U.S. Markets closed

Edited Transcript of LTBR earnings conference call or presentation 16-Mar-18 2:00pm GMT

Full Year 2017 Lightbridge Corp Earnings Call

MCLEAN Mar 19, 2018 (Thomson StreetEvents) -- Edited Transcript of Lightbridge Corp earnings conference call or presentation Friday, March 16, 2018 at 2:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* David Waldman

* James P. Malone

Lightbridge Corporation - Chief Nuclear Fuel Development Officer

* Linda Joan Zwobota

Lightbridge Corporation - CFO & Treasurer

* Seth Grae

Lightbridge Corporation - CEO, President & Executive Director

================================================================================

Conference Call Participants

================================================================================

* Paulenne Roeske Kirschenbaum

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Greetings, and welcome to Lightbridge 2017 Fourth Quarter Earnings and Business Update Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host, David Waldman. Thank you, you may begin.

--------------------------------------------------------------------------------

David Waldman, [2]

--------------------------------------------------------------------------------

Thank you, Matt. Good morning, and welcome to Lightbridge's 2017 Year-end Business Update Conference Call.

The company's press release was distributed Thursday morning and can be viewed on the Investor Relations page of Lightbridge website at ltbridge.com. If anyone has questions after the call, you may contact Investor Relations at (855) 379-9900.

Seth Grae, our Chief Executive Officer, will lead today's call. In addition, the following executives are available to answer your questions: Linda Zwobota, Chief Financial Officer; Jim Malone, Chief Nuclear Fuel Development Officer; Andrey Mushakov, Executive Vice President for International Nuclear Operations; and Jonathan Baggett, Vice President for Program Management and Deputy Nuclear Quality Assurance Manager.

Today's presentation includes forward-looking statements about the company's competitive position and product and service offerings. During the course of 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 our current expectation 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 statement, whether as a result of new developments or otherwise.

You can participate in today's call in 2 ways: First, you may submit questions for management in writing to ir@ltbridge.com. If you've already submitted a question, we thank you. You can also submit them at any time during the prepared remarks or during the Q&A period. Third, after the prepared remarks, telephone lines will be open for live questions.

Now, here is Lightbridge CEO, Seth Grae. Please go ahead, Seth.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [3]

--------------------------------------------------------------------------------

Thank you, David. Good morning, everyone.

In 2017, we laid the foundation for Lightbridge's recently announced 50-50 joint venture with Framatome, the new name for AREVA NP. Less than 2 months ago, we launched that JV called Enfission to complete the development, regulatory licensing and commercial deployment of nuclear fuel assemblies based on Lightbridge-designed metallic fuel technology and other nuclear fuel intellectual property. Arguably, this was the most pivotal event in our company's history. Framatome is the ideal partner, with established manufacturing capabilities and impeccable reputation as a nuclear fuel supplier and a large global footprint.

Not only is Framatome a global leader in the nuclear energy market focused on designing, servicing, fueling and advancing the global nuclear fleet, but it is also majority-owned by EDF Group, the largest nuclear reactor operator in the world. This JV is a tremendous validation and accomplishment for Lightbridge.

In our earlier conference calls, we discussed the economic potential of our fuel, based on a report by Siemens' U.S. subsidiary Pace Global, whereby even a 25% market penetration in the U.S. alone could generate $150 million to $200 million in annual royalties to us. While we are not prepared to publicly disclose specific details about the revenue model for Enfission at this time, suffice it to say, we believe the new JV will provide greater upside for Lightbridge shareholders.

It is also worth noting that EDF's own financial reports for 2017 stated that the fair market value of Framatome's intellectual property is approximately EUR 700 million. We now own 50% of the joint venture and have access to the portions of that IP that we need to complete the commercial design and produce the Lightbridge fuel. EDF's annual report mentioned our Enfission JV with Framatome as a highlight of the last year.

Since launching Enfission on January 25, Lightbridge and Framatome have been moving forward aggressively with our plans. Specifically, we are working on developing a regulatory license plan for Lead Test Assemblies, and we expect to present this plan to the U.S. Nuclear Regulatory Commission later this year. We are also developing analytical models for our metallic fuel technology that can be used for reactor analysis and regulatory licensing.

Our near-term priority is to invest in metallic fuel fabrication capabilities to ensure that we can begin test reactor irradiation of our fuel samples under prototypic commercial reactor operating conditions in 2020. We also continue to receive valuable feedback on our fuel technology development plan through our Nuclear Utility Fuel Advisory Board, which is comprised of 4 large nuclear operators in the U.S., Exelon, Duke, Dominion and Southern Company, that collectively generate over half the nuclear power in the United States.

We would like to thank the team at Framatome for their commitment to commercializing our innovative fuel technology. Partnerships like this are vital to ensure that today's nuclear energy facilities have the technologies they need to operate safely and efficiently for decades to come, and can continue to provide low carbon and reliable baseload electricity. We are honored to work with Framatome on this important project and believe the economic and safety benefits of our fuel will encourage greater use of nuclear power.

We also continue to expand our intellectual property protection. Recently, we received a notice of allowance in the United States that allows Lightbridge's patent portfolio coverage to -- that expands and extends Lightbridge's patent portfolio coverage to an entire metallic fuel assembly designed for Western-type pressurized water reactors, which comprise 2/3 of all power reactors in operation worldwide.

This particular patent focuses on the fuel assembly design, building on an earlier U.S. patent involving metallic fuel rod design and other U.S. patents for a different variant of the fuel assembly design.

Intellectual property in our proprietary fuel designs reflects years of research and effort by our team, including many of the leading experts within the nuclear energy field. Our metallic fuel designs can also be adapted for use in nearly all other power reactors around the world. We were also awarded key patents in Europe and China relating to our innovative metallic fuel design, which extends through 2034. Just this past Monday, we announced another key patent in Japan that covers the process by which our fuel is manufactured. The ability to produce safer and more economic carbon-free power with our fuel is aligned with Japan's mission of restarting the country's nuclear power program, thereby cutting greenhouse gas emissions and reducing the need to import fossil fuels to the island nation. This is especially important in Japan, given the high cost of imported natural gas.

To date, we have received patents covering our metallic nuclear fuel rod design and now have brought intellectual property protection in our key markets, including the United States, Europe, China, South Korea, Canada, Eurasia and Australia. With dozens of patents issued and pending around the world, we have assembled a strong intellectual property portfolio that through Enfission, we plan to leverage via commercial arrangements.

Earlier this month, an independent scientific paper was published in Nuclear Engineering and Design, a technical journal affiliated with the European Nuclear Society. The paper reports the results of a study that shows that Lightbridge's spent fuel could not be used to make nuclear bombs. The abstract states that the plutonium from Lightbridge's spent fuel would be "useless" for a nuclear explosive device.

Last week, we presented again at CleanEquity Monaco. CleanEquity is an annual invitation-only event co-hosted by Prince Albert's Foundation and Innovator Capital of London, featuring some of the world's most innovative sustainable technology companies. The audience included selected sovereign, corporate, family and professional investors, policymakers and end users. Prince Albert described the benefits of Lightbridge fuel during his address at the conference.

We also look forward to presenting at the Gabelli & Company Fourth Annual Waste Conference on March 23 in New York, where we will discuss the proliferation resistance of spent fuel using our technology as well as how our fuel reduces the amount of waste. For those of you unfamiliar with Gabelli & Company, it is one of the premier investment firms in the world.

We are seeing growing interest, not only among investors and commercial partners but also increased government support for nuclear energy in the U.S. and around the world. Nearly all of the nuclear power plants in the U.S. have received license renewals to extend operations from 40 to 60 years. And the first applicants for subsequent license renewals to extend reactor operations to 80 years have announced plans to begin the process with the NRC this year. Importantly, the White House has placed nuclear energy at the forefront of its energy agenda, including new programs to boost nuclear power research and development. In fact, the White House has recently stated that President Trump's biggest achievements in his energy dominance agenda are all about nuclear energy. President Trump has called for a complete review of U.S. nuclear energy policy in order to revive and expand our nuclear energy sector. The White House is leading the nuclear policy review, which includes a focus on restoring U.S. nuclear R&D capabilities and enabling innovation in the development and deployment of new reactors.

I'd also like to point out, for the first time in 23 years, the U.S. Department of Energy has resumed operations at the Transient Reactor Test Facility, also known as TREAT. This reactor is a crucial part of the nation's nuclear R&D infrastructure and provides the capability to test nuclear reactor fuels and materials under extreme conditions. Such testing can help to improve safety and performance of the current and future nuclear reactor fleet. We believe this is a major development and holds enormous promise for Lightbridge. We will provide more details on the TREAT reactor at a later date.

It is clear that our nuclear fuel designs are attracting attention at both the commercial and governmental levels, given that our technology holds significant promise to enhance reactor safety, improve nuclear power plant economics through increased power outlook and/or longer fuel cycles, improved proliferation resistance of spent fuel and reduce the amount of waste.

Since the end of 2017, we have significantly enhanced our balance sheet, including a recent capital raise with strategic and accredited American and European investors, including family offices. As a result, our balance sheet is stronger than at any time in our company's history, and we now have approximately $27 million of cash on hand, which will help to accelerate our commercialization efforts. We appreciate your support as we continue to progress towards commercialization of our technology into an improving and growing global nuclear power industry. We will keep you apprised of developments as they unfold.

Now I'll turn the call over to Lightbridge's Chief Financial Officer, Linda Zwobota, to summarize the company's financial results for the year.

--------------------------------------------------------------------------------

Linda Joan Zwobota, Lightbridge Corporation - CFO & Treasurer [4]

--------------------------------------------------------------------------------

Thank you, Seth. For information regarding our 2017 financial results, please refer to our recently filed earnings release for all of the financial details. As Seth mentioned, our current cash balance is the highest in the company's history, approximately $27 million as of today. We have raised gross proceeds of approximately $21 million from our at-the-market financing facility in 2018 at market prices on a weighted average basis of approximately $2.09 per share, which is well above the current market price of our stock, with no warrants attached, which are typical for other types of equity financing instruments.

On January 30, 2018, we also closed on our offering of $4 million in Convertible Series B Preferred Stock with strategic and accredited American and European investors, including family offices. We issued 2.7 million shares of the company's newly created Non-Voting Series B Convertible Preferred Stock, plus warrants with a 6-month term, to purchase up to 666,664 common shares at $1.875. We have raised this money in 2018 because we wanted to put ourselves in the financial position to apply for and potentially receive funding from the U.S. Department of Energy later this year. We anticipate that these recent financing activities in 2018 will help us meet the minimum cost-sharing requirement that commercial recipients of DOE funding must satisfy. This means that the strength of our current balance sheet will enable us to apply for a non-dilutive DOE funding and grant that would otherwise not have been available to us. This potential DOE funding could be used towards the future development and/or regulatory licensing of Lightbridge fuel. The dollar amounts of DOE funding, if awarded to us, are unknown at this time, but we expect them to be significant and meaningful to our project. We have no debt and no longer have an equity line of credit.

We also carefully managed our expenses in 2017, and excluding funding that may be required for research and development expenses, we expect our monthly cash burn for general and administrative expenses to be in the range of $400,000 to $500,000 per month for the next 12 months. We anticipate our spending for research and development activities, including our work through Enfission, will be in the range of $10 million to $12 million in 2018, which is also well within our means given the strength of our current balance sheet. This spending will be used to advance our technical milestones earlier described by Seth.

The 2018 financing has provided us with more than sufficient working capital to execute our research and development strategy for the next 12 months and beyond, and has given us the opportunity to apply for a sizable DOE grant.

I will be available for your questions during the next segment of today's presentation, but Seth, back to you.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [5]

--------------------------------------------------------------------------------

Thank you, Linda. Let's open the call to your questions. In addition to asking live questions by telephone, you can also submit questions in writing to ir@ltbridge.com. We will pause while the operator, Matt, reviews the procedure for asking live questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions)

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [2]

--------------------------------------------------------------------------------

And while we're waiting for the live questions, David Waldman, who's with Crescendo Communications, which handles our Investor Relations, will proceed with questions coming in via email. David?

--------------------------------------------------------------------------------

David Waldman, [3]

--------------------------------------------------------------------------------

Thank you, Seth. Our first question: An expert from Framatome recently presented at the NEI Nuclear R&D Summit. Can you provide further details about that presentation, as well as what's described as Project 1 in your SEC filings?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [4]

--------------------------------------------------------------------------------

I liked seeing that, a little over a week ago, a senior executive from Framatome, was the first participant at a major conference -- speaking at a major conference in the name of Enfission. It was Enfission's debut at a major nuclear energy conference. And what we call Project 1, what we're focusing on the efforts of Enfission now, is focused on what's called a 17x17 PWR fuel assembly design. So the 4 utilities that are advising us, that are preparing to apply to the Nuclear Regulatory Commission for the Lead Test Assemblies at Lightbridge fuel, will start with the most common typical type of reactor in the world, which is a pressurized water reactor, a PWR, and the fuel assemblies are 17 rods by 17 rods square, hence it's called a 17x17 PWR fuel assembly. We will start with that, that's the most common in the world, that's what our customers most want us to fill. We will then move on to other reactor designs as well as other countries, once we have that NRC license, which we think will help from around the world. Next question, David?

--------------------------------------------------------------------------------

David Waldman, [5]

--------------------------------------------------------------------------------

Sorry, what is -- yes, sorry, our next question is: What is the current timeline for radiation testing at Halden, as well as announcing the first commercial utility and timing of the first Lead Test Assembly?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [6]

--------------------------------------------------------------------------------

Okay, so we'll ask Jim Malone to take this one.

--------------------------------------------------------------------------------

James P. Malone, Lightbridge Corporation - Chief Nuclear Fuel Development Officer [7]

--------------------------------------------------------------------------------

Okay. As indicated in our recent 10-K filing and based on our current expectations, we anticipate that either directly or through Enfission, we will develop a regulatory licensing plan for Lead Test Assemblies and present it to the U.S. Nuclear Regulatory Commission in 2018. We are also working with the industry on the proper way to address the Lead Test Assemblies and get the approval of the NRC in the most expeditious manner possible. We will then enter into a Lead Test Assembly agreement with a host reactor in 2019, 2020. We'll develop analytical models in 2018 through 2023 for our metallic fuel technology, and those models will be used for reactor analysis and regulatory licensing. We will also perform in-reactor and out-of-reactor experiments in 2020 and 2023. We'll have a semi-scale metallic fuel sample fabricated in 2019, 2020 for irradiation testing in a test reactor environment under prototypic commercial reactor conditions. We will also establish a pilot scale fuel fabrication facility and demonstrate full-length fabrication of our metallic fuel rods in 2020 through 2023. And we'll begin Lead Test Assembly, or LTA, operation in a full-size commercial light water reactor as soon as 2023, '24. This involves testing a limited number of full-scale fuel assemblies in the core of a commercial nuclear power plant over three 18-month cycles. There is a degree of uncertainty associated with this schedule due to various project risks, including funding availability, regulatory licensing risks, availability of high-assay, low-enriched uranium for our Lead Test Assemblies, availability of test facilities, et cetera. We are currently working with Framatome to reduce schedule uncertainty and will update you as we make progress.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [8]

--------------------------------------------------------------------------------

Thank you, Jim. David, another question?

--------------------------------------------------------------------------------

David Waldman, [9]

--------------------------------------------------------------------------------

Yes, thank you, and then let me ask one more and then we'll open up for some of the live questions. We touched on this a little bit earlier, but how does Lightbridge plan to fund the balance of the R&D costs? And what are the possibilities for grant funding for some or all of these costs?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [10]

--------------------------------------------------------------------------------

Well, Lightbridge intends to prioritize funding contributions to the project with third-party sources, such as government funding, including the U.S. Department of Energy, DOE, and prospective nuclear utility customers. So we expect funding from third-party sources could provide 50% or more of the total estimated fuel development costs. We anticipate that the remaining balance will be funded through cash contributions to Enfission by Lightbridge and Framatome. So why don't we go to some of the live questions and then you can come back to any more email questions. Matt, any live questions?

--------------------------------------------------------------------------------

Operator [11]

--------------------------------------------------------------------------------

We do have a question here from [James Anderson], a private investor.

--------------------------------------------------------------------------------

Unidentified Participant, [12]

--------------------------------------------------------------------------------

Seth, the stock is trading below its 200-day moving average and doesn't reflect the rapid progress you report. Because even with the JV finalized, theoretical benefits and recent positive macroeconomic nuclear development, the fuel remains unproven in a reactor, which is noted as a risk in your 10-K filing. Related to this, in several articles on the World Nuclear News website, you expressed confidence Halden testing would commence in 2017. But now, even with the engineering might of Framatome and all the years of planning you've done, we're told the testing date is 2020. I realize waiting for the JV slowed things down, but that doesn't explain a multiyear delay. What is the reason for this delay? Without a fuel testing catalyst this year, what will keep the stock from crashing? This unexplained setback benefits only short sellers, so I hope you'll clear up the testing timelines, past and present, and bring a major milestone much sooner than 2020. Secondly and lastly, there's been significant dilution since the JV. Linda mentioned you're applying for DOE funding, I assume to the GAIN program to utilize the TREAT reactor. Is this funding opportunity the reason for the bulk of your dilution? When exactly do you plan to apply? And would DOE funding accelerate your time line? Bottom line, investors are concerned if you don't test the fuel in a timely fashion, you won't increase shareholder value and the industry will advance without you.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [13]

--------------------------------------------------------------------------------

Well, thank you for those questions, and I'll say, first of all, you're seeing not just our own validation of the technology, but a lot of the independent validation starting to come out, including in that journal affiliated with the European Nuclear Society that studied the fuel from a nonproliferation standpoint. I'll say that the overall schedule of the program is on track. What you have to be concerned about is when do we get Lead Test Assemblies in a commercial reactor. The exact timing of certain steps between now and then might move around, but we're still looking at 2023, maybe 2024, for what will really be the final commercial product, the full bundle, the fuel assemblies in a commercial reactor in the United States. So what we were talking about in 2017 at Halden was not that. And it wasn't even the enriched fuel or the Lightbridge shaped fuel. What we were talking about in 2017 was cylindrical rods, not enriched, showing the thermal conductivity of the metal in Halden at 2017. That is not what we're talking about for 2020, which is on track, which is actual enriched uranium and actual quad load, twisted metallic fuel in hold, and that hasn't changed. So what's changed is where that thermal conductivity might be done, and that's part of what we're looking at with DOE, including at Idaho National Laboratory. So a test not being done in a Halden reactor, but done in another reactor that's just as good, paid for half by somebody else, is not a bad thing. And that's what we're going for. As for the funding we've raised, we don't regard this as being dilutive if it's what we need to attract massive government funding into the project, to show the balance sheet strength to receive it. And to achieve the technical milestones we're achieving to show the government that we can meet those goals. So with that, I don't think you should look at Halden as being delayed. I think you need to look at that 2020 date as getting the actual Lightbridge fuel rods with uranium enrichment in there, and which reactors certain tests are done at before then, is something that's going to happen. It's just that we haven't exactly put out which reactors those will be done in. But they're getting done. As you know, we're working with the largest company in the world in our industry with access to a lot of places, and we're working with the government of the country that has the most test reactors and facilities and national labs in the world. And there are new possibilities opening up to us that we're taking advantage of, including new grant funding opportunities. So thanks for the question, James, and let me ask Matt for another live question.

--------------------------------------------------------------------------------

Operator [14]

--------------------------------------------------------------------------------

The next question's from [Peter Revere] from Dawson James.

--------------------------------------------------------------------------------

Unidentified Analyst, [15]

--------------------------------------------------------------------------------

Yes, a question for you, on that recent money raise, the $2.09 average, was there like a Black Scholes issue with that, to where if the stock went down like it did, they would get the lower price?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [16]

--------------------------------------------------------------------------------

You mean on the warrants? No.

--------------------------------------------------------------------------------

Linda Joan Zwobota, Lightbridge Corporation - CFO & Treasurer [17]

--------------------------------------------------------------------------------

But this is on the ATM -- this is on the ATM, and those have (inaudible).

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [18]

--------------------------------------------------------------------------------

On the ATM? No.

--------------------------------------------------------------------------------

Linda Joan Zwobota, Lightbridge Corporation - CFO & Treasurer [19]

--------------------------------------------------------------------------------

Yes, the $2.09 is the average on what we raised in 2018 through the ATM.

--------------------------------------------------------------------------------

Unidentified Analyst, [20]

--------------------------------------------------------------------------------

Okay. Another thing, on that $75 million shelf you put out yesterday, is that out -- you said you don't need any more money for this year. And are you -- is that there for a government like the D -- or that comes in with funding, are you going to issue shares to them? Is that why that's set up that way? It's a big shelf.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [21]

--------------------------------------------------------------------------------

No. We've always taken advantage, as a NASDAQ-listed company, of having whatever shelf we can have for future financing flexibility. It doesn't mean we're going to use it all. We haven't always used it all. We love Bloomberg. We appreciate the coverage Bloomberg has given us. They made a little mistake yesterday when they reported that we filed a $750 million shelf, which they eventually corrected yesterday. But no, the $75 million shelf is something that we're allowed to have under the NASDAQ rules, and we find that most NASDAQ-listed companies do at least file to have the capacity, should they need it, in the future. We do not intend on using that whole amount, but it's good to have available. Who knows what the future holds.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

And we do have another question over the phone from Paulenne Kirschenbaum, a private investor.

--------------------------------------------------------------------------------

Paulenne Roeske Kirschenbaum, [23]

--------------------------------------------------------------------------------

Seth, it was anticipated that the joint venture would contribute a significant amount of cash to the new joint venture. However, half of EUR 700 million is significant. Congratulations on that. I think that should significantly change the perspective toward the company. My question, though a number of others have been answered, is in the next 24 months, do you anticipate any further revenues coming from the consulting area, inasmuch as that's always been a hallmark and a visual accomplishment of the company, Saudi Arabia or any of the other countries that are interested in advancing their nuclear capability?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [24]

--------------------------------------------------------------------------------

Yes, and first, just to clarify, for those who might have missed the beginning of the call, we haven't received EUR 700 million, that the EDF has valued Framatome's intellectual property at EUR 700 million, and we...

--------------------------------------------------------------------------------

Paulenne Roeske Kirschenbaum, [25]

--------------------------------------------------------------------------------

But I understand you own half of that? That's what I understood.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [26]

--------------------------------------------------------------------------------

We -- half of all the rights to what we need from it to bring forward Lightbridge fuel, correct, as part of Framatome's contribution to the JV. The revenues, first let me say, we do expect some, as soon as this year, on a lead fuel rod contract with a major utility to be negotiated and we hope announced later this year. On the consulting, our revenues to date are about $25 million, at about a 45% -- sorry, about $55 million, $56 million, at about a 45% gross margin. And we've really shifted away from that to focus on the fuel. And much of that earnings that we've received over the last several years have been in the Gulf region of the Middle East, particularly in the United Arab Emirates, starting a new nuclear program. And we just haven't seen countries starting new nuclear programs and reactors that didn't have reactors before that really want independent consultants to guide them as to who to buy it from. They more go to these state-owned enterprises that just bring everything turnkey and you can't pick and choose. If you buy from Russia or you buy from China and they're funding it, you don't need an American consultant to say, "Well, this could come from an American company instead," especially if the Americans aren't bringing as much financing. But we do have some work in the area and we've been contacted about some new opportunities that we are exploring, starting. There's one we're a little hesitant on because it almost required some lobbying roles by Lightbridge, which we've never done and we don't plan on ever doing in the United States. But for consulting overseas, that's something we're willing to do and we are looking at some possible opportunities. But the focus really is on the fuel. And I think the more material revenues starting later this year won't be from consulting but will be on the fuel on a lead test rod contract.

--------------------------------------------------------------------------------

Paulenne Roeske Kirschenbaum, [27]

--------------------------------------------------------------------------------

What will they provide per facility, per year and for how long, from the nuclear utilities?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [28]

--------------------------------------------------------------------------------

Well, during this development and testing phase, it's going to be what we'll announce in those contracts. Those are not fully negotiated yet and we don't have a number to give you. But I'll say, I think it's something that will be material to Lightbridge and to Enfission. It will be meaningful payments by utilities for fuel that they expect to receive in the future for electricity they will sell. We think it's going to be really something that's going to be a very different conference call when we discuss it. As I said earlier in this call, that the signing of the joint venture with Framatome on Enfission was the most significant event in the company's history. And that's true, and that's all sort of what I call the supply-side, that we can develop this fuel, we can provide the fuel. But if no one's buying it, we can supply all the capacity in the world and it won't matter. So I think the next announcement that we truthfully say, again, is the most significant announcement in the company's history, is someone paying material amounts of cash to buy the fuel to use it to sell electricity to customers. And the revenues from that selling electricity will, in the future, then keep flowing to us as we are selling the fuel to generate the power. So we're looking forward to that later this year and we'll provide updates, certainly, when that is signed and announced. And we expect that will be a rather significant and public event at a U.S. nuclear power plant powering a major city. So thank you for that. And Matt, any other live questions?

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

(Operator Instructions)

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [30]

--------------------------------------------------------------------------------

Okay, while we're waiting, David, go back to any other email questions?

--------------------------------------------------------------------------------

David Waldman, [31]

--------------------------------------------------------------------------------

Yes, and we would certainly encourage anyone to re-prompt if they have follow-up questions. But in the sake of time, I'm going to go to some of the pre-submitted questions. The next one is: I understand that the 4 utilities on your advisory board are anxious to use your technology and are confident that it is viable. Can you comment on possibilities of investment by these utilities or the potential economics and any upfront license or technology access fees?

--------------------------------------------------------------------------------

James P. Malone, Lightbridge Corporation - Chief Nuclear Fuel Development Officer [32]

--------------------------------------------------------------------------------

Well, let me take that one, David. This is Jim. We believe there is a possibility of securing upfront funding contributions toward our fuel development program from prospective utility customers that will be tied to key technical milestones. It is in the utility customers' interest to ensure the project has sufficient funding to proceed as expeditiously as possible in order to meet their expectations. So this is a distinct possibility for us.

--------------------------------------------------------------------------------

David Waldman, [33]

--------------------------------------------------------------------------------

Great. Thank you. Our next pre-submitted question: Are there any parallel testing programs available in another reactor besides Halden? In what way does INL's going online help to alleviate any time frame or bottleneck concerns at the Halden reactor for Lightbridge fuel testing?

--------------------------------------------------------------------------------

James P. Malone, Lightbridge Corporation - Chief Nuclear Fuel Development Officer [34]

--------------------------------------------------------------------------------

This is Jim again. I'll take that one. In November last year, DOE restarted operations of the Transient Reactor Test facility, or TREAT, after it had been maintained in standby mode for 23 years. The TREAT reactor can be used for transient testing of our fuel samples. The testing would be in addition to the planned irradiation testing at Halden and may actually use some samples from Halden that have been irradiated fully, transported to Idaho for use in the TREAT reactor, proving the fuel, even at the end of its life, is more robust than the competition.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [35]

--------------------------------------------------------------------------------

Great. Thank you. Any other by email, David?

--------------------------------------------------------------------------------

David Waldman, [36]

--------------------------------------------------------------------------------

We do. Can you comment further on the safety advantages of the Lightbridge fuel and how you plan to promote those advantages?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [37]

--------------------------------------------------------------------------------

Well, let me start and I'll turn it over to Jim. Safety is the top priority of the nuclear power industry, certainly of the utilities and suppliers we're working with. And this fuel was designed to bring major safety advantages that manifest through about a 1,000 degree Celsius cooler operating temperature, significantly more coping time in what's called a large break LOCA, loss-of-coolant accident, or design-basis loss-of-coolant accident, when the reactor is losing water or the water is not flowing through the reactor. You can see in our investor presentation a comparison to the current fuel, that when it hits about 850 degrees Celsius, there's what's called steam zirconium interaction that separates the hydrogen from the oxygen and that free-floating hydrogen can explode, which is -- is what happened at Fukushima. In these design-basis, LOCA accidents, the Lightbridge fuel does not hit 850 degrees. It stays cool, it's literally cool fuel, and it doesn't generate the hydrogen gas that can explode. We have some people that have been advising us from utilities that have called this a LOCA-Proof fuel, just tremendous safety advantages of the fuel. Now in the industry, that's, yes, what we talk about when we mean safety. Out there in the public, people also talk about nuclear weapons. And you'll see the Siemens report, through its Pace Global U.S. subsidiary on our website, that goes through the proliferation-resistance benefits of our fuel. And this new report from the journal affiliated with the European Nuclear Society, with its dramatic sweeping statement about how the Lightbridge fuel would be useless, the plutonium from the fuel would be useless, for producing a bomb. And that's partly because the Lightbridge fuel produces so little plutonium-239, which is the weapons-usable isotope, it's partly because the little plutonium-239 that is produced fissions in situ in the core as it's produced, generating more power, making the plutonium-239 go away, becoming daughter isotopes. But also because the Lightbridge fuel, through a chain from uranium-238, produces plutonium-238, which is not a weapons-usable isotope of plutonium that is a heat generator, and would spoil the explosive capability of any weapon. And even in reprocessing, the plutonium-238 can't be separated from the plutonium-239. And if you want, you can go look at the abstract online in that journal, or you can buy it behind the paywall of the full article, but I think we gave a pretty good preview of it here. But more from a utility perspective, let me turn it back over to Jim, who was the Head of Fuel for the largest utility in the U.S. and had leading responsibilities for safety when he was at Exelon.

--------------------------------------------------------------------------------

James P. Malone, Lightbridge Corporation - Chief Nuclear Fuel Development Officer [38]

--------------------------------------------------------------------------------

Thanks, Seth. The attributes of our fuel really manifest themselves in what the Nuclear Regulatory Commission refers to as Chapter 15 or anticipated operational occurrences. These are transient events that could disturb the performance of the fuel. Initial analysis of our fuel indicates that we are far superior to the competition with respect to performance in these prescribed accident or upset events that the NRC requires be analyzed before they will permit the fuel to be used in a commercial reactor of an industrial scale. That fact by itself is very significant. In addition to Seth's description of the behavior of the fuel in the loss-of-coolant accident and the comment we received from a very credible engineer regarding the fact that the fuel is LOCA-Proof, just speaks volumes about it. No one else can make that comment, so we have a distinct advantage in that regard.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [39]

--------------------------------------------------------------------------------

Any more, David?

--------------------------------------------------------------------------------

David Waldman, [40]

--------------------------------------------------------------------------------

Yes, let me read one more question and then we'll turn it back to Matt for live questions and then we'll come back to some of the other questions that have been pre-submitted. The next question: Does Lightbridge fuel fall into the category for walk-away-safe reactor, and if not, what is the relevance of that term?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [41]

--------------------------------------------------------------------------------

Well, first of all, walk-away-safe is not a nuclear industry term. That is something out there in the popular press. The term has been in the press a little bit recently because a fantastic reactor designed by NuScale, of a small modular pressurized water reactor, is going through the design certification process of the U.S. Nuclear Regulatory Commission. We expect in the next couple of years, it will receive that license, putting the U.S. in the driver seat for really what I view is the best small modular reactor design in the world, and frankly, one that can use our fuel, too. But -- and Framatome is the fuel designer and provider, but NuScale, who's just done a fantastic job on the design of that reactor. And what's been in the press is that recently, during the course of its review, the NRC has said that the reactor would not need off-site power. That in the event of an incident, if all power were cut off to it, which is what happened at Fukushima, the natural safety systems of that reactor, including convection to continue circulating the water, just with forces of nature, including gravity and the pressures in the reactor, would not need an external power supply, would not need an external water supply. And the term walk-away-safe was raised in the media in the last few years, as people could literally walk away from a NuScale reactor in a worst-case scenario and nobody would get hurt and the reactor...

(technical difficulty)

the water and the incident would eventually end. So our fuel brings tremendous benefits, as we've described on the call, of much longer coping time to the large gigawatt-plus, 1000-megawatt-plus reactors that power the major cities, that are very different from a small modular reactor that's mostly underground. The large reactors don't yet have those kinds of natural convection systems, although the Westinghouse AP1000 has a very good one, and that reactor is being built in the U.S. and in China. So our reactor would add a lot of coping time, as Jim said. It would add a lot of safety benefits. But in the end, eventually, if there were never off-site power restored, if there were never water added to the reactor, any substance in the core of that reactor could eventually be destroyed. Now our fuel would provide a lot of benefits, a lot of time to deal with the problem. As we said, in design-basis LOCA, it would not produce the hydrogen that explodes. But in the end, that reactor would not be what people colloquially call walk-away-safe. You'd have to combine it with other systems, like you see in the AP1000 from Westinghouse, the convection circulating water, the water tank on the top of the reactor, systems to resupply the water tank. So our fuel, combined with others, might get you there. But the current fleet of operating reactors would still be a bit short of that, even with our fuel, but tremendous advantages over the situation today. David, another question?

--------------------------------------------------------------------------------

David Waldman, [42]

--------------------------------------------------------------------------------

Yes, thanks. This time I'll turn it back to Matt for some more live and then we'll come back to the pre-submitted questions.

--------------------------------------------------------------------------------

Operator [43]

--------------------------------------------------------------------------------

(Operator Instructions) And our next question is from [Ken Miller], a private investor.

--------------------------------------------------------------------------------

Unidentified Participant, [44]

--------------------------------------------------------------------------------

Yes, I just have a financial question for your CFO. Was it right that the Framatome book value, or their value of the company is about $700 million and Lightbridge's share of it is now about 50%, is that correct?

--------------------------------------------------------------------------------

Linda Joan Zwobota, Lightbridge Corporation - CFO & Treasurer [45]

--------------------------------------------------------------------------------

Not exactly. But what was being discussed here was the value of Framatome's IP. And the Enfission, our joint venture, has a license to use that IP. Now on their financial statements, that IP was valued at EUR 700 million. So is that clear?

--------------------------------------------------------------------------------

Unidentified Participant, [46]

--------------------------------------------------------------------------------

Okay. Yes, it is and I just -- basically, what I'm just trying to do is I just wanted to make sure I understood that. By the way, congratulations on the joint venture. And then also -- and then on your last filing in March 8, is it right that right now, you guys have about 22.8 million shares outstanding?

--------------------------------------------------------------------------------

Linda Joan Zwobota, Lightbridge Corporation - CFO & Treasurer [47]

--------------------------------------------------------------------------------

That's about right. I don't have it in front of me. I think it's -- I know it's between 22 million, 23 million.

--------------------------------------------------------------------------------

Unidentified Participant, [48]

--------------------------------------------------------------------------------

Okay, great. So I mean, it's not as simple as just the book value of Lightbridge. You could not value it at its stake in Framatome, plus the $5.79 million on your financial statements, kind of -- divided by the shares outstanding. That looks like it's $15.35 a share, plus your assets minus your liabilities, which are none. Am I missing something with that?

--------------------------------------------------------------------------------

Linda Joan Zwobota, Lightbridge Corporation - CFO & Treasurer [49]

--------------------------------------------------------------------------------

Yes. We state our IP in terms of historical costs, and I think if you really wanted to look at our company, you would have to analyze the future cash flows and the present value of the future cash flows. And so the accounting data that you're referring to is not going to provide you with that.

--------------------------------------------------------------------------------

Unidentified Participant, [50]

--------------------------------------------------------------------------------

Okay, and so it should be used more as a guide not as an absolute valuation tool?

--------------------------------------------------------------------------------

Linda Joan Zwobota, Lightbridge Corporation - CFO & Treasurer [51]

--------------------------------------------------------------------------------

This is true. But the present value of the future cash flows, I don't have this in front of me, but this is a very impressive number.

--------------------------------------------------------------------------------

Unidentified Participant, [52]

--------------------------------------------------------------------------------

Okay, yes, that's what I was -- I was kind of shocked when I heard how good the numbers were. I just want to make sure I understood, okay.

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [53]

--------------------------------------------------------------------------------

Let me just add one thing on that, which is again, some context, EDF, Electricite de France -- I apologize for my French for those who speak it who are listening -- EDF is the largest company in the world in the nuclear power industry. It owns and operates not only 59 reactors in France and building another one, but also British Energy in Britain, and is very active in expanding globally. It's been in acquisition mode, and its biggest recent acquisition is Framatome. It owns a majority and controlling stake in Framatome; Mitsubishi Heavy Industries of Japan and Assystem of France have minority stakes in Framatome. And EDF, in its annual report for 2017, which came out recently, and that featured a mention of the Enfission JV with Lightbridge as a highlight of the year in EDF's annual report, it says that EDF valued Framatome's IP at EUR 700 million. Now, not every single piece of that IP is going to be relevant to Lightbridge. Framatome has other IP in other areas, too. But a lot of it is, and we just have sweeping access to all of it that is, and we do own half of that within Enfission.

--------------------------------------------------------------------------------

Operator [54]

--------------------------------------------------------------------------------

Our next question is from [Peter Revere] from Dawson James.

--------------------------------------------------------------------------------

Unidentified Analyst, [55]

--------------------------------------------------------------------------------

Yes, I had most of my questions answered, so I'm just figuring out, with $27 million in cash and you said 22 million or 24 million shares fully diluted. I'm just figuring out cash value per share, what would you say it would be, $1.22, $1.20?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [56]

--------------------------------------------------------------------------------

Yes, just do the math. It's just division, yes. So it's about that. And let me just mention, technically, in response to the last question, too, is, it's not that we own 700 million of IP, it's that we have a license to it; we have a license to use it. But your math is right, [Peter]. And Matt, any other questions?

--------------------------------------------------------------------------------

David Waldman, [57]

--------------------------------------------------------------------------------

Let me -- we'll -- let me just read off -- there are a couple more that have been submitted electronically. Our next one is: How does Framatome's marketing of EATF conflict or support efforts around current Lightbridge fuels?

--------------------------------------------------------------------------------

James P. Malone, Lightbridge Corporation - Chief Nuclear Fuel Development Officer [58]

--------------------------------------------------------------------------------

This is Jim, I'll take that one. Some EATF concepts, such as chromium coating being developed by Framatome, can be combined with the Lightbridge fuel to further increase its safety benefits, particularly in the beyond design-basis or severe accident scenarios. Preliminary modeling shows that the Lightbridge fuel can -- performs much better compared to conventional UO2 fuel in major design-basis events, such as a large break loss-of-coolant accident that Seth referred to earlier. Incorporating chromium coating could provide additional safety benefits in severe accidents, where there is an extensive loss of on-site and off-site power. As a result, Lightbridge fuel can be viewed as a natural extension of the ATF program. And we are working in early stages with 2 companies to help us further the application of the Framatome-developed coating to the Lightbridge fuel design.

--------------------------------------------------------------------------------

David Waldman, [59]

--------------------------------------------------------------------------------

Great. The next question is: What is the status of the thorium-based seed and blanket fuel technologies?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [60]

--------------------------------------------------------------------------------

Well, we're not actively pursuing that now. We're not putting any resources into that now. The technology is available in case uranium prices surge significantly in the future. And that can make a thorium fuel cycle economically attractive to utilities. We're focusing on what the utilities want and what the customers want. And they're focusing on paying for improving the economics of the current fleet and new reactors and improving the safety of the current fleet and new reactors. And that's what our metallic fuel does. Our metallic fuel with a thorium blanket doesn't add to that with the thorium. The thorium adds other benefits, and when we were developing the thorium fuel, which led to our metallic fuel development, we received U.S. government funding for development work in Russia, for disposing of weapons-grade plutonium at Westinghouse, under government funding. Did a report that was excellent results of using our thorium fuel to dispose of weapons-grade plutonium. Both the U.S. and Russia decided to end the program without disposing of any weapons-grade plutonium at all and still haven't. And there are no government programs to support that. So it's not a good idea to have that as a business line. It was also a time when India was just plentiful in thorium but has hardly any uranium, was interested in thorium fuel designs for reactors to be self-sufficient using their own thorium, but the deal with the United States opened India to world uranium market, and their interest in thorium is much less now. And in fact, the reactors they've been buying could use our metallic fuel, as they are uranium-fuel, pressurized water reactors. So the thorium seed and blanket fuel technologies are technologies that we developed and owned, but we are not going to be putting resources into them until customers, either at the government level or the utility level, express interest in actually paying to use such fuels, which right now, is not the case.

--------------------------------------------------------------------------------

David Waldman, [61]

--------------------------------------------------------------------------------

Great, thank you. The next question was a follow-up on the grant program: Can you provide any more details around what you anticipate the grants might be used for?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [62]

--------------------------------------------------------------------------------

Well, basically, the grants would be used for the fuel development work that we've described. The grants would be used particularly for the U.S. government facilities. Let me broaden this a little bit, just to discuss a little more about the use of proceeds behind the recent capital raises, the timing, what we will look at going forward, including with grant money from the government. So really, there are 2 main drivers, that Linda has talked about, behind our 2 -- our recent capital raises. The first is that we want to have sufficient funding to accelerate the fuel development program with Framatome through Enfission, and we are doing that. And the second is we need to have a strong balance sheet and a significant cash balance to be able to apply for the DOE funding. So we need to meet the criteria and get the DOE money before we can have the use of proceeds for it. We need to show this balance sheet strength to DOE, which is obviously, very sensitive after Solyndra and some others that didn't do so well in the energy area with government funding, and we're going to plan to be a big success story for them. So let's focus on that second factor and answer directly the question a little more on the government funding. So in December 2017 is when the Department of Energy issued a funding opportunity announcement, known as a FOA, funding opportunity announcement. It was not under ARPA-E, as one of the earlier question -- questioners mentioned. It was this FOA is what we'll be applying under. And DOE is seeking applications for unique or new ideas that will improve the existing reactor fleet and the potential for future U.S. nuclear power deployments. They want to see U.S. nuclear technology leadership, U.S. industry competitiveness. I've been asked about this a bit on -- by Stuart Varney on some FOX Business News appearances, where the administration is really pushing meeting these goals, and we think the Lightbridge technology helps meet them. And according to this FOA, this funding opportunity announcement, it says, "The fundamental premise behind this FOA is to provide a direct vehicle to support innovative domestic nuclear industry-driven designs and technologies that have high potential to improve the overall economic outlook for nuclear power in the U.S. The investment provided by the government will accelerate development of these designs and technologies so the existing domestic fleet of nuclear power plants remains viable, and the most mature new advanced U.S. designs can be deployed as early as mid-to-late 2020s and be globally competitive." I just read that off this FOA document I have in front of me. So based on our recently -- our recent discussions with DOE officials, we believe our project fits exactly within the objectives of this FOA. We intend to apply for this DOE funding. One of the key requirements is the ability of the applicant to provide cost-sharing contributions. The minimum amount of cost-sharing contributions varies on the specific scope of work. The specific tasks can range anywhere from 20% to 50% of the total project cost under the FOA, where the company pays 20% to 50% of the task and the government provides between 80% and 50%. So it can be a pretty good deal. Since we'd like to see as much DOE funding as is available per award, and it's $10 million per award, and you can have 2 applications running at once, overlapping, and this could add up to be quite a lot for our project over the next several years. We need to have cash on hand to demonstrate to DOE our ability to meet the minimum cost-sharing contributions that are required. And I think Jim kind of went through very well the timing and details by year of what we're looking to do with that funding as we go through, at Halden, at Idaho National Laboratory, lead test rod in U.S. commercial reactors and finally, the Lead Test Assemblies in the U.S. commercial reactors. So any other questions you want to bring up, David, or we'll go back to Matt?

--------------------------------------------------------------------------------

David Waldman, [63]

--------------------------------------------------------------------------------

Yes, in the interest of time, I'm going to read one more question that we -- that was submitted to us and then I'll turn the call back to you, Seth. What steps has the company taken to increase its exposure within the mainstream media, trade media and the investment community?

--------------------------------------------------------------------------------

Seth Grae, Lightbridge Corporation - CEO, President & Executive Director [64]

--------------------------------------------------------------------------------

Well, as I just mentioned, we did twice, once this week, on Tuesday, and back on January 25, when we announced the Enfission joint venture, have appearances on FOX Business News, which it is amazing how many people watch that and gets the word out and how many people contact us each time we have something like that. And we expect to have more, particularly with Stuart Varney, who seems to like to argue with me about nuclear power. There have been several trade media articles coming out, particularly in World Nuclear News and other press from the World Nuclear Association based in London, as well as trade press from the Nuclear Energy Institute in Washington, D.C. Also quite a bit over the last 1.5 months or so since we announced the Enfission JV. As I mentioned, Prince Albert speaking to this very august group in Monaco last week, specifically and in detail, described benefits of Lightbridge fuel in his speech to the conference that included many of the most sophisticated and largest investors that are interested in clean technology and in sustainability. We have coming up this month, as we mentioned, speaking at the Gabelli conference in New York, particularly focusing on environmental benefits, which for us will include the nonproliferation and volume of waste advantages. We mentioned that a senior Framatome official recently, for the first time, appeared at a conference in the name of Enfission, at a Nuclear Energy Institute conference in the last couple of weeks. So I think you'll see more trade press, more popular media, like the FOX Business News appearances, more conferences, like the Gabelli conference. Yes, I think these are what I'll call a little bit higher-shelf conferences we're getting invited to as well, like CleanEquity Monaco and Gabelli. You don't often see companies with our market cap at these kind of conferences, particularly one like Gabelli's. So we're getting back to the question about doing the math on the cash per share. We expect to deliver in ways that, as Linda said, investors will start looking at the cash flows that will come to this project and the discounted present values of those cash flows and value of the stock in that way. And with that, we're a few minutes overtime, but these have been fantastic questions. And our lines are always open here at ir@ltbridge.com. So please contact us in between these calls as well. You can also call us with your questions or comments at 1, for those calling from outside the U.S., the number (855) 379-9900. Again, thank you very much for participating in the call. We look forward to our first quarter call coming up in May. And thank you, and goodbye.

--------------------------------------------------------------------------------

Operator [65]

--------------------------------------------------------------------------------

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.