Q4 2023 Lightbridge Corp Earnings Call

Presentation

Operator

Thank you for standing by, and welcome to the Lightbridge Corporation business update and fiscal year 2023 conference call. Please note that today's call is being recorded. It is now my pleasure to introduce Matthew Abenante, Director of Investor Relations for Lightbridge Corporation.

Thank you, Abigail, and thanks to all of you for joining us today. the company's earnings press release was distributed yesterday and can be viewed on the Investor Relations page of the Lightbridge website at w. w. w. dot LT. bridge.com.
Joining us on the call today is Seth Grae, Chief Executive Officer, along with Andrey Mushakov, Executive Vice President for Nuclear Operations, Scott Holcombe, Vice President of Engineering, Lawrence Goldman, Chief Financial Officer, and Sherrie Holloway controller.
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 a 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. 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.
Morning, Seth?

Thank you, Matt, and thank you all for joining us to discuss Lightbridge's 2023 results. I am pleased with the momentum building within the nuclear sector and the pivotal role Lightbridge is poised to play in this transformative period. Our advancements in fuel technology, combined with a growing network of strategic partnerships, position us to address the challenges and opportunities presented by the emerging global mandates to greatly expand nuclear capacity in 2023 Lightbridge achieved several key milestones and made important advancements in our ongoing fuel development efforts.
Earlier in the year, we strengthened our leadership team by welcoming Sheri Goodman and Dr. Scott Holcombe to our team. Ms. Goodman, a recognized national security expert joined Lightbridge as an independent director, bringing invaluable insights into the intersection of energy and national security as our new Vice President of Engineering. Dr. Holcomb brings extensive expertise in nuclear fuel and materials development and management of interdisciplinary teams of engineers and subject matter experts further bolstering our nuclear fuel technology leadership in December, we announced an agreement with Centrus Energy to conduct a front-end engineering and design study for a Lightbridge pilot fuel fabrication facility in Piketon, Ohio.
Centra's currently hosts a US-based production facility for high assay, low enriched uranium or Halo partnering with a US Department of Energy DOE on the site. The key objective of the FEED study is to determine the scope of work cost and schedule estimates and identify key risk factors for establishing a Lightbridge pilot fuel fab facility.
The results of this study will form the basis for a decision on the way for establishing a Lightbridge pilot fuel fab facility for manufacture of full and fuel rods for demonstrating and licensing Lightbridge fuel in commercial reactors. We also entered into an agreement with the protesting nuclear Research Institute, known as R. 10 ICN based in Romania to assess the compatibility of Lightbridge fuel for use, you can do reactors.
This study will identify any critical parameters for further evaluation and design findings will guide future economic evaluations and support navigating potential regulatory licensing related issues. The feasibility of using Lightbridge Fuel and Candu reactors is confirmed we believe this type of reactor may offer an opportunity for faster time to market due to the unique design and operating conditions of Candu reactors.
Last summer, we announced a research study led by Texas A&M University and including Lightbridge NuScale power and structural integrity associates as part of the DOE nuclear energy university program are the award. This project focuses on thermal hydraulic modeling and testing, which aims to increase the understanding of the overall performance of Lightbridge fuel under simulated normal and off normal conditions in new scales SMR.
This follows a similarly structured study with MIT. announced in 2022 that focuses on Nutronics modeling and safety evaluation of Lightbridge Fuel and a new scale SMR in an effort to better communicate our fuel development, progress, industry investors and other key stakeholders Lightbridge's adopting the technology readiness level or TRL. system. We are using the TRRO framework to plan our development in a logical and efficient way. The TRL. system was originally developed by NASA and is widely recognized across technical industries, the Organization for Economic Cooperation and Development. The OECD includes a nuclear energy agency, which provides a standardized TRL framework for assessing and communicating the maturity of nuclear fuel technology. As with NASA's TRL.s, this framework encompasses a scale from one to nine was TRL. one, representing the initial concept or theoretical stage and TRL nine denoting a technology that has been proven in its operational environments utilizing the TRL. system allows Lightbridge to map the development of our nuclear fuel technology against a clear standardized metric, enabling stakeholders to gauge progress in a structured and transparent manner.
Currently we believe Lightbridge Fuel is positioned at TRL four to five, indicating a significant phase in our development process. At this stage, Lightbridge Fuel has moved beyond TRL one to three CRR theoretical research and entered into the realm of validation in a laboratory environment or TRL. four and preparations for validation in representative operating conditions or TRL. five. This signifies that the core principles underlying Lightbridge Fuel have been successfully demonstrated through a number of computer modeling analyses and initial proof of concept experiments.
We expect our ongoing project at INL. will generate in reactor data to further validate Thermo physical properties of our uranium zirconium alloy in coupon samples, which supports late stages of TRL four as a next step we plan to conduct irradiation testing of Radlinx with our uranium zirconium alloy to verify the technology's performance under conditions that will closely simulate operational scenarios. This work will support TRL. five. This will signal this will signify a pivotal transition from conceptual designs in laboratory tests to in reactor testing in representative and actual conditions. The fuel experience in commercial reactors this phase is critical for demonstrating our fuels design materials performance and identifying potential challenges, allowing for adjustments and enhancements before advancing to system prototype demonstration in operational environments, which make up TRL six and seven. Achieving material four to five is an important milestone that validates Lightbridge Fuel and our achievements thus far and sets the stage for subsequent development steps.
Moving us closer to commercialization and widespread adoption of our advanced nuclear fuel, which will be TRL eight and nine.
I'll turn the call over to Andrey Mushakov, Executive VP for nuclear operations to review our ongoing fuel development effort activities. Andre?

Thank you set. I'll now discuss our ongoing project pathetic national laboratory.
In 2023, we concluded several key project milestones at Barrick National Laboratory. First, we issued a quality implementation plan for our collaborative project to ensure work and back to the pilot national laboratory and the result, Intel based on our project would meet local and industry quality assurance requests to issue the fuel specification for the coupon samples that we're currently working on to prepare for irradiation testing on the advanced battery three performed initial testing and characterization of several of our games and kits used in either commercial laboratories, existing equipment with depleted uranium and recording our materials. And four, we performed additional cash, some of larger size in goods using depleted uranium and zirconium materials this year.
In 2024, we plan to number one continuing to validate the tests and for Process System scaled up in gets depleted uranium to perform initial extrusion demonstration was depleted uranium use and larger size ingots. Three advance our procurement efforts for custom language extrusion tooling for Idaho National Laboratories facility and five updates in chronic and thermal analyses for the experimental data package.
Once the demonstration work was depleted, uranium produced acceptable results either from national laboratory manufacturing group on samples using enriched uranium for insertion and the Advanced Test Reactor for radiation based well under the conditions that that will simulate and with the performance of fossil fuels, this work supports the late stages of CRL for experimental data obtained during subsequent authorizations nomination awards with the release of future project past statements under our existing agreements with national laboratory field is vital for our model development and validation efforts.
Now I'll ask Scott Holcomb, our Vice President of Engineering, to give us an update on several other ongoing projects and initiatives.

Thank you, Andre. First, we are expanding our field development team. This expansion aims to build our in-house computer modeling capabilities in critical areas such as Nutronics, thermal hydraulics, fuel performance, transient analyses. We believe this will support advancement through TRL levels four to nine as it underpins our ability to model and simulate our fuels behavior under various operating conditions.
An essential aspect of our development process Additionally, we're progressing with our engineering study for the use of Lightbridge Fuel and Candu reactors in collaboration with scrap and ICN. This study is evaluating the compatibility and suitability of Lightbridge fuel for use and can do pressurized heavy water reactors, which spans activities pre TRL level four, confirming the feasibility of our fuel and other reactor types.
Finally, our announced FEED study for our Lightbridge pilot fuel fabrication facility in Piketon, Ohio with Centrus Energy could support activities across TRL levels five to eight moving us closer to realizing our vision for commercial scale fuel rod manufacturing.
With that, I'll turn the call back over to Frank.

Well, thank you, Scott, for the first time at a UN Karp Conference of the Parties of global climate change events at COPT 28 in December, in Dubai, nuclear energy was recognized alongside other clean energy sectors in the negotiations final statement. In addition, the United States over to own over 20 other countries pledged to triple nuclear energy capacity globally by 2050. This ambitious goal requires maintaining the operation of approximately 400 large nuclear reactors currently in operation worldwide including 93 in the United States and construction are constructing around 800 more large reactors.
This would represent an unprecedented expansion of nuclear power infrastructure. Today, nearly three months after comp 28, there are 62 large reactors under construction with over 100 more plants to be built and public proposals for another 300 reactors. Almost all of these are for large reactors. Moreover, should the industry shift its focus toward small modular reactors.
The required number could escalate dramatically potentially to thousands of units depending on their individual capacities. We are seeing signs of the shift towards greater demand for nuclear power across the supply chain, not just in license extension for existing plants and reactor newbuilds, but also restarts of previously shut down reactors. Uranium prices are approaching record highs across both commodity and ETFs, outpacing even the NASDAQ 100 Index since the pandemic.
This approaching nuclear expansion could increase the potential size of addressable market for Lightbridge fuel, we anticipate a potential increase in demand for more efficient, safer and economically viable nuclear fuel. This makes Lightbridge fuel an attractive option for both the existing reactors and the future plants being built today and in the future.
Going forward, our focus remains on advancing our fuel development, strengthening our collaborations with both industry and academic partners and hitting our key milestones. Our ongoing research and development efforts and strong intellectual property portfolio position us favorably in an industry set to expand dramatically throughout the world, ensuring that Lightbridge remains at the forefront of the nuclear renaissance that's underway.
I will now turn the call over to Larry Goldman, Chief Financial Officer, to summarize the Company's financial results. Larry?

Thank you, Seth, and good morning, everyone. For further information regarding our year-end 2023 financial results and disclosures, please refer to our earnings release that we filed yesterday as well as our annual report on Form 10 K that will be filed with the Securities and Exchange Commission within the next few days. The Company's working capital position was $28.3 million at December 31st, 2023 versus $28.7 million at December 31st, 2022.
Total assets were $29.4 million and total liabilities were $0.5 million at December 31st, 2023. Today, we have ample working capital and financial flexibility to support our near term fuel development expenditures. This is very important to Lightbridge and our stockholders as well as our external stakeholders such as the federal government to ensure that we have sufficient working capital as well as the ability to access capital in the future.
In order to conduct our R&D activities, total cash and cash equivalents were $28.6 million as compared to $28.9 million at December 31st, 2022, a decrease of $0.3 million for the year ended December 31st, 2023. Total cash used in operating activities for the year ended December 31st, 2023 was $6.5 million, a decrease of $0.2 million compared to the $6.7 million of cash used in operating activities for the year ended December 31st, 2022.
Total cash provided by financing activities for the year ended December 31st, 2023 was $6.2 million, a decrease of $4.7 million compared to the $10.9 million for the year ended December 31st, 2022. This decrease was due to a decrease in the net proceeds from the issuance of common stock by our at-the-market or ATM facility in support of our long-term business and future financing requirements.
With respect to our fuel development. We expect to continue to see government funding in the future, along with new strategic alliances. It 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.
I will now turn the call over to Sherri Holloway, our Controller, who will go over our P&L financial information for the year 2023. Sherry?

Thank you, Larry. Net loss was $7.9 million for the year ended December 31st, 2023, compared to $7.5 million for the year ended December 31st, 2022. Total R&D expenses amounted to $1.9 million for the year ended December 31st, 2023 compared to $0.7 million for the year ended December 31st, 2022, an increase of $1.2 million. This increase was primarily due to the increase in R&D activities related to the development of our fuel.
This increase primarily consisted of an increase in INL project labor costs at $0.8 million, an increase in allocated employee compensation and employee benefits of $0.4 million, an increase in consulting expenses of $0.1 million, an increase in travel expenses of $0.1 million and an increase in stock-based compensation expenses of $0.1 million.
This increase was offset by a decrease of $0.3 million, primarily related to the gateway for accelerated innovation in nuclear in Valtera work recorded as research and development expenses in 2022 that was completed in the first quarter of 2023.
Total G&A expenses were $7.1 million for the year ended December 31st, 2023, compared to $7.5 million for the year ended December 31st, 2022 the decrease of $0.4 million was primarily due two, a decrease in employee compensation and employee benefits of $0.4 million due to the increase in the time allocation percentage of in-house employee labor costs to research and development expenses,
a decrease in consulting expenses of $0.1 million, decrease in insurance expense of $0.1 million decrease in dues and SaaS subscriptions of $0.1 million and a decrease in promotion expenses of $0.1 million, offset by increase in stock-based compensation of $0.4 million, which was due to the partial vesting of restricted stock awards granted in 2022. Total stock-based compensation included in G&A expenses, it was $1.1 million for the years ended December 31st, 2023 and 2020.
Yes.
Total other operating income was zero for the year ended December 31st, 2023, compared to $0.4 million for the year ended December 31st, 2022. This $0.4 million decrease was due to the GAIN voucher project that was completed in the first quarter at 2023. Total other income was $1.1 million for the year ended December 31st, 2023, compared to other income of $0.3 million for the year ended December 31st, 2022, an increase of $0.8 million. The increase in other income was due to an increase in interest income earned from the purchase of treasury bills and from our bank savings accounts. Back to you, Seth.

Thank you, Sherry, and thank you, everybody, for participating on today's call. I understand there are questions. We look forward to providing additional updates. In the meantime, you can reach us at at LT. bridge.com. stay safe and well, goodbye.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.