Lightbridge Corp (NASDAQ:LTBR) Q2 2022 Earnings Conference Call July 28, 2022 4:00 PM ET
Company Participants
Matthew Abenante – Director, IR
Seth Grae – President, CEO and Executive Director
Andrey Mushakov – EVP, Nuclear Operations
Lawrence Goldman – CFO, Treasurer and Corporate Secretary
Sherrie Holloway – Controller
James Fornof – VP, Nuclear Program Management
Conference Call Participants
Operator
Thank you for standing by and welcome to the Lightbridge Corporation Business Update and Second Quarter 2022 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.
Matthew Abenante
Thank you, Justin, and thanks to all of you for joining us today. The company’s earnings press release was distributed after the market closed 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; Andrey Mushakov, Executive Vice President for Nuclear Operations; Sherrie Holloway, Controller; and Jim Fornof, Vice President for Program Management.
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 would like to turn the call over to our first speaker, Seth Grae, Chief Executive Officer of Lightbridge. Hello, Seth.
Seth Grae
Thank you, Matt, and thank you all for joining us to discuss Lightbridge’s second quarter 2022 results. Lightbridge’s progress and momentum during the first half of 2022 has been encouraging and our outlook for continued momentum in the second half of the year is just as promising.
Also thus far in 2022, we have further strengthened our intellectual property protection of Lightbridge Fuel technology by securing patents from Canada and Eurasia, and sharing that our intellectual property will enjoy broad protections in support of our efforts to commercialize Lightbridge Fuel.
Last week, we announced that Lightbridge signed a memorandum of understanding with Curio, a company that is developing technology called TRUfuel to produce transuranic materials from recycling used nuclear fuel.
Under this MOU, we will explore government funding opportunities with Curio relating to Curio’s TRUfuel technology and potential use of transuranic material is feedstock in Lightbridge design metallic fuel rods to power existing large reactors and coming small modular reactors.
We were impressed with Curio’s recent progress, including their MOU with Northwest Energy — sorry, with Energy Northwest as an industry partner and potential off taker of products produced through Curio’s nuclear waste recycling process.
Last month, we announced that MIT was awarded an $800,000 grant from the U.S. Department of Energy’s Nuclear Energy University Program R&D awards to study the deployment of accident tolerant fuels in small modular reactors.
Within this study, MIT will simulate the usage and safety performance of Lightbridge Fuel inside a NuScale small modular reactor. Importantly, this research dovetails with our strategic focus on fueling SMRs and over the future and the potential additional benefits Lightbridge Fuel rods will bring to SMRs. This is another example of the exciting collaborative efforts between Lightbridge and DOE. This project similar to our two GAIN vouchers represents important work on the path to commercialization that is being supported by DOE.
We are seeing growing support for nuclear power, particularly in government in providing energy security for ourselves and our allies, and also for climate reasons. Importantly, we are seeing stepped up support for nuclear power from government, which Lightbridge expects to benefit from.
Lightbridge’s Nuclear Fuel technology can help the U.S. government meet its strategic goals. As I’ve spoken about in the prior calls and interviews, Lightbridge is in negotiations for a strategic partnership project under which Lightbridge Fuel will help American meet its clean energy and energy security goals.
This series of agreements will allow for cooperative work at Idaho National Laboratory, leading up to irradiation testing of fuel samples in the advanced test reactor. This is a key critical path step necessary to support fuel performance modeling and regulatory licensing efforts for commercial deployment of Lightbridge fuel.
As you have seen in the news, many European countries will start rationing natural gas and will hope for a mild winter. Germany will soon decide which companies have to shut factories to ration power.
The great need in the marketplace is for more power. It’s not a coincidence that earlier this month, the European Union voted to include nuclear power in its green energy taxonomy, which will help bring more power — more money into projects that the EU considers to be sustainable and will slash greenhouse gas emissions.
New reactors are under construction on order or planned across the U.K. and throughout Europe. It’s also encouraging to see that Belgium has scaled back plans to phase out nuclear reactors and similarly over in Asia, South Korea has scale backed plans to phase out nuclear reactors.
The technology surrounding reactors of the future is compelling for their reduced size and greater efficiency. However, at Lightbridge, we believe that fuel is the secret of nuclear energy and our fuel will help shape the future of nuclear energy.
Current fuel rods have only had incremental changes in design over the approximately 65 years of the nuclear power industry. Lightbridge has reimagined the nuclear fuel rod using advanced technology to make nuclear fuel even safer and more economical than today’s fuel rods, without compromising on safety and quality.
Much of the discussions among industry, the administration, and Congress is about energy security, and ensuring that there’s enough power being supplied. One of the many benefits of Lightbridge fuel will be 30% more power than with standard nuclear fuel rods for new reactors designed to take that added power.
The 30% is based on a preliminary assessment we perform for a power upgrade for an EPR reactor. We believe similar power upgrades will be feasible in other large reactors, as well as SMRs.
Our confidence continues to grow about the improving competitiveness of nuclear energy for baseload power generation, and transitioning our power grid to clean energy sources by 2050. This month, the breakthrough Institute published a report that evaluates what a clean energy transition in the U.S. will look like incorporating advanced nuclear energy, stating that bold investments in advanced nuclear technology in the United States will advance technological innovation, secure leadership in international nuclear markets, and support national energy security and electricity, grid resilience, all while improving the environment and health and accelerating U.S. climate action.
A report published by the International Energy Agency last month concluded that, “the policy landscape is changing, opening up opportunities for a nuclear comeback.” Country seems to be waking up to the realization that they can’t meet their national security, energy or climate goals without nuclear energy. And now we’re seeing this is really starting to happen.
Just yesterday, we were pleasantly surprised with the news of a deal between Senators Joe Manchin and Chuck Schumer on a Reconciliation Bill that will invest $370 billion in clean energy and climate change programs, which offers support for hydrogen, renewables, and nuclear energy.
We are happy to see that the bill includes a production tax credit for existing nuclear plants to help keep them operating. Plants to keep operating we’ll be able to use our fuel, which also will provide economic benefits to the plants. In addition, the bill includes funding for National Labs, which is important for testing new technologies such as ours, and most importantly for us, the bill includes $700 million to support the availability of HALEU, high assay low enriched uranium for research, development and demonstration. HALEU is used in our fuel technology. This bill is a major and necessary step forward to secure a domestic HALEU supply, which is long overdue, and will have a strong positive impact on our ability to produce Lightbridge Fuel rods.
I’ll turn the call over to Andrey Mushakov, Executive VP for Nuclear Operations, who will give us a quick review of our near-term research and development activities. Andrey?
Andrey Mushakov
Thank you, Seth. As Seth mentioned they continue to make progress in our fuel development program. We continue our ongoing work on the second GAIN voucher was Pacific Northwest National Laboratory or PNNL. The scope of this project is a demonstration of our fuel casting process using depleted uranium in 50 weight percent alloy with zirconium. This is a key step in the fabrication process for our fuel. And it’s also informs our approach the fabrication of fuel samples for radiation and the Advanced Test reactor at Idaho National Laboratory.
The total value of the project is approximately $660,000 with three quarters of this amount funded by the U.S. Department of Energy, further scope performed by PNNL. We’ll provide further updates as we make additional progress on this project in the coming months.
We designed Lightbridge Fuel to enable small modular reactors to more efficiently load follow then as achievable this current nuclear fuel, ramping up and down in power is renewables available.
SMR is Lightbridge Fuel can combined with renewables to power a zero carbon electric grid. In addition, we expect Lightbridge’s technology to reduce the cost of generating electricity from an SMR which strengthens the business case for deploying large numbers of SMRs to deliver reliable power and meet energy security and climate goals.
Back to you, Seth.
Seth Grae
Well, thank you, Andrey. Now, I will turn the call over to Larry Goldman, Chief Financial Officer to summarize the company’s financial results.
Lawrence Goldman
Thank you, Seth and good afternoon, everyone. For further information regarding our second quarter 2022 financial results and disclosures, please refer to our earnings release that we filed yesterday and our Form 10-Q that we will file with the SEC later today.
The company’s working capital position at June 30th, 2022 is $29.2 million compared to $24.7 million at December 31st, 2021, an increase of $4.5 million. Total assets were $29.8 million and total liabilities were $0.5 million at June 30th, 2022.
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 internal 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 R&D activities.
Total cash used in operating activities were $3.1 million for the six months ended June 30th, 2022, a decrease of approximately $4.6 million compared to $7.7 million for the first half of 2021. This decrease was due primarily to the dissolution of our former joint venture last year and the payment of approximately $4.2 million for outstanding invoices for work performed, and other expenses incurred.
Total cash provided by financing activities for the six months ended June 30th, 2022 was $7.6 million due to an increase in the net proceeds from the issuance of common stock by our at-the-market facility, ATM.
In support of our long-term business and future financing requirements with respect to our fuel development, we expect to seek to continue additional DOE 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.
Lightbridge is working with the U.S. national laboratories on R&D activities, which is negotiating — and is negotiating new tracks for additional future scopes of work in 2022 and beyond.
Net loss for the second quarter of 2022 was $1.5 million compared to $1.6 million for the second quarter of 2021.
I will now turn the call over to Sherrie Holloway, our Controller, who will go over select P&L financial information for the first half of 2022.
Sherrie Holloway
Thank you, Larry. Total R&D expenses decreased by approximately $0.1 million for the three months ended June 30th, 2022 as compared to the three months ended June 30th, 2021. This decrease was primarily due to a decrease in consulting and outside R&D expenses of approximately $0.1 million.
All other R&D expenses for the three months ended June 30th, 2022 and June 30th, 2021 were fairly consistent period-to-period.
Total general and administrative expenses decreased by approximately point $1 million for the three months ended June 30th, 2022 as compared to the second quarter of 2021. This decrease was primarily due to a decrease in consulting fees of approximately $0.1 million and a decrease in professional fees of approximately $0.1 million.
Relating to fees incurred arbitration in connection with an arbitration matter that was settled in 2021 that was not repeated during the three months ended June 30th, 2022. These decreases were offset by increases in Directors fees and stock-based compensation expenses of approximately $0.1 million.
It was a net other operating gain of $0.1 million for the three months ended June 30th, 2022 compared to $0.2 million net operating gain for the three months ended June 30 2021. This $0.1 million decrease was due to the financial cash distribution from the dissolved Enfission joint venture that occurred in 2021.
It was contributed services research and development from the game program of approximately $0.1 million for the three months ended June 30th, 2022 and June 30th, 2021. With a charge to R&D expenses, and a corresponding amount recorded to contributed services, research and development.
Now, over to Seth.
Seth Grae
Thank you, Sherrie. And with that, we will go to the question-and-answer session. Thank you to everyone who has submitted questions, Matt, please go to the questions.
Question-and-Answer Session
A – Matthew Abenante
Okay. Our first question and they write I have a question about advanced nuclear energy for enriched life or ANEEL. I would like to know how ANEEL potentially affects use of your technology, whether for good or bad or not at all?
Seth Grae
Andrey, you take that one?
Andrey Mushakov
Sure. Lightbridge has several patented thorium-based fuel designs for Light Water Reactors that we’re not actively pursuing at the moment, but primarily due to the current unfavorable market conditions for thorium fuels.
We believe that based on discussions with the utility partners that the benefits of Lightbridge’s metallic fuel outweighs the benefits of thorium in terms of improving nuclear power plant economics and safety for water-cooled reactors. However, we will continue to monitor market conditions, particularly the price of natural uranium to see if a thorium fuel cycle becomes economically feasible in the future. Thank you.
Matthew Abenante
Our next question. Back in April, Duke Energy and Purdue University announced a joint feasibility study to explore using SMRs on Purdue’s campus. Would Lightbridge be in the running and collaborating on studies such as these or approach universities about such research opportunities?
Seth Grae
Right. And Jim leads it’s a lot of our work with universities. Do you want me to take that question?
James Fornof
Sure, Seth. As we understand it, the announcement by Purdue and Duke Energy is initially focused on the feasibility of using an SMR as a component of Purdue’s green energy roadmap.
While Purdue currently has a small 10 kilowatt research reactor called the PUR-1 on campus, the concept of a power reactor would be the first at a university in the U.S. Of course, Duke Energy is already very experienced in nuclear power operations with 11 reactor units already operating in North and South Carolina.
Since there has been no announced result from the feasibility study to-date, the choice of reactor type is still apparently open. And if a water-cooled SMR such as NuScale, Holtec, or GE Hitachi is chosen, Lightbridge could potentially be able to provide fuel for that unit. Other designs — or other potential designs using molten salt, — or with sodium coolant would roll us out.
Regarding the collaboration with universities on research opportunities, Lightbridge is open to working with universities that can help us advance our R&D and commercialization goals. A good example of this, as Seth mentioned earlier, is our recently announced collaboration with MIT and NuScale Power to study the deployment of accident tolerant fuel and SMRs.
The award to MIT is part of the DOE’s Nuclear Energy University program and is expected to begin in the second half of this year. Among several objectives, the project will simulate the fuel and safety performance of Lightbridge Fuel in a NuScale SMR. Thank you.
Matthew Abenante
The next question, can you provide more color about the Curio MOU and what a future project with them would entail?
Seth Grae
Lightbridge Fuel is being designed to use uranium as the fissile material. We also have designed variants that could use plutonium to eliminate existing plutonium stockpiles, while generating carbon-free power. Curio is working on reprocessing technology that could remove plutonium from using nuclear fuel. With that plutonium mixed with other fissile material so that it could not be used for weapons purposes, we believe it could be feasible to use that reprocess material in Lightbridge fuel.
We look forward to exploring along with cheerio possibilities of government funding for studies in this area. And we’ll certainly, report more as we make progress.
Will the HALEU needed for Lightbridge Fuel samples be sourced from INL’s down blended highly enriched uranium or another source? The initial Halo for our fuel samples that will be irradiated in the Advanced Test reactor will be supplied by the U.S. government, I believe from existing stockpiles.
Where the government gets it from is up to the government how it got in their stockpiles, which I understand I think was from enriching uranium several years ago, not from down blending, but will be provided to us from those stockpiles.
Larger scale commercial supplies of HALEU for commercial supply of our fuel would come from new enrichment to uranium by an enrichment company. The U.S. government stockpiles can’t meet large scale commercial production of HALEU, but they can meet what we’ll need for our testing purposes, Advanced Test reactor with these samples.
Matthew Abenante
And our last question is actually a two-parter. CENTRIS would appear to be the first available source for commercial HALEU for Lightbridge Fuel. Would Curio be the eventual optimal choice when and if available for Lightbridge Fuel? In other words, are there two HALEU options for Lightbridge?
Seth Grae
Curio will not produce HALEU. Curio is looking to reprocess used reactor fuel to extract plutonium mixed with other substances that substances and they get very non-proliferative and that that material is something that we will explore using in a variant of Lightbridge Fuel instead of HALEU. We have variants that have zirconium metal with HALEU metal and we could have variants with zirconium metal with plutonium or variants of zirconium metal with plutonium mixed with some other substances, like what Curio was looking to produce.
CENTRIS is demonstrating its ability to produce HALEU and other companies are also exploring use of their approaches to produce HALEU in the U.S. as well as in Europe.
And I’ll add that with the new $700 million in the bill that Senator Joe Manchin is supporting, we are very, very much more confidence that the U.S. will have sufficient commercial production of HALEU in the United States.
Matthew Abenante
Back to you.
Seth Grae
Well, thank you, Matt. And I’ll just mention, we’re invited to the [indiscernible] live tomorrow at 3:45 P.M. US Eastern Time at the NASDAQ market site in Times Square in New York on TD Ameritrade Network. So, if any of you are watching TD Ameritrade tomorrow afternoon, we’ll be answering some more questions there.
And I want to thank everybody for participating on today’s call. It’s an exciting time in nuclear and for Lightbridge. 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. Good bye.
Operator
This concludes today’s conference call. Thank you for participating You may now disconnect.
Be the first to comment