5E Advanced Materials Technical Report Update

0:08 Okay, as folks are coming to the room, I'll go ahead and get started. I'll say good morning, good afternoon, good evening, depending on where in the world you're logging in from today. I think there's at least 10 time zones represented today, so thanks everybody for joining me. I have with me today Paul Weibel, CEO of 5e Advanced Materials, to discuss the company's recently published Pre-Feasibility Technical Report. Paul, how are you? I'm great, good to be here. Awesome. So here's how today's gonna work for the folks in the room. I've got some questions today for Paul, but this is an interactive event. There's a chat button on the bottom right of your screen. Please do feel free to ask questions at any point during today's event. We'll try to get to all of them. If for whatever reason we don't,

0:38 I'll make sure that Paul and the 5E team get those questions over email. So with your contact information, we can get back to you at his leisure. But today's event is also being recorded and will be available for replay probably early tomorrow morning Eastern time It'll pop right up in your inbox It'll also be available on our YouTube page and likely soon thereafter on the 5e web page But let me jump right into the details of the protein for today Paul I know before you get into the nitty-gritty the PFS I'd love you just share your general thoughts and impressions on the report, the initial feedback and reception from the market. Yeah, happy to. So there's been about 18 months of mining data, 14, 15 months of chemical plant data that has gone into this report that really, we believe it's an outstanding report.

1:26 Definitely need to thank all the QPs as well as our third party engineering partners for Miocene, our partners out in Chile, and our internal owners team that really put all their contributions into the report. I think it's probably table 18.2 in the technical report really gets into the differences on a traditional class 4 estimate and what we delivered. It started with we have a plot plan, We know where our well field is gonna start, where the header is. We are able to do material takeoffs. We have actual true PLS data that was sent to Comeco.

2:15 We have our own independent lab, have been doing tests on that 10 times over and ultimately the the mass and energy balance that was derived it was true bottoms up based on real pls and so for a Yes, it's a PFS, but we

2:31 think it's much better than that. We know it's much better than that. And I think it's Table 18.4 highlights that and it's a quality report. I think we put out the PEA almost a little over 2 years ago. We were bound by SK 1300 standards so that was Mining Guide 7 changed. So it took us a little bit of time to get that out and there was a lot of assumptions at that point in time and that's all changed now because it's all done on real data and we've demonstrated that we can mine this. And we have the team that can do it. So, pleased. I think the market has liked it. It's a 40-year mine life and that's 41% of the resource. There's an exploration target and it does not include additional load claims we've staked in file, which is about another third of the resource that'll get included with the feasibility study. So a very, very large multi-generational resource and We're quite pleased. Great. Let me get right into the details then. So at $554.80, all in sustaining cash costs, versus that $1,355 average Bork asset pricing, you're looking at $800 per ton in operating margin. But with 130,000 tons annually, that's what 100 million in operating cashflow. So what's driving this kind of remarkable margin profile and how sustainable is that price?

3:56 Yeah, I think the first topic on that is the cost structure. And so we knew over the last 2 years that this project needed to be tackled hands down on the cost side. You know, I think that we'll talk about the flow sheet later, but we've changed it up a little bit. We've optimized, it's chilled crystallization today. And so that's why we're at that 5 and change. And that also includes

4:32 our logistics costs of about 113,114 bucks a ton that we're assuming today. And so some of these technical reports, it's a bit of a modeling exercise based on assumptions. And we're assuming we bear all that cost. So you strip that out and you're closer to like 450 for all in sustaining cash costs. It takes a little bit of time to get to that because you got to ramp up. And additionally, the calcium chloride's on a little bit of a lag because we use the pond to get there in solution, but that's where we'll be. And it's quite competitive. Additionally, we got there on the fixed cost side by going a little bit bigger and spreading more fixed costs over additional tonnage.

5:23 When we took a look at the permits, it's super primitive for borates. And we got clarification from the lead agency that borate can be defined as boron oxide or oxide equivalent, which was basically gives us permits for 160,000 tons of boric acid. So that's really was how we tackled it on the cost side. On the price side, so I think our first, gosh, 12 to 16 0.25, it's an average boric acid price of $12.50. But remember, our costs are in there, so that's really a net back price of closer to 1140, 1130, my commercial team would tell me I'm being too conservative.

6:11 And because there's supply and demand that really justifies it being at those levels. So yeah, I think to just a succinctly answer to question, it was really driven off of the variable costs. And yeah, I do believe pricing sustainable as this market's in an oligopoly where demand's growing. Sure. And we'll get more to the market again in a bit, but I just wanted to stick to the details for a second. So that proposed $435 million initial capital investment generates, according to the

6:39 report, $3.75 billion in pre-tax, pre-cash flow over the mine life. It's up $8.6 million cash on cash return. I'm curious if you could break down for everybody that's in the room, what's included in the CapEx and how it differs from previous reports. Sure. And that's cash flow only converting 41% of the resource.

7:01 So yeah, major differences are that, the PFS dramatically improved, CapEx, clarity in that it includes co-gen. There was an assumption in the PEA that we would basically procure power at run of the mill everyday rates from an electricity perspective, and someone would ultimately finance that co-gen. That's still a very viable option that can come out of the CapEx. We can put together a long-term power agreement in exchange for someone powering the co-gen. The co-gen with the contingency was about 53 million dollars so that that could be stripped out of the capex that's optionality but that that that sits in in capital today, on the well field side and this is the other big difference is that phase 1 on an apples to apples basis included 160 vertical wells.

7:52 Today's mine plan is 27 horizontal wells. And so we had really good data from the 80s that kind of showed, you know, based on the porosity and permeability of culminite, where solution would migrate and when. That was kind of firmed up by we have these tilt meters that basically can track where our solution is at a given point in time from above ground. And it kind of aligned with what was in the 80s. And we looked at this and, you know, if you look at the area of the deposit, 160 wells for where we wanted the mine was a lot of a lot of wells and if you go into larger phases

8:41 it's 2 or 3 x the quantity of wells and We're fortunate in that our geology really is Homogeneous in that it's about 200 feet thick. There's 4 mineralized horizons with with the major mineralized horizon being 130 to 150 feet And we have really high grade culminate and so directionally we can I've been saying this for maybe 10 months, we're taking pages out of the playbook of oil and gas, because there's one thing this country is very good at, and that is drilling for oil and gas. And all of our major vendors that we're using on the drilling side are all, well, they all have operations out of Bakersfield, California, and a bunch of them tend to be headquartered down in Texas.

9:29 And So that implementing, and we'll talk about this, some of the initial results we're getting out of these horizontal wells, but they're very good. And the last major difference on the CAPEX and some of the differences ultimately how we changed crystallization. So the PEA included evaporative crystallization.

9:51 That's how the small scale facility was actually designed. And given the real high performance we've had with head grade, we've been able to change that and go to a chilled methodology. And so just from an OPEX perspective, that's actually decreased. I think the PEA had 20 MMBTUs per short ton and we're now at 7. So like a material material decrease and natural gas usage. Also, you're getting the benefit of that in that that it's, you know, that steam and that gas is also being used to generate electricity. So it's a win-win. So it's, you know, we've, to summarize, it's been, Cogen is now included. The well field has gotten significantly skinnier and more efficient, and we've optimized OpEx by changing the flow sheet and crystallization strategy.

10:46 Great. I got one last question that's right in the numbers here, because I just want to put in perspective folks in the room, but the PMS shows that you're going to recover the entire 435 million CapEx in under 6 years, and then generate just free cash flow for 33 plus years. So My question is given these cash flow characteristics, I know there's investors that love those long duration predictable cash flow assets. Are you getting any interest from infrastructure funds, yield focused investors, any of those guys? Yeah, we do have like a line out the door of some of the most reputable private equity funds. They've been knocking on the door for the past 6 to 8 weeks, have known this is coming. We were hoping we could get this out in late June. These technical reports are quite a bit of a laborious process that you have multiple groups all incorporating in from geo to process specialists at floor to their CAPEX team.

11:45 Then you overlay the well field And all this was kind of going on while we were drilling 3,000 feet of directional wells. So it was a pretty busy time. But yeah, this project has a ton of interest just because of its strategic importance. The Boron supply-demand dynamic is really interesting. I've gotten pulled in a couple market studies, and it's definitely one of those very unique markets in that demand's growing, but supplies not keeping pace. So, yeah, from a longer duration, long term investment underpinned by a very large multi-generational resource, Yeah, there's interest.

12:31 Great. I do want to talk about the 5E's market position for a second. My understanding is that you'll be producing approximately 11% of Bork acid demand from just this single project. So what does that mean to you in terms of how it positions the company for pricing power, contract negotiations, et cetera? Yeah, so that's 11% of the market today. So, which is continue to grow. So that number shrinks when we come online at commercial. And I think we did have a really, And that was another piece of the puzzle that was coming in there was the market study that Klein led, but they engaged former members of the oligopoly. I think at the table we had, and with their collaboration, 130 years of Borate sales experience across North America, Asia, South America, and the LATAM region, and Europe, Middle East and Africa. So we basically covered the globe.

13:26 And so we had some kind of core base assumptions that Eddy and Turkey will expand an incremental 60,000 tons. And what we're seeing very much in the market today is supply and demand are at parity. And I'll cite a couple instances here where one of the larger players has exited Vietnam, they've also exited India, and the market's short, cannot get supply. That's led to some really interesting pricing numbers, like 1,400 a ton.

14:03 Distributors are calling us and we can't get it. I talked to a US customer. The other market that has been tight has been the US, and that's been driven off of, I call it tariff arbitrage, where obviously the second largest global producer, US-based, there's tariffs and reciprocal tariffs that any US producer would be dealing with. And so Ultimately, Turkey has decided to let's go sell boron where the US producer can go ultimately where they have to sell at higher prices. And so let's go also sell that capacity into China so we can get higher netbacks. And so in the interim, US warehouses have been short. And I talked to a producer, this was probably maybe 6 weeks ago, and they had to buy product from a Canadian distributor at 1,300 a ton. So there's, listen, the long-term mark, like this market is contracted based on off-takes. And so, but if you're not in those off-takes and the market starts to get tight, the spot market can be a really great place to add additional margin.

15:21 Also, just tying back to supply and demand, we think that's a parity today. We've also assumed that the 2 other permanent projects, 5E being one of them, are going to come online when it's publicly stated, which is about the 2028-2029 timeline. And so you look at that and you're like, okay, there's only 5 or 6 sizable boron deposits in the globe, 2 have permits, 3 of those are in the exploration stage.

15:50 You can assume 60,000 tonnes from Eddie, 5E and Rilett come online when they say they're going to do, And the market's still in a deficit. So I think, you know, the and then you have the ability where we have our piece and we can start to segment across the various customers, which, you know, is how we've already signed up 14 global customers and passed their process. Great. You already touched on it a bit, but I know that Boron has been designated critical infrastructure by Homeland Security, American Defense, et cetera. And I'm curious, in the era of tariffs and Buy American, How do you think the domestic supply advantage translates into competitive positioning for 5e?

16:36 Yeah, so there's definitely interest in securing all aspects of the supply chain from the upstream to midstream and downstream. And there was one of the first executive orders was that mining was now included in the industrial base. And you're going to definitely see additional projects. Dacca Pass is coming online. Perpetua is making a go at it. And so I think there's there's an emphasis here. And in this next 4 year window is is is. And I think Biden was all about the green side and clean energy and Trump's all about like we need to bolster up the industrial base. We talked about how the US warehouses have been out of stock. I think that just speaks on those 3 markets, which is US, India, and Vietnam, how susceptible prices are to supply demand and utilization, which is really one of the big drivers in Incline's pricing model.

17:35 And so, you know, there's, what we've done is we've ultimately partnered with different companies that are working to bolster up domestic supply chains. And one side of that has been on the carbide side, where 85% of boron carbide is out of China. And so there's different groups that we've been working with where we can produce that domestically. And given, you know, what does carbide go into? It's Kevlar tank armor and it's the third hardest material on planet Earth. And so this is just one example how 5E is kind of playing its part in bolstering up the domestic side supply chains and ultimately providing the upstream feedstock. So ultimately, you know, this is no, the boron carbide market for U.S. Defense is no longer a market that the Chinese can dominate.

18:27 And I appreciate that. It's just interesting context. Now, I know you've got 14 customers already qualified through the small scale facility you've got up. I'd love if you could just share insights into what the value-add proposition is for 5e to securing these agreements. Sure. So I think on the, You can use those 14 as a canary in the coal mine or the leading indicator to indicate that, hey, there needs to be incremental supply because our phones are ringing and it's definitely a concerning,

19:01 I think the customer is concerned because supply and demand is tight. And I think the first proposition is quality of raw material. We've demonstrated that we can meet the highest specification in the market, which is LCD glass. If you read section 10 of the PFS, you can see that we actually partnered with Cameco. We sent them to mine solution and we know exactly what we need to do to achieve our sulfate chloride spec and impurity profiles on the finished product. And there's actually really good pictures in there that detail the boric acid coming out of first stage crystallization and then a redissolve and the second step of crystallization. And it looks awesome.

19:47 So I think achieving product quality is of utmost importance. The second is that we can be a reliable long-term supplier.

19:59 And I think this resource is massive. It's really of high quality of strategic importance to national security, and it'll be here for many, many generations to come. The second, and we've, so we've, we really did a great job focusing at this in the PFS, and it's where we'll continue to focus our efforts is on the cost curve. And that's tackling variable cost. And ultimately, Our goal is to be second on that cost curve. It's a cost curve of 2. Yeah, there you go. Well, yeah. So, and I think there are a couple other smaller Boric acid producers, but we hear time and time again from various customers and market can hand a Bible vouch this that they struggle with the quality side. So yeah, that's where we'll provide the value. I appreciate that. I want to get into the operations and scalability for a second. So one

20:54 thing I found interesting in the PFS is that in-situ leaching approach where you're achieving 81.9% recovery with really minimal surface disturbance. So I'm curious if you could just give your take on how the tech advantage translates into cost savings, environmental benefits, compared to the more traditional approaches. Sure, so it definitely comes back to culminite and the geology. And I think that you have the 4 different types of ore most common where borates are found. Culminate, Elexite, Tin-Cal, and Kernite. So culminate is, I describe as the Mercedes-Benz of mineralization for boron. It's a calcium-based boron mineral, and it's just really easy to leach. We've saw that in the lab in 2018, and we've seen that real-time in the plant. So having that is really how we can get that 81.9% recovery.

21:48 Additionally, from an environmental perspective, we're low touch. There's no open pit, there's no tailings dams, just a 6 inch borehole and a mill. Yeah, there you go. I wanna talk a bit more about those horizontal wells, because the conversion of those intercepting 3000 feet of that culminate is obviously an operational breakthrough. But I'm curious, how does it, I got to ask you about the timing, how does it impact your confidence in that production ramp up to get to that 130,000 tons annually, I believe by late 2028. Yeah, there was definitely some reconciliation that needed to occur between what's the anticipated feed rate that the plant's gonna achieve and what is the quantity of wells on a gallons per minute basis that will ultimately need to be established to feed that chemical plant.

22:38 So we'll use this as an opportunity to talk about the horizontal wells. So we have 4 injection recovery wells today And our mineralized zone is about 200 feet. So we're coming into contact with approximately 800 feet of pay zone. We took 2 of those wells and let's talk cost. So each of those wells was about 900 grand. So it was $3.6 million to install those 4 vertical wells. Now, we get the benefit of actually utilizing the vertical piece where we've sidetracked off of those 2 wells, but that still took a decent amount of time because it was a complex drilling program to kind of, you need to, your initial hole and kind of breakthrough

23:27 of your vertical well needs to be larger because you're going to put a flexible casing through that. So it needs to be wider and it actually takes a decent amount of time to drill. But it's not an apples to apples comparison, but it's close. $1.5 million we've now outlaid and we now instead of having, well, it's 2 wells, so 400 feet of mineralization, we now have 3,400 feet of mineralization. So on a, how much more bang for your buck does your drilling dollars get you? And also to note that we're able to do geological logs along the way and be looking at what's actually coming out of the ground.

24:14 One of those wells is a perfect 10 out of 10 score and is in high-grade Goldmanite the whole entire way. So it's definitely the way this deposit needs to be mined. And I think we've known that has been the case. And we really had like ourselves all amped up out of the gate and we're probably like a little bit too bullish. And so like we expect like instant gratification

24:45 when we started to recover PLS. And so right away, I think, so we've just completed today, we're almost done our fourth cycle. So we're very much like in the early stages of this, But I think after 2 cycles, our boron PPM was about 3000. And just for like simplistic calculations, you take 3000 divided by 10,000, and then you multiply that by approximately 6, and that'll give you sort of an indication of what your head grade is. So at 3,000 divided by 10 times 6, we were at like a 1.8% head grade, which isn't good. And I was like, the team, we're all like, what's going on? Well, then we did cycle 3. And it just like, clicked.

25:37 And we got 20,000 gallons out 6.5 percent head grade, like 11,700 ppms boron, 91 degrees. And so there's temperature that we can use to our advantage too. And it was just really good. We're on our fourth cycle and we're not all the way done yet. And so we're kind of mid to high fives. So like really, really good initial results.

26:07 And so we'll continue to operate this. We got to, you know, more customers want products. So we're that facility will operate And ultimately, as we think about the debt diligence, like we need to run this well field so we can, there's no questions that are left unanswered when we go through the project finance diligence process. Okay. I appreciate that. I know the technical report only covers phase 1. So I'm curious if you can give the folks in the room a sense of the expansion potential. So I'm talking the additional tonnage, but also those value-add boron derivatives. And what does it mean for the investors in the room? Sure, so, and We're definitely ahead of the curve on this one because we've been able to actually incorporate some of our testing to this, or incorporate some vendor testing while we were kind of going through the pre-feed process.

27:00 But customers, it's well-known, they'll pay, So boric acid is 56% B2O3. Customers pay a premium for more B2O3. That's the boron component, and that's what gives glass its higher strength and its heat resistance. And that's where the premium chemical properties of boron lies. And so we're looking at product mixes with higher B2O3 content, which would drive you ultimately up to oxide, but there's potentially a blend, a metaboric acid, which would be 86% B2O3 that customers will pay much more than the regular price of boric acid. There's also a value proposition there if we could deliver that. That's not included in phase 1, but that's something that the team has bandwidth to do working on in parallel.

27:50 Additionally, we can go bigger. This is a very, very large resource. And again, 40 year mine life, 41% of the resource, we can go 2 to 3 times larger and the resource has the capacity. So I think really good economics with phase 1 and we can go bigger once we deliver phase 1. Great. I do have some questions on risk management, but just a little round topic. Tate Sullivan from the chat asks, what are the next steps in the project finance diligence process? So we need off-takes. That's like front and center right now. We have 18 Super SACs that are going out probably end of this month, early September for a 5 week trial for glass tank testing.

28:38 And then the next phase was

28:42 like we needed to get these capital and OpEx numbers so we can really know how much debt we can take on and ultimately set the table for offtake so we can demonstrate that we, to a lender's perspective, that we can pay back all of our cash costs, clear margin and payback principle and interest. So that's really the priority here on the go forward basis is the off takes need to come. One question. So I know you've been operating the small scale facility since April of last year. It's given you a real operational data for the pre-fees. What have been the learnings you've had so far and how do they give you confidence to scaling up to that real heavy commercial production?

29:27 Sure, so, and shout out to our lab, our chemist, David has done a great job because we've tested so many different aspects of the plant. It started at, and the lab data really kind of tells the story of all the lessons learned. And out of the gate, 18 months ago, it was all about the well field. Hey, do we get that baseline head grade that aligns with what amount they saw in the 80s? And yes, it does. And so, well field got put together and came along, and it was... And all the data very much aligned, It was 30 to 60 days to condition. Obviously, horizontal wells demonstrating that that can happen a little bit sooner. And then kind of right around May, when the plant turned on, it became all about how do we get on spec?

30:18 And that was a finicky process. Took a little bit of time, but we got there. And then there was a period where it was all about gypsum. Hey, and we realized we needed to put more sulfuric acid into the calcium stream to precipitate out more gypsum. And so,

30:38 I can say that then that all that data was kind of reinforced by our OEM testing we did in conjunction with pre-feed engineering, which is another reason why that PFS is Bigger and better than an ordinary PFS because a lot of companies They'll do their vendor testing in the feed stage and feed costs more money and that's how you get projects that go over budget, what they anticipated because they don't do that vendor testing. So we did that vendor testing in line and I can say like the flow sheet's not going to change now. We know what it's going to be. So we can close the book on chapter 1 and chapter 2 is all about horizontal wells. I think we're going to be able to reduce them, we'll be able to optimize them and it's the commercial agreements for the offtake.

31:30 So that's where we're going. I think one of the biggest learning lessons, too, has been materials of construction do matter, especially when you are dealing in an acidic environment. One other change to the flow sheet we made was we actually neutralized the stream. Once we get out of the well field, like before we actually, you know, first step acid concentration needs to be fully neutralized. And that actually has helped us with materials and construction. And one of the reasons we've been able to toggle down the CapEx. Great. I want to talk about permitting real quick, because I know the existing permits you already have in place, they'll have up to 160,000 short tons of bork acid production. So it looks very well positioned regulatory wise. But curious if you could share with the folks in the room, what are the remaining permitting regulatory milestones between now and that commercial production? What's still

32:22 to come? Sure. So, we had initial capital numbers in February, and when we got the capital, we were able to isolate that there was about $40 to $45 million of capex attributable to sodium and calcium removal. So the calcium is what drives gypsum and the sodium, all that salt, right? Gosh, sodium maybe 20 bucks a ton, gypsum, USGS, basically from a mind FOB basis, USGS publishes prices. It's about 36 bucks a ton. They are not value added by products. We did incorporate calcium chloride into that design. That is a little bit more of a value added product. We'll produce now up to 57,000 tons of liquid solution, or I'll say we have optionality too. So you can toggle kind of between the 2. But one of the ways we cut CAPEX was we incorporated some additional ponds into the design, about 34 acres. Now, what needs to be kind of noted is that, well, we have about 8 or 9 acres of ponds that sit on our site today.

33:33 We're gonna close them down because actually the plant's gonna be built where those ponds sit. We'll need a WDR, which is a waste discharge permit for those ponds. Now it's a really unique situation because that's happening on the back end of the plant. So they're lying ponds, they

33:53 are water, calcium, sodium, predominantly. There's other companies out there that have ponds that are a bit contentious. They have arsenic. This is not what it is. This was just purely a value engineering. And listen, the trade-off was good. The ponds are about 5 million bucks. So we saved about $40 million in CapEx by incorporating this and we're one of the few geological areas where us and Atacama Desert, where listen, let mother nature do the heavy lifting and evaporate any of the excess water to create the finished product. What's coming out of those ponds is actually a saleable product. I want to talk about generally the boron market for a second, because obviously looking at your sensitivity analysis, boric acid is the key value driver. It's the star of the show. You mentioned earlier, you think that market's going to grow. Tell me more. What do you think is going to drive that demand outlook for boron?

34:43 Yeah, Great question. And I use the analogy diversification. So if you look at the boron market, it goes into over 300 applications. So as we did the market study, glass is growing kind of in line with ordinary inflation. Some of the gap glass applications a little bit more, but let's assume that's about a third of the market and that's the 3 to 3.5 percent. Non-glass, which is fertilizer, ceramics, construction materials, flame retardants, growing about 4.5 percent. But the big driver of how then you get up there is specialty boron. It's carbides north of 5 percent, permanent magnets, which requires the ferroboron and EDs, those categories are closer to mid-teens.

35:32 And so, and you can kind of break out glass, non-glass specialties into kind of 0.333, 0.333, 0.333. And so when you take, when you have 3.5 percent, 4.5 percent, and kind of

35:47 on average for all specialties, it's about 8%, but with ferroboron, which is a decent chunk and in size off of magnets, growing at 15, 16%, it kind of wrap your head around how this market's going to grow at 5.5 percent. And what's really interesting is that when you look at what boron does for each of those different applications, Well, you can't make glass without sand or silica and boron. You know, it is a micronutrient, and so that gets put into blends. Insulation. Boron's the main ingredient that gives insulation its fire efficacy.

36:38 On the permanent magnets, yes, like and I use the analogy of mining.com did a great article on this, is that rare earths no doubt start a show, they won the Oscar. You know, Tom Hanks and Forrest Gump, that's it. But the borate, it's like you can't make that magnet and that magnet is not what it is without Boron. And so we get the Oscar for best supporting actor. And so the point being is that there's value in use and there's very little substitutability, which is why, which is really kind of speaks to the criticality of what Boron provides. Great. I appreciate that. And one thing, just zooming out, I'd love if beyond the Boron market opportunity, you can just give folks in the room, you know, if there's perspective and existing investors, a couple of reasons why to invest in 5E specifically compared, let's say, to other critical minerals companies?

37:33 Sure. So I think it's a world-class resource that we've mined and we've been processing for 18 months. We can achieve commercial production and we do expect to achieve commercial production at scale. On a DCF basis in just phase 1, and we all know the stock market's forward looking, it's a $700 million NPV. We'll just take basic math and divide the 20 million shares outstanding, that's a $30 share price. Now, obviously there's discount rates and we do risk this over time, but I do think where we are today, it doesn't justify valuation. And the third being we have a strong management team and a highly engaged board. We have the know-how, we've been doing it for the 18 months. And if you look at the board, you can follow the flow sheet on the mining side. You have Bryn who knows solution mining inside and out.

38:26 On that flow sheet, that mining feeds a chemical plant where Graham lends his expertise. You need funds to do that. That's where Barry comes in. And then ultimately we need cheap agency debt, which is where Kirk comes in on the policy side. Cool. I have one question. So with the technical report complete, you're moving towards that definitive feasibility, feed engineering, what should investors who are new to the story, been around a long time, what should they expect to come next? What are the next milestones of the next year and a half? So we talked a little bit about the 18 Superstacks that's here, that's going to come. We've had really good conversations with XM. Josh and I both spoke with the XM team last Friday. So XM has what's called an engineering multiplier program where they can loan for feed engineering.

39:15 So if you look at the funds we need, about 8.5 million of like 40% of our cash flow requirements is actually for feed engineering. And we can get a loan for that. And it can be, listen, we have no debt today. We've cleaned up the balance sheet, all common stock. And at some point in time, we are gonna add debt through Project Finance. But Ex-Im has an engineering multiplier program that's really good cheap paper, i.e. 5 to 7 year term, treasury rates plus 100 bps, and it can be refied into a broader project finance facility. So it's truly non-dilutive and you can be paying that down along with project finance when you're cash flowing.

40:10 And there's line of sight on that. So that's, I have the, I got the application Friday. I know XM is like jam-packed because the Uncle Sam's fiscal year ends September 30th, so they're mandated. They got to get a bunch of loans done before then, but I believe we got to get that application in now. It'll be senior secured and we have the collateral. We have 400 acres of real property with billions of dollars of boron in the ground. So there will be a collateral package, but it's great, low cost, cheap capital today. So we're going to apply for that. Market will love us getting a smaller loan. And there's a 2 part benefit of that because one, listen, you have multiple different debt packages that you can get, you have commercial banks, they tend to be a little bit more expensive, but they can move a little bit faster. You have private capital that tends to be most expensive but can move fast.

41:08 And then in turn, you have agency debt, which tends to end up being a little bit slower, but it's the lowest form of capital get. And this is a great way to immediately get this application in, start off to take a bit off, like a bite off of your liquidity that you need. And it gets their diligence team looking at the project and comfortable with us and demonstrating, hey, we have a really good bottoms up budget on what the feed costs will be, what the actual, all the additional testing that needs to be done. Like we now, so we now know how to make the product and what's our crystallization strategy. Now we got to go out for bid for basic engineering processes and we need to do 2 because, listen, that's our largest piece of kit. So you got to keep those crystallization vendors honest or otherwise, you know, that's when costs go up.

42:03 So we need to keep it competitive. And so, yeah, I think that'll be a major catalyst. We're working on the offtake. And listen, we've made a really solid pitch to Dep Secretary of Interior on why born has its place on the critical minerals list We that list is coming out this Fall I I do not know if we're on the initial list, but I do believe that I know the path we must take through the public comment process, which will be backed up with customer letters validating why they're concerned.

42:48 And USGS cannot ignore the industrial base. And when the customers are saying like we're concerned about Boron, Boron I think can get flagged on here this type, this go around. And I think if you look at that and that happens, there's like 1 or 2 ways to get exposure to Boron in the stock market. We are the only pure play, and that would be very good for, and that opens up additional cheaper agency options. And listen, I'm not going to rest till we get it on the list, but that's the plan. And we have made and we will continue to make the pitch. Great. I got one last question on the future before I'll jump to the questions that are in chat and one that came in over email. I know given this project alone can generate, will generate substantial cash flows. How are you thinking about capital allocation once you're operational with commercial production? Is it returning cash to shareholders, funding expansion phases, you're looking for new projects?

43:45 What's up next? It'd be expansion or we go derivatives. Listen, we're a young company and we, probably not dividends out of the gate because we wanna take that capital, reinvest it back into the business to And the market needs to tell us that that's what we need to do supply and demand when I market It's not stock market supply and demand market Saying that there's a need but there's I mean we see it on the the boron side is there's a ton of opportunity in those derivatives. We'll have the upstream feedstock and we can really have a competitive advantage going downstream and building out a derivative pipeline. I think that would be my, that's my expectation.

44:31 Great. I appreciate that. One question that came in over email, it's a quick one. Are you still planning to extract lithium? So it's interesting. So we're blessed that we're dealing in aqueous chemistries. So everything is in solution and we are pipes and valves at every junction in the plant. And what's interesting is actually initial ICP analysis shows an uptick in lithium with the horizontal wells, which makes sense because a lot of the, you're coming into a much larger contact of mineralization and we're closer to 65 ppm in solution. Now, like this is not a, there's a decent size lithium resource there.

45:19 But on a tonnage perspective, we had like 130,000 tons of boric acid to think through the logistics and about 57,000 liquid tons of calcium chloride and 130,000 tons of gypsum. Those are serious tonnages out of the gate. On the lithium side, it's a much smaller piece. So the benefit is that that can play catch up at some point in time, and it can be a bolt-on process along the way, and it's there. There's no question, lithium's in the solution. And so we, and that as well as some of the metals Today the assumption is is that we're paying The metals to be removed I There's catalyst business that needs magnesium aluminum and iron in Hydroxide form that would probably just at least not, they would come pick it up for free. It would not be a cost and that's included and it adds about 2 or 0.3 of a percentage point to IRR.

46:16 But yeah, like we will bolt on process and the priority was focusing on the big things out of the gate. That's included in the base economics. We didn't take credit for anything else. So there is no lithium byproduct credit today in this PFS, nor is there anything on the metals, but that's all would be additional creative aspects to the economics. Great. A couple of questions from the chat that I'll run through, just a couple of quick ones. S. Egan asks, can you explain what co-gen process you're planning on using? So we would, the Mojave, Kendra Morgan's Mojave natural gas pipeline is right along Interstate 40 and it's 2 miles from site. So we would tie in with a metering station right off of the main trunk. That is actually in our record of decision.

47:10 So it's permitted today. The 2 miles of pipe line to the facility is there. And so we would use the gas to ultimately run a turbine and to generate electricity and then also for the boiling of the water. So we got 3 budgetary bids as part of our process. One was like way too big and because that was their lowest size and then we had 2 other really good competitive bids from actually tier 1 OEMs that made sense. One is actually manufactured here in San Diego, which is the one we went with. So that's an option. The other option is we're commissioning a method of service study, which is with SoCal Edison.

47:59 That'll take a little bit of time to work through, but there's trade off and we have a megawatt of shore power today. Great. P.Mirror from the chat just wants a reminder of the cap structure of 5B. So today it's all clean common stock. I often get asked, well, is there warrants? And so there is $20 million worth of warrants struck at 355 US per share. So you have about 5.6 million shares in warrants at 355. Those warrants are set to, they were 1 year warrants. I think February they expire, so maybe another 6 or 7 months. And then there's another set of warrants up at $18 a share.

48:48 Everything else is ultimately the management incentive plan, which basically myself and the team, options were restruck at the conversion price where lenders converted to equity, which is 674 a share. They're both very sophisticated investors and basically all parties are now aligned. And listen, I think we're all motivated. Listen, we're all here. We like the upside, but we also want to see this project built. Sure. And last question I'll throw to you just to close off today is Heiko from HCW. It says, obviously, shares have been quite well the last few days. Wants to know, what have you been saying to investors who have asked if you feel like the PFS came in better than expected?

49:36 Yeah, it's interesting. I think Friday, share price was decent. And then it's these technical reports, It's 120 pages. It takes some time to judge digest. I think the release was well received But I think over the weekend people had a chance to digest it. Talk to a handful of people and I think one person said like they were concerned after the pea you know there was In what this has demonstrated is we've tackled this on the cost side. Listen, these are our mass and energy balance and CapEx numbers that the floor is signing off on. It's the Greenville, South Carolina corporate headquarters group that's behind this. And it's very real. And I think the reserve kind of speaks to it, 40 year mine life. It's a multi generational resource and it's 41% of reserves.

50:28 So the resource is converted into reserves. That can go up because SEC only lets you incorporate into your reserves on what's in your mine plan and our mine plan is a little different than open pit in that we're wells. So if we incorporate additional wells we can convert more resource to reserve. But yeah, I think people have been pleased. It is a very good technical report. And I don't know if you were able to dial in in the early part, but table 18.2 in the technical report really speaks to 4's work product. And, you know, they specifically cited to typical class 4 estimate has this level of, it's a factored estimate for these things and, or this, and that, and then, you know, for what we've done, like 60% of it might've been material takeoffs on actual measurements of piping so we're able to drill down and get that quality more of a quality estimate. I also think that listen it's another look on the the market and I think on the back of what you see occurring in DC and very much shoring up supply chains, people are like, oh, what's this unforgotten element boron?

51:45 Say what? And there's been a lot of good media that has picked this up. And we were also prepared. We've had a lot of time to think about this, and we wanted to really get the story out because I spent a lot of my day educating, and the more I can use a catalyst like this release to kind of give us tailwinds, it makes my job a little bit easier. Nope, makes sense. One last question from the chat, and then we'll jump today. Newberry Springs asks, what's the expected water drop for the project? I'd have to like really get into Flora's basis on that, but we have, so what's really interesting is that when you look, the deposit's bound by faults.

52:31 So the resource sits in between 2 faults where there's like no water and it's really ideal for solution mining. And then outside of those 2 faults, there's water wells on each side. Now what's interesting is people, and I've had people ask about like, what about like drinking water and it's California and it's the desert. Newberry Springs is a town of 40 people. Also, there's the water we have is non-potable and it's not a drinking water And so it's actually a closed basin. So it's kind of the groundwater flows to collect, it doesn't go anywhere. So it is ideal there is about, we have one of the wells is 650 gallons a minute.

53:19 And then the other one, the well that's in the plan of operation is 150,000 gallons a day. And so we have not seen subsidence or anything of that nature. And I think that's a question we often get and it's clearly addressed in the technical report because we actually give some real good data on that. Awesome. Well, Paul, we're close to the end of the hour. Thanks so much for getting into the nitty gritty with me and looking towards the future of 5e. Everybody who joined, thanks so much for joining us. I know it's early in the morning for some of you and in the evening for the rest of you. I do appreciate you joining us. The replay will be available probably tomorrow morning and I'll pass along any additional questions through to Paul and the team at 5e. Paul, thank you so much. I Hope you have a great Tuesday afternoon. Have a great day. See you.