ION to extract gold, silver, copper and rare earths from e-waste?

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 26,785,000 ION shares at the time of publishing this article. The Company has been engaged by ION to share our commentary on the progress of our Investment in ION over time.

Did you know that the circuit boards on the inside of the device you are reading this on are filled with valuable gold, silver and rare earth elements?

Look around your home and office, how many old electronic devices are lying around, unused for years?

Think about how many old computers, mobile phones, TVs, VCRs, and other old electronic devices you (and your parents) have discarded over the last 50 years.

(now multiply that by billions of other people and companies around the world doing the same thing)

Discarded electronic appliances such as mobile phones, computers, and televisions are generally called “e-waste”.

(get it... “electronic” waste)

Globally, approximately 62 million metric tons of new e-waste are generated each year.

$91BN worth of recoverable metals was the 2022 estimate of the value contained in e-waste.

Only 22% of that e-waste is currently recycled.

Yesterday our metals recycling Investment Iondrive (ASX:ION) announced it will test its technology to extract high-value materials such as copper, gold, silver, palladium, and rare earth elements from Printed Circuit Boards found in e-waste.

Over the last 12 hours gold and silver prices have both surged.

Printed Circuit Boards are some of the most valuable components of e-waste so it makes sense to focus on these.

One tonne of printed circuit boards contains >US$40,000 worth of gold, plus thousands of dollars of silver, copper, and palladium.

Here’s the numbers from a 2024 study - the thing is the gold price keeps going up - so it's much more now (for example, just overnight alone, gold was up another ~3.5%)...

(Source)

ION is our Investment in a macro thematic that we think will grow exponentially - urban mining.

Essentially extracting valuable minerals from waste.

We have watched another company MTM Critical Minerals run up to ~$190M market cap off the back of developing an urban mining technology.

Past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Given ION’s tiny $24M market cap in comparison, we are hoping ION can soon start to close the gap on MTM.

The “key unlock” for MTM was applying its technology into different waste products and extracting different commodities... everything from gold to gallium.

A little bit further down we will explain the difference between ION’s technology and MTM’s technology, and why we think this week’s move by ION into different markets could be a game changer for the company.

Today we are going to take a closer look at ION and its urban mining of e-waste to extract valuable metals.

ION’s recycling tech is a chemical process that “Deep Eutectic Solvents” together with “benign organic solvents”.

Deep Eutectic Solvents are green solvents that interact through hydrogen bonding to create a mixture with a lower melting point than its individual components.

These solvents can be re-used to extract more minerals - unlike acids which are consumed.

Being a chemical process based on biodegradable solvents, ION’s metals extraction technology is NOT energy or acid intensive...

(like most other metals recycling technologies).

ION has already proven its technology works on extracting lithium, nickel and cobalt from old electric vehicle batteries.

But now ION is expanding into extracting gold, copper, silver and rare earths from old printed circuit boards (PCBs).

1 tonne of PCBs usually has >US$40,000 of recoverable metals inside them...

(Source)

With gold and copper both trading at all-time highs (and last night silver touching new 14 year highs), we think it is the perfect time for ION to start investigating this space.

ION’s first testing on e-waste will start next quarter with the University of Adelaide, and initial results are expected later in the year.

ION has been given a A$100,000 grant by the South Australian Government to support this effort.

ION had $7M cash at the end of the last quarter.

There’s another feedstock ION can use...

E-waste and battery recycling isn’t the only thing ION is going after either...

A few months ago, ION announced that for the first time it would move “into critical mineral processing, including testing new feedstock from the US”.

Minerals processing is a huge market that affects basically any company that mines and processes raw materials.

Minerals processing is where a large mining producer (say Rio Tinto or Anglo America) takes the ore and pre-processes it for shipping to a smelter.

Then the smelter will take the concentrate and convert it into a useful material.

For copper this looks like:

Copper Ore → Copper Concentrate → Copper Wire

At scale, if a large mining producer is able to get a better “recovery rate” on converting its ore into a concentrate, it could mean millions of dollars of extra revenue generated... all from the same mine.

ION’s tech is now being plugged into that process - first targeting the nickel processing market, by testing new feedstock from the US.

(Source - ION Quarterly Report)

What’s next for ION

Coming up next for ION will be:

1. Battery recycling FID - ION expects to be making a Final Investment Decision (FID) on its pilot plant in July. IF everything goes to plan, ION’s plan is to have the plant in production by the end of the year.
2. E-waste testwork to commence - Initial tests to start in the coming weeks for recovering copper, gold, silver, osmium and rare earth elements from Printed Circuit Boards. Results from those initial tests expected in Q3 2025.
3. Mineral processing results - ION is starting with nickel processing. Tests are currently underway on feedstock out of the USA. We could see results from the testing any day now.

How does the $24M capped ION compare to the $190M capped MTM?

One of the key reasons we Invested in ION was because we thought its technology could eventually be applied into different markets.

DES processes have really only been around since the early 2000s and haven’t really been tested in the recycling industry at scale.

Why do we like ION?

Innovation pipeline - more types of recycling tech for different critical metals.

ION has a strategic partnership with the University of Adelaide. Under the partnership ION gets a first look at any new technologies developed by the university and the research is being funded by a $5M grant that was awarded by the Australian Research Council. The research is being overseen by two professors who developed ION’s current DES recycling technology.

Source: “Why we Invested in ION” - ION Investment Memo 3 December 2024

Our bet is that ION could refine its battery recycling tech and start building its pilot plant...

BUT while the pilot plant is being built there ION could test its technology in other markets.

Targeting other commodities, like gold, silver and copper.

We have seen that type of strategy work well for another ASX-listed company - MTM Critical Metals.

MTM is a good example of how market interest can increase as recycling technology is applied to various different markets.

The more markets that work with the technology, and the more commodities that can be extracted, the greater the real world applications.

MTM has applied its “flash joule heating” technology to multiple sources of feedstock and put out announcements recovering everything from gold to gallium.

In essence, MTM’s technology uses huge amounts of energy to burn and incinerate everything except for the metals that need to be extracted.

MTM has gone from ~2.5 cents to a high of ~37 cents off newsflow around recovering gallium, germanium, rare earths, tin and a whole lot more from e-waste.

Past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

The main difference between MTM and ION’s technologies is that ION’s is a chemical process whereas MTM’s requires heating things to very high temperatures.

That means MTM’s technology can be a lot more energy intensive relative to ION’s tech - but ION is yet to prove that its technology works at scale.

Our bet is that ION can recover metals with a lower carbon footprint, with biodegradable solvents and no expensive energy requirements.

MTM is currently capped at ~$190M.

Whereas ION is capped at ~$24M.

ION also had ~$7M cash in the bank at the end of last quarter, which is strong given its current low market cap.

We think that being a chemical process with far lower energy and acid intensity could make ION’s tech more appealing in commercial scenarios.

As ION tests its technology on similar things to MTM (and assuming the recovery rates are strong) we think the market may start to close the gap between the two companies...

Especially as ION starts testwork on precious metals, critical metals and maybe even in the near future - military metals.

We think ION’s valuation could actually surpass its peers because of how applicable its tech is to multiple other markets...

Including extracting metals from ore in mining...

More on ION’s minerals processing angle

As we mentioned above, ION announced a few months ago that it was moving “into critical mineral processing, including testing new feedstock from the US”.

(Source)

ION explicitly mentioned it would be “evaluating mixed hydroxide precipitate (MHP) as a potential feedstock” - the company’s first move into minerals processing.

Minerals processing is where a large mining producer takes the ore and pre-processes it for shipping to a smelter.

Then the smelter will take the concentrate and convert it into a useful material.

For copper this looks like: Copper Ore → Copper Concentrate → Copper Wire

Improving the recoveries from “ore” to “concentrate" can have a huge impact on the profits of major mining companies.

A big company like Rio Tinto can never change the ore body that it is mining, but what it can control is the amount of ore it recovers from it.

This is where a big amount of the R&D is spent for major mining companies.

ION’s team knows all about this industry too...

ION Non-Executive Director Hugo Schumann was the former CFO of Jetti Resources, which developed copper extraction tech.

Jetti went on to raise Series C funding of US$50M and then Series D funding of US$160M which valued the company at US$2.5BN in 2022.

Jetti was backed by top industry investors like Freeport, BHP, Mitsubishi and Blackrock - proof of the maturity of the minerals processing industry relative to the recycling industry.

(Source)

Jetti was focusing on copper, ION is targeting nickel.

ION said it will be testing its tech on “mixed hydroxide precipitate (MHP)” which comes from nickel laterite ores and typically contains ~40% nickel and 1-10% cobalt.

Nickel laterite projects are usually in the lowest cost percentile of projects globally so they are operating even in rough nickel markets like the one we are in now.

(Think the mega mines that are producing most of the world’s supply in Indonesia right now)

ION will be testing to see if it can convert mixed hydroxide precipitate directly into battery grade nickel/cobalt products.

IF successful, it could mean nickel producers/refiners can capture a larger part of the nickel/cobalt supply chains, which would make ION’s tech very valuable to them.

The big bet with the mineral processing tech is if ION can get the same type of interest that Jetti Resources’ was getting for its copper tech.

More on the ION team

In addition to Hugo Schumann as a Non Exec Director, we are backing the ION team here.

IF ION can show that its tech can be applied to mineral processing we think ION’s team have the right set of expertise to advance the technology toward commercialisation.

Here’s some other key people driving the ION team:

1. ION CEO Ebbe Dommisse - who was Chief Operating Officer for a biomass waste recycling startup through to commercialisation and an IPO on Norway’s stock exchange at a market cap of €194M.
   AND
2. ION Commercial Director Lewis Utting - who was the former Managing Director/CEO of SciDev (ASX: SDV) (a waste water treatment company). During Lewis’s time at SciDev, the stock went from 6.5c to $1.

Past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

What could trigger a re-rate in ION’s share price?

Over the next 6-9 months, we think one (or multiple) of these catalysts could trigger a sustained re-rate in ION’s market cap:

1. Pilot plant build for battery recycling tech - ION is planning to have its pilot plant built and ready for operations before the end of this year... Final Investment Decision on the pilot plant is expected in July.
2. ION’s mineral processing tech gets de-risked - ION is currently testing its technology on “US sourced feedstock”. Any big feedstock supply deal, partnership deal or really strong results could be a big unexpected catalyst for ION.
3. Application into new markets - Here, ION is looking at recovering copper, gold, silver, osmium and rare earth elements from e-waste (Printed Circuit Boards). Testing should start any day now and results before the end of the year. We could see the market re-rate ION if the results are positive.

Typically recycling tech that goes out of the lab and into the pilot plant scale is usually where companies can get a big valuation uplift.

Inside the last 12 months, we have seen three private companies working on recycling technology secure big funding deals:

• Ascend Elements raised US$524M and also secured two grants from the US Department of Energy, totalling US$480M (September 2023).
• Cylib recently closed a €55M series A round to develop an industrial scale plant (May 2024).
• Descyle also raised €12M in a series A to develop its demonstration plant (November 2024).

(Source)

Ultimately, we want to see ION switch its pilot plant on and start commercialising its technology.

Commercialisation is central to our Big Bet which is as follows:

Our ION Big Bet:

“ION re-rates to a +$150M market cap on successful large-scale production of commercial quantities of battery materials through its recycling process and/or by securing important partnerships in the recycling industry.”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our ION Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

What’s next for ION?

Battery Recycling pilot plant

ION recently completed economic modelling for its battery recycling pilot plant.

Check out our note on that news here: ION - Tech to extract critical minerals from old electronic products

Next we want to see the company make progress with the design development for the plant.

We will also be looking for updates on the results from the ongoing optimisation tests and semi-continuous testing.

ION is aiming for a Final Investment Decision (FID) in July so we should see more news on this front inside the next two months.

Objective #2: Design and build pilot plant

The pilot plant will set the stage for ION to better develop its technology, and provide potential samples to offtake customers.

Milestones

🔄 Complete design of pilot plant

🔄 Lock in EPCM contract for the build

🔲 Start construction on pilot plant

🔲 Complete pilot plant construction

(NEW) - Testing for critical mineral processing (nickel industry)

We are also looking forward to seeing the results from the tests ION will be doing on mixed hydroxide precipitate (MHP) feedstock.

This sits outside of the objectives we set for ION in our Investment Memo BUT it is still a big part of the reason why we Invested in ION.

A strong outcome will be if ION can show that its technology is effective at turning MHP into finished battery grade products.

IF ION can deliver that we think it could start to bring industry interest into ION’s tech.

(NEW) - Testing to start on e-waste

We also want to see ION put out initial test results on the e-waste (Printed Circuit Board’s) front.

It's hard to know what to expect here, but we are hoping initial testing is positive and that the market likes the results once they come out.

What are the key risks?

The two main risks for ION in the short term are “Scale up / Technology risk” and “Funding risk”.

Now that ION is moving into new markets, there is no guarantee ION’s tech is able to produce the recovery rates needed for its tech to be deemed ‘commercially viable’.

IF the market starts to price in expectations of positive results and ION is unable to deliver it could impact the company’s share price in a negative way.

Scale up / technology risk

There is no guarantee that the Pilot Plant is able to replicate the results from the large lab study. Also “feedstock reliability” both in terms of supply and consistency of material is a big risk for ION to scale up its operations.

Source: “What could go wrong” - ION Investment Memo 03 December 2024

In terms of funding, ION has a very healthy cash balance at ~$7M (at March 31st) relative to its ~$24M market cap.

The company is looking to make a Final Investment Decision on its battery recycling pilot plant in July.

We don't know how much this plant will cost just yet, but there could be a funding shortfall to cover the build and run the rest of the business. It might be at that point the company will need to seek strategic financing partners to progress development.

Funding and dilution risk

ION is a pre-revenue small cap company. This means that ION may need to raise funds in the future via capital raises that may incur dilution to shareholders.

Source: “What could go wrong” - ION Investment Memo 03 December 2024

To see more risks, check out our ION Investment Memo here.

Our ION Investment Memo

Our Investment Memo provides a short, high-level summary of our reasons for Investing.

We use this memo to track the progress of all our Investments over time.

Click here to read our ION Investment Memo where you will find:

• What does ION do?
• The macro theme for ION
• Our ION Big Bet
• What we want to see ION achieve
• Why we are Invested in ION
• The key risks to our Investment Thesis
• Our Investment Plan