Lightbridge Corporation

Greetings and welcome to the Lightbridge Corporation Business Update and First Quarter 2020 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Matthew Abenante, Investor Relations for Lightbridge Corporation. Thank you, sir. You may begin.

Thank you, Michelle. And thanks to all of you for joining us today. 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, Executive Vice President for Nuclear Operations, Jim Fornoff, Vice President for Program Management, and Sherry Holloway, Senior Staff Accountant. 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 involves 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. With that, I would like to turn the call over to our first speaker, Seth Grae, Chief Executive Officer of Lightbridge.

Hello, Seth. Hello, Matt, and thank you. Thank you all for joining us today. I sincerely hope that each of you and your families are healthy and safe. We ended fiscal year 2019 on a high note winning the GAEN voucher, our first U.S. Department of Energy funding award for the project, which helps position the company for the next phase of fuel development. We were delighted to announce the Cooperative Research and Development Agreement, CRADA, with Battelle Energy Alliance, LLC, the operating contractor of Idaho National Laboratory, with DOE in mid-April, which was the major milestone for Lightbridge. The CRADA is for $845,000 with three quarters of this amount paid by DOE or $633,000 for the scope performed by INL with the remainder comprising in-kind or non-cash contributions from Lightbridge for its scope of work in support of this project. In terms of the size of the gain voucher, the DOE states that it only allocates awards over $500,000, quote, in cases with a clear need and involving a truly exceptional technology or innovation, unquote. We are now a government contractor in developing our metallic fuel. The scope of the project, which is 12 months in duration, includes experiments designed for irradiation of metallic fuel material samples in the advanced test reactor at INL. We will establish the test plan for the measurement of key thermophysical properties of our fuel materials, both before and after irradiation. From there, INL will perform the detailed design and establish the safety case for the experiment in the advanced test reactor. We expect these steps will lead to the complete design and safety case needed for insertion of our fuel materials into the Advanced Test Reactor. Why is this all important? Successful performance under this CRADA is a necessary first step toward insertion of our fuel material samples into the Advanced Test Reactor. This irradiation testing will provide valuable data on the fuel's behavior during irradiation, which we'll use to support regulatory licensing. The next step which we are already working on is to manufacture our fuel material samples. We have identified suitable facilities within the U.S. National Laboratory Complex that we believe have the relevant capabilities and equipment to manufacture these samples. In the coming months, we will provide further updates on our progress toward this significant milestone as we advance our discussions toward a definitive agreement. Once the fuel material samples are manufactured, they will be placed for irradiation testing in the advanced test reactor. And finally, after the irradiation testing is complete, a post-irradiation examination of the fuel materials will be performed in hot cells at Idaho National Lab. In parallel, we are also evaluating suitable fabrication facilities for the next phase of our co-extrusion fabrication technology demonstration work. As previously announced late last year, we successfully demonstrated our co-extrusion process using surrogate materials. The next step is to evaluate the surrogate rods using non-destructive and destructive examination and perform any process optimizations that may be required. We will provide updates on this fabrication process demonstration milestone as we make further progress over the coming months. We believe that engaging with DOE through the GAIN program could not have come at a better time for Lightbridge. This CRADA allows us to form a close working relationship with DOE, gaining access to world-class facilities, world-class equipment, and world-class experts. As an aside, I was happy to provide a quote to GAEN for inclusion in the fact sheet for the GAEN program that is on their website. In the quote, I stated that, quote, the GAEN initiative is helping American companies move development of advanced nuclear technology into the fast lane. Through GAEN, Lightbridge can leverage the unique world-class facilities at the US national laboratories to demonstrate our advanced metallic fuel a key step on the path to market." Quotes like this, as well as several referenced in our recent announcements, reflect the potential opportunities we see before us in partnering with DOE, particularly when combined with recent federal policy commitments. These commitments to funding and supporting next generation nuclear fuel technologies are made in the Nuclear Fuel Working Group Report on Restoring America's Competitive Nuclear Energy Advantage, a Strategy to Assure U.S. National Security. I was happy to be a part of the discussion with President Trump at the White House that helped lead to the Working Group. This historic report has paved the way for advanced nuclear technology to be driven by the federal government for the foreseeable future. I thought Secretary of Energy Dan Briette did a brilliant job of making the case for U.S. support for nuclear innovation. Importantly, we do not see the bipartisan support for nuclear power changing, regardless of the results of elections this fall. The thrust of new pieces of legislation is geared to be bipartisan. These new policies are forward-looking to the United States competing and winning. not just domestically but globally with new technologies. Over the years, America has gradually ceded its leadership position in nuclear energy to Russia and China, which threatens American competitiveness and national security. In fact, just today, the Office of Nuclear Energy at DOE announced the launch of its Advanced Reactor Demonstration Program, which will provide $160 million for initial funding to build two reactors that can operate within the next five to seven years. One of the hallmark policies that came from the Nuclear Fuel Working Group report was the support for production of high assay, low enriched uranium, or HALU. HALU production is necessary to meet industry and defense needs in the coming decade. While HALU is broadly defined as uranium enriched above 5 but less than 20 weight percent in isotope uranium-235, most next generation reactors and advanced fuels, including light bridge fuel, require HALU with uranium-235 enrichment between 10 and 19.75 percent. Our strategy is very well aligned with the recommendations of the Nuclear Fuel Working Group report and the prevailing US nuclear policy. We are working towards being one of the companies that will help implement these new policies. In addition to bipartisan support for nuclear power at the federal level, Virginia, Lightbridge's home state, is an example of the growing support for nuclear power at the state level. On April 30th, the Virginia Nuclear Energy Consortium, of which I am a board member, issued a press release highlighting a recent bill signed by Governor Northam that worked towards incorporating nuclear energy for its carbon-free goals in Virginia. I think Virginia sees the large and growing federal support for nuclear power, particularly for advanced technologies, and wants to help position companies and universities within the state to receive that federal support. The legislation is also part of a trend in other states and countries to recognize nuclear as part of clean energy. I recently read an article by Mark Andreessen, co-founder of Netscape and co-founder and general partner of Silicon Valley venture capital firm Andreessen Horowitz, where he discusses how we can rethink and redesign many of our social and economic norms in a post-COVID-19 world. In the article, he references solving the climate crisis saying, quote, Energy experts say that all carbon-based electrical power generation on the planet could be replaced by building a few thousand zero emission nuclear reactors. Maybe we could start with 10 new reactors, then 100, then the rest." I bring this up because the recognition of nuclear power as a source of zero carbon emission energy is growing in our society from the halls of the federal government to a growing number of states to Silicon Valley. They recognize the massive energy challenges that the world faces, reducing carbon emissions while increasing energy capacity to power a growing world population and economy. Renewable energy will only be able to address a fraction of the future energy capacity that will be needed over the next 30 years while needing to comply with mandates that call for reduced emissions. There are currently 419 reactors operating in the world. Lightbridge has calculated that all energy used in the world today is the equivalent of 8,900 large reactors, with 84% of that energy actually generated by fossil fuels, 11% by hydro and renewables, and only 4.5% generated by nuclear. In 2050, total energy use in the world is expected to be the equivalent of over 21,000 large reactors. Nuclear energy needs to be a major component of future capacity if we're going to achieve these shared goals. This is the opportunity we are working towards for Lightbridge Fuel. The average annual fuel spend per light water reactor per year is about $50 million. With 419 reactors operating worldwide today, such reactors operating worldwide today, this creates an addressable market of $21 billion at today's capacity. Lightbridge fuel can help the existing and future new large reactors compete against natural gas and renewables. Furthermore, the deployment of new smaller safe reactors, which our fuel can further optimize, opens the door for the next generation of reliable nuclear power and a larger addressable market. Lightbridge Fuel is designed to operate with virtually every reactor in the world. Once we are in commercialization, nuclear fuel supply agreements will generate long-term, high margin recurring revenue. Earlier this month, we were notified by the Japan Patent Office of a patent grant related to a light bridge metallic fuel assembly design for using can-do type reactors, further strengthening our worldwide patent portfolio. We have worked to expand our patent estate and will be exploring opportunities in the can-do fuel market. And with that, I will turn the call over to Andrey Mushakov, Executive VP for Nuclear Operations, who will discuss the can-do market. Andrey.