NanoXplore Inc.

day and thank you for standing by. Welcome to the first quarter 2024 NanoExplorer earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sophie Rosignol. Please go ahead.

Merci, opérateur. Bonjour à tous et bienvenue à la conférence téléphonique du premier trimestre 2024 de NanoExplore. Good morning everyone and welcome to Nano Explore's first quarter conference call. Today I'm here with Soroj Nazarpour, our President and CEO, and Perro Azevedo, our CFO. We will start with our prepared remarks and then a Q&A. Please note that our discussion will include estimates and other forward-looking information, which our actual results may differ from in the future. we invite you to review the cautionary language in yesterday's earning release in our MD&E regarding the various factors, assumption, and risk that could cause our actual result to differ. With that, let me turn it over to Suresh.

Merci, Sophie. Hello, everyone, and thank you all for joining our call today. We will first start with the review of economy and the impact on our business. I will then expand on our capital allocation plans and I will end my remarks with an update on Volta Explore. After almost two years of volatility and interest rate increases by central banks, we are seeing a reduction in economic activities and in consumer spending. Even though this reduction in economic activity helps with this inflation, it will certainly hamper growth in the next few quarters. As it relates to our business, Our first quarter is historically slower because of our customer plans being shut down during summer. Against that backdrop, I'm very pleased with the performance of NanoExplore team as we have been able to significantly improve our gross margin to almost 20% compared to the last year's first quarter which was around 12%. Our focus on higher margin products such as graphene and graphene enhanced products together with operational improvement, continues to positively contribute to our financial performance. We also maintained our healthy balance sheet with almost $40 million of liquidity. Now let's talk about our capital allocation plans related to our five-year strategy. As we go through the next few quarters of economic uncertainty, our strategy is to maintain a healthy balance sheet while preparing for the next phase of growth that could potentially start by mid-2024. As disclosed previously in our five-year strategy plan, we're focused on three areas of growth. Graphene-enhanced composite lightweighting business, graphene and anode materials 16,000 metric ton per year production plant, and VoltaXplorer battery plant. In our lightweighting business, our graphene solution is gaining momentum, and more customers are interested in our composite products. Graphene brings several benefits to composite products, such as improving the surface quality by reducing blisters and surface imperfections, and enhancing the rigidity of the composites, which enables light weighting. This technical improvement translates into higher gross margins for our products, well over the industry standard, and set NanoExplorer apart. from traditional composite parts suppliers. Furthermore, the industry is adopting these solutions. Last month we announced new contracts representing $24 million per year of business at maturity and we're working on a couple of similar contracts. Our exposure to this market has been mostly in heavy commercial vehicles and we are looking to expand to passenger vehicles. Having said that, we are selective on the businesses that we quote on and are discussing with customers to contribute to the capital investment. Regarding our graphene and anode material 16,000 metric tons per year production facility, our commercial activities on the anode size are accelerating following the recent announcement of graphite export control from China. The anode market is heavily dominated by China and North American supply is very limited. We're currently testing our anode materials and discussing commercial partnership with a few OEMs and their battery production partners. And following the announcement, these discussions accelerated. As previously disclosed in our five-year strategy plan, this facility requires nearly $120 million of investment, which is almost 70% of our total investment until 2027. Therefore, our final investment decision is conditional to off the contract from this OEM as it enables us to finance this facility through dedicated credit facility, along with government subsidies and investment tax credit. This 16,000 metric ton per year facility will produce around 8,000 metric ton per year of anode material and 8,000 metric ton per year of our pure graphene powder. Within the last few years, we have been actively working to enhance our graphene production knowledge and know-how. And as a result of this hard work and dedication, I'm very pleased to announce that we have been able to produce graphene through a dry production process. Dry production process compared to our water-based graphene production process has several benefits. First, it has a much higher output than production. meaning that capex per ton is significantly lower. Second, as there is no water or solvent used in the process, the footprint is significantly smaller. And third, which is extremely important, our cost of production is significantly lower, enabling us to match carbon black selling price. We anticipate producing 8,000 metric ton per year of dry processed graphene in this facility and will expand from there. This is a very important milestone for Nanoexplore and graphene market as a whole, as we can now target almost all carbon black applications and provide an all-encompassing, cost-effective, and sustainable alternative to the carbon black customers. It will provide more details on our proprietary dry processing of graphene and our technology in a separate press release. When it comes to commercial activities related to our existing graphene production outside of transportation segments, our team continues to work hand-in-hand with all our existing and potential clients to establish the best strategy for incorporating graphene into their products. Testing and validation processes are continuing with several customers in our target market. For instance, drilling fluids continue to show promise as graphene adds several benefits, such as improved lubricity Our customers are doing field trials now, and we will report to market on the results. Related to the foam, we're actively working on several foam chemistries such as XPS, PIR, and PU, mainly to improve insulating properties and achieve better flame retardants. Graphene is a sustainable replacement for other conventional additives that have been utilized in this market and also offers a better performance. Even though commercial cells are still small, we're expecting to see steady cell growth in the next few quarters. Switching gears to VoltaXplore, following successful commissioning of the retooling process to 21,700 cells, we are now producing high-performance power and energy batteries. In one side of the spectrum, we have produced power cells with a large concentration of our silicon additives, or SICK, in the anode, and with over 1,000 cycles of stability. On the other side of the spectrum, we have produced energy cells with outstanding lifetime stability for almost 50 years of daily use. Our power cells are highly fit for high-power and demanding applications such as power tools, sports vehicles, and aeronautics, and our long-cycle life energy cells are highly fit for good storage and pig-shaving applications. VoltaXplorer is continuing to make strides in the battery world by positioning itself as a niche and high performance battery producer in North America. And I have to congratulate VoltaXplorer team for their achievements. Now, moving to VoltaXplorer financing, we're progressing very well and are getting very close to the conclusion of $500 million financing to build Volta's 2 gigawatt hour battery gigafactory. Our financing package has three components. government support debt and equity we currently have visibility on government support and debt portion of the financing which is around 75 percent of the total financing and are working on the completion of the remaining equity portion Related to the construction, we have selected our land and agreed with the construction company to construct our building. We anticipate beginning the construction in the second quarter of 2024 and receiving production equipment by fourth quarter of 2025. Commissioning and the start of production will be in 2026. With that, I will now give the floor to Pedro, who will discuss the financials and our outlook.