Homerun Resources (HMRFF): Turning High-Purity Silica into a Strategic Materials Platform

In this episode of WTR Small Cap Spotlight, Homerun Resources CEO Brian Leeners joins WTR's Tim Gerdeman and Dmitry Silversteyn to discuss the company's integrated strategy to transform high-purity silica into solar glass, advanced materials, and energy storage solutions. The conversation covers recent engineering achievements, financing strategy, government incentives, commercialization plans, and the milestones that could shape Homerun's long-term growth story.

Transcript

SPEAKER_01 0:01

Welcome to the WTR Small Cap Spotlight Podcast. I'm your host, Tim Gerdeman, Vice Chair and Co-Founder and Chief Marketing Officer of Water Tower Research. In today's podcast episode, I'm being joined by Brian Laniers, CEO of Home Run Resources, OTC Ticker Symbol, HMRF. HomeRun Resources is building a silica-powered backbone for the energy transition movement across four focus verticals: silica, solar, energy storage, and energy solutions. Anchored by a uniquely high-purity low-iron silica resource in Bahia, Brazil, HomeRun transforms raw silica into essential products and technologies that accelerate clean power adoption and deliver durable value. Also joining is my WTR equity research colleague, Dimitri Silverstein. Good morning, gents, and thank you for joining me. Hi guys, good to see you again.

SPEAKER_00 0:56

Thank you, Tim. Happy to be here.

SPEAKER_01 0:58

Brian, nice to have you back on the podcast. It's been a while. The company has issued over that time several key announcements, particularly in the past month. What are the top takeaways of those updates from an investor perspective to kick things off?

SPEAKER_02 1:13

I think generally the most important thing to uh to focus on is that we're in that stage of transition uh from planning and feasibility uh towards capitalization and build stage. That's you know, sort of a natural evolution based on where we are in the material space. But we're we're right in that point of transition or that pivot point. I think specifically uh drawing attention to the fact that we've just received Bahia state approval relative to their incentive tax program. It's really important. Um, the advancements that were made in the purification side relative to the 3N and 4N, 99.9 and 99.99 uh silica uh purification. Um, and and one of the key things as well is I mean, even though we're not sans space, uh we've completed our first order in the industrial silica sans space that went out uh in that time period. And then obviously uh the main uh event over the last sort of 60 days is receipt of the bankable feasibility study relative to the solar glass manufacturing plant, which was very positive. And we've just added to that positivity uh with this uh recent announcement of the Baie Estate Tax Incentive Program.

SPEAKER_01 2:31

That's material news. Uh, thanks for sharing with us. And I'm going to turn it over to Dimitri to ask you a few more questions. Sure.

SPEAKER_00 2:38

Thank you, Tim. Uh hi, Brian, and welcome back to the program. Uh let's dive a little bit deeper into some of these things that uh have taken place uh with respect to the company in the last uh two, three months. Uh the company recently uh completed the CapEx budget for the phase one of your 3N purification plan. Um why is this an important milestone and how does it move home run from being a resource company that you mentioned to becoming an integrated industrial materials company?

SPEAKER_02 3:06

Uh that's a good question. I mean, it's really the first step in uh in the flow of our product from sitting in the ground as a natural resource to eventually getting to advanced materials in the tech and energy sector. Uh, but that first phase is the 3N purification. And what that does is that effectively creates an industrial silica sand product because it's washed and sorted. That's that's our our silica is so high purity in its natural form that all we have to do is wash and sort it to achieve 3N. And then that becomes the feedstock for the solar glass facility. The solar glass requires that silica as the largest component or the largest input. Uh, and then it also becomes the feedstock into the 4N and 5N, that 99.99 and 99.999 uh percent silica that moves into those higher margin, higher end marketplaces. So it's a key transition point relative to the silica vertical uh that is you know the core essence of the business.

SPEAKER_00 4:13

Understand. So shortly after that announcement, you also confirmed the preferred 4N purification pathway and began evaluating uh multiple plant configurations. For investors who are not material scientists, why is moving from 3N to 4N purity such a meaningful value creation step for the company?

SPEAKER_02 4:32

Uh, because silica really operates on a pyramid uh as far as quality goes. As you get near the top of the pyramid, the price point really changes. And it doesn't just change uh uh uh you know in in steps, it changes exponentially. And so to put that into you know a real category, your three end material, you're looking at you know up to $100 the industrial product. For the fore-end material, which is higher purity, you're looking at higher margins, which is several hundred dollars plus. So there's a real margin expansion relative to moving up the pyramid, but everybody needs to understand you can only move up that pyramid if you start with the right product as your raw input. And we're lucky enough to have probably the highest quality silica sand asset in the world.

SPEAKER_00 5:24

So when it comes to moving from 3N to 4N and what you've done in terms of de-risking that, uh or at least uh picking the uh the purification pathway that you're going to use to get to 4M, does that decision reduce the technical risk, improve project economics, or both?

SPEAKER_02 5:41

Um, there's not a lot of technical risk in producing 3N. Uh a wash and sort plant is uh has been around you know in in various iterations that have modernized over you know a couple of hundred years. So from that perspective, there's very little uh engineering or or a build risk in that. The foreign, the risk is really can you achieve it? Right. So we've now evidenced across all of our testing, which is with a variety of independent labs, you know, in the US and Europe now, uh, we've achieved 4N relatively easily. Uh we've achieved 4N plus close to five N. So from that perspective, the risk of getting there uh is really not that big of an issue anymore. I mean, to the really high end, we still have to work on that. And we're working with UC Davis in the US on that as well. Uh so I I think there's an achievement risk that's been eliminated. Now the risk is a capex risk. And we've just announced uh recently uh up to $15 million financing. So we're now in a situation where we're starting to receive capital interest from institutional entities through uh investment banking partnerships that we put together. That's the first of those. There will be a sequence of steps here, uh, but we're working through the sequence of steps, kind of along the same uh pathway that we're working from three in to four in to five in uh within the context of the purification requirements.

SPEAKER_00 7:12

Understood, Brian. So before we get into the capital race that you just mentioned, I just wanted to kind of go back a little bit. One aspect that stood out to me uh is the integration of the enduring energy storage technology into the your purification process that you're evaluating. How does combining energy storage with silica processing potentially differentiate home run from other high purity silica developers?

SPEAKER_02 7:37

Uh well, we're the first, so we're definitely differentiated. Um uh I was lucky enough to identify the enduring technology. Uh, almost three years ago, we initiated a relationship. I remember uh, like it was yesterday, the first meeting that we had, where I dropped my idea on them, which was, hey folks, you guys get to a thousand degrees Celsius and you can calcize silica at a thousand degrees Celsius. Maybe we can use this as a first step in the purification process. For those people who don't know, uh thermal treatment is like the pretreatment. Calcination at a thousand degrees Celsius is the pre-treatment for silica before it goes into an acid leaching wash uh treatment. Uh, and that's how you purify the silica. So we were like, hey, wouldn't it be great to integrate our high purity silica into this enduring energy storage system at the same time, calcine that silica as a cost-free step because you're building the energy storage, anyways. And then the vision at that time was that we would integrate that energy storage into our overall industrial process capability in Bahia as an iteration of that technology to one, use it for our own benefit, uh, and two, to demonstrate uh how good that uh technology is relative to certain use cases. And so it's nice to bring that all together. Uh, we've got Anziplan now in Germany that'll be working on two process flows. One includes the traditional uh calcyne technique, which is a rotary kiln and quite expensive, and the other will be uh the integration of the enduring system, which we intend on building at that industrial site anyways, into that processing or that purification as that pre-treatment step for thermal treatment, but using that energy storage system. That energy storage system, uh, the input is electricity from a variety of different forms, whether they're renewable or grid. And then the output is industrial heat or energy in the form of electricity. So we've got a lot of moving parts relative to taking advantage of that enduring system. But a key aspect of that is integrating that calcining, that thermal pretreatment into that system. So the sand that drops out of that system that's been cycled in the energy storage process is now calcined and ready for acid leach.

SPEAKER_00 10:04

Wow. Okay. So this is not simply a a sort of lowering the capex and operating costs of the business once at RAM subs. It sounds like it could become a competitive advantage for you that's difficult for others to replicate.

SPEAKER_02 10:19

Well, we own the IP, so it'll be difficult to replicate. Uh, we filed a patent on that uh along with our friends at the Department of Energy, the NREL folks uh in Colorado. So that it's a competitive advantage from an IP protected perspective. But yeah, it's also a competitive advantage because the calcite step is one capex expensive and two operationally expensive because you're usually burning hydrocarbons to make that rotary kiln heat. And so if we can do that within the energy storage system, so we're storing energy that we're using anyways and calcining our material within that energy storage material uh system, sorry, and then dropping that out. We've now completed that first step. We don't need that rotary kiln. We don't need that capex and we don't have that op cost. So yeah, there is an economic advantage as well. And and as you know, Dimitri, we've always focused on how we can build a core strategic advantage through the entirety of the business model. That requires a bit of time and creative thought, but this is an example of how that comes to fruition.

SPEAKER_00 11:23

Sure, sure, I understand that. Um, so let's get back to the financing side. Uh, you announced a uh Canadian $15 million facility uh with the Lind Partners, uh, along with relationships with Benchmark and Stonex. Um, investors often react cautiously, let's say, to convertible financing. Why did this structure make sense for home run at this stage?

SPEAKER_02 11:45

Um, when we were originally approached by Lynd, uh, who have been very successful in the materials space over the years, uh and we were introduced to Lynn through our investment banking partners at Stonex. When we when we were first introduced, it was really a traditional convertible to venture. Uh, but what we did was we worked through that negotiation process and ended up with something that was radically different from what we saw on the table at the beginning. And and and the biggest component of that is that it really, really focuses on minimizing dilution because obviously dilution is the issue that shareholders are concerned about, you know, those death spiral financings. This is not one of those, and it's neutered to the degree that we have the right to buy it out. And if we exercise that right, they have a back right to still convert one quarter of the outstanding amount at that time. Um, so we can even take the entirety and reduce that on a subsequent financing coming in. So when we look at subsequent financings coming in, we will obviously state to those entities, hey, you know what, we'd like to take out this facility if possible, relative to this overall findings that we're doing on the basis that that new financing is also less dilutive. You know, we're all big shareholders in the company as far as principles, and I'm the founder. Um, so from that perspective, dilution is a key issue, but it has to be balanced with building value and building that value within uh uh fast a period of time as possible because time is your competitor, obviously, in every business model. But we're we're we're happy with how it turned out uh and it gives us financial flexibility going forward relative to those other entities that we are uh that we are dealing with.

SPEAKER_00 13:39

Understood. So in your press release talking about that capital raise, you described this as a bridge to a larger institutional financing and the potential senior US exchange listing. What milestones are you hoping to achieve before pursuing that next step?

SPEAKER_02 13:54

Uh, we're in the process of pursuing that next step. Um, we we wanted to just put a bridge in place relative to the timing that it takes to put together these larger project-based financings. So, for instance, on the solar glass facility, that financing is going to be somewhere around $400 million. We have enough entities at the table right now working through the due diligence process uh that we exceed that amount amount that we would need, that $400 million, but you still have to work through that process. And and that's not a quick thing to do. So we've identified multiple parties. We're in uh we're in due diligence with multiple parties. Some of those have been identified publicly uh through our our public disclosure. Some of those are not known yet and will be identified when uh when in when that is required. But that's the process that we're going through. We're doing that also uh with other organizations relative to the purification, the silica side of the business. Uh, and we're doing that also relative to uh the energy storage uh and the solutions side of the business. So we've really built the company sort of as a hold co sitting over top of those four verticals, with each of those verticals operating like an independent entity.

SPEAKER_00 15:17

Understood. That's that's a I I think holding company structure at this point is probably if you're looking for asset level financing, is certainly in my experience, has been the right way to position the company. So you you referenced this before, you made an announcement regarding Baez uh tax incentive program, which appears to strengthen the economics of the solar blast project. Um, obviously without issuing additional shares, that's always good. How meaningful is this incentive? And what does it say about the level of government support you're receiving in Brazil?

SPEAKER_02 15:48

Uh it's huge. Um if you look at the potential benefits of that tax incentive program, you're looking at tens of millions of dollars uh across CapEx requirements and also across the first several years of operational uh cash flow. And so from that perspective, that tax benefit, that that actual event uh has more benefit from a value perspective than our entire current market cap. So from that perspective, is it material? Yeah, it's very material because it's bigger than our current market cap. So from that perspective, you know, we're executing. Uh, you know, we're we're we're in that period where where the speculative retail investor is starting to get tired and the institutional investor is getting excited. That's always, you know, that's always a pivot point. And and we're literally right there. So from that perspective, uh it's a great benefit. Uh and it just it puts another stamp of approval and credibility on what we've been building relative to uh an ongoing relationship with with the state government who's providing these tax incentives, and also the federal government from a potential financing perspective as well. So we've we've done a lot to build those relationships. We're proud of those relationships, and it's nice to see those stamps of approval from the federal and the state government within the jurisdiction within which we're building uh this industrial base.

SPEAKER_00 17:24

Absolutely, uh Brian, I can agree with you more when it comes to permitting uh you know government uh buy-in is is uh uh probably the most critical step here. So looking across these announcements, it seems the company is simultaneously, as you often tend to do, uh pursuing and advancing engineering, financing, government partnerships, and commercialization. Which of these areas do you believe the market is still underappreciating today as we go through this uh inflection point that you mentioned of going from retail investors and starting to bump up on radars of institutional investors?

SPEAKER_02 17:59

Uh I'm gonna have to say all of those. Uh and and and and the underappreciation isn't just slight, the underappreciation is huge from the perspective of value, right? If you look at if you look at uh analog companies, you know, I mean we're we're we're a bit of a rarity relative to the exchange we trade on because usually the the the peers that we trade against are are are linear resource companies. You know, have one resource, they're developing that resource or working to sell that resource to a bigger mining company. So, you know, we're completing our our engineering across all the verticals in 2026. We've initiated our institutional financing plans, we've announced multiple government partnerships and support benefits, we've commenced sales of our industrial silica. You know, we're we're executing on every aspect of our business, and we're doing that all in parallel, and we're doing that on finite resources. So I'm really proud of the team. I'm I'm a proud, I'm proud of how they've executed on the strategic plan. And it really is a strategic plan that we started with. You know, these these are, if you go back, you'll see Brian Leaner's making statements relative to doing all these things, you know, two, three years ago. And so from that perspective, to see this execution and move down these pathways towards building this value, we're getting really close. You know, I don't know where that actual pivot point is relative to a particular date on the calendar, but I know we're in that, and it we're in that region of the development of the company. And, you know, that's the precursor to that big move that you see uh for materials companies when they start to move towards, you know, building and spending the CapEx relative to building out their industrial presence and then transitioning, obviously, that into cash flow. The great thing for us, because we're vertically integrated, is we get to do that four times, right? So it's not one mind producing one product, it's four verticals producing four products plus. So we're getting exponential leverage in that second phase of value proposition that that we're just starting on.

SPEAKER_00 20:11

Great, great, Brian. So absolutely you have a lot to be proud of given how far you've come in the last three years and just in the last year or so that we've been uh working closely together, you can really see the progress the company is making. Um, at some point, investors will realize that and react accordingly. So, as I close out our conversations and thank you again for for uh stopping by, as investors look ahead over the next, let's say, 12 months, what are the key milestones that they should watch for to judge whether HomeRun is successfully executing on its strategy?

SPEAKER_02 20:45

Um watch it, watch and and see that we're actually doing what we say we're gonna do. Um I I understand the mindset of retail investors and obviously our shareholder base outside of principles and a few uh entries over the last while that that look more like institutions than retail investors. You know, that price, everything's about price, price, price, price. If the price isn't reflecting value, there is no value. And that's not actually the equation. You know, the value catches up to price or the value passes price and and and they're they fluctuate. So when we started this journey, we had less than five million dollar value. You know, we were we were a shell trading on it on the junior exchange in Canada. And now we're in that pivot from feasibility to to finance of those verticals and building out, you know, at a a potentially billion dollar plus business. So I think just watch and see that we're executing on what we say we're gonna do, which we've been doing since the beginning of this journey. And and I think if people do that and take a step back, they see that, hey, at some point in time, value will match the build. Uh, and that's the big reward, right? It's being able to sit on that investment or make that investment from a timing perspective. And I would I would argue that that right now is probably the best, the best proposition from value relative to what we've achieved and and and what the forward uh path looks like.

SPEAKER_00 22:16

Thank you, Brian. That was a very good answer. Thank you. You're welcome. And thank you for having me.

SPEAKER_01 22:21

Thanks, Dimitri, and thanks, uh Brian, for joining us. Always great catching back up on home run resources. Don't be shy about coming back on as you hit more milestones. And I'd be remiss if I didn't say in closing a little uh midweek humor is that I've been on Wall Street for 33 years and you use two of the greatest signs I've ever heard. Time is one of our greatest competitors, which I had not heard, but I totally agree with you on. And then the other one was that uh retail investors are getting tired at the exact time that institutional investors are getting excited, which is a pretty cool inflection point. So thanks, congratulations, great to see you again.

SPEAKER_02 22:51

Thanks, Tim. Thanks, Dimitri. Appreciate the opportunity. Thank you, Brian. Thank you, Tim.

SPEAKER_01 22:56

Thank you for listening, and don't forget to subscribe, as well as visiting www.watertowerresearch.com to stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry-specific symposiums, and conference schedules. We will see you next time for another edition of the WTR Small Cap Spotlight Podcast. Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick.