Edited Transcript of LTBR earnings conference call or presentation 10-May-19 3:00pm GMT

Q1 2019 Lightbridge Corp Earnings Call

MCLEAN May 24, 2019 (Thomson StreetEvents) -- Edited Transcript of Lightbridge Corp earnings conference call or presentation Friday, May 10, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrey Mushakov

Lightbridge Corporation - EVP of Nuclear Operations

* James D. Fornof

Lightbridge Corporation - VP of Government Program Management

* James P. Malone

Lightbridge Corporation - Senior VP & Chief Nuclear Fuel Development Officer

* Lawrence Goldman

Lightbridge Corporation - CFO

* Seth Grae

Lightbridge Corporation - President, CEO & Executive Director

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Conference Call Participants

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* Michael Edward Hoffman

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research

* Thomas Dehudy

Brandywine Global Investment Management, LLC - Senior Research Analyst

* Aref Adibi

* David K. Waldman

Crescendo Communications, LLC - President & CEO

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Presentation

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Operator [1]

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Greetings. Welcome to Lightbridge 2019 First Quarter Earnings Call. (Operator Instructions) Please note, this conference is being recorded. I will now turn the conference over to David Waldman, Investor Relations. Thank you. You may begin.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [2]

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Thank you, operator. Good morning, and welcome to Lightbridge's First Quarter 2019 Business Update Conference Call. The company's press release was distributed after the market close on Thursday and can be viewed on the Investor Relations page of the Lightbridge website at www.ltbridge.com. If anyone has questions after the call, you may contact Investor Relations at 1 (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. Larry Goldman, Chief Financial Officer; Jim Malone, Senior Vice President and Chief Nuclear Fuel Development Officer; Andrey Mushakov, Executive Vice President for Nuclear Operations; Jim Fornof, Vice President for Government Program Management; and [Sherry Holloway], Senior Staff Accountant.

Today's presentation includes forward-looking statements about the company's competitive position and product and service offerings. During today's call, words such as expect, anticipate, believe and intend will be used in our discussion of goals or events in the future. This presentation is based on our current expectations and involve certain risks and uncertainties that may cause actual results to differ significantly from such estimates. These and other risks are set forth in more detail in Lightbridge's filings with the Securities and Exchange Commission. Lightbridge does not assume any obligation to update or revise any such forward-looking statements whether as a result of new developments or otherwise.

You can participate in today's call in 2 ways. 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. In addition, after the prepared remarks, telephone lines will be open for live questions.

Now here is Lightbridge's CEO, Seth Grae.

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

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Well, thank you, David, and good morning, everyone. On this call, you're going to hear about our recent progress, advancing our metallic nuclear fuel technology towards commercialization, moving expeditiously with discussions to finalize our first commercial utility agreements.

While I realize investors are anxious for details, we are limited by strict confidentiality obligations as to what we can disclose at the moment. What I can say now is that we are following an established process that we expect will result in a lead test rod contract with a major U.S. nuclear utility this year. We will communicate the details as soon as we are able to do so.

We're also working closely with Framatome through the Enfission joint venture to evaluate several options for fabrication of the fuel samples for lead test rod demonstration in a U.S. commercial reactor.

I'd like to turn the call over to Andrey Mushakov, our Executive VP for Nuclear Operations, who will review the work we're doing on fabrication of our fuel, specific activities we have recently undertaken at Enfission and the reasons why those activities are important. Andrey?

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Andrey Mushakov, Lightbridge Corporation - EVP of Nuclear Operations [4]

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Thank you, Seth. Let's start with 3 highlights of our fabrication activities. First, we fabricated and characterized uranium zirconium samples using powder and casting routes at the University of Lille in France. This is a significant milestone that provides the first validation of feasibility for both the fabrication rods for our metallic fuel rods and the characterization data that should allow us to select the preferred manufacturing approach as we move forward to the lead test rod demonstration program at a U.S. commercial reactor.

Second, we developed the preliminary inspection strategy for Lightbridge Fuel rods. This is important for quality assurance and regulatory licensing purposes. And third, we completed construction of the CERCA research and development workshop at a Framatome facility in France and preparations for commissioning are currently underway.

Turning next to our fuel design activities. First, we completed a neutronic assessment of various burnable absorbers for Lightbridge Fuel rods. Second, the 3-D printed heater rod segments were delivered for critical heat flux test and hardware preparation. And third, we completed additional APOLLO-2a neutronics code modifications to be able to model the shroud and corner structure elements within the Lightbridge Fuel assembly. The APOLLO-2a neutronics code was developed in the zone by our Enfission joint venture partner, Framatome, which has made the code available to the Genesis Project. We are pursuing development of fuel for the 17x17 pressurized water reactor market in the United States. We are grateful to Framatome for this and other valuable in-kind contributions they are making for the Genesis Project.

Turning to regulatory licensing activities. We completed a study of the building to building interaction for the planned Enfission production facility in Richland, Washington. And we continued the development of the licensing requirements for the lead test rod demonstration at a U.S. commercial reactor.

Looking ahead, we expect to demonstrate full-length extrusion of our metallic rods using surrogate materials this year. This would be a significant fabrication milestone confirming our ability to scale-up the fabrication process from a 3-foot rod up to 12- to 14-foot rod, which is the length of the fuel rods used in large commercial reactors.

Back to you, Seth.

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

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Okay. Thanks, Andrey. We continue to see increased governmental support, not only for nuclear energy in general, but specifically for Lightbridge Fuel. This is due to the fact that Lightbridge Fuel enables existing nuclear power plants to produce even more noncarbon energy than before. Thereby, improving the economics of these plants while further enhancing safety.

As we have discussed previously, we submitted a new grant application to the U.S. Department of Energy in late January 2019, and we expect to hear back later this quarter. Our business is not dependent on these grants. However, if a DOE grant is awarded, it will help accelerate our project time lines through the Enfission JV with Framatome.

Just last month, the Gateway for Accelerated Intervention in Nuclear, or GAIN, initiative of the U.S. Department of Energy, Office of Nuclear Energy announced that Framatome Inc. had been awarded a nuclear energy voucher to help accelerate licensing of the Lightbridge Fuel design. This GAIN nuclear energy voucher further validates DOE's support for our technology, which bodes well for future opportunities.

DOE established GAIN to provide the nuclear community with technical, regulatory and financial support to advance innovative nuclear technologies toward commercialization. While our focus is on developing fuel for large Western pressurized water reactors, as Andrey mentioned the 17x17 reactors, we're also seeing increased interest in Lightbridge Fuel for other types of reactors. We expect to have upcoming news on this subject.

Also, our focus is to start with utility customers in the U.S. as reflected by the 4 members of the Nuclear Utility Fuel Advisory Board or NUFAB. Due to interest overseas, though, we are also exploring a utility membership from another country.

I'm also pleased to report, as expected, we received an extension from NASDAQ, which provides us an additional 6 months or until November 4, 2019, to meet the $1 continued listing requirement. Given the upcoming milestones and catalysts, we are confident that we will be able to meet this goal within the required time frame.

We are also building awareness and receiving positive feedback for our technology at important nuclear power industry events. This past quarter, I was invited, along with other nuclear industry executives, to major governmental and private events to discuss a variety of issues relating to nuclear energy.

In February, as discussed on our last call, I was grateful to have had the opportunity to meet with President Trump and discuss Lightbridge Fuel and how the U.S. nuclear power industry helps bring the strongest nonproliferation, safety and security standards to global markets.

We also discussed the strength of nuclear suppliers from across the U.S. industry and how these strengths contribute to the domestic industrial base that is vital to American companies competing and winning overseas. In March, I participated in a nuclear energy panel at the U.S. Capitol building sponsored by the Atlantic Council and the Nuclear Innovation Alliance. We shared insights on the role of nuclear energy in geopolitics and the role that international nuclear energy plays in influencing global nuclear safety, security and nonproliferation norms.

More recently, Jim Malone shared the next-generation fuel cycle panel during the World Nuclear Fuel Cycle Conference co-organized by the Nuclear Energy Institute and the World Nuclear Association. In addition, Lawrence Mercier, Vice President of Project Integration and Head of Communication at Enfission as well as Deputy Head of Strategy of Fuel at Framatome shared a subgroup on fabrication during the World Nuclear Association Fuel Report Working Group meeting, where she discussed the dynamic fuel market and the impact of new developments on the fuel cycle.

And last month, I also took part in a panel discussion, entitled Ensuring a Stable Talent Pipeline that was held at the Nuclear Deployment Forum. The forum was hosted by the Nuclear Energy Institute, Electric Power Research Institute and DOE's Gateway for Accelerated Innovation in Nuclear in Washington, D.C. The forum highlighted the progress and challenges involved in deploying advanced nuclear technologies. I was honored to have been reappointed by the U.S. Secretary of Commerce Wilbur Ross to the Civil Nuclear Trade Advisory Committee, or CINTAC, which advises him on nuclear power.

In addition to government support, we are gaining attention at the commercial level. As I mentioned earlier, we're working closely with Framatome through the Enfission joint venture to evaluate several options for fabrication of the fuel samples for lead test rod demonstration in a U.S. commercial reactor. And Andrey highlighted much of the progress being made there.

At the same time, the expansion of our intellectual property portfolio is central to our strategy as we advance towards commercialization. We believe that a strong patent portfolio will help establish and sustain our leadership in key global markets. In April, we announced that we received a Canadian patent related to 4-lobe metallic fuel rod design and related manufacturing method.

We also received a Notice of Allowance in February for another key patent in China, which relates to a fuel assembly design incorporating multi-lobe fuel rods for using CANDU heavy water reactors. This patent allowance expands Lightbridge's growing IP portfolio in China as we prepare for full-scale deployment of our innovative fuel designs in Asia and around the world.

In summary, our nuclear fuel designs are attracting attention at both the commercial and governmental levels as our technology is designed to enhance reactor safety, improve nuclear power plants economics through increased power output, improve proliferation resistance to spent fuel and reduce the amount of the waste.

We're pleased that on Wednesday, the Senate confirmed all 3 nominees to the Board of the U.S. Export-Import Bank, where the quorum of Board members, the U.S. Export-Import Bank can now support financing of projects valued at over $10 million including nuclear energy exports.

Now I'll turn the call over to Larry Goldman, our Chief Financial Officer, to go over with you selected financial information from the first quarter. Larry?

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Lawrence Goldman, Lightbridge Corporation - CFO [6]

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Thank you, Seth, and good morning, everyone. For information regarding our first quarter 2019 financial results, please refer to our earnings release that we filed at the close of market yesterday. We will be filing our first quarter Form 10-Q at the close of market today.

Our working capital surplus at March 31, 2019 was $23.4 million. We ended this quarter with $23.5 million in cash and cash equivalents compared to $24.6 million at December 31, 2018, a $1.1 million decrease for the quarter. Our current total operating budget for the next 12 months, including our equity contributions to our Enfission joint venture for R&D work, is approximately $16 million.

Cash used in our operating activities was approximately $1.5 million and cash used in our investing activities including our capital investment in our Enfission joint venture and patent filing costs was approximately $1.6 million. This cash outflow was partially offset by net proceeds from the sale of approximately $2 million of our common stock for the quarter.

We used cash during the quarter to primarily fund our research and development and general and administrative expenses. Our total R&D spend for the quarter, including our pro rata share of R&D expenses from our Enfission joint venture, which was recorded under the equity method of accounting, totaled $2.2 million out of our total operating loss for the quarter of $3.1 million.

The proceeds from the sale of our common stock for this quarter of $2 million was raised primarily to pay for our R&D expenses. The future potential sources of capital available to us in 2019, our funding from equity investments and potential grants that we are actively seeking from the Department of Energy.

As Seth mentioned, we are seeing increased interest for our fuel for other types of reactors in addition to large pressurized water reactors. Opportunities that we are exploring relating to other types of reactors may also bring about new opportunities relating to DOE funding support.

We anticipate that our current working capital and additional equity investments in 2019 will enable us to meet the DOE minimum cost sharing requirement that typically range from 20% to 50% of the total project cost.

In support of our long-term business plan and future financing sources with respect to our fuel development, we plan to create strategic alliances and obtain cost sharing contributions by receiving additional funding from others in order to help fund all our R&D milestones leading to the commercialization of our fuel.

Barbara Kanakry, our Controller, is traveling today. So this quarter, [Sherry Holloway], our Senior Staff Accountant, will go over some select P&L financial information for the first quarter of 2019.

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Unidentified Company Representative, [7]

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Thank you, Larry. Total research and development expenses, not including R&D expenses from our Enfission joint venture, were $0.9 million for the 3 months ended March 31, 2019 and 2018. Research and development expenses consisted primarily of employee compensation and related French benefits and overhead costs related to the research and development of our fuel.

General and administrative expenses for the first quarter of 2019 were $1.3 million compared to $2.2 million for the first quarter of 2018. There was a decrease in stock-based compensation of approximately $0.6 million and a decrease in professional fees of approximately $0.4 million, which were partially offset by increase in employee compensation and employee benefits of approximately $0.1 million.

Other operating expenses were $0.9 million for first quarter 2019 consisting of our equity and loss from our Enfission joint venture of $1.3 million, which consisted primarily of research and development expenses offset by our income from the corporate research and development support we provided to Enfission of $0.4 million.

Other operating expenses were $0.6 million for the first quarter of 2018 consisting of our equity and loss from our Enfission joint venture of $1 million, offset by income from the corporate research and development support we provided to Enfission of $0.4 million.

Now over to you, Seth.

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

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Thank you, [Sherry]. So let's open the call to your questions. While we pause while the operator reviews the procedure for asking live questions, we'll then move questions -- for now, why don't we just move into the questions that have been submitted by e-mail? So David Waldman, who's with Crescendo Communications, who handles our Investor Relations, will start by proceeding with the questions we've received by e-mail while the operator polls the call questions.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [9]

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Yes. And if operator, if you could can just give those instructions and then we'll move right into the Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

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David K. Waldman, Crescendo Communications, LLC - President & CEO [2]

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Thank you, operator. The first question that was submitted in advance by [Ellen Litback] at Forest Capital is as follows. It's clear Lightbridge has made significant progress through Enfission with premise of being an ideal partner for PWR and BWR reactor types. Can you comment on any discussions or interests from other potential partners as it relates to other reactor types?

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

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Well, yes, our joint venture with Framatome includes pressurized water reactors and boiling water reactors, and it also includes water-cooled small modular reactors and water-cooled research reactors. Pressurized water reactors are the largest segment in the world in terms of operating reactors and reactors under construction and being built, and boiling water reactors are the second largest category of reactors in the world. Between them, they are the vast majority of the market available to us in the global fleet.

So while we're currently focused on the 17x17 pressurized water reactor fuel assembly design as our initial product, we are actively pursuing potential opportunities in other reactor types through our joint venture with Framatome. A reason for the joint venture, including pressurized water reactor, boiling water reactor, water-cooled small modular reactor and research reactor fuel, is that Framatome manufacturers and sells all of those types of fuel.

Now Lightbridge Fuel can also be used in other types of reactors outside our primary markets that are smaller markets. Our fuel could be usable in Russian VVER reactors, which are type of pressurized water reactor, and in heavy water reactors such as CANDU reactors and perhaps, since some of the future advanced reactor designs. And thank you for that question. Next question?

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David K. Waldman, Crescendo Communications, LLC - President & CEO [4]

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Thanks. And operator, let's take our first live question.

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Operator [5]

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Our first question is from Mike Hoffman with Stifel.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [6]

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Michael Hoffman. Can you just remind me of how you think about what the economics to a power plant would be? Why this is so attractive to them, whether it's improved yield, lower maintenance costs or outages or life cycle costs to fuel?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [7]

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Sure. Sure. Let me start with that. First of all, through the power upgrade and the longer fuel cycle provided by our fuel according to a report done by Siemens, there's about $60 million of annual benefit to each reactor. That's from the added electricity from the power upgrade, from selling electricity on days, the reactor what otherwise have been closed due to not having as many refueling outages and also, that doesn't even include the cost of replacement power during outages with our additional savings. And it doesn't include potential savings from nonemission of CO2, adding more nonemitting electricity. And perhaps, some economics that can be generated by safety such as perhaps not needing nuclear safety-grade diesel generators or smaller evacuation zone around the reactor, which is expensive, and our fuel can save money there. And I'll ask Andrey to chime in as well on the economics.

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Andrey Mushakov, Lightbridge Corporation - EVP of Nuclear Operations [8]

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Sure, Seth. Yes. I think, basically, if you look at that independent Siemens report that's available on our website that in detail looked at the economic case for fuel for 10% power, operate 24-month cycle and exists in nuclear power plant is expected to spend, all in, roughly $85 million to switch to our fuel. And then each year, that nuclear power plant is going to be generating tens of millions of dollars in additional incremental operating margin.

Again, that depends -- the specific number depends on the wholesale power price, which can change from year to year. But we are looking at very high potential internal rate of return whereby within a few years, that nuclear power plant can recoup. It's upfront investment and then continue to generate millions and millions of dollars in additional incremental margin -- operating margin for the plant.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [9]

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Thanks. We'll go now to -- back to some of the questions that were submitted. The next question is, what has led to delays of the utility contract? And when can we expect the contract?

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

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Well, as we mentioned, we are moving forward expeditiously with discussions to finalize this first utility agreement. It is going well. While I realize investors are anxious for the details, we are limited by strict confidentiality obligations as to what we can disclose right now. What I can say is that we are following an established process that we expect will result in this lead test rod contract with a major U.S. nuclear utility this year. We expect this will be the most significant milestone our company has yet reached. And we will communicate the details as soon as we are able to do so under the confidentiality or operating under. Unfortunately, that is all we can say right now.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [11]

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Okay. Thank you. Our next question, can you expand on any plans to raise capital to cover the upcoming R&D expenses as well as what role grants may play in the equation?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [12]

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Yes. And we'll turn over to Larry Goldman, our CFO, for that answer.

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Lawrence Goldman, Lightbridge Corporation - CFO [13]

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Thanks, Seth. So generally, all technology companies in the development stage, like Lightbridge, need to raise capital. So what we're doing here is we're in discussions and working with -- very hard to supplement equity funding with government grants, technology access fees and strategic partnerships. Government grants can play an important role in providing funding contributions to our fuel development efforts. So as we communicated previously, we're pursuing DOE funding opportunities. We submitted our FOA, federal opportunity announcement, application on January 31, 2019, and we expect to hear back from the DOE in the next 1 to 2 months.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [14]

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Great. Thank you. The next question that was submitted is you mentioned EXIM Bank can now support financing a project valued at over $10 million including nuclear energy exports. What are the implications of this? And how would it relate to Lightbridge?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [15]

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Earlier this week, the Senate confirmed all 3 nominees to the Export-Import Bank's Board, which restores for the first time in several years a quorum to the Board of Directors. So now for the first time in years, the EXIM Bank can finance exports with projects valued at over $10 million, including nuclear energy exports. All fuel purchases of our fuel will be over $10 million. We are targeting overseas markets. We've talked about China on this call with patents. We've talked about other places with our IP and perhaps a new member of our Nuclear Utility Fuel Advisory Board that we're in discussions with from overseas.

So the first part of the answer is definitely for our fuel, Export-Import Bank financing can help overseas utilities buy our fuel. The second answer is new reactors, both large reactors or small modular reactors that are exported from the U.S. or have heavy U.S. vendor content in them, which would be way over $10 million could be financed by EXIM. These could be reactors that include our fuel. These could be reactors whose designs are modified to optimize use of our fuel, a new build pressurized water reactor optimized around our fuel could have a 30% power upgrade, not the 10% that Andrey mentioned on the design, the Siemens have evaluated.

So there are actually fantastic opportunities overseas. And the last thing I'll say on this is most bids specs, if not all, for new rector build around the world include the vendor country's export credit agency being able to participate in the funding. The U.S. Export-Import Bank is the only credit agency the government has that could do that in the U.S. China has 3 such agencies. So now the U.S. government can compete. And this is a bit of cooperation from the executive and legislative branches on helping our industry between the President Trump nominees and the Senate confirmations, and we're happy to see it. So thank you for the question.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [16]

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Great. Thanks. Operator, we'll go now to our next live question.

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Operator [17]

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Our next question is from Tom Dehudy with Brandywine Global.

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Thomas Dehudy, Brandywine Global Investment Management, LLC - Senior Research Analyst [18]

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Can you review the equity raise in the first quarter in terms of the price that was sold? Who you sold it to and why you believe you needed to raise equity when you think you may be getting a grant in a couple of months or you may be getting a utility partner soon?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [19]

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Yes. Yes. And the answer is in some ways embedded within your question that in order to meet government grants criteria, we have to already have in the bank our matching funds, which range from 20% to 50% generally of the amount. So generally, the government will put in 50% to 80% as grant money if the company receiving the grant puts in the balance 20% of the amount up to 50% of the amount. And the more cash we have in the bank, the more likely we are to receive the grant and the larger grant we can receive.

I'll also say that auditors are now looking beyond 12 months, generally 18 months for cash in the bank for going concern. We don't have a going concern in our financial statements. So even if we win the grants and provide our full match, we still have enough cash in the bank for everything else we have to do, too. And in terms of how we went about this, I'll ask Larry to give more detail.

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Lawrence Goldman, Lightbridge Corporation - CFO [20]

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Yes. Sure. Thanks, Seth. So as Seth mentioned, for the above reasons, that's why we raised a little bit of money in the first quarter. We opportunistically used the ATM. We just don't use it every day when we see an opportunity, especially if we're using the funds primarily to pay research and development expenses. As I mentioned in my part of the script, that's what we'll do. And again, in the future, we'll use the ATM. Right now, we don't have an ATM up and running. But if and when we do, we'll use it opportunistically as well to raise funds.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [21]

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Thank you. We'll take -- so we will now go back to some questions that were submitted in advance. Our next question is sponsors of the New Green Deal now seems to leave the door open to nuclear being part of the solution. Can you comment on any developments in Congress that relates to nuclear and climate change?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [22]

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Yes. Just this week, there were a lot of developments that have been in the news this week relating principally of sponsors of the Green New Deal resolution. Senator Ed Markey is the lead sponsor in the Senate. And he has said from the beginning that he is holding the door open to nuclear power, that he's not against nuclear power being part of the solution for climate change. He hasn't said that he's for nuclear power. But he hasn't said he's against it either or that it will be kept out of the Green New Deal.

But this week, the development is that the House of Representatives lead sponsor, Congresswomen Alexandria Ocasio-Cortez, changed her statements. She now is mirroring what Senator Markey is saying. And she is saying that she is open to nuclear being part of the Green New Deal that she's not for it, she's not against it, that she's open to it. And that is a change in her public statements. And frankly, I think it reflects reality.

As we've discussed in some of our presentations, climate goals can only be met with an increase in nuclear power as part of the energy generating mix. Not having an increase in nuclear power by any way we calculate it will make it impossible to hit climate goals. So it makes sense that if there's to be a Green New Deal, that nuclear power will be part of it.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [23]

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Great. Thank you. Our next question is can you provide specifics on timing of inserting lead test rods into a research reactor?

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

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Jim Malone is leading that effort for us. Jim?

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James P. Malone, Lightbridge Corporation - Senior VP & Chief Nuclear Fuel Development Officer [25]

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Thanks, Seth. Our current plans call for inserting fuel samples into a research reactor in 2021. These samples will be used to collect key irradiation data, which allow us to validate the advanced computer simulation models and support our regulatory licensing efforts with the U.S. Nuclear Regulatory Commission. Another important part of our in-reactor fuel demonstration program is insertion of our first lead test rod in a commercial power reactor in the U.S. We currently expect to begin a lead test rod operation as early as 2022.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [26]

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Thanks. Our next question, when would Framatome's recently allotted GAIN voucher for Lightbridge Fuel be used?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [27]

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Okay. Well, Jim Fornof is handling this for Lightbridge. Jim?

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James D. Fornof, Lightbridge Corporation - VP of Government Program Management [28]

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Yes. Thanks, Seth. Let me first say that not only is Framatome's GAIN award important from a funding perspective, as Larry previously discussed, but it's also an important validation by the DOE of the metallic Lightbridge Fuel technology and Enfission's approach to licensing with the NRC.

The scope of the GAIN voucher is FMEA and PIRT. This means failure modes and effects analysis and phenomena identification and ranking technique. These are important steps in the NRC's licensing approach to new technologies. And Framatome's GAIN partner, the Idaho National Laboratory, brings an important third-party expert view to these efforts, which adds credibility to the overall licensing approach for Lightbridge Fuel.

But regarding the timing of this GAIN award, Framatome as the primary applicant is leading these discussions with the DOE. Lightbridge and our Enfission joint venture are supporting our partner as needed with technology and IP information as well as with integration of the overall project.

While the DOE indicates a notional time line for completion of negotiations of approximately 18 weeks from the award, they are under no obligation to maintain the schedule and that actual closing may be sooner or later than indicated in the department's notional time line based on the complexity of the award and availability of resources. Thank you.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [29]

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Thanks. Our next question, does the GAIN voucher solidify your ability to perform tests at a U.S. government reactor?

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James D. Fornof, Lightbridge Corporation - VP of Government Program Management [30]

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As I mentioned above -- in the last question, the scope of Framatome's GAIN voucher doesn't really relate to in-reactor testing. The scope is important from the perspective of regulatory licensing with the NRC. So it really doesn't relate to in-reactor testing.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [31]

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Okay. Thank you. Our next question is why did Framatome and not Enfission apply for the voucher?

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James D. Fornof, Lightbridge Corporation - VP of Government Program Management [32]

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I'll take that one again. As part of our strategy, Lightbridge submitted the FOA, Funding Opportunity Announcement application in January and Framatome submitted the GAIN voucher application in the same time frame. We determined that focusing on different DOE grant opportunities in this fashion would better align the company's experience and capabilities and improve our chances for success.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [33]

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Okay. Thanks. We'll now take another live question.

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Operator [34]

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Our next question is from [Mark Love], private investor.

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Unidentified Participant, [35]

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[Mark Love]. Seth, you had said earlier that, if awarded, the grant money would help to decrease the time line in our development goals. Can you -- I guess, 2 things. Can you explain in total, understanding you may not be awarded the grants, but what the total amount of the grant money is that you've applied for? And two, if you're not awarded those funds, do you perceive raising capital earlier in the year to again execute upon the intended time lines?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [36]

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Yes. What I'd say is, first of all, the exact dollar amount is confidential at this point. It is an amount that is significant to us and would be significant to the project. Under the rules, we are not allowed to disclose that amount right now. That is something confidential, and we could actually jeopardize our chances of winning if we were to disclose it.

As we said, this money would accelerate the project. Without it, it would slow it down. And as I said on the last call, when Enfission was launched last year, this opportunity did not exist. So our time lines, our funding plans did not include this opportunity. This is something new that we jumped on. I think as Jim Fornof said, we've coordinated with Framatome. They were able to apply for and be awarded the GAIN voucher we've applied for. And we'll hear -- we expect by the end of June on this funding opportunity announcement award.

So if not awarded the money, we won't have the acceleration in our schedule. We won't have the DOE money, at least not now. We could receive other DOE funding and apply for other DOE funding. And as Larry mentioned earlier in the call with a potential new opportunity relating to another kind of reactor that might be some other DOE funding available to our project as well that we're looking into.

So no, it won't change the funding plans we otherwise had. In fact, we've loaded up on funding to try to win this award. So that's been what we've done.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [37]

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Thanks. Our next question has been submitted in advance. The current NUFAB letter of interest for Lightbridge Fuel is 4 years old this month. In view of the improved nuclear power environment, is there any momentum to gain a renewed public commitment for the Lightbridge Fuel initiative from the current NUFAB members?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [38]

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Yes. Let me start, and I'll turn it over to Jim Malone, who's leading this effort and put the Nuclear Utility Fuel Advisory Board together originally.

First of all, the lead test rod agreement that we're working on is with one of the NUFAB members, and all are involved in the discussion and very aware of and helping us in this process. And secondly, as we mentioned earlier that for the first time, we are considering an overseas addition to the NUFAB of a new utility. So I would say this is an extremely active and very important part of our project. And the Nuclear Utility Fuel Advisory Board was advising Lightbridge, and now that's moved over to advising Enfission. Jim?

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James P. Malone, Lightbridge Corporation - Senior VP & Chief Nuclear Fuel Development Officer [39]

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Yes. I would just like to add that we will be holding a NUFAB meeting later this year. And we hope to have our first international NUFAB member participate in that meeting. Lightbridge, along with the current NUFAB members, also participate in the Nuclear Energy Institute's Accident Tolerant Fuel Working Group. So our fuel has additional industry exposure and support.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [40]

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Operator, we'll move to our next live question.

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Operator [41]

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We have a follow-up question from Mike Hoffman with Stifel.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [42]

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It's Michael again. So you've given a lot of milestones on various different speakers. Seth, could you just summarize for us as we look out over the next 24 months the list of milestones that we're watching for?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [43]

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Yes. We have some extremely important milestones coming up. Let me just start with a more general overview. I will ask Andrey to give some more specifics. But certainly, we're waiting to hear by the end of June on the lead -- sorry, the U.S. Government Department of Energy Funding Opportunity Announcement award. We're working on potential new membership, overseas membership, I think very significant relating to the Nuclear Utility Fuel Advisory Board. And we're expecting what could be fairly near-term news relating to an additional kind of reactor and interest in our fuel and how we think that might also help with the Department of Energy.

We have very important upcoming milestone in the next few months that Andrey mentioned earlier relating to actually fabricating our fuel rods up to full commercial length using surrogate materials. That means not using enriched uranium, but having the real cladding material, the zirconium alloys that Framatome can provide and actually demonstrating and showing utilities and the regulators producing just in these next few months, the fuel rods. And we're expecting to have some video and imaging and other communications to our investors about that and some visits to the facilities from important people, from government and from around the industry.

We're expecting then to go through, as Jim Malone was talking about earlier in response to a question, the steps toward fabricating and inserting fuel into our research reactor, probably at a U.S. government institution, at a national laboratory. And then ultimately taking fuel from both our commercial testing and the lead test rod with a commercial utility in the U.S. and the national laboratory research reactor and looking at further testing in the TREAT reactor at the Idaho National Laboratory under transient testings, severe accident testing. Chernobyl is now on HBO. We're very proud to show how our fuel will be able to stand up under extreme conditions that no one else's can do what our fuel can, we believe? And we're anxious to demonstrate that under those conditions in the TREAT reactor.

And ultimately, then leading toward the lead test assembly agreements, bundles of fuel rods in the next couple of years, these contracts with utilities after the lead test rods. And the lead test assemblies are really the final commercial product getting into commercial reactors first in the U.S. and then with that NRC licensing we'll be getting using that overseas to our deploying overseas regulators and expanding to overseas markets. And then you'll really see the value of these patents that we've been racking up recently. And with that, let me turn it over to Andrey for a little more detail.

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Andrey Mushakov, Lightbridge Corporation - EVP of Nuclear Operations [44]

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Yes. I think you've covered it pretty well. As Seth pointed out, I would just add that for lead test assembly operation, we are going to be working on that pilot fuel fab facility ahead of time, obviously. That would have to be deployed where those full lengths lead test assemblies are going to be manufactured. And as we previously discussed, we identified with Framatome a site in Richland, Washington, which is the existing fuel fab facility where Framatome currently manufactures their standard commercial fuel.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [45]

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Great. So we'll now take our next live question. Operator?

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Operator [46]

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Our next question is from [Robert McKim], private investor.

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Unidentified Participant, [47]

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You said that you're confident that the $1 threshold is necessary for NASDAQ compliance, leaving that by November this year. That's a kind of 20% gain on today's share price within a couple of months. But my question for you is that if you're so confident on the price increasing, then why aren't you, the members of the Board and senior management, buying significant amounts of shares in the open market?

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [48]

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Yes. First of all, the $1 minimum closing bid price is one of many criteria for maintaining a NASDAQ listing. On every other criteria, we are way in excess and beyond of those criteria, the stockholders' equity, the number of stockholders, all of the listing criteria, we way exceed them. So NASDAQ gave us this extension. We have about 6 months to get the stock price over $1 for 10 consecutive closes and for closing bid. And with these milestones that we've outlined, we really don't have a doubt that we will get there and that we won't need 6 months.

In terms of management buying shares, we do have management that take some compensation in equity. We do have -- management has purchased some shares. We also have very significant blackout periods and are right now in possession of material nonpublic information, positive information about the company that I don't think you'd be happy if management bought shares without you knowing it.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [49]

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Thank you. Let's now turn to a question that was submitted in advance. There is a more positive public nuclear power outlook and government legislative support with the Nuclear Energy Leadership Act with an attempt to equalize nuclear power cost with nonnuclear power utilities. Can there be a case made that there could be a decrease in urgency for Lightbridge Fuel at this moment? Not meaning that Lightbridge Fuel will not become a catalyst for the nuclear power industry, but the immediate need for cost containment and increased market position for nuclear power has been ironically moderated by legislation making the current advanced technology fuels a very convenient choice.

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [50]

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Yes. Let me start by saying, as with just about everything on this call, this is a very U.S.-centric view that Lightbridge is starting in the U.S. but it's for a global market. And the situations are different in different markets, and we're very close to them and working with them as well. But I'll only answer this relating to the U.S. market. It's like the beginning of the novel, A Tale of Two of Cities. It's the best of times, and it's the worst of times. Like the question says, it's the best of times in that there is the Nuclear Energy Leadership Act, or NELA, which is going through the Congress and the President is saying we'll sign. There's other legislation supporting nuclear power going through the Congress. The Congress in the recent budget information has put out is actually increasing above the administration's request. That seems to be happening every year in the area of nuclear power and then the administration agreeing to the increased funding, which make things like for Funding Opportunity Announcement with the DOE in the GAIN vouchers available to us, these increased funding.

So this is all good. You're seeing a lot of support from the government in the industry. The bad news is, it's the worst of times because it's not enough. And a lot of the action is at the state level. We've seen Ohio, New Jersey, New York take steps to save nuclear reactors from closing. We've seen Vermont not enclose its only reactor. We've seen this week news from Exelon that the Three Mile Island plant in Pennsylvania will close this year.

So clearly, the Nuclear Energy Leadership Act, the Congressional funding, all of these steps are not yet enough. And the industry and the government are working together very well at the executive branch, at the legislative branch to do more. But the industry desperately needs improved economics while improving safety to compete against natural gas prices and to compete against subsidized renewables. You have wins bidding negative pricing at night in some places. You can't beat negative pricing no matter how efficient it is. There need to be some modifications to the marketplace. And I think those are coming to build in some rationality.

And I think the Lightbridge Fuel is needed now more than ever. And the combination of these government actions and the benefit that Lightbridge Fuel brings cannot only help keep reactors open and make them more efficient and more profitable, but can also help build the case toward deploying new reactors. You have the current types and the different types. Thanks for the question.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [51]

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Operator, we'll now take the next live question.

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Operator [52]

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Our next question is from Alex Adibi with Adibi Realty.

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Aref Adibi, [53]

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I was just going to ask you if you anticipate hiring more personnel in the international and national fuel sales departments. And what is the time line to secure these landmark types of deals? And now you're anticipating having representatives in multiple regions for extended assignments.

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Seth Grae, Lightbridge Corporation - President, CEO & Executive Director [54]

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Well, what I'd say this is that our joint venture partner, Framatome, is the largest designer, manufacturer and seller of nuclear fuel in the world with major industrial facilities in the United States, France, Germany and China and significant nuclear fuel operations in dozens of countries. In fact, Framatome is, as we speak, heavily involved in 250 out of the about 450 reactors in the world. They have the most sophisticated sales force and nuclear fuel in the world, the most active. They certainly can be in contact with every reactor that they currently behold and compete for those and protect the turf they already have as well as with new reactors that will be built.

So Lightbridge itself does not have a sales force. We have our Nuclear Utility Fuel Advisory Board that we expect will expand overseas. But one of the benefits of working with Framatome is our 50-50 partner is that they have the most significant and most successful nuclear sales force in the world. I'll add that 1 of the 3 directors of Enfission from Framatome is Bob Freeman, who is the Head of nuclear fuel contract for North America for Framatome. And all of the other Framatome personnel involved with Enfission on the Board and its officers and personnel are equally significant and bring global reach in fuel sales and help make sure the reactors around the world are in contact with our advances, are learning about them, are following it.

And Framatome is in this to sell it to them, just like we are. So the short answer is, no, Lightbridge won't expand sales. But Framatome brings a ton of capacity to Enfission.

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David K. Waldman, Crescendo Communications, LLC - President & CEO [55]

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And that concludes our questions. So we'll turn the call back over to management.

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

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Oh well, thank you. So I want to thank everybody for joining the call. I want to thank all our investors. And these were very good questions. We'll look forward to providing additional updates in the very near future. You'll be hearing from us soon. In the meantime, our lines are always open at ir@ltbridge.com and at 1 (855) 379-9900. Thank you, and goodbye.

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Operator [57]

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Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.