Lightbridge Corporation (Nasdaq: LTBR), an advanced nuclear fuel
technology company, today issued a corporate update in a letter to
shareholders from President and CEO Seth Grae.
To our Valued Shareholders,
1. Event
in China
Over the last couple of days several of you have
reached out to Lightbridge with questions relating to nuclear fuel.
The questions have been caused by the incident at the nuclear power
plant at Taishan in China. We do not have clear and reliable enough
information to definitively describe what happened. From what we
understand, the incident is unlikely to pose a threat to the health
or safety of the public, but we would need more information before
we could definitively come to that conclusion.
From the little we have learned through news
sources, assuming it is accurate, it seems that one or more nuclear
fuel rods that have already provided power to the reactor have
developed a breach in their cladding, which is the tube that holds
the uranium pellets inside a conventional fuel rod. The breach or
breaches caused gases that form inside the tube to escape into the
reactor systems. These gases are normally produced by fission in
uranium dioxide pellets in the fuel used today in reactors. Fuel
rods should not crack in a well-operated plant, but it does happen
sometimes, and the plants are designed to handle the event, and
operators are trained to mitigate any resulting danger inside and
outside the plant.
There is much more we could say, but at this
point, we think it prudent to wait until there is additional
credible information. What we can discuss are differences relating
to the nuclear fuel that Lightbridge is developing.
2. Lightbridge
Fuel™ is being developed to prevent this type of
incident
We are developing Lightbridge Fuel™ to avoid
releasing gases, even in the event of an incident like what we
believe likely has occurred in China. Unlike current nuclear fuel
that consists of uranium pellets in ceramic form stacked in a tube
with space around the pellets that fills with gases from the
fission process, Lightbridge Fuel™ is a high-technology product
that is made from all metal. The metallic design is part of the
technology that allows the fuel to operate about a thousand degrees
Celsius cooler down the center line of the fuel rod than current
fuel, while providing greater power and lowering the cost of
electricity generated by the plant. The fuel consists of three
zones that are metallurgically bonded together during the
fabrication process. The bonding improves fuel rod integrity and
thermal conductivity and eliminates a source of fission product
release in the event of a breach along the fuel rod’s surface. The
low operating temperature of our metallic fuel results in gaseous
fission products being immobile which therefore behave as solid
fission products that do not leak out of the rod in the event of a
breach.
3. Lightbridge
Fuel™ and renewables
The Lightbridge Fuel technology will also
provide many additional benefits. Current nuclear fuel is not very
good for load following with renewables due to the fragility of
conventional fuel rods severely limiting the rate at which power
can be ramped up or ramped down. Reactors power up very slowly,
usually over a course of several days, and also ramp down in power
slowly. Ramping up or down faster would risk damaging conventional
fuel rods, including cracking the fuel tubes and releasing the
fission product gases that build up in the rods. In addition, the
nuclear plants themselves are not designed to go up in power fast,
and would need more robust pipes and other components that could
handle the power surges and drops more efficiently. Finally,
today’s large reactors have such high capital costs that most of
them need to operate at full power almost all the time in order to
be profitable.
Natural gas plants are being deployed globally
to balance the electric grid with renewables. Gas plants can surge
up and down in power as the sun rises or sets or goes behind a
cloud and the winds kick up or slow or stop completely. Natural gas
emits about half as much CO2 as coal. Our understanding is that it
is very unlikely that grid-level battery storage will be developed
that can economically back up a city in the foreseeable future, and
it is equally unlikely that carbon capture will be economically
deployable at a large scale to remove the CO2 from natural gas
plant emissions. If the world is going to meet IPCC climate goals,
we believe significant growth in nuclear power will be required.
Reactors emit no CO2. Since we also believe that only a relatively
small number of new large reactors will be deployed, the world will
need thousands of small modular reactors, the major assembly of
which can be done in factories and at shipyards and delivered to
customers globally.
If the small modular reactors use the same old
pellets-in-tube fuel as today’s large reactors, we do not believe
they will be able to surge up and down in power fast enough to
balance with renewables on the grid. The small modular reactors
will need to be designed with components that can handle up and
down surges in power as renewables come on and off line, and with
Lightbridge Fuel™ they will be able to do so with a fuel designed
to prevent the release of fission product gases even in the
unlikely event of a breach along a fuel rod.
4. Recent
milestones in developing this technology in cooperation with the
U.S. government
In March of this year, the U.S. Department of
Energy (DOE) awarded Lightbridge our second funding voucher from
the Gateway for Accelerated Innovation in Nuclear (GAIN) program.
Under this voucher, DOE will pay 75% of the R&D costs for our
collaborative work with Pacific Northwest National Laboratory. We
will use depleted uranium in demonstrating Lightbridge’s
proprietary casting process, which is a key step in manufacturing
our fuel. We expect to sign a Cooperative Research and Development
Agreement soon to begin this work.
We continue to make progress under our first
GAIN voucher, with Idaho National Laboratory. We are designing an
experiment to irradiate our fuel using coupon samples that will
contain high-assay low-enriched uranium (HALEU) in the Advanced
Test Reactor. We are close to completing the experiment’s
conceptual design and are moving into the detailed design phase,
which we expect to complete later this year. DOE is also paying 75%
of the R&D costs under this GAIN voucher.
On May 11th Lightbridge announced that we
successfully demonstrated our proprietary high-temperature
co-extrusion process and produced fuel rods using surrogate
materials of the length needed for small modular reactors.
5. Minimizing
shareholder dilution and growing cooperation with the U.S.
government
Our two GAIN vouchers allow Lightbridge to
partner with the U.S. government while minimizing shareholder
dilution. In addition to the government paying 75% of R&D costs
under each voucher, DOE and its national labs provide access to
world-class facilities such as the Advanced Test Reactor and the
Transient Test Reactor (TREAT).
In my previous letter to shareholders in
February, I discussed how the Advanced Test Reactor at Idaho
National Laboratory has enough space to add two additional test
loops that allow nuclear fuels and materials to be tested under
specific conditions, such as those matching commercial reactors.
The Advanced Test Reactor currently contains only one such test
loop, and it is getting crowded with experiments that advanced
nuclear companies want to run. We believe the lack of enough test
loops is holding back American innovation necessary to compete
globally with China and Russia. Lightbridge is working to convince
the U.S. Congress and the Biden Administration to budget $35
million for FY2022 to add two new test loops.
The U.S. government continues to be a powerful
ally for the nuclear power industry, because of the government’s
commitment to transition to clean energy and the strategic
importance of nuclear power. Nuclear reactors provide one-fifth of
America’s total electricity, but more than half of the country’s
zero-emissions electricity. In addition, China and Russia’s moves
to deploy reactors in countries of strategic importance to the
U.S., such as the United Kingdom, Egypt, and Turkey, is part of
what is spurring the U.S. to support advanced nuclear technologies.
It is in the nation’s interest for U.S. companies to compete and
win against China and Russia, to help ensure that emerging nuclear
energy countries are in America’s spheres of influence.
We are managing Lightbridge’s cash resources to
deliver shareholder value. The two GAIN vouchers cover most of our
R&D costs on critical experiments to advance development of
Lightbridge Fuel™. These vouchers provide sizable benefits to our
fuel development efforts, while minimizing the dilution to our
shareholders that would have occurred had we attempted these
experiments on our own. We will continue to pursue additional DOE
funding, either from the GAIN program or other funding
opportunities, to further our fuel development in the most
cost-efficient manner for our shareholders. The current experiments
plus future experiments and modeling and simulation will help us
meet criteria needed for regulatory licensing of the fuel and to
prove the fuel’s benefits to customers. As a publicly traded
company, Lightbridge is committed to full transparency in its
operations, including its ongoing fuel development efforts.
6. Russell
Microcap© Index
On June 15th we announced that Lightbridge would
be added to the Russell Microcap© Index on June 28th. We are proud
to be one of the few publicly traded nuclear companies, and to be
included in the index. The index listing will help Lightbridge
broaden our investor base. Investors are increasingly learning that
advanced nuclear technology is necessary for U.S. companies to
compete globally and to meet climate goals.
7. Conclusion
We hope to learn more credible information soon
relating to the incident at the nuclear power plant at Taishan in
China. We are developing Lightbridge Fuel™ to avoid the release of
gases from nuclear fuels and also to bring many additional
significant benefits, including enhancing the ability of small
modular reactors to load follow with renewables on a zero-emission
electric grid. We are making significant progress while striving to
minimize dilution to our shareholders. Thank you for your continued
support.
Very truly yours,
Seth Grae
President & Chief Executive Officer
Lightbridge Corporation
About Lightbridge
Corporation
Lightbridge (NASDAQ: LTBR) is an advanced
nuclear fuel technology development company positioned to enable
carbon-free energy applications that will be essential in
preventing climate change. The Company is developing Lightbridge
Fuel™, a proprietary next-generation nuclear fuel technology for
Small Modular Reactors, as well as existing light-water reactors,
which significantly enhances reactor safety, economics, and fuel
proliferation resistance. To date, Lightbridge has been awarded
twice by the U.S. Department of Energy’s Gateway for Accelerated
Innovation in Nuclear program to support development of Lightbridge
Fuel™. Lightbridge’s innovative fuel technology is backed by an
extensive worldwide patent portfolio. For more information, please
visit: www.ltbridge.com.
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Forward Looking Statements
With the exception of historical matters, the
matters discussed herein are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding the timing and outcome of research
and development activities, other steps to commercialize
Lightbridge Fuel™, the benefits of Lightbridge Fuel™ and future
governmental support and funding for nuclear energy. These
statements are based on current expectations on the date of this
communication and involve a number of risks and uncertainties that
may cause actual results to differ significantly from such
estimates. The risks include, but are not limited to: the Company’s
ability to commercialize its nuclear fuel technology; the degree of
market adoption of the Company’s product and service offerings; the
Company’s ability to fund general corporate overhead and outside
research and development costs; market competition; our ability to
attract and retain qualified employees; dependence on strategic
partners; demand for fuel for nuclear reactors, including small
modular reactors; the Company’s ability to manage its business
effectively in a rapidly evolving market; the availability of
nuclear test reactors and the risks associated with unexpected
changes in the Company’s fuel development timeline; the increased
costs associated with metallization of our nuclear fuel; public
perception of nuclear energy generally; changes in the political
environment; risks associated with the further spread of COVID-19,
including the ultimate impact of COVID-19 on people, economies, and
the Company’s ability to access capital markets; changes in the
laws, rules and regulations governing the Company’s business;
development and utilization of, and challenges to, our intellectual
property; risks associated with potential shareholder activism;
potential and contingent liabilities; as well as other factors
described in our filings with the Securities and Exchange
Commission. A further description of risks and uncertainties can be
found in Lightbridge’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2020 and in our other filings with the
Securities and Exchange Commission, including in the sections
thereof captioned “Risk Factors” and “Forward-Looking Statements”,
all of which are available at http://www.sec.gov/ and
www.ltbridge.com. Lightbridge does not assume any obligation to
update or revise any such forward-looking statements, whether as
the result of new developments or otherwise, except as required by
law. Readers are cautioned not to put undue reliance on
forward-looking statements. A further description of risks and
uncertainties can be found in Lightbridge’s Annual Report on Form
10-K for the fiscal year ended December 31st, 2020 and in its other
filings with the Securities and Exchange Commission, including in
the sections thereof captioned “Risk Factors” and “Forward-Looking
Statements”, all of which are available at http://www.sec.gov/ and
www.ltbridge.com.
Investor Relations Contact:Matthew Abenante,
IRCDirector of Investor Relations Tel: +1 (646) 828-8710
ir@ltbridge.com
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