went to Professor Zak Fang out of the University of Utah, professor of metallurgy there, to investigate – he was a metal. Did a lot of work in metal hydrides to investigate the low-cost development of Titanium metal. Titanium metal has for the last 70-years been produced by 1 process, which is a Carbon intensive, energy-intensive process called the Kroll process. People have tried new techniques but have failed. What Professor Zak Fang realised, or the scientific breakthrough that he had, was that there was a very elegant solution in that when you tried to reduce Titanium minerals, or Titanium scrap, with high oxygen content into Titanium metals, and you did it in the presence of Hydrogen, you could reduce it easily with any reductant. He chose Magnesium because that’s cheap. Prior to that, there was no ability - thermodynamically, it was impossible to break the Titanium-Oxygen bonds and create a purified Titanium metal just with reduction. You had these heavily chemically intensive processes, being the Kroll process, to produce Titanium metal. That process he did, he was funded, he got another $3M between the Department of Defence and the Department of Energy grants, took it to pilot scale. He is producing Titanium metal powders today at a small scale from the pilot labs and showed that it was far lower energy intensity, lower cost, far lower cost to make spherical powders to go into powdered metallurgy applications and 3D printing, and it was all patented. We are taking that on. We are expanding the research. We are looking to take it forward, but it is complete scientific breakthrough type research.

Matthew Gordon: Does anyone come close to you? Is there anyone else out there who’s got anything?

Anastasios Arima: No, there’s nothing. Everything else was focused on improvements to the Kroll process or electrolysis methods to make Titanium metal. No one was able to hit the quality specs or the ability to scale up what we can.

Matthew Gordon: Right, and you’ve got the zero carbon component, which you’re almost trying to sprinkle lightly onto this.

Anastasios Arima: Once you integrate backwards into the mineral deposit, you’ve got a lot more, but this technology as well can be used for Zirconium metal production, and we’re going to be testing it on other metal productions.

Matthew Gordon: Okay, let’s park that up because I want to keep this fairly high-level, big picture stuff. You said big ideas matter here, so there’s the technology. In terms of the audiences, application, more importantly, the current revenue potential of those revenue streams, those markets, versus what you think it could be because what is it today, and what do you think it could be?

Anastasios Arima: Yeah, so the Titanium metal market, if we look at just that metal market today, it’s about $4Bn - $5Bn per annum. It’s a big market dominated by the Chinese and Russian supply. That’s the primary metal market, not the end parts. The end parts are a multiple of that once you’ve taken them through the machine and mill. That’s an immediate market that, especially here, the US is the largest for Titanium mill products just because of aerospace and defence, so we believe that over time, we will have that market, the US source supply of Titanium. Over a Chinese Russian source, it’s pretty easy to sell, but really where the big picture is, is in the substitution of mainly Stainless Steel but also Aluminium components. The reason we use Stainless Steel is for corrosion resistance. Titanium has superior corrosion resistance, as good or potentially superior strength, but is 45% lighter, so in almost all applications that you look to use high-strength Steels of Stainless Steels, you can replace with Titanium once you bring the cost of Titanium close to that.

Matthew Gordon: How big is that market?

Anastasios Arima: $110Bn - $115Bn for Stainless Steel, and growing substantially, and then $160Bn for the Aluminium market. Realistically, it’s a huge market.

Matthew Gordon: That’s getting interesting. The USP - if you were selling into that market and you go, ‘You should be using us instead of what you’ve been traditionally used to buying because’ - why? Remind me.

Anastasios Arima: Lightweight. It’s got all the same characteristics, but it’s lighter weight and more corrosion resistant. That’s the reason you’re using Stainless Steel. If you’re using Stainless Steel in applications around corrosive environments, you should switch to Titanium. That’s really why you use a lot of Stainless Steel around the place. Stainless Steel cooktops and other taps and stuff like that. You could do that, but really the big applications are those large industrial applications. Those large applications within what is now the battery industry. We use a lot of Stainless Steel and high-strength Steels because you need corrosion resistance you need high temperatures; you need high ultimate strengths, and you want lighter weight. Titanium wasn’t an option before. Now that Titanium will be an option with us scanning our technology, this is an opportunity to take that. That’s huge in the Electric vehicle industry because of weight - we look at cathodes, and the energy density is the numerator; the denominator is weight on energy intensity and range and everything. There’s a lot being done on weight, but a 45% reduction in weight will do a lot more than an increase of 10% energy density. It can enable not just passenger vehicles, but what we’re seeing in some of the industry discussions we’re having is that it could be a complete game-changer for the freight industry, which is where batteries are not-

Matthew Gordon: It’s clear who you’re going after. You’ve got a technology you’re telling me is not only proprietary but unique for now. You’ve raised $24M recently in a private placement in Australia. What are you going to do with it to advance this story? How do you advance this story?

Anastasios Arima: Advancing the story is fairly straightforward. We’ve got what I would say is the mineral business, which is the mine, and what we’re doing in West Tennessee and the sustainability of mining around that, and then the metals business. So, around the minerals business is the typical mineral development. We’ve got our chalk resource that is imminent for the market. That’s important because it establishes to the market and also to potential customers that we have a major source of Titanium minerals and Rare Earth minerals here. We then need to continue test work, Scoping Study, come out with that to identify how big it’s going to be, costs, those sorts of, and then progress all the off-take discussions we have around the mineral products, whether it be the Zircon, the Titanium minerals, and the Rare Earth minerals as well, where we do have the relationship with Energy Fuels where they could take it, crack it, and sell directly to supply chains. That typical progression of mineral business development follows a very similar progression as everybody else. The only thing I would say here is that there’s a lot of interest, probably a lot more interest than a project in Africa or Australia because these critical minerals in the US today are getting a hell of a lot of interest, and having them, and in addition to that we’ve got a very large focus on safety, sustainability of the system, decarbonisation of that minerals business, and we’ll be making a lot of announcements over the next few months around how we are going to tackle that. That’s very important, adds a lot of value. Put that to the side on the metals side of the business where we are committing a large chunk of funding, approximately $10M, from the $24M that we raised. That is really optimisation of the process that is happening today in Utah. Optimising it for both our ore that’s going to be coming out of the ground in Tennessee and then also the Titanium scrap to Titanium metal production. There’s a big focus by a lot of companies on a circular supply chain. This technology not only lowers the cost but actually allows for 100% recyclable Titanium metal, which was not possible with the Kroll process. We are focusing on that, the optimisation of that. Then as we head into next year, we are looking at scale-up. Our first scale-up facility to address the prototyping and potential small-batch production for suppliers is going to be at least starting construction next year, and then post that over the longer term, we aim to commercialise that. But over the next 12-months, it’s optimisation, and then the construction of the first scale-up facility as well.

Matthew Gordon: Just listed, haven’t you? When did you list?

Anastasios Arima: We listed - we announced in September of last year, and the transaction closed in December. I think on December 1st I was appointed to the board. It had the symbol TEO, and now it’s HYM.

Matthew Gordon: It’s a very aggressive timeline. We’ll indicate all of that. It’s a very aggressive timeline. You’re talking the language of someone who’s trying to get this done really quickly. Are you worried that you’re going too fast, or are you worried about missing the EV revolution?

Anastasios Arima: Look, you’ve got to have growth plans. There are growth plans when you go too fast. For me, on the metals technology side, that’s not too fast. This has been in development since 2013; 2017 through now, it’s been piloted. There’s some optimisation to do specific to us but the process is known, it’s been repeated, and there have been tonnes of Titanium metal made and sampled. I don’t think that’s too fast. When I talk about a scale-up, I’m not talking 10,000t or 100,000t, I’m talking a scale-up from where we are now. Still significant, but still not that 10,000t+ commercial. Now, potentially it could be 1,000t. I don’t know, we have to do the work, but I don’t think on the Titanium metals side that’s being too aggressive. I think we could be more aggressive, but we are talking to potential industry partners and if we secure some of those for some early engagement with us, whether it be prototyping or small-batch processing, then we will become aggressive, and you’ll see what aggressive means on that. But on the Titanium minerals side, that’s where we’re being a bit more aggressive than some of these other companies, and have been more aggressive in terms of exploration, land consolidation, moving through Scoping, Pre-Feasibility, Feasibility. We aim to finish our Feasibility Study by the end of next year. That is pretty aggressive. It’s the timeline we believe we can meet, but it is aggressive.

Matthew Gordon: Why do you think you can meet that? That really is quite quick.

Anastasios Arima: The main reason is that instead of - this is a mineral sands development, so it’s relatively straightforward compared to say a Lithium project development, or a big Copper or Nickel project. The minerals are separated through processes that are really well understood, so what we’re doing there, usually with the Pre-Feasibility and Feasibility on many projects it’s about the metallurgy, so we’re accelerating those metallurgical test work programs and trying to get them done by - we’re going to have some more metallurgical results out this year, we’ll try and have the very detailed metallurgical work done by the middle of next year, and that then fits into the Pre-Feasibility and Feasibility Study. I think the Pre-Feasibility and Feasibility Study can be fairly straightforward because the mining is very straightforward. It’s the simplest mining out there - it’s a sandpit, so it’s not too difficult. Then the equipment needed is relatively well understood, and unlike projects in the middle of Australia or Africa, we don’t need to design for supporting infrastructure. We just tap off existing grids, existing road and rail infrastructure for the development of the project. There are no big, long lead times on designing and engineering how you’re going to get the product out and so on and so forth. It’s a fairly straightforward development. It’s really getting that test work done, which has been what has delayed us this year, but that’s why we’re trying to do it faster into next year. We believe we can hit those timelines.

Matthew Gordon: Okay, if I look at your valuation, you’re $160M market cap out of the gate practically, and you haven’t done too much yet. You’ve got a whole bunch of things in place, but you’ve actually got to start doing things. The technology is there, I’ll give you that. You’ve got a bit of work to do on the actual deposit itself, but you’ve outlined a Feasibility Study by end of next year, fantastic. Do you think that people have made a rod for your back in terms of how they’re valuing you today? How soon are you going to be able to come back and say, ‘Hey, we’ve got some MOUs in place; we’ve got some loose agreements in place with these industry players who I think we’re going to be able to work with.’

Anastasios Arima: You bring up a good point. Again, it’s a bit different to a project that’s $500M in Africa or something like that, and financing is going to be an issue. Financing is no issue in my opinion for a problem like this.

Matthew Gordon: Why? Tell me why.

Anastasios Arima: Those high capital numbers, we don’t need. Capital typically for these mineral sands operations that you see globally are focused on infrastructure. Building port and building rail are much more expensive than building work concentration plants, mineral separation plants, which are off-the-shelf technology. We’ve done a lot of work. We’ve spent probably $4M or $5M on the ground already in the last year on drilling and test work, maybe more. We understand well that there’s a deposit that’s going to be globally significant and continue to grow out here. I think people are starting to take that into account. Really the size of it, I think if people understood the potential out here, that $160M would be really cheap. We need to continue to do that work, continue to get it out to market, and then I think the value will come. I think from an MOU perspective, or a customer interaction perspective, it’s similar. They can see that this will be a project. You have to take it on its word, but they can see that. We’ve already sent a lot of customer samples out for both the Zircon and the Titanium minerals, and we’ve already secured at an MOU level the relationship with Energy Fuels, which is a strong relationship with Mike Chalmers and his team. It’s not as difficult for a large pigment producer or a large ceramic company to say, ‘Will this be a real supplier that we can count into our supply chain?’ I think that ticks the box, and then it’s really the discussion about - is it going to be a 2023 supplier or is it going to be a 2024 supplier? - which a lot of the management teams there are looking at today. Now, again I can’t stress the advantage of being a US source of supply for US industries. There are huge advantages for logistics, and for the Carbon intensity of those logistics. Our view is to be sustainable and decarbonise where we can. That helps them as well in their decarbonisation goals. Everybody in the western world, her win the US, and eventually in Europe - and in Europe especially - are focused on that, so having lower cost, better logistics, better decarbonisation within the supply chain is key, and we’re probably one of the only companies, the only development company, that can offer that. That’s going to be I think a lot more straightforward than what people see it to be.

Matthew Gordon: Are you going to have an OTC listing?

Anastasios Arima: I think we do have a - well, we do have an OTC listing under the bulletin board that somebody - we did not put it up, it’s one of the ones where anybody can put it up and it’s not managed by the company. I think you have to go to OTCQB or OTCQX and then we have to report and all that. Now, in hindsight, maybe we should have done it at the start of the year. I’ve always been of the view since doing it with Piedmont that we’ll want to get to a Nasdaq listing as soon as possible. We still are pushing towards a Nasdaq listing. The timing of that, we just need to see; we have a few things to do, but the Nasdaq listing is very important. That’s what I’m focused on. Do we do a QX in between? I think there’s the potential to have the Nasdaq listing sooner rather than later, so there’s no need to do the intermediary QX step.

Matthew Gordon: Okay, fair enough. The other thing I think you’re benefiting from is the Tesla association via Piedmont previous operation where perhaps you’ve got a ready and willing audience of Americans thinking more of the same, please, Taso. Okay, so you’ve laid out the plan, you’ve got some money to do it, so what are we looking for now? What are the deliverables I can pick you up on if you don’t deliver?

Anastasios Arima: It’s great, the milestones really are the Scoping Study, the metallurgical test work programs, and the resource coming, and then there’s further land acquisition and drilling that we’ve got being done in Tennessee, so that helps to continue to establish how big this critical mineral region is. We’re going to be getting that out. That’s over the next 3 and 6-months. There’s a lot of information to get out there but it’s a lot of value-added information, especially for the resource investor, which a lot of I suspect your base is. In addition to that, there’s a lot to come out on the technology side. We are having active discussions with a range of different parties on the technology side for potential prototyping. We have signed an MOU with EOS, the largest 3D printing machine maker - one of the largest globally - in Germany. We are going to be working more closely with them over the next few months as well to look at different opportunities to deploy low-cost, sustainable Titanium powders within the system. There are a lot of other discussions going on with machine makers, groups that actually make the parts, the end-users, and stakeholders that are involved in sustainable supply chains both in Europe and the US. There’s a lot of information and potential relationships that we could announce in the future there, and that we’re working on, but then especially there’s a lot of milestones to come out on our actual test programs, work programs, taking the ore to metal, taking scrap to metal, what that looks like, how that compares against current Titanium metals in the industry today. We hope to get those results out so that we can show that we can meet or exceed industry standards and that it’s just a matter of time before the world sees low-cost sustainable Titanium metal.

Matthew Gordon: Taso, look I appreciate you coming on and telling this story. It’s a young story; an exciting space to be looking at. I love the subliminal advertising behind you. It’s to the moon, folks. This one is to the moon. Andy Warhol says so. Okay, I appreciate it, stay in touch and let us know how you get on.

Anastasios Arima: Perfect, thanks very much. See you.

To find out more, go to the Hyperion Metals website