5E Advanced Materials Inc. (FEAM) 2024 Q4 Earnings Call Summary

Optimistic Highlights

• Significant Progress in 2024

Obtained final EPA approval, started small scale facility, achieved first production, and shipped first customer samples.

• Capital Raise

Raised $10 million, including $4 million from a new U.S.-based shareholder and $6 million in convertible notes.

• Customer Qualification Program

Launched in late June, with positive feedback from initial customers in specialty glass and pharmaceutical glass products.

• Government Support

Accepted into the Federal Cornerstone program and submitted applications for significant funding from the DoD and DoE.

Pessimistic Highlights

• Maintenance Issues

Experienced plant downtime due to maintenance issues, including a leak at the heat exchanger and design revisions for the screw conveyor.

• Production Rate

Currently operating at one short ton per day, which is lower than initial goals but deemed optimal for current liquidity.

• Headwinds in 2024

Faced challenges that impacted progress, though these were overcome to position the company better for 2025.

Company Outlook

• Engineering and Commercial Goals

Aiming to complete the first phase of engineering for a 90,000-ton boric acid commercial facility by December or January 2025.

• Offtake Agreements and Partnerships

Focused on securing offtake agreements and exploring partnerships for byproducts.

• Government Funding

Anticipating favorable results from DoD and DoE funding applications, which could significantly impact Phase 1 CapEx.

• Customer Qualification and Production

Continuing customer qualification program and aiming to build inventory for incremental sales.

Q & A Highlights

• Q: Update on recent spot market pricing and issues with larger market constituents? (Canyon Hayes, from D.A. Davidson)

A: Spot pricing for boric acid is in the range of $1,100 to $1,250 per ton. Issues with caking in large quantities still persist for some producers. (J.T. Starzecki)

• Q: Update on balance sheet and recent capital injection? (Canyon Hayes, from D.A. Davidson)

A: The recent capital raise will get us through the first phase of the FEL-2 Engineering program into early 2025. (Paul Weibel)

• Q: Details on customer qualification program and consistency of grade vs. volume? (Tate Sullivan, from Maxim Group)

A: Each customer has specific specs. The current production rate of one ton per day is adequate for customer qualification. (Paul Weibel, J.T. Starzecki)

• Q: Operating costs for the small scale facility? (Tate Sullivan, from Maxim Group)

A: Variable costs include hydrochloric acid, LNG, lime, and sulfuric acid. Fixed costs are higher due to 24/7 operations. (Paul Weibel)

• Q: Details on lithium recovery methods and timeline? (Matthew Key, from B. Riley Securities)

A: Evaluating various recovery methods, including ion exchange. More data is needed before speaking to timelines. (Paul Weibel)

• Q: Potential funding from DoD and DoE applications? (Matthew Key, from B. Riley Securities)

A: Significant funding requests have been made, including $285 million from the EXIM credit back guarantee. (J.T. Starzecki)

• Q: Benefits of being on the USGS Critical Minerals list? (Tate Sullivan, from Maxim Group)

A: It would unlock additional funding opportunities, particularly from the DoE and Loan Program Office. (J.T. Starzecki)

• Q: Anticipated next steps in customer qualification program? (Investor submitted)

A: Steps include lab testing, storage and handling testing, small scale production, and full batch runs, depending on the customer. (J.T. Starzecki)

• Q: Production-based revenues in fiscal 2025? (Investor submitted)

A: Yes, aiming to build inventory and make incremental sales as production credits. (Paul Weibel)

• Q: Biggest risks in completing FEL-2 Engineering program? (Investor submitted)

A: Assessing the calcium stream and potential partnership opportunities for byproducts. (Paul Weibel)