5E Advanced Materials, Inc. ($FEAM)

Time zone is represented today. So thanks for joining us from all across the world. I'm lucky enough today to be joined by Paul Weibel, CEO of 5# Advanced Materials to discuss the recent developments with the company, but also give a view into the future for investors and prospective investors who are both here in the room and watching the replay. Paul, how are you today?

I'm good. Glad to be here.

Awesome. Let me do some quick housekeeping, how it's going to work today just for the folks in the crowd. I've got some questions for Paul just based on both recent news but also what's coming up. But it is an interactive event. I know some people have already submitted questions in advance over e-mail. I appreciate that very much. But there is also a chat function at the bottom of the screen. Please do ask questions during the event or you can also e-mail them in. I'll keep an eye on those too. If we don't get your question for whatever reason, either we run out of time or it's a little off topic or doesn't quite fit. I'm still going to make sure that the team gets those questions afterwards. I'll be sure to get back to you either on e-mail or by phone, depending on what you put in during your registration. The only other two things I'll say is that this is being recorded and will be available for replay in the early -- sorry, late afternoon, Eastern Time, probably before end of day for folks on the East Coast. And also there's a request meeting button at the bottom of the screen. Please feel free to press that if you'd like to have an opportunity to meet with Paul or anyone from the team. I'll make sure we connect those following this event. Paul, let me get into the meat and potatoes here. The headline this quarter, to me, the first offtake heads agreement, a long-term deal with domestic industrial customer, 7,500 tons of boric acid a year with optionality all the way up to 10,000. So after years, I know you've gone through of qualification work, what does it mean to finally have a signed commercial commitment in hand? And why was this the right first customer to anchor your book? Yes. Great to be here. It's good to get the monkey off the back.

Yes, I think it's a major catalyst. The market likes offtake agreements. I think it's confirmation we're real. We've qualified multiple industry segments across various industries. I'd also say like it was important, one, because this is a large buyer of boric acid. There's more opportunity there. I think this is kind of the first what they felt comfortable. It also made logistical sense, just where we're based, cost to serve relatively reasonable. And so those factors went in. And obviously, there's a relationship aspect too, for our commercial team to get them comfortable. And I think it kind of sets the stage for more to come. I think you're still muted.

I got embarrassed myself once a day. It's like it's the law of webinars once a day you go good. The structure I found notable of the deal, the fixed pricing with annual escalation. You got that 5-year initial term and automatic renewal out to 10 years. So walk us through why you went for that shape rather than spot index-linked pricing, all these other options and what locked-in revenue does for conversations with project lenders at this point?

Yes. So we have offtake proposals of various shapes and sizes. The structure, though, at its core, the principle is about bankability. The reality is if you talk to lenders, they're going to say, how are you going to mitigate price and quantity in your off-take agreements? How can we model revenue and so the simplest way is actually fixed pricing. And I think that comes in -- bankability comes in various shapes and sizes from -- at its simplest form or a fixed agreement. Cost plus or you can index to a certain benchmark with the floor or potentially collared and that has a ceiling. And so for this customer, this industry, this made sense. It obviously has the annual escalation, which is good because, obviously, what you do see in reagents, especially hydro park acid and traditionally sulfuric, though that's been an interesting conversation in the market today, but they tend to kind of go up inflation. So you can kind of lock in and really model and underpin the debt financing. One of the other proposals we have out there today is actually the borrow market is very opaque. When we first started approaching customers, they would ask for market-based contracts. And I'm like, well, what's the market? Well, it's a proposal that the other 2 players in the oligopoly who have already spent their capital are offering. That's not going to work. I mean what China is to rare earth, [indiscernible] can beat to boron. So we need to mitigate price and quantity. And so what we've actually done too is we fast markets does provide a West Coast FOB benchmark price. We've kind of walked customers through that. We've vetted the their price, it's pretty close. And it's not going to be perfect, but I think what they're going to do a very good job of is capturing a trend. And sometimes, maybe our customers' procurement team could do better or worse than that benchmark, but I think over time, it's going to be relatively reasonable. And the proposition we've kind of made to other customers, and this was a big theme of the roadshow is kind of walking them through 5E and also to like what we would envision a contract structure looking like has been, listen, I think we would propose a fast market benchmark. We talk about the trend. It will capture that. In turn, what we would propose is to establish bankability as a floor price. And listen, if that floor price, if the price would go below that floor, they would have to pay that floor. But in exchange for that, we would offer a ceiling price. And listen, if boric acid prices go to $1,500, $1,400 a ton, $1,600, which supply and demand definitely is a big driver of pricing and utilization, you have a great contract because you're capped at a ceiling price and relative to your competitors, you're going to make a lot of money. And at the same time, you're going to introduce a third supplier into the market by giving us a bankable structure. And kind of given what we're seeing in the market today from just actually a supply and demand, the deficits here at least in the U.S., people say that's fairly reasonable. And so it's only been until kind of back of last year kind of this year, that we've been able to really kind of soften ground and make that progress where people are amenable to these structures.

Sure. It's been so long people talk about the incoming deficits, but they've arrived of conversations. Yes. I do want to talk about Roto that you were on in March. I'm going to ask you some crystal ball gazing here, so bear with me. I know you met with a dozen or more industrial boron customers and distributors. Where does the broader pipeline stand right now? And how many -- again, ballpark crystal ball gazing, how many of those conversations do you realistically see converting to binding offtake over the next year or so?

Yes, I call my commercial team daily. I'm like, what's the status?

Where are we.

Yes, I think the first thing to know is like there's general consensus. Customers want a third reliable U.S. domestic supplier. Americans tend to be very reliable and it's a very secure jurisdiction here. So that's a common theme and a trend we saw with all the customers. I think sometimes like always price does matter. And we've been very good with thinking outside the box creatively on ways to bring value to each specific customer that all of a sudden says, that's a really good idea. That's something we should pursue. So I think, listen, there were 12 customers kind of various shapes and sizes. We probably have 6 active proposals in the [indiscernible] and I'd say 3 are very close, like they're like through a review like I'm waiting on nominated volume. So like there's -- we kind of are close to or I've had their proposal back where I'm like, why would really like this in there. And we have approved templates, we're kind of lean with that. And then, listen, everything -- everyone has really kind of marked it up kind of for what's comfortable to them. And okay, we go back and forth. And it's a negotiation. And we kind of get to a meeting of the minds. But there's 3 that are very close that I continue to talk to to Mark and the commercial team and it's like, all right, like what do we need to do? And I think it's -- they're coming. This is going to be a big theme for 2026. We knocked down the first, and there's more to come. Mark was in Asia last week, out of the Asia trip. Now we have -- we're a much more diverse portfolio of bore products and just a forecast we can talk about Med in a little bit. And I think 6 customers, here's what they ordered on the menu from a sample size. Here's the contact, here's their phone number, here's the address, and let's get this out. So that all kind of, listen, Asia is going to be a little slower. I think the commercial team went over there. Again, similar conversations to what they saw on the U.S. trip where, again, one another supplier, there's concerns. And I think the plan will be another visit towards the back end of the summer after they've digested done their analysis on those samples. And then you can kind of hopefully expect a similar progression where, okay, March, mid-March, we were on the road, mid-May, two months or so, you start knocking down some of the Asian customers. We also did engage one of Mark's former colleagues at Rio. It's actually -- it's more domestic based and we call it North America, but it's a segment we actually have not targeted. Again, like I wish I could be more transparent from like listeners, in the industry, but we're trying to break into an oligopoly here you just kind of hold your cars to the best. But progress is being made. And I think that's a big industry segment because Mark's an industrial guy, that at Rio and Eddie, when he was there, that was his kind of bread and butter. And now 1 of his former colleagues has a whole different sector of the borate market that there is very large bankable customers as well as ultimately size. And I think we're just looking for a piece out of the gate. We don't need all supply. It's 130,000 tons in the model, it's 90,000 in year 1. So you can kind of see like it doesn't take that many customers to start to build a substantial portfolio.

SP1 Okay. No, I appreciate that. I don't want to -- I want to kind of zoom out for a second and talk about boron generally, because I know we've even discussed today, but I know you've spoken generally about the domestic boric acid market slipping into a pretty serious supply deficit. I'd love if you could just help investors in the room understand what's driving that first -- and then how much of a tailwind kind of tightening U.S. market is for domestic producer that isn't even in production yet.

Yes. Really interesting time in the borate market. Obviously, boron was added to the critical minerals list in November last year. We kind of foreshadowed that occurring. Once it was added, you really had a couple of interesting fundamental shifts. And I can say like I do applaud the U.S. government because relative to some of the other minerals, where they're adding things is critical and acting kind of on the back foot, at least on the boron side, like I would have loved to see it added 3 years ago, and that would have got an A+ rating. I think you still get the B rating, like it still really good that it's added now. The deficits kind of here and you got a 5E project that can be is a near-term solution. And I think we're a bit more on the front foot than the back foot. So I think that's that was a big positive. But I think -- all right, so you've always had -- we talked about this oligopoly. And so the second largest global producer is for sale right now that should conclude here, I don't know, in 2 months or so from what I hear, it's the process is moving along. That customer, they're not expanding. It's a depleting asset and they kind of are who we thought they were. They produce, they are very, very great like producer. They're 25% of global supply, and they definitely -- they produce their 0.5 million tons of oxide, but there's no expansion coming right? That's one. There's always been another much smaller producer in California on borates. It's -- there's a soda ash primary producer. And listen, it's a shame there was an earthquake damage and then ultimately, COVID and like just kind of a tale of unfortunate events and really compounded by the soda ash market is long and China is supplying some very cheap soda ash, and that has caused them just they can't compete on the cost curve. So they've they're restructuring the business in the sense that they've exited soda ash and then also for acid, they're going to -- there's a couple of different refined borates, sodium borates is 1 of them. It's more of the commodity of the borates, but they'll produce not boric acid -- and that was about 55,000 to 60,000 tons, and they were predominantly supplying in North America. And this is all public, and they exited. And we saw on our supply and demand analysis, 2025 was kind of the year of parity. It was always like a little -- because it's just such an opaque market. '24, '25 we're like teetering on is there excess spot, excess demand, deficits, and once they took their 60,000 tons out of the market, like the full deficit was here. And what we saw was customers scrambling for challenging South America product or begging Eddy to supply them. And listen, I think it's like people scramble it. And in that point, it's like, what's the price because there's really like where is the bid and the offer. And when you're in a deficit, price discovery is really interesting. And so I think that -- and what we've seen now is like it's a little tight in Asia, but like any of the large Asian customers are contracted. They really weren't buying from this domestic producer. And so what the anticipation is, and this is really kind of strategic on why we sent Mark over to Asia now that boric acid and borate contract negotiating season for '27 starting. And so massive like ripples and waves are hitting U.S. markets while customers are scrambling, but Asia was kind of relatively insulated. And as you go and renegotiate and contracts are, up what's going to happen is those ripples are now going to hit the Asian markets because listen, those existing producers, they're 60,000 tighter on utilization. Their utilization went up. And so that drives higher pricing that drives a tighter supply in demand. And -- so I think that bodes well for what we have going on in Asia. And so that was the big driver that really pushed it to deficit. Also now you see boron getting more coverage. Project Blue, which is actually like spun out of the Wood McKinsey Roskill Group. They actually do have a -- they've reinitiated their boron coverage. They had a fantastic 2015 report, like 350 pages forward detailed it. And so we had a call with them recently and they're -- like -- and these are like some of the best market research teams and like the deficits here on their radar. So I -- it's -- I think, like, it's definitely the year of boron.

There you go. I want to zoom in on one thing because the meta boric acid product for you guys seems to -- to me, come out of basically nowhere this year, roughly about 80% boric oxide equivalent with the provisional patents already filed. What's the customer pull on that material specifically? And how should we think about where it sits on the margin curve versus standard granular boric acid?

Yes. We're excited about that. And I think they're similar to the meta like there'll be some more products that kind of come out of that technology package that we've been working on. Listen, a lot of customers, and it's not all, but they strive -- they seek higher B2O3. And so -- just from a basic molecular level, boric acid is actually 3 hydrogens a bore on molecule and 3 oxygens or on oxide is just B2O3. So when you look at a specification boric acid is actually quoted as 56.3% B2O3 -- and at the molecular level, there's additional water molecules with hydrogen and oxygen. The boron oxides and anhydrous product, i.e. less water molecules. And so customers pay a premium for boron oxide, typically about 3 to maybe 4x the price of oil acid. They're compensated for additional capital spend to drive off the water. What and what certain industries do want specifically LCD, textile fiberglass, pyrex, they want higher B2O3. But again, they may be price sensitive and that they would like a higher B2O3, but they don't want to pay for it. And ultimately, what we've seen is that, and this is a product that we created, we -- there's some literature on it, but ultimately, we kind of questioned like why isn't this in the market? And the reality is actually the 2 large producers, they produce the bookends. They make boron oxide, which is pretty capital intensive and they also make or boric acid. There's no reason to have an intermediary. They can charge a higher price for customers that want the 97%, 98% B2O3, boron oxide. And so we've been able to get there to at a meta product, free flowing meat specs and samples are out to customers and listen at a very minimal basis, there's a stokiometric value. If you -- if a customer really wants the B2O3 content, they can in turn if they procure an 80%, they can use less product. So in theory, there's a parity point on a B 203 basis where they'll just pay a higher price because it's the same prices for acid relatively speaking, on an 80% basis. they're buying less tons. So that provides a higher price point. Additionally, you're shipping more valuable bore on, so your unit economics can get better on a shipping basis, -- additionally -- and so like you have actually 2 opportunities to convert customers. You have your traditional people that are buying bored acid, but they would like a higher B2O3 product, fine. You can come up with that stokiometric price point on the low end coming up from boric acid, but then let's assume boric acid sells for $1,000 a ton, boron oxide will use a simple analysis where it sells for 3x the price of boric acid so $3,000 a ton. Someone who's buying boron oxide maybe they would like an intermediary product, right? They found out that their manufacturing process does better with higher B2O3, but there hasn't been this intervener in the market. Also, maybe they're really sick of paying 3x the price. So you can take 3000 x0.8, right? I don't have my calculator, but that is maybe $2,400. And all of a sudden, you have a ceiling price for boron oxide customers. So now what you've done is you've taken boric acid at 1,000, boron oxide at $3,000 and and you maybe have a spread of $1,400 to $2,400 where there's value potentially to these customers and you have higher price points, you can start to contract it, really, really novel and innovative. And it was really important to file the patents, too, because we don't want anyone else to do this. So yes, I think there's -- I think that can kind of give you some indication on like what the margin is because you have some price points how I'm thinking about it. And yes, there's going to be some incremental OpEx on the energy side. But like, listen, we get the PFS and in the economic analysis, what is the biggest driver to the model is actually commodity price. And so you creatively through this technology get to a better product that gets us a higher price point, and it's going to be accretive to economics.

Here you're going -- and then kind of other direction, I'll throw you for a second. I know a recent announcement highlighted a lithium PEA because your PFS included a LCE lithium resource, but no reserve because it was not included in the economics. Can you help explain what drove the update for the lithium PEA just for folks in the room?

Sure. Listen, we've always had a lithium chloride in our solution. And it kind of ranges from 40 PPMs up to 100 PPMs in solution. And when you kind of -- when you extrapolate that on a mass and energy balance, about 500 tons a year at 130,000 tons of production, okay? Obviously, if you can hit some higher areas of lithium, maybe you get to 150 ppm, but that's the driver of your output in quantity. And so when we were starting the pre-FEED engineering phase that led to the PFS, we actually had a very good, robust discussion and intentional about do we include lithium in the scope -- the reality is you're going to produce about 130,000 tons of boric acid, 130,000 tons of gypsum, like serious logistic aspects, the 500 tons of lithium, man, this is interesting, and it can be accretive to economics. But like that's not our core business out of the gate. And given we're dealing with aqueous chemistries, you can always add a valve or a slip stream and both that on the back end. And so -- and also at the time, the lithium market got beat up, prices were $9 a kg, and it just was like this isn't a high priority. So fine. And now we're at a point where the business is simple and a lot of emphasis on the offtakes and the commercials. And so we -- our technical team had some capacity. One of the other things we did was we included some solar EVA ponds in our design. We do have sodium, which is salt that is not very -- listen, you can sell it, but it's just not a huge economic driver. And there was about $45 million in kind of our initial CapEx for specifically evaporation or evaporator equipment and installed -- total installed cost for the sodium. And I'm like, guys, like this just -- we can't be spending this. We got to find another way. Listen, we're blessed that we're in high desert in California, which is very similar to the Atacama, that solar EVA ponds are a very viable technology path. And so we included additional 5 ponds. Listen, there's nothing contentious about this. It's actually like the back end of our process. So you're really just removing saltwater and just letting kind of the sun take out the sodium. And or sun take out the water, so you get a remaining sodium and then that gave us some optionality to make a liquid calcium chloride. And so we put that into the design. And so we came back now to floor and we said, "Hey, okay, DLE technology has actually like made some strides from just a technical readiness perspective, and we have this lithium chloride, let's kind of do a trade-off of potentially 2 or 3 options. So it was DLE adding a sixth pond, pretty small, too. And then we also looked at potentially would we sell a liquid stream if we had a counterparty, but that was a little bit more difficult to price. And the focus really came into the DLE versus the solar EVA. And I mean, it just made -- and we've kind of used the $18 a kg we're seeing today in the market. as kind of our base case. We have real prices on what we could procure commodities. We know the CapEx. And listen, there -- and that's what Fluor did, and it's one additional pond plus some equipment to make a lithium carbonate. And we think we have actually all the equipment predominantly today. So that while the CapEx is in there, it's already sunk because we can repurpose small-scale facility, and it's a sixth pond. And really like inexpensive and very proven technologies. Listen, it's definitely not fast. You won't get it right away. There's kind of you got to build kind of flow in the ponds and let it build up and so you can evaporate. But it's how they do it in the Atacama, and you ultimately are like a very low-cost producer on that byproduct then. And it kind of at $18 a kg kind of equates to a $50 per credit to boric acid at 130,000 tons. And that's nice. And it's really pretty like nominal capital that we're going to have to deploy. So we kind of did it. It was pretty inexpensive before and was a bolt-on and kind of similar to what we're -- while we're kind of progressing commercials, really focusing on with the Meta and potentially ferroboron.

Yes. And I actually -- I wanted to get into Ferroboron actually because I know that does have the market's attention to some degree. For people in the audience who know you as a boric acid story, -- can you explain what magnet grade ferroboron is and how it fits into the neodymium iron boron magnet supply chain just because I think most investors probably don't know that story.

Sure. And so like 5B stands for the fifth element and Advanced Materials is ultimately from a boric acid product, you can make various boron derivatives. And it's it's always been a medium term, like a longer-term vision of the business. And we are at a point where the network has grown and we can start to do a little bit of R&D that's actually not very expensive. And the big -- the first -- so let's talk like the basics, a neodymium iron permanent magnet, i.e. what everyone in the government's talking about to the rare earth permanent magnets. Those magnets, chemistries are Nd for the neodominium, Fe for the iron and B for the boron. And so the rare earths are in the manufacturing process combined with the [indiscernible] and they don't take iron and they don't just take a boron. There's actually an intermediary step, which kind of were doing the R&D on, and it's actually not that novel of the technology well known to get to ferroboron, right?

And it's aluminum or carbon there reduction in [indiscernible].

And that's how it's made. Now we don't know the exact process, the baking time, the temperatures, and that's what we're fleshing out. And -- but the reality is no one in the U.S. makes ferroboron and that creates a supply vulnerability. In fact, most of it does come out of China. And there is Japanese production, but this really kind of came on our radar as the commercial team was was received an inbound from a Chinese ferroboron manufacturer, and they're looking to scale up to 4,000 tons a month of boric acid. I'm like, wow, that's a sizable contract.

Delicious.

And that's 48,000 tons a year of boric acid and I'm like, okay, we need to learn more here. And so we did. And then we were talking to a couple of industry folks in the rare earth and Magna space, and they kind of said, like, listen, we can buy Japanese ferroboron or we can get Chinese ferroboron, like that's obviously found upon secure magnets. And we have a need. And so I said, so it was like, okay, this is -- and we know it's growing. It's -- I can't go on to LinkedIn without seeing something about magnet CAGRs and supply concerns. And so we kind of went down that path. And as we started to also do additional homework and research, well, the barrier to entry is actually it's the B. So it's kind of -- that's our core competency. And so if you think about it, what I expect is ultimately, if you convertibly integrated and this isn't -- like I think we need to do the R&D and then there's prospect then kind of start from the bench in the lab and then go up to some level of pilot or make larger quantities. And we have multiple specs for the Magna grade. And the major difference is it's a lower carbon ferroboron to go into the magnet and because also ferroboron goes to steel. And that's the much bigger market, but the magnets are very much growing. And so I think that long term, like our cash cost is our input cost into that work stream. And so you can have a competitive advantage there. I don't know if we will compete I need to do some, obviously, as we work through [indiscernible] energy balance and get those details, we can start to model it out, and we'll do the market analysis to understand where people are on the cost of China. But I think like the value proposition is like what can provide is a domestic reliable, fully like mine to magnet on the ferroboron piece, iron readily available in the United States and kind of round out the domestic supply chain, and we can be a much more reliable supplier relative to the Chinese. And I think still like very competitive because it's our cost -- our cash cost coming in the China input side. And so I think that's exciting. I also think there's whispers where I saw it from another CEO, as long as distribution list, there's kind of whispers, China may just like cut off rare earth,and I've heard whispers that that could also be the ferroboron too. And so -- like there's a reason they got it right and they added boron as a critical mineral, it just wasn't about boric acid. It was about some of the -- definitely the derivatives that are in there as well and what China dominates. So yes, I think it's a very interesting and exciting work stream we have going on.

No, I'm going to stick to ferroboron because I think the strategic case is it's kind of obviously like you outlined, the U.S. doesn't produce it domestically. The supply chain all runs through China, which is tightening export controls seems like every month, they're stopping the export of something new that American fortunately has relied on. So I guess my question, just as an add on to what you just went through, how quickly could 5E become a meaningful domestic source of ferroboron.

Sure. And I have my government affairs team, like pestering me to go take this to Department of War now, and like we've -- so we've done the testing in the sense that we've dialed in parameters. And this month, we will -- like the lab space is rented like we're going to take those parameters and work on the reduction. And so I think if we can provide successful samples, then you would look to in the fall make a larger quantity that we could say, you can put this in trial this in a magnet production, make a magnet. That's the goal. I would rather have the conversation with the Department of War with here's my samples. Take a look. Here's the spec we've made. That's a much more powerful, we've done the R&D because then I would expect it's like, okay, wow, great, can we -- how can we help.

No, that's -- it's a good framing to come in with. So I'm sorry, I appreciate you going to my flight of fancy with ferroboron that element is so interesting. I want to talk about the balance sheet for a second because obviously, you closed $36 million in February is more than 4x oversubscribed, and then added Jonathan Siegler to your team to the borate. with his project finance background, and I know you're ongoing interactions with exam, what is his arrival? Or what should it signal to investors about how you intend to fund that kind of heavier capital phase at Fort Katy? And what do you expect to be debt? What role could federal financing play? And any information you can give on that?

Yes. Listen, that last -- the offering was 4x oversubscribed. It was an S-1. So it was -- look, those are hard deals to get off when you're public. SEC has actually changed the rules that we could -- that would have no longer be the case if we did that now, which probably would have been better pricing. But I think, like, listen, it definitely shored up our balance sheet, put us in a really good position. The goal is not to have to come back to the public markets. It's to really kind of focus on the debt piece and building the relationship with [indiscernible] and additionally, it's -- if there is a -- there's nondilutive aspects, other grants we've applied for, we can touch on that in a little bit, if it makes sense. And but I think, like, listen, we -- and this is why the offtakes are so important because the stronger they are and the more they mitigate price and quantity, the more we can actually take on on debt. And ultimately, listen, I think that usually the one point, when you talk to the lenders, it's kind of a 1.2% interest coverage ratio they're going to target to look at. And to the perspective, you have a fixed price offtake or you have a floor price, you can really get a good sense of what the revenue is going to be like behind those contracts that ultimately can validate and get under comfortable on the coverage ratio. And so like, listen, XM can loan up to 20% -up to 80% of the project, but like the interest coverage ratio needs to make sense. So that's why, especially as we look at some of these higher-priced products on the meta side that's really important. And ultimately, a potential lithium carbonate credit helps us get more competitive on the cash cost. So I think we would target as much debt as makes reasonable sense on we can maintain those coverage ratios and that's driven by the commercials. And then, listen, I think what we're seeing today is the -- like U.S. governments are investing in companies. We submitted a grant application and that was all a question that it was like would you be open to, including the government on the capital stack. We do have listen, like we've had proposals for royalties. I think what I'm very sensitive about is like your royalty, if you're going to do something and especially having like a lithium stream, you could potentially royalty off of that as well. But you would look at -- you don't want to mess up your project finance because royalty tends to be a -- that will get recorded in accounting, and I'll sit on your deeds or your BLM claims. And you just -- sometimes the language of a royalty agreement can cause lenders to have pause. So I think we want to really progress on the debt side, and then any kind of optionality as the last and top up on a potential royalty as well? Like it's -- there's an option for that. And then I think if there's any equity deficit you would -- like we plan to have meetings with the OSC. I think we're waiting on a DOE grant. So that would open. If we win that, we would target like in the grant agreement like have that conversation because it was in their NOF. And so I think the goal was to do a bigger raise so we can mitigate the possibility of coming back to public markets. And I think, the goal would be the agency debt. It is a really cheap form of capital, and we're building that relationship with XM, and that's important. And it's ultimately a cornerstone on the offtakes.

Here we go. So I want to next just try to pull a lot of these threads together, if you don't mind. So between the offtakes, metaboric asset, the ferroboron program, the financing pieces, what do you -- are there specific boxes that still need to be checked before 5E can take that final decision on Ford Cady?

Yes. It's -- the business is pretty simple. It's -- the focus is commercials and a little derisking on the wellfield side. We're going to test a jet pump here. We've done it on the bench, and it looks good, and we'll put it down well. And -- but it's really building the commercial pipeline to go into feed because if you're going to go into feed, you're going to build something and additionally, it you need confidence that there's customers on the other side of feed. So if you raise the debt and you put steel in the ground, when that steel is constructed, you have a product that customers will buy. So that's -- and candidly, like I had not -- like Mark's fantastic, has great relationships. But a lot of the focus of the business previously was on the bit of the derisking and capital raising at times. And that raise ultimately did open up the door that I can kind of go arm and arm with Mark and really focus on the commercial aspects of the business. And so if you think about like I started really focusing on this 3 months ago, and like we're -- here we go. So we're -- this is the big -- this is what needs to happen, is the commercials. And I think they're massive validation and it's definitely a great catalyst as well. Listen, the other thing is what's interesting on the meta as well as potentially ferroboron, but we've got to progress that. It's not quite as far as meta. But either toll like we have various samples out to customers now where they're being shipped after the Asia roadshow. And listen, I mean, you need a contract, you need supply, which is for that's -- but there's traders out there. So it actually potential we're looking at more near-term cash flow opportunities on on some on the meta side. So that's something we're lifting many stores.

Great. Last one for me, and then we'll jump to some of the stuff that's coming from the audience, a lot of which we've already covered, so it should be pretty speedy. But I just wanted to zoom out and take a look at, looking forward a little bit because for an investor looking at 5E today, and I know there's some folks in the room is the first time looking at the 5E story. So today versus a year ago, what's the single biggest thing in your opinion that's changed about the risk profile of the story? And what catalyst can you point to that folks in the room should keep an eye on in the next 12 months?

Like 2026 will be the year of offtakes. So that's the big big catalyst on the horizon. Listen, we did apply for a DOE grant as part of mines of the future. I mean it's going to be competitive, but it was a sizable grant. We thought we'd know by the end of February, it's going a little slower. But I think it's -- we've kind of heard whispers it's under review. I don't know the exact status, but if that would be a major catalyst would be -- it's a decent about a nondilutive funding. I was like a 60-page grant. I mean it was we spent our Christmas rating. Yes. And I think like -- listen, it's just a simpler business now. Like we know it's dressed predominantly, and it's been done at a decent size. So it's -- and the market started -- the market has turned. So there's there's a need for that reliable supplier. And it's taken us a little bit of time to get there, but it's here. So I think next 12 months is a big focus on the commercials.

Great. No, I appreciate that. Going to some stuff that's been asked by the audience. One, they asked about other federal or shape grant applications or nondilutive funding efforts. You've already touched on it, but if you got any other additional comments on status of those or whether any awards are likely to materially reduce the need for equity financing. I'll let you give another go, but I know we've already kind of covered it. So just if you that.

DOE award would potentially materially reduce any need. So that -- I mean, super would be -- it's a home run. The -- I mean we are monitoring other grant opportunities. There was actually one that got dropped yesterday. It's -- I mean, it's interesting. It's -- a white paper would be due in 15 days. We can actually take our existing application and kind of repurpose that into that -- and then there's a -- you would find out on your white paper by pretty soon and then you would have to submit a formal application. And if you get moved on from there, you get invited to pitch at a conference later this summer like shark tank. So it's an interesting way. It's a bit on orthodox. Interesting. So we'll see. I think we're going to -- we'll apply and we'll go through that. So we're consistently working and I know Curt's been in D.C. and will be in D.C. this week, meeting with another agency that we can -- we're talking nondilutive. So it's always on the radar.

Great. No, I appreciate that. I just somebody asked so good to reiterate. One person asked just a quick question and now they can look up your disclosures, and I'm sure that's a number you're about to quote. But somebody is just asking current treasury of the company as far as last reporting.

Yes. I think $25.3 million and listen, I think we target like having kind of burned we're still operating in the pilot, but we target $1 million a month. So like the benefit there was a point where the small-scale facility was operating 24/7. And like we're a much smaller team now. We kind of have adjusted. And so it's a much more reasonable burn rate today. I think our Maxim analyst, we surprised them with this last quarter, and we'll continue to really kind of stewards of capital on the burn. I know I do see 1 question on the permits, and so we got a record decision in 1994. That basically gives us the ability to operate on the federal land that surrounds our real property. We have State of California and San Bernardino County approved a mining and reclamation plan and use permit. Also in 1994, that's how we operate today actually, and that's our licenses to operate to the permits are very real. Obviously, you'll have some ancillary, like so those are two of the big permits. The other major permit is our underground injection control permit with EPA. We've received authorization to operate. And so like the demonstration plant, we we operate today is really licensed under those permits. Now there's other like ancillary permits, not major mining permits, air permits. We have all that. Again, we'll pull some additional permits. It's -- you don't do that till feed when you actually understand every piece of kit that's going to go in there. And those specification it spec sheets on the kit has actually the NOx and the SOx emissions. And then in turn, you will -- you go apply for the permit, the very high degree of late, there's no reason we won't get them. And obviously, we included in the scope of solar [indiscernible], we will -- we've had conversations with them with the water board, like there's nothing contentious about this. Like even the water we produce, it's actually a closed basin. It's brackish like regear. So like it's not going any groundwater. We have -- water is adjudicated in California, like we've been demonstrating use. So it's not -- it is for us. And so like we'll put those solar E-bands, not going to be a gating item. And that -- well, actually, now that we've included a bond the application will get updated, and it's pretty much ready to go, and it's a couple of months process. It's -- California gets a little bit of a bad rap. But I think if -- when you're in Sambrano County, it's a good county to be in.

It seems like a pretty clear it. Now just before getting to the last 2 questions from the audience, I just want to remind everybody because I know there's a lot of you in the room. There's a request meeting button at the bottom. If you would like to meet with Paul or the 5E team, please you hit that button, I'll try to eat you guys connected following today's event. Robert from the chat asks one of those questions, it's tough to answer, but I'll throw it to anyway. What's the anticipated average contract size to get the throne out up?

Yes. I think like we target price points that are in our PFS. And so that's obviously -- we've had to think outside the box and kind of be creative with some of that stuff, but that's kind of look at the PFS, and you can kind of see where we need to be because all the commercials are kind of all underpinned by like what's going to get us to FID. And listen, I think from -- we will -- we're not going to be where we have like 2 or 3 or 4 customers like we're going to have a portfolio of customers. And I could very realistically see a scenario where probably targets 25%, maybe it's closer to 20% or it could be as up as 30%. Some of the distributors are smaller, lower tonnage, but they're good, reliable customers. And so I think you would have this diverse portfolio across various industries, definitely meeting export Nexus. And in turn, you're going to have a diversification of a combination of various contracts that some are fixed, some are colored. And then you would obviously have some portfolio in there for just spot market, where you can take advantage of what we think is going to be a higher-priced environment because that's driven off of supply and demand.

No, I appreciate that. Last question. We've already touched on it, but -- and also the people's last opportunity to ask a final question, if you like, well, Paul answers this one. Todd, just wants reiteration what status of financing in the XM.

Yes. So the big loan we -- like for me, like a large project finance like, we'll have a check-in at about 25,000 tons under contract with counsel like for project finance. And then like for me, my gut is like at 50,000 tons, that's when you should apply for a loan. So like that's a KPI for us. Perpetual just got their loan. And we've been talking to XM to start to get them familiar with the project through a smaller E&P loan. And that would -- because I think there's a relationship aspect, that's really important here. And also it gives people an XM the ability to familiarize themselves with the team as well as the project and kind of some of the technicals. So that's, for me, that's like the target. Obviously, there's 7,500 tons under like more is going to come. And I think that because that's -- those are kind of like what I have in my mind, but again, it could change. But I think like as you think about it, maybe it's less because like in first year production, you really probably only going to produce 90,000 tons of 130,000 because you've got to kind of scale up and work into that. And so I think you have some -- there's still, obviously, very large customers, specifically out of Asia that have multiple plants. And the way I'm thinking about it is that you could potentially Obviously, you want to get closer to 130,000 tons. And as your sequelae sequencing that, like what you would be -- what we're talking to about some of those customers is like, okay, implant in year 1, this plan. In year 2, I need that plant. And so you start to be very strategic on what's that kind of revenue lead sheet look like?

Awesome. Well, Paul, thank you so much for letting me Grill on a recent history of the company, going through some of the recent news. Everybody in the audience, another lot, thanks so much for joining. If you have additional questions, you think of the perfect one to ask right after the event ends, somewhat often happens to me. Please do send it in. I'll make sure that the 5E team gets it and gets back to you. But Paul, thank you very much. I think this is very informative, and thanks, everybody, for joining.

Thanks. Have a great day. See you.

Have a very great day, everyone. Cheers.