5E Advanced Materials highlights strategic federal partnerships and strong project fundamentals, positioning for sustained growth and value creation in critical minerals sector.

OPERATOR - (00:00:00)

A flow sheet and process that is modern, low cost and high value, underpinned by resilient domestic boron supply that supports both commercial and national priorities. Market participants are increasingly viewing 5E Advanced Materials as a strategic partner for the future. When combined with the US Critical Minerals designation, these market dynamics further strengthens 5E's position and reinforce 5E Advanced Materials's importance to the US supply chain security as the only pure play US advanced staged domestic boron asset. 5E Advanced Materials now qualifies for several federal funding and grant programs designed to rebuild American mineral supply chains. These include the US Export Import bank where 5E already holds a $285 million letter of interest under the Make More in America Initiative, a program specifically created to support US manufacturing, exports, infrastructure and supply chains. Ex Im's Engineering Multiplier program where we have applied for a $10 million loan that has the possibility to finance a significant portion of our feed activities on on a non dilutive basis. The Office of Strategic Capital and the US Development Finance Corporation where Executive Order 14241 defines a mineral largely with reference to the USGS List. The Executive Order delegates the Defense Production Act Lending and Investment Authorities to the Secretary of War and the CEO of the DFC and requires the establishment of certain mineral funding mechanisms including the Department of War Office of strategic capital. The One Big Beautiful Bill act of 2025 authorized 5 billion for investments in critical mineral supply chains sorry 5 billion for investments in critical mineral supply chains made pursuant to the Industrial Base Fund and up to 100 billion in principal amounts of direct loans and guaranteed loans for critical minerals and relative industries and projects. The Department of Energy's Loan Program Office where in addition to Title 17, the Innovative Energy and Innovative Supply chain prongs are enhanced by this designation. Given the explicit reference to the statutory reference of critical minerals being the USGS list, 5E Advanced Materials is ideally positioned to benefit as a shovel ready advanced state project aligned with national priorities. Access to these programs has the potential to strengthen our balance sheet, reduce equity dilution and accelerate execution. That's a direct result of the federal government recognizing what we built and our strategic domestic resources and reserves ready to move into production operationally. Our team continues to execute with precision, maintaining strong alignment with our milestones and reinforcing the quality of our technical and commercial foundation. As we discussed last quarter, a pre feasibility study confirms strong project economics, a 39 and a half year mine life, a 19.2% pre tax IRR and a pre tax MPV of 725 million for only phase one of the 5E Advanced Materials project. Those fundamentals continue to anchor our forward plan. We've now successfully qualified our high purity boric acid with multiple customers across sectors including specialty glass, fiberglass, ceramics, agriculture, defense and advanced materials. Most notably, we have advanced to full scale testing and furnace trials with a Tier 1 specialty glass manufacturer following the successful shipment of 20 tons of boric acid from the Port of Los Angeles to Taiwan. I can confirm that as of last week the shipment had arrived in Taiwan and will be deployed in a live testing environment in the near term. Additionally, we Supplied an additional 1,000 pounds of boric acid to a domestic boron carbide manufacturer. China currently controls much of the boron carbide supply chain and and we're excited to do our part in reshoring domestic boron carbide production as it is critical to our national defense. On the back of the 20 ton shipment, we're also preparing additional product shipments for other LCD glass producers, reinforcing both the scalability and reliability of our operation. Each one of these milestones builds customer trust and advances historically towards long term offtake agreements, a key bridge between development and commercial operations. Looking at the market opportunity, the Critical Minerals designation aligns perfectly with broader US Industrial policy. Boron is essential to technologies that support advanced manufacturing and enable the energy policy objectives everything from permanent magnets, semiconductors, EVs, wind turbines and defense armor systems to advance advanced glass and composites, which 5E Advanced Materials positions as a strategic enabler within multiple national frameworks. From a development standpoint, our trajectory remains clear. We are nearing completion of feed ready engineering deliverables, advancing strategic financing discussions and negotiating off take terms. Each step brings us closer to our goal of a 2026 final investment decision. As we move through these milestones, our goal remains consistent with what I outlined in our previous call to progress methodically de risk every stage and build a capital structure that supports long term value creation. The remainder of fiscal year 2026 will be focused on three primary priorities 1 securing non dilutive US capital support through EX IM, OSC, DFC and DOE programs. While skeptics may have heard this previously from 5E Advanced Materials, the Reseq designation is a major catalyst and milestone to having a much more broader and in depth discussion on financing our project and providing access to larger pools of capital two Advancing customer agreements in commercial offtake contracts where we expect a more detailed negotiation to commence before year end and three executing a rigorous and diligently planned feed and pre fid work streams to ensure we are construction ready in 2026. Additionally, we have commenced the work stream to upgrade our mineral resource statement on the back of securing and recording the remaining federal lode claims for the rest of the Colemanite mineralization of the deposit. Further, we have begun steps to build a portfolio of intellectual property on our proprietary mining techniques and processing solutions. These steps position 5E to cement our mineral tenure for the long term, become the premier ISL borate producer in the United States and transition confidently to into construction and ultimately commercial production, delivering long term value for our shareholders and strengthening America's domestic mineral independence. In closing, this quarter truly represents an inflection point, one that underscores our growing momentum, validates our strategy and sets the stage for sustained growth and value creation. The federal recognition of boron as a critical mineral validates years of technical work, market engagement and policy advocacy. It affirms that what we're building at 5E Advanced Materials matters not just commercially, but strategically. As I said on our last call, this is a story of proof, not potential. And now with federal alignment and growing customer traction, we're proving that 5E Advanced Materials is positioned to become America's trusted 5E Advanced Materials supplier. Advanced materials thank you to our employees, partners and shareholders for your continued commitment. We're building something rare and a foundation for America's energy and advanced materials future. With that, we'll open up the call to any questions. Thank you, Paul. We will now begin the question and answer session. To ask a question, please press star one on your telephone keypad. To withdraw your question, please press star two. We ask that you please limit yourself to one question and one follow up and then return to the queue. If you have additional questions, please wait a moment whilst we poll for questions. Thank you. Our first question is coming from Tate Sullivan of the Maxim Group. Tate, your line is live.

Tate Sullivan - Equity Analyst - (00:09:24)

Thank you. And Paul, congratulations on having boron beyond the critical mineral list. And you highlighted the potential in your last call and how you were part of that process. Congratulations is part of being on that list. Is is there any word from or previous comments from the Defense Logistics Agency that boron, that there may be a government stockpile of boron going forward or any boron derivatives. I think the trend has been to in the past stockpile carbide. On the USGS Commodity Summary there was a pretty large award maybe about a year, year and a half ago to a company through DPA for domestic production of boron carbide. Obviously that's a supply chain that's dominated by China. That customer has, you know, reached out to a couple of the other borate producers. Kind of our understanding has been a bit Ignored. And so we partnered with them, you know, went through the initial qualification process with smaller samples and now they are piloting production, looking to moved to its full scale. And that was £1,000 as part of that pilot process. And I think, listen, to get back to your question, I think the stock buying of carbide has occurred in the past. Not sure if there's stock buying right now, especially given what is happening on the midstream with that producer. But I think the plan is to ultimately get off of China and domesticate that supply chain. Thank you. And then separately in the 10Q I saw some language about the horizontal wells. Two horizontal wells that you're drilling. Is that for resource expansion and definition work? Is that for flow testing and have you started flow testing if that is part of the process? No, this actually validating the commercial design. So we drilled in July and into early August to horizontal lateral. So we had four injection recovery wells. And about maybe each of those wells were going down to about 1500ft total depth vertically. And we have at about 10, 80ft below ground. We've sidetracked off those two wells with 1500 foot laterals. We got a minor modification from EPA to get permission to do that. Our commercial mine plan contemplates 4,000 foot laterals. So we're kind of, you know, if you think about scaling and proof of concept. And so we've run about six or seven cycles on those wells and you know, the results have been really good. One of the things that as we're coming up on two years of operating the small scale facility here in January and one of the things we saw with the vertical wells is you'd have head grades that would be consistently at 5% and then they jump to 7, 8% and then back down to 3%. You had a bit of variance from a geology perspective. Our deposit was a lake millions of years ago and evaporated. And it's pretty homogeneous. It's about the mineralized zone is 13 to 1500ft underground. And that gives us the ability to take a horizontal well and run for a couple thousand feet through high grade Colemanite zones. What has happened now as we've tested these wells, all samples like from a head grade and boron percentage in solution, the variance is like gone away. And there's a much higher rate of efficiency from a mining process in that we're consistent. And as you think about your design going into feed engineering, the basis you're going to give your EPC contractor, we now have a really High degree of confidence on what that bell curve looks like from a boron imperfect in solution percentage as well as our metal impurities. Impurities and our calcium to boron ratios. So it really gives, it just gives us a much better position to have a successful seed program and ultimately design a plant at commercial scale. That's going to work. Thank you, Paul.

OPERATOR - (00:14:14)

Thank you very much. Our next question is coming from Heiko Ilei of HC Wainwright. Heiko, your line is live.

Case - (00:14:25)

Hi Paul, it's Case. Heiko's on the plane right now listening to the webcast. Thank you for taking our question. No problem. Good to chat. Case, how, how are you doing? Great, thanks for asking. Earlier on the call you discussed the several government programs that supported boron. Could you give us some color on maybe the percentage or and dollar terms that you think we could see from such programs? Seems pretty pertinent given the long term demand drivers are pretty obvious. Yeah, great question. Listen, I think you know, now that you have this critical minerals designation, it really opens up all aspects of the capital structure from the loans to well you saw what happened with 5E Advanced Materials where they came in and now they're at 10% shareholder and they didn't prefer. So I think I would get asked previously at different conferences and as we're talking to investors, is that a possibility? And my kind of first response was, listen, we need to get the government to acknowledge boron's a critical mineral. So now that we've done that, I think we can really have a much more in depth discussion on hey, what's the right loan? We want to go after we have the LOI with xm but now you can kind of run parallel processes as you go get the debt and obviously the debt helps geared IRRs so you know, you can optimize your cash flows through the loans but then you can have the conversation about hey, what does the balance of the equity look like and could you have a conversation with OSC on potentially providing some of that capital? And so now on the back of that like I would say, like we have a $435 million capital estimate. Like that's the sky's the limit in the interim. There's had a call today on we are a member of Cornerstone Consortium. What we're doing on the wellfield side is both innovative and to a certain extent we're proving that the horizontal, we know the vertical wells work, we're proving that the horizontal wells are actually a better design and the results are already speaking for themselves. But hey, can we go get smaller Grants now through Cornerstone on the mining side and I think on the back of some of these executive orders that kind of came out earlier in the year. Now you getting through, you know, CRs have been passed. You can people returning to their desk, you can actually go have those conversations. Absolutely. Thank you. One more question. You mentioned some of the fluctuating head grades on the call. From a geological point of view, what exactly is this based on and how does it impact your internal model? You mentioned having more clarity on the bell curve to see what's going on. Great technical question there. So when we say head grade, we're talking about what's the boron percentage by weight in solution that's coming and being extracted from underground to surface. And so when we start an injection recovery cycle to go mine the boron, we're starting for our permit with 95% water, 5% hydrochloric acid and just you know, HCl, it's no different than the muriatic acid I put in my swimming pools as a conditioner. But that with the water and increases in temperature creates the ability to leach the Colemanite. And so when we inject, we let that then sit underground. What happens in that 24 to 48 hour time period is that HCL reacts with the Colemanite and dissolves the minerals. When we come up above ground, what ends up happening is we catch multiple samples of solution, we send them to our lab on site and we run an ICP analysis on that. What happens is you can see what's your hcl concentration in that solution. And so when you, before you injected, you started at 5%. And when we test in the lab, it's about 0.25 to half a percent HCL. So that HCL has now been reacted and replaced with dissolved boron in solution. And because boron is super soluble, that is with temperature, the more you can dissolve, the better head grade you can get. We, you can, you can supersaturate and outperform on the mining side. And so our, our base case assumes 9 to 10% head grade. We've proven the solubility curve out on the low end and ultimately what we're focusing here on the next like month and a half, two months is really vetting that out on the commercial design. So economics for the that's in the PFS remain intact. And you know, I think we, we've had some really initial good results where we've gotten kind of right around that 7% head grade. But we're limited today on the temperature we can actually inject at the small scale facility. And so one of the items, and this is kind of teasing out, like the next call is like, we have downhole heaters on order. They're used in oil and gas, and every day they can get up to actually 300 degrees C. That's not the temperature we need to mine at. We're going to kind of hang it right around 160 to 180 degrees at. Okay.