Lightbridge Corporation (NASDAQ:LTBR) Q2 2023 Earnings Call Transcript

Lightbridge Corporation (NASDAQ:LTBR) Q2 2023 Earnings Call Transcript July 27, 2023

Operator: Thank you for standing by and welcome to the Lightbridge Corporation Business Update and Second Quarter 2023 Conference Call. Please note that today’s call is being recorded. It is now my pleasure to introduce Matthew Abenante, Director of Investor Relations for Lightbridge Corporation. Please go ahead.

Matthew Abenante: Thank you, Lisa and thanks to all of you for joining us today. The company’s earnings press release was distributed yesterday and can be viewed on the Investor Relations page of the Lightbridge website at www.ltbridge.com. Joining us on the call today is Seth Grae, Chief Executive Officer; along with Larry Goldman, Chief Financial Officer; and Andrey Mushakov, Executive Vice President for Nuclear Operations. I would like to remind our listeners that any statements on this call that are not historical facts are forward-looking statements. Today’s presentation includes forward-looking statements about the company’s competitive position and product and service offerings. During today’s call, words such as expect, anticipate, believe and intend will be used in our discussion of goals or events in the future.

This presentation is based on current expectations and involve certain risks and uncertainties that may cause actual results to differ significantly from such estimates. These and other risks are set forth in more detail in Lightbridge’s filings with the Securities and Exchange Commission. Lightbridge does not assume any obligation to update or revise any such forward-looking statements, whether as a result of new developments or otherwise. And with that, I’d like to turn the call over to our first speaker, Seth Grae, Chief Executive Officer of Lightbridge. Hello, Seth.

Seth Grae: Well, thank you. Hello, Matt and thank you all for joining us to discuss Lightbridge’s second quarter results. I’m delighted to share our latest achievements and developments with you. On July 6, we announced that Texas A&M University has been awarded approximately $1 million from the U.S. Department of Energy’s Nuclear Energy University program R&D Awards, to evaluate thermal hydraulic performance of Lightbridge Fuel in a NuScale small modular reactor. The choice of Texas A&M University for this study speaks to their world-renowned standing in nuclear engineering education. Their expertise and research capabilities make them an invaluable partner for this project. We are proud to have them leading this critical study and we are eagerly looking forward to this new collaborative project.

The study planned to be conducted over a span of 3 years is designed to develop a comprehensive understanding of how Lightbridge Fuel performs in a small modular reactor, an SMR designed by NuScale power. NuScale is a recognized global leader in developing SMRs which are playing an increasingly important role in the move towards safer, more efficient and flexible nuclear power. Partnering with us in this project is structural integrity associates which will perform the thermal evaluation of Lightbridge Fuel in the SMR using its Pegasus simulation software. This software represents a next-generation fuel evaluation and design optimization tool which will provide us with detailed insights into the performance of our fuel under various conditions.

I want to take a moment to express our gratitude to the U.S. Department of Energy. Their financial support through the Nuclear Energy University program R&D awards has been instrumental in enabling this research and experimental work. This is the second year in a row that Lightbridge Fuel has been selected for evaluation in an NEUP study as we continue to work today with MIT. These kinds of collaborative projects are an important component of advancing our nuclear technology understanding and capabilities. Overall, we’re confident that this project will yield critical insight into the performance of Lightbridge Fuel in NuScale SMRs. These insights will help inform our future research and development and ultimately, we believe they will contribute toward paving the way for widespread commercial adaptation of next-generation nuclear fuel technology, strengthening our ability to provide safe, efficient and sustainable nuclear energy.

In addition to our achievements in R&D, the U.S. government approved Lightbridge’s request to join 2 pivotal public-private nuclear power partnerships. The first of these partnerships is with the Department of Energy’s high-assay, low-enriched uranium consortium or HALEU consortium. Achieving a national HALEU stockpile and production capacity is a key step in supporting advanced nuclear energy technologies like the ones we’re developing. The consortium is focused on streamlining the production and use of HALEU in the U.S. aiming to promote energy security and sustainability, both of which are pivotal to our strategic vision. By joining this consortium, we are now part of an industry-leading group of companies and organizations focused on advancing availability of this critical feedstock material.

I’ll also just mention that just before we started this call a few minutes ago, the U.S. Senate voted on a bill to support increasing enrichment capacity in the U.S. for HALEU and it passed in the Senate and the vote was 96 to 3, reflecting widespread bipartisan support for nuclear power. And I also want to mention a second partnership that we’ve entered into with the U.S. Department of Commerce International Trade Administration’s SMR Working Group. This working group brings together industry leaders in the field of SMRs to facilitate international trade and cooperation. As a member, we gain opportunities to influence policies and initiatives that affect the SMR market and we can contribute to setting global standards for this emerging industry.

Given the rising demand for SMRs in Europe and globally, we believe this position working within the working group will help us understand better SMR related technologies to see how Lightbridge Fuel could best fit into international deployment plans for SMRs. And additionally, I was reappointed by the U.S. Secretary of Commerce, Gina Raimondo to the U.S. Civil Nuclear Trade Advisory Committee, or CINTAC. As a member, I’ll continue to provide advice for developing and administering programs to expand U.S. exports of civil nuclear goods and services. All of these partnerships place Lightbridge squarely at the nexus of public policy and private innovation in the nuclear energy sector. They will not only help us to continue to develop Lightbridge Fuel but will also give us an influential role in shaping the future of nuclear power, both in the United States and internationally.

As we take meaningful strides in our development, we have also been strengthening our team with industry-leading talent. On April 25, we were thrilled to welcome Dr.Scott Holcombe to Lightbridge as Vice President of Engineering. With his distinguished career and profound experience in the field of nuclear engineering and irradiation testing experiments, Dr.Holcombe brings a wealth of expertise that will be instrumental in driving our fuel development endeavors forward. Dr.Holcombe will not only provide technical leadership but will also influence our strategic direction as we strive to redefine the future of nuclear energy. On April 3, we were equally delighted to have Sherri Goodman joining our Board of Directors. Ms.Goodman is a renowned expert for her comprehensive knowledge and vast expertise in the intersecting domains of national security, energy and environmental issues.

Her inclusion in our Board brings a unique perspective that will enhance our ability to navigate the complexities of a global energy landscape. In her role, Ms.Goodman will chair the newly constituted Energy Security and National Security Committee of the Board. This committee will play a vital role in advising our organization on matters of energy security and related national security issues, ensuring that we are not only providing innovative energy solutions but are also contributing to positively — also contributing positively to the global energy security landscape. Turning to our strong patent portfolio. During the second quarter, we received a notice of allowance for a divisional patent relating to Lightbridge’s innovative metallic nuclear fuel assemblies from the U.S. patent and trademark office.

This expands our intellectual property portfolio with more than 160 patents and is an integral component of the company’s plans to commercialize Lightbridge Fuel technology in the future. I’ll turn the call over to Andrey Mushakov, Executive VP for Nuclear Operations, to review our ongoing fuel development activities. Andrey?

Andrey Mushakov: Thank you, Seth. As previously announced, we have been working since last December with Idaho National Laboratory under an umbrella strategic partnership project agreement and an Umbrella Cooperative Research and Development agreement to support the development of Lightbridge Fuel. Earlier this year, we worked with Idaho National Laboratory to complete an quality implementation plan for the project. This was an essential first step to ensure that all future work performed at Idaho National Laboratory and the project, will meet the U.S. Nuclear Regulatory Commission’s quality assurance requirements. We’re currently working with INL to demonstrate casting of delta-phase uranium-zirconium ingots with depleted uranium using existing INL equipment.

As part of that effort, we have recently been able to cash to initial ingots using depleted uranium and zirconium alloy materials, they currently undergoing characterization. Our next step is to scale up the ingot size to make it suitable for extrusion and then conduct initial extrusions from the scaled up ingots. In addition to our projects with Idaho National Laboratory, as Seth mentioned, Lightbridge is collaborating with Texas A&M University, NuScale Power and structural integrity associates on a $1 million study funded by the U.S. Department of Energy’s Nuclear Energy University Program R&D Awards. The second collaboration for Lightbridge with the U.S. University. As we’ve previously announced, we also have an ongoing collaborative project with MIT.

First, I’ll briefly describe the new collaborative project with Texas A&M. The project entails a comprehensive characterization over the performance of the Lightbridge helical cruciform advanced fuel design which will generate a unique set of experimental data of friction factor, low and heat transfer behavior, on the new scales, light water, small modular reactor, simulated normal and of normal conditions. The project is expected to accelerate the deployment of advanced fuels for light water SMR’s applications by leveraging the use of existing testing infrastructure, major basic thermal-hydraulic properties, et cetera. The ongoing study led by MIT, the second study relates to the evaluation of accident on fuels in various types of small module reactors.

The project that we are collaborating with MIT on aims to simulate the fuel and safety performance of Lightbridge Fuel for the NuScale small modular reactor and provide scope and analysis to improve the safety and economics of light water reactor small modular reactors. With that, I’ll turn the call over back to you, Seth.

Seth Grae: Thank you, Andrey. Global efforts to attain net zero carbon targets championed by both governments and private entities have led to a policy shift favoring nuclear power. The ongoing war in Ukraine has magnified global energy problems and amplified apprehensions regarding energy security. Therefore, nuclear power is being increasingly perceived as a pivotal element in accomplishing national security, energy and climate objectives, more so than renewable energy sources. Nuclear power allows for a responsible amplification of clean, reliable baseloaded electricity production with 0 carbon emissions. This energy source also minimizes reliance on nations that can disrupt fossil fuel supplies. Countries throughout North America, the European Union and Asia have begun initiatives to extend nuclear plant licenses, reinitialize reactors and construct new facilities.

Countries seem to be waking up to the realization that they can’t meet their national security, energy or climate goals without a significant increase in nuclear power. And now we’re seeing that this is starting to happen. Just in the last month, we saw the U.K. launch great British Nuclear Initiative, a competition to help drive the expansion of new nuclear power plants in the U.K. which has set a target of 25% of its electricity from nuclear energy by 2050. We also saw Poland approved its first nuclear power plant based on a new scale SMR. In the U.S., Maria Korsnick, President and CEO of the Nuclear Energy Institute, testified before the House Energy and Commerce Subcommittee on energy, climate and grid security. During a hearing title, American Nuclear Energy expansion, updating policies for efficient, predictable licensing and deployment.

The hearing highlighted the resounding bipartisan endorsement for nuclear energy and the mutually recognize significance it holds for our national energy and security considerations. During the hearing, committee members from both political parties, they imminently emphasize the urgent necessity to reassert U.S. dominance in nuclear technology. This can be achieved by modernizing the Nuclear Regulatory Commission’s operations for increased efficiency and process simplification, securing a reliable and safe domestic fuel supply and strengthening U.S. competitiveness in the international nuclear market. These are objectives that we fully and enthusiastically back. This is an exciting time for the nuclear industry and particularly for Lightbridge.

We look forward to updating investors on the progress we will make throughout the year. Now I will turn the call over to Larry Goldman, Chief Financial Officer, to summarize the company’s financial results. Larry?

Q&A Session

Larry Goldman: Thank you, Seth and good afternoon, everyone. For further information regarding our second quarter 2023 financial results and disclosures, please refer to our earnings release that we filed yesterday. The company’s working capital position was $28 million at June 30, 2023, versus $28.7 million at December 31, 2022. Total assets were $29.2 million and total liabilities were $0.6 million at June 30, 2023. Today, we have ample working capital and financial flexibility to support our near-term fuel development expenditures. This is very important to Lightbridge and our stockholders as well as our external stakeholders such as the federal government, to ensure that we have sufficient working capital as well as the ability to access capital in the future in order to conduct our future R&D activities.

Total cash and cash equivalents was $28.2 million as compared to $28.9 million at December 31, 2022, a decrease of $0.7 million for the 6 months ended June 30, 2023, as compared to the prior period due to the following: Total cash used in operating activities for the 6 months ended June 30, 2023, was $3 million, a decrease of $0.1 million compared to $3.1 million for the prior period in 2022. Total cash provided by financing activities for the 6 months ended June 30, 2023, was $2.3 million, a decrease of $5.3 million compared to the $7.6 million raised for the prior period in 2022. This decrease was due to the decrease in net proceeds from the issuance of our common stock by our at-the-market facility. Regarding our P&L financial information, net loss was $1.7 million for the second quarter ended June 30, 2023, compared to $1.5 million for the second quarter 2022, due to the following: Total R&D expenses amounted to $0.4 million for the second quarter June 30, 2023, as compared to $0.2 million for the second quarter June 30, 2022, an increase of $0.2 million.

This increase was primarily due to an increase in project labor costs incurred from the U.S. National Laboratories of $1.1 million, an increase in R&D payroll of $0.1 million, an increase in consulting fees of $0.1 million, offset by a decrease in other R&D costs of $0.1 million. Total G&A costs were $1.6 million for the second quarter June 30, 2023, as compared to $1.4 million for the second quarter June 30, 2022. There was an increase in stock-based compensation of $0.1 million and an increase in professional fees of $0.1 million. Total other income was $0.3 million for the second quarter June 30, 2023, as compared to 0 for the second quarter June 30, 2022. This increase was due to an increase in interest income earned from the purchase of our treasury bills and our bank savings account.

In support of our long-term business and future financing requirements with respect to our fuel development, we expect to continue to seek government funding in the future, along with new strategic alliances that may contain cost-sharing contributions and additional funding from others in order to help fund our future R&D milestones leading to the commercialization of Lightbridge Fuel. Back to you, Seth.

Seth Grae: Well, thank you, Larry. And with that, we will go to the question-and-answer session. Thank you to everyone who has submitted questions. Matt, please go ahead with the questions.

A – Matthew Abenante: Okay. Our first question, are both the metallic bonded cladding and full casting method being examined for Lightbridge Fuel testing or has one been determined? Are both the 3 and 4 low versions of Lightbridge Fuel being evaluated?

Seth Grae: Well, on the first part, our ongoing work at Idaho National Laboratory under the existing Statement of Work includes both casting and extrusion of unclad coupon samples. The initial irradiation testing in the Advanced Test Reactor will include fuel material coupon samples comprised of delta phase enriched uranium and zirconium alloy materials which is similar to the fuel material composition to be ultimately used in the commercial fuel product. The purpose of this initial experiment is to generate irradiation performance data for Lightbridge’s delta-phase uranium-zirconium alloy relating to various thermal physical properties. The data will support fuel performance modeling and regulatory licensing efforts for commercial deployment of Lightbridge Fuel.

Subsequent phases of this work our plan that will be under 2 umbrella agreements with Idaho National Lab to be released in the future. And these will include post-irradiation examination of the irradiated fuel material coupons fabricated of co-extruded fully clad multi-low Lightbridge Fuel rodlets and lube [ph] radiation testing of these robots in the advanced test reactor as well as transient experiments in the transient reactor test facility, also known as the TREAT reactor at Idaho National Laboratory and then corresponding postirradiation examination. On the part of the question, the 3 or 4 low version of the fuel, we’re developing both. They will be for different types of reactors that optimize fitting inside the fuel assembly geometry for those reactors.

So for example, for Western pressurized water reactors, it’s a 4-lobed design and for Russian VVER-type reactors. It’s a 3-lobed design. But for each reactor, there’s a version of Lightbridge Fuel that’s optimized for that reactor.

Matthew Abenante: The second question, how does TRISO fuel compare and contrast to Lightbridge Fuel?

Seth Grae: Well, they’re very different. The — first of all, TRISO, I hear it pronounced both ways. I usually say TRISO. And they’re meant for different reactor applications for different types of reactors. TRISO stands for a tristructural isotropic and it’s a coated particle fuel and it’s generally for high-temperature reactor designs that include high-temperature gas-cooled reactors and fluoride salt-cooled, high-temperature reactors. There are several so-called generation 4 and microreactor designs in development by companies that include Ex-Energy, Westinghouse, BWXT and Kyros Power. Now none of these reactors have yet been deployed. In contrast, Lightbridge Fuel can be used in both the existing fleet of water cooled reactors, such as PWRs and BWRs and conduce [ph] as well as Russian VVERs as well as future water-cooled small modular reactors of these types of technologies like PWR and BWR.

They are currently under development by companies like NuScale developing their SMR, GE-Hitachi developing the BWRX-300 reactor and other companies like Rolls-Royce and Holtec that are developing PWR SMRs.

Matthew Abenante: And for our final question, is there a rough estimate for the cost of retrofitting existing fleet reactors to accept Lightbridge Fuel?

Seth Grae: $85 million. Siemens has a subsidiary called Pace Global that performed an economic study of Lightbridge Fuel, looking at the cost of retrofitting a typical existing 1,100-megawatt pressurized water reactor, a typical large reactor that’s running in the world today for use of Lightbridge Fuel. And you can actually see this study on the Lightbridge website under the technical articles. And the Siemens subsidiary, Pace Global estimated a onetime upfront cost of $85 million per reactor to accommodate Lightbridge Fuel capable of a 10% power upgrade to the reactor plus a 24-month fuel cycle extended from the reactor’s existing 18-month fuel cycle. So that’s we think, excellent actually advantages for the cost for the utility that has the reactor.

Another advantage is that the capital cost is 0 for the nuclear power plant to get the longer fuel cycles which will extend the fuel cycle from 18 to 24 months, plus the significantly improved safety margin associated with Lightbridge Fuel. That all comes with the fuel. The nuclear power plant will incur some upfront costs relating to regulatory licensing, procedure, updates, training as part of the conversion of Lightbridge Fuel. But basically, we expect our fuel will be a drop-in substitute in the case of the fuel cycle extension only. And with that, that was the last question, Matt. I want to thank everybody for participating on today’s call. We look forward to providing additional updates in the near future. In the meantime, we can be reached at ir@ltbridge.com.

Stay safe and well. Goodbye.

Operator: This concludes today’s conference. Thank you all for joining. You may disconnect. Everyone, have a great day.