5E Commences Commercial Production at Boron Americas Complex

0:07 I'll say good morning, good afternoon, or good evening, depending on where you're logging in from today. It looks like we have quite an international audience, so thank you all for making time today. I'm joined today by 5e Advanced Materials CEO and Director, Susan Brannan, and the company's CFO, Paul Weibel. Susan, Paul, thanks for joining me today. Thank you for having us. Pleasure to be here. Awesome. And if you bear with me for just a couple of brief housekeeping items before we begin, I'll say today's event is being recorded. The replay will be available tomorrow early morning Eastern time at the latest. So please do feel free to share once it pops up. It should come right to your email.

0:40 This is a short session today. We are going to have some time for audience questions. There's a chat button on the bottom right of your screen. Because we only have 15 minutes for today's event, there's a chance we won't get to your question. Please do ask it anyway. Transcript will be shared with the 5e Advanced Materials Executive Team, and they'll be sure to get back to you quickly with a response. So that's enough out of me. Let's get into the questions.

1:01 So Susan, I wanted to start with you. Could you lay the foundation of accomplishments since the beginning of the year for 5E Advanced Materials and also the significance of last week's market announcement? Thank you, Romeo. It's been a really exciting 3 and a half months. And what has transpired since January 1 is that prior to being able to inject acid, we had designs and we had models. And today, we have action. So as part of the traditional

1:37 operations model, plan, do, check, act, planning is done. We are full into the doing phase. We are validating the parameters that have been in the models. Once we have identified those parameters and checked them, we move forward. And we're really in a really exciting time because we're getting actual real-world data. So we're able to validate and prepare for the commercial plant. So the most impactful part of last week's announcement is we have the ability now to really focus on the commercial plant with data from the well field and from the small-scale facility. So we as I said we began injecting acid January 1st.

2:27 That was something we did on 1 shift you know we start stop start stop validated our models were able to go to 2 shifts and really, really get the flywheel moving. To me, this is 3 and a half months of action, flywheel,

2:42 get the activity moving and move into actual implementation. So without implementation, you don't get product. So we're in that mode now where we are moving from, again, from the design, from the models, from the theory into action and ultimately to product. Awesome. Thanks, Susan. Next one's for Paul. So you're, as I gather, commencing commercial operations with the small scale facility expecting to produce 2,000 short tons of boric acid and targeting initial production of lithium carbonate. I'd love just for the audience we've got here today, if you could elaborate on this, for people who might not be like me, that familiar with the process, processing of boric acid, lithium carbonate. Curious, what are the extra steps are involved to actually produce lithium carbonate?

3:30 Yeah, no, great question and happy to share and appreciate everyone's time today.

3:37 So it's really a 2 step process, right? You have your mining in your well field, we have 4 injection recovery wells, we'll inject the light hydrochloric acid water based solution underground that reacts aqueously with our culminating deposit, which technically is a phenomenal deposit to leach. From there, we'll pump, airlift to surface, send to the chemical plant where we'll evaporate and crystallize and drop out the boric acid. From there, you also have some deleterious elements that are in solution, some iron, some magnesium, aluminum. You'll drop them out through metal salts removal, and at that point, you'll still have a lithium chloride in your solution.

4:23 Currently, we have the facility and there's a small skid pilot plant that is attached, getting connected, and that stream, after it runs through boric acid and the metal salts, will go through ion exchange through spinels. And that spinel will attract the chloride and isolate the lithium chloride so that you can then introduce soda ash and create a carbonate product. Just to close out the process, we'll then go,

4:57 you'll have calcite and so you'll introduce sulfuric acid and that'll create another byproduct, which is gypsum, which can be used as a soil conditioner. So unique process, and then that goes right back down hole and it's a closed loop

5:13 clean design. Oh, nice. I got another question for you more on the finance side. So as a company CFO, curious if you could speak to the audience about funding plans to move expansion of the SSF forward and how the company plans to execute on this? Yep. No, hot question. I think, you know, first we did the equity raise, just about $18 million in financing at the end of January. That got us to, that will get us to first production. And from there, we, you know, there were some incremental CapEx, fairly nominal, that's pretty much done dusted, as the plan has started up. And so, you know, since then, we're just looking at having the various tools at our disposal to be opportunistic.

6:04 We have, we're a US-based issuer, we have our S3 or shelf prospectus now up. That was put up about a month ago. That's a tool for liquidity. There's now an ATM facility. We're analyzing royalty transactions. We own 6 real parcels of property. They're completely clean, unencumbered as it stands today. And there's also government funding applications. And as we put in the most recent release,

6:36 we are you know, there's applications in multiple and we're going to be opportunistic here. And I think we're looking towards catalysts. Right. We're one of the first new we are the first new producer of boric acid or will be here in the short term. And that's a milestone that needs to be celebrated and a meaningful catalyst to the company. So I think, you know, the focus has been on execution. We're executing, we're dialing it in. Susan has done a great job

7:07 wrapping up the permits to get into that first production on January 1. Now we're operation on the mining side, and now we're focused on the chemical plan and the processing of getting first production. Awesome, thank you. And I'll shoot it back to Susan, then we'll jump to a couple audience questions, only obviously as many as we have time for. I didn't know this is a pretty short event today. I would say, Susan, I'd love if you could discuss with our audience what stakeholders can expect in the next quarter and for the remainder of this calendar year, so through to Christmas, when it comes to project delivery and news flow. Yeah, so Again, great question and definitely top of mind. We are focused as to really piggyback up what Paul just said. It's taken us about 3 and a half months to get where we are in the well field where we are very comfortable that we have a design that works, process that works, and we're learning more every day. So when I say we're comfortable, we're comfortable at where we are. We're still at the very,

8:11 very great progress over the 3 and a half months. We're, you know, 10 days, 12 days in to the small-scale facility. So we're gonna continue to grow, learn. I use the flywheel example, I spend a lot of time in automotive.

8:30 These things start slowly and you learn, you improve, you learn, you improve, you learn, you improve. So it's really my focus is how do we take what we're learning today so that we can optimize the commercial facility moving forward. What is that optimal capital to operating, you know, what's the balance there, what technologies do we wanna use, what I'm really excited about it. You know, there are a lot of technologies that exist today that were not necessarily applied early on in the thinking on this process that will allow us to become much more efficient. Even something that may seem simple like machine learning, we're taking the data from the well field

9:12 from 1980 and putting it into a machine learning program, which is just, you know, giving us enormous amounts of information that even though that information was available, it wasn't necessarily available in a usable form. So what I'm excited about and what to expect coming forward is, you know, as we learn more, we'll talk more about that. As we talked about, we're going to get product. As we get product, we'll talk about the, you know, what's the quality of that. We'll go to quality first, and then we'll go to quantity. And so that's the next quarter and the next, you know, and between now and Christmas.

9:46 Thank you. So I'm going to jump to a question from the chat, and then I'll go to a question that's come in over email while this event's been on. David from the chat asks, could you elaborate on who's leading the operations team on site at this time? Yes. We have a plant manager. His name is Lonnie Bailey, and he is leading the operations site today. And he has built a very, very creative and innovative team. So we have the combination of the discipline that is required to run any type of facility. But we have enormous creativity and innovation in our team and we're really excited and proud of the team and the work they've done and the work that Lonnie has done as a leader. Awesome, thank you. One question came in over email, you sort of tackled it in the end of your last question, but they ask, what's the next catalyst that prospective investors can look forward to at 5e?

10:39 Go to Paul. Yeah, I can take it. And so I think we're dialed in on first production and production on spec, right? So, you know, we're working on getting product through crystallization. We spent the first 2 months, 3 months really conditioning those well fields, accumulated 50,000 gallons. And now it's, hey, let's take that PLS and let's get that to belt filter and then get that to dryer. And let's get that on spec. And I think what we, you know, it's interesting because as we put out these announcements, we're getting inbounds on the customer side. And I think it's really exciting because

11:21 it's something you can touch and feel and put in a super sack and start, you know, the qualification process with the various interested parties and customers that we're going to be supplying in the future. I think, you know, don't want to undersell that qualification product or process. You know, boric acid is every bit of a, it's boron's first derivative. It's a specialty chemical, right? So

11:48 future customers have their specifications and we need to meet those specifications. And the qualification process starts with kg samples. And then that goes through major customers, R&D facilities, and they trial it and they look at the quality and from there it'll run the lap you'll upsize to larger quantities that they'll run through a plan and that's that's a process and So as we kind of kick off that process and get first production, we're going to be working on those customer channels for the future and opening up those supply chains and ultimately looking to go into offtake. And I think when we think about the offtakes, you're looking at then, okay, what's going to be bankable, and we can really start honing in on the debt piece for the commercial facility.

12:40 And so I think that's, you know, that on the back of fell to like, we have a really good technical report. We know what our process is. It's crystallizing and the couple open items are

12:53 an SK1300, SEC regs, capital estimate of plus or minus 25%. That's going to come after fail too. Feel really good though on our capital estimate today and that there's actually opportunities to improve. We're learning so much good data from the well field, head grades at or better to historical norms at 5.5%. I think we're revamping the way of thinking and saying like, let's take pages out of the playbook of oil and gas. Listen, the original mind design was vertical wells. Oil and gas, there's a reason they're doing horizontal wells today. We got to look at that and we are. I think that's going to massively provide opportunities for us down the road as we get into the commercial phase to come off capital.

13:47 Great. Thanks. I just have time for just one more question that came in on email. And everybody else too, apologize if I didn't get to you, but like I said, I'll make sure that the executive team at 5E gets your questions right away and they'll get back to you quite quickly. One question from Steven that came in over email is, does 5U Advanced Materials have a relationship with or planning to have a relationship with the Department of Defense? Yes, we do have a relationship with the Department of Defense. And I actually believe it was my first day on the job. The Department of Defense came to the site and did a visit, and they actually posted it on social media. So we're not allowed to, they did, and we have... We're not... I'm sorry, we're not. We are a critical material for the Department of Defense. So we are, you know, we're critical to, or Boron, I should say, is critical to many parts of the defense industry.

14:46 And the Department of Defense has shown significant interest in partnering with us. Awesome. Appreciate that very much. So, like I said, there's a couple of questions left in chat, but I'll make sure that they get to you guys as soon as possible. Otherwise, I know this was a short event, but thanks so much for joining me today. And for those watching the replay will be available early tomorrow morning Eastern time. Thanks again, Susan and Paul for running through this today. Thank you. Thanks. You