5E Advanced Materials, Inc. (Nasdaq: FEAM) (ASX: 5EA) (“5E” or the
“Company”), a boron and lithium company with U.S. government
Critical Infrastructure designation for its 5E Boron Americas (Fort
Cady) Complex, today announced its financial results for the fiscal
year end 2022.
Corporate Strategy
5E and boron sit at the convergence of three
global mega-trends: decarbonization, food security, and domestic
supply of critical materials. The Company is positioned
strategically to benefit from the expected surge in demand for
boron and lithium as a result of high-growth decarbonization
technologies which commonly utilize these advanced materials as key
inputs, the recognition of boron’s importance to keep the world fed
as an essential micronutrient required by crops, and the move to
reduce reliance on foreign sourcing and processing in a critical
supply chain.
Given existing geological limitations, there are
few major known boron projects globally. 5E possesses the largest,
and only substantially permitted, of these six projects. The 5E
Boron Americas (Fort Cady) Complex in Southern California, which
hosts the largest known new conventional source of boron in the
world, is designated as Critical Infrastructure by the U.S.
government.
With approximately 85% of global supply coming
from two commodity miners, 5E is well positioned to execute its
corporate strategy of becoming a high-margin, high-value,
vertically integrated producer of boron and lithium specialty and
advanced materials. With this strategy, the Company will be
positioned to take advantage of its boron and lithium supply and
potentially favorable cost position, particularly in the highly
fragmented downstream boron market with few vertically integrated
suppliers.
In May 2022, 5E announced plans to expand the
production capacity of its large-scale complex to 500,000 tons per
year of boric acid. The Company also announced its goal to sell
boron advanced materials to take advantage of higher pricing,
operational synergies, and the currently fragmented market. The
global advanced materials supply chain is at risk of disruption,
with an over-reliance on Turkey and China for sourcing and
processing, respectively. The U.S. government, as well as certain
of 5E’s customers, has also sought to domesticate the boron supply
chain, which aligns with 5E’s strategy to create a vertically
integrated U.S. based complex. 5E also announced potential lithium
carbonate production of several thousand tons per year upon
completion of the large-scale complex, which could make 5E one of
the largest producers of lithium in the U.S.
Customer and Strategic
Partnerships
As part of the commercialization plans, 5E has
dedicated resources to secure strategic collaboration agreements
with customers that could include offtake and financing support
linked to the supply of boric acid, boron advanced materials, and
lithium carbonate. During the fiscal year, the Company signed
non-binding letters of intent with Corning Incorporated and Borman
Specialty Materials. Corning Inc. is a Fortune 300 company and one
of the largest technical glass manufacturers in the world. Under
the letter of intent, 5E would supply boron specialty materials
while collaborating with Corning to develop and supply boron
advanced materials. Borman is a U.S. producer of boron and other
advanced materials that supply future facing global markets within
the semiconductor, life sciences, aerospace, military, and
automotive industries. Under the letter of intent, 5E would supply
Borman with boric acid and boron advanced materials. The Company is
also advancing discussions with other customers who are also
interested in ensuring domestic supply of boron and lithium.
The Company executed research agreements with
leading academic institutions Georgetown University (“Georgetown”)
and Boston College. Both research agreements position 5E to
potentially develop intellectual property and commercialization
pathways within downstream boron-based decarbonization
applications. 5E’s research agreement with Georgetown aims to
enhance the performance of permanent magnets by increasing the use
of boron. The Company’s research agreement with Boston College
intends to advance boron-based materials within solar energy
systems. Solar energy is expected to play an important role in
serving the increased demand for a carbon-neutral global economy
and the agreement has the potential to create boron-based materials
that serve the accelerating, future-facing solar marketplace.
5E Boron Americas (Fort Cady)
Complex
The SSBF is expected to serve as a foundation
for the design of the large-scale complex and to support potential
cost optimization and value engineering. The SSBF is also an
essential step for the Company to deliver product to potential
customers and to progress downstream boron advanced materials
capabilities. The Company has made substantial progress on the SSBF
this year after completing detailed engineering, procuring and
receiving long-lead item equipment, increasing staffing, completing
four supply wells, assigning the construction contract to Matrix
Service, and breaking ground on construction. Importantly, there
have been no lost time injuries for any 5E sites during the year,
as the Company continues to prioritize the safety and well-being of
personnel.
The SSBF is on schedule for mechanical
completion in CQ4 2022 and first production in early 2023. With a
target production of 2,000 tons per year of boric acid, the SSBF
provides considerable optionality for the Company to continue
delivering on its corporate strategy.
Engineering, design, and construction for the
large-scale complex is targeted to occur after operations of the
SSBF with mechanical completion in 2025. Initial production
capacity of the large-scale complex is targeted at 250,000 tons per
year of boric acid and several thousand tons per year of lithium
carbonate. Capacity is later targeted to increase to 500,000 tons
per year of boric acid and several thousand tons per year of
lithium carbonate with incremental capacity expansions.
Photos of Construction at the 5E Boron
Americas (Fort Cady) Complex
Marketing Initiatives
In December 2021, the Company announced the
engagement of Bank of America as capital markets advisor and the
fiscal year-end culminated with the Company’s inclusion in the
Russell 2000®, 3000®, and Microcap® indices, the MSCI Global Small
Cap Australia index, and, most recently, the ASX 300 index.
Inclusions in these major indices has placed the Company’s
securities in the portfolios of some of the world’s largest global
asset management firms. The Company continues to pursue further
index inclusions to increase investor awareness and demand for 5E
securities. The Company has participated in several investor
conferences, including the Baird 2022 Vehicle Technology &
Mobility Conference, Canaccord Genuity 42nd Annual Growth
Conference, and the Credit Suisse 35th Annual Specialties and
Basics Conference.
The Company continues to increase its marketing
efforts, recently launching a new investor presentation that
highlights the significance of boron and lithium in enabling three
global mega trends: decarbonization, food security, and onshoring
critical materials. The Company also hired a Chief Marketing
Officer and a Marketing Manager to further promote 5E and boron to
investors and other stakeholders. Over the coming months, 5E plans
to launch extensive marketing campaigns that includes in-person and
virtual investor presentations, social media outreach, and print
and video press. The Company will also participate in several other
investor conferences and host site tours of its 5E Boron Americas
(Fort Cady) Complex.
Boron remains a relatively unknown material to
the investment community despite its use in everyday and future
facing applications. As such, adding resources to educate and
mainstream boron could unlock value for shareholders as the Company
is focused on becoming a global leader in the material.
Corporate Activities
5E’s team in California and Texas continues to
grow with several new hires across operations, administration,
marketing and finance, including a VP of Operations with more than
19 years of experience at Albemarle Corporation that spans across
multiple disciplines including process design, purchasing, M&A,
and general management. The Company also hired a Chief Accounting
Officer with more than 29 years of accounting experience at
PricewaterhouseCoopers and natural resources companies. As of
fiscal year-end, the majority of administrative and operational
personnel have transitioned to the U.S. after a successful
reorganization and U.S. listing on Nasdaq in March 2022. Local
hiring in California is expected to increase as the Company works
towards completion of the SSBF and scaling of the business.
In light of the recent Presidential Executive
Orders and U.S. government initiatives to onshore and secure
production of critical materials, the Company has increased its
government affairs effort by engaging a specialized management
consulting firm in May 2022 to pursue federal, state, and local
funding opportunities. In February 2022, the Integrated Boron
Facility successfully received Critical Infrastructure designation
by the U.S. Department of Homeland Security, validating the
domestic security pillar of the three global mega-trends.
5E continues to advance its efforts around
environmental, social, and governance (“ESG”), and has been working
with a North American sustainability consulting firm to bolster our
ESG and sustainability strategy and future reporting framework.
Photos of 5E’s Nasdaq
listing
Full Year FY2022 Financial
Highlights
As of year-end, the Company maintained a cash
balance of $31.0 million and working capital of $23.6 million.
Construction in progress balance was $25.6 million, compared to
$12.7 million in the prior year as the Company continues
construction of the SSBF. Project expenses increased 119%
year-over-year given increased construction preparation for the
SSBF. General and administrative expenses increased by $43.0
million year-over-year, primarily due to $37.7 million of non-cash
stock-based compensation, which includes $31.0 million of stock
issued as payment for non-recurring consulting fees under the
Company’s Advisory Agreement with Blue Horizon Advisors, LLC
(“BHA”), and $5.6 million of non-recurring costs associated with
the Company’s reorganization and subsequent listing of shares on
Nasdaq. Research and development expenses increased year-over-year
as the Company progressed its advanced materials strategy and
depreciation and amortization expenses increased as the Company
began placing assets into service.
|
FOR THE YEAR-ENDED JUNE 30(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Operating expenses: |
|
|
Project expenses |
$ |
12,853 |
|
|
$ |
5,966 |
|
General and administrative(1) |
|
54,733 |
|
|
|
11,637 |
|
Research and development |
|
133 |
|
|
|
- |
|
Depreciation and amortization expense |
|
112 |
|
|
|
31 |
|
Total operating expenses |
|
67,831 |
|
|
|
17,634 |
|
Income (loss) from
operations |
|
(67,831 |
) |
|
|
(17,634 |
) |
Non-operating income
(expense) |
|
|
Other income |
|
65 |
|
|
|
45 |
|
Interest income |
|
3 |
|
|
|
9 |
|
Interest expense |
|
(6 |
) |
|
|
(5 |
) |
Net foreign exchange gain (loss) |
|
1,056 |
|
|
|
(1,668 |
) |
Total non-operating income
(expense) |
|
1,118 |
|
|
|
(1,619 |
) |
Net income
(loss) |
|
(66,713 |
) |
|
|
(19,253 |
) |
Comprehensive income (loss): |
|
|
Reporting currency
translation |
|
(1,417 |
) |
|
|
1,916 |
|
Comprehensive income
(loss) |
$ |
(68,130 |
) |
|
$ |
(17,337 |
) |
Net loss per common share – basic
and diluted |
$ |
(1.63 |
) |
|
$ |
(0.56 |
) |
Weighted average common shares
outstanding – basic and diluted |
|
40,807 |
|
|
|
34,175 |
|
(1) Includes $37.7 and $6.4 million in non-cash
share based compensation for the periods ended June 30, 2022 and
2021, respectively.
Bluescape Investment
On August 11, 2022, after fiscal year-end, the
Company secured a $60 million private placement with Bluescape.
Bluescape, a U.S. strategic financial partner with experience and
relationships within the power and resources sectors, its U.S.
shareholder base, and the U.S. federal government, represents a
cornerstone investor for 5E. The private placement includes senior
secured convertible notes due 2027 (“the Notes”), which are
convertible into shares of the Company’s common stock. The Notes
were funded on August 26, 2022, resulting in an available cash
balance at closing of $68.4 million.
Commenting on Full Year 2022 Results, 5E
President and CEO, Mr. Henri Tausch, said:
“I am pleased by the
efforts of our team and milestones achieved over the fiscal year.
We successfully transitioned the team and Company to the U.S.,
listed on Nasdaq, gained Critical Infrastructure designation,
enhanced the project’s scope, and broke ground on the SSBF. We also
signed a research agreement with Georgetown University and LOIs
with potential future customers, including Corning Inc., a Fortune
300 company and one of the largest technical glass manufacturers in
the world.
As we enter a new
fiscal year, I am excited for catalysts to come. We target
completion of our SSBF in CQ4 2022, additional commercial LOIs and
contracts, and increased stakeholder engagement and awareness.
Boron prices and fundamentals remain favorable, and we are in a
strong financial position to execute after closing the private
placement with Bluescape in August.”
About 5E Advanced Materials,
Inc.
5E Advanced Materials, Inc. (Nasdaq: FEAM) (ASX:
5EA) is focused on becoming a vertically integrated global leader
and supplier of boron specialty and advanced materials,
complemented by lithium co-product production. The Company’s
mission is to become a supplier of these critical materials to
industries addressing global decarbonization, food and domestic
security. Boron and lithium products will target applications in
the fields of electric transportation, clean energy infrastructure,
such as solar and wind power, fertilizers, and domestic security.
The business strategy and objectives are to develop capabilities
ranging from upstream extraction and product sales of boric acid,
lithium carbonate and potentially other co-products, to downstream
boron advanced material processing and development. The business is
based on our large domestic boron and lithium resource, which is
located in Southern California and designated as Critical
Infrastructure by the Department of Homeland Security’s
Cybersecurity and Infrastructure Security Agency.
Forward Looking Statements and
Disclosures
This press release includes “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended. All statements other than
statements of historical fact included in this press release
regarding our business strategy, plans, goal, and objectives are
forward-looking statements. When used in this press release, the
words “believe,” “project,” “expect,” “anticipate,” “estimate,”
“intend,” “budget,” “target,” “aim,” “strategy,” “estimate,”
“plan,” “guidance,” “outlook,” “intent,” “may,” “should,” “could,”
“will,” “would,” “will be,” “will continue,” “will likely result,”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. These forward-looking statements are based
on 5E’s current expectations and assumptions about future events
and are based on currently available information as to the outcome
and timing of future events. We caution you that these
forward-looking statements are subject to all of the risks and
uncertainties, most of which are difficult to predict and many of
which are beyond our control, incident to the extraction of the
critical materials we intend to produce and advanced materials
production and development. These risks include, but are not
limited to: our limited operating history in the borates and
lithium industries and no revenue from our proposed extraction
operations at our properties; our need for substantial additional
financing to execute our business plan and our ability to access
capital and the financial markets; our status as an exploration
stage company dependant on a single project with no known
Regulation S-K 1300 mineral reserves and the inherent uncertainty
in estimates of mineral resources; our lack of history in mineral
production and the significant risks associated with achieving our
business strategies, including our downstream processing ambitions;
our incurrence of significant net operating losses to date and
plans to incur continued losses for the foreseeable future; risks
and uncertainties relating to the development of the Fort Cady
project, including our ability to timely and successfully complete
our Small Scale Boron Facility; and other risks. Should one or more
of these risks or uncertainties occur, or should underlying
assumptions prove incorrect, our actual results and plans could
differ materially from those expressed in any forward-looking
statements. No representation or warranty (express or implied) is
made as to, and no reliance should be place on, any information,
including projections, estimates, targets, and opinions contained
herein, and no liability whatsoever is accepted as to any errors,
omissions, or misstatements contained herein. You are cautioned not
to place undue reliance on any forward-looking statements, which
speak only as to the date of this press release.
For additional information regarding these
various factors, you should carefully review the risk factors and
other disclosures in the Company’s amended Form 10 filed with the
U.S. Securities and Exchange Commission on March 7, 2022, and its
Form 10-Q filed with the SEC on May 12, 2022, as well as the latest
risk factors described in the Form 8-K filed on August 11, 2022.
Additional risks are also disclosed by 5E in its filings with the
Securities and Exchange Commission, as well as its filing under the
Australian Securities Exchange, throughout the year, including its
Form 10-K, Form 10-Qs and Form 8-Ks, as well as in its filings
under the Australian Securities Exchange. Any forward-looking
statements are given only as of the date hereof. Except as required
by law, 5E expressly disclaims any obligation to update or revise
any such forward-looking statements. Additionally, 5E undertakes no
obligation to comment on third party analyses or statements
regarding 5E’s actual or expected financial or operating results or
its securities.
Authorized for release by:
Henri Tausch, President and Chief Executive Officer
For further information contact:
Chance PipitoneInvestor Relationscpipitone@5eadvancedmaterials.com
Ph: +1 (346) 433-8912 |
J.T. StarzeckiChief Marketing
Officerjstarzecki@5eadvancedmaterials.com Ph: +1 (612)
719-5076 |
Chris SullivanMediachris@macmillancom.comPh: +1 (917) 902-0617 |
Photos accompanying this announcement are available at:
https://www.globenewswire.com/NewsRoom/AttachmentNg/afb49c89-3335-49cb-81f5-718ce17ee2c3
https://www.globenewswire.com/NewsRoom/AttachmentNg/0806107c-ee3c-4a88-8fdd-3dcd3be5289a
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