5E Advanced Materials Inc. Q4 FY2023 earnings call

Susan Brennan discussed taking over as CEO in April 2023, progress on the 5E Boron Americas project including EPA permit conditions (ongoing work on water monitoring wells, injection recovery wells, and historic well plugging/abandoning), and in-sourcing construction and optimization activities to control costs. Paul Weibel talked about progress on the Small Scale Boron Facility (SSBF), overcoming construction challenges, the capital scope of the project with a phased approach targeting 90,000 tons of boric acid and 1,100 tons of lithium carbonate in Phase 1, and a blended capital strategy including equity, debt, and non-dilutive financing. J.T Starzecki highlighted commercial strategy (engaging with potential offtake customers, product validation), government affairs (partnerships with DOD, DOE, and Loan Programs Office), and market demand for boron and lithium, emphasizing the growing need for these materials in clean energy and defense sectors.

Anticipates receiving EPA authorization to inject water for step rate testing, which is the last remaining condition for injection approval; once step rate testing is complete, expects authorization to inject acid to commence mining. Plans for Phase 1 commercial production targeting 90,000 tons of boric acid and 1,100 tons of lithium carbonate with an estimated capital requirement of ~$389 million. Seeks a blended capital structure including equity, debt, and non-dilutive financing such as mineral royalties and customer prepayments.

Delays in EPA permit approval due to conditions related to water monitoring, injection recovery wells, and historic wells. Contract dispute with the previous construction contractor. Cash burn risks and need to secure additional capital to fund project development.

Q: Remind on pricing assumptions and market deficit for boric acid.

A: Paul Weibel said full year production pricing is about $1700 per ton, and J.T Starzecki noted the market is at a tipping point with demand outpacing supply.

Q: Changes in customer discussions due to Turkey's position.

A: J.T Starzecki mentioned customers are seeking to diversify supply to avoid risk of product availability and pricing.

Q: Timing of government financing and DPA Title III.

A: J.T Starzecki discussed near-term funding via DOD's DPA Title III and multi-step process via DOE's Loan Program Office with different due diligence phases.

Q: CapEx on SSBF and ongoing disputes.

A: Chris Knight discussed CapEx on finalizing piping and electrical work in SSBF; Susan Brennan noted active litigation prevents comment on ongoing disputes with the previous contractor.

Q: SSBF production and offtake.

A: J.T Starzecki mentioned some production for qualification, then volume available for sales after testing and customer approval.