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Item 1. Business

2023-03-30 compared with 2022-03-31 · 128 added, 145 removed, 157 unchanged (63% of the section changed)

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Lightbridge’s principal executive offices are located at 11710 Plaza America Drive, Suite 2000, Reston, Virginia 20190 USA.

At Lightbridge we are developing the next generation of nuclear fuel to impact, in a meaningful way, the world’s climate and energy problems.

Our nuclear fuel could significantly improve the economics, safety, and proliferation resistance of nuclear fuel in existing and new nuclear reactors, large and small, with a meaningful impact on addressing climate change, and air pollution, all while benefiting national security.

At Lightbridge we are developing the next generation of nuclear fuel to impact, in a meaningful way, the world’s climate and energy security problems.

Our nuclear fuel could significantly improve the economics and safety of existing and new nuclear power plants, large and small, enhance proliferation resistance of spent nuclear fuel, and have a meaningful impact on addressing climate change and air pollution, all while benefiting national security.

We project that the world’s energy and climate needs can only be met if nuclear power’s share of the energy-generating mix grows substantially in the coming decades.

We are developing our nuclear fuel to enable that to happen.

In particular, we are focusing on the potential of small modular reactors that we believe can benefit from our fuel with improved economics and load following when included on an electric grid with renewables.

According to the World Nuclear Association (WNA), there are 437 operable power reactors worldwide and an additional 57 reactors under construction.

We expect slow net growth in this number as old reactors close and fewer new large reactors are built, due to the inherent challenges facing new build large reactors, including regulatory and political challenges, financing difficulties, and the inability for large reactors to be profitable without running constantly.

We believe our metallic fuel will offer significant economic and safety benefits over traditional nuclear fuel, primarily because of the superior heat transfer properties of all-metal fuel and the resulting lower operating temperature of the fuel.

We believe Lightbridge will benefit from a growing nuclear power industry, and we are developing our nuclear fuel to help enable that growth to happen.

We believe our metallic fuel will offer significant economic and safety benefits over traditional nuclear fuel, primarily because of the superior heat transfer properties and the resulting lower operating temperature of all-metal fuel.

We also believe that uprating a reactor with Lightbridge Fuel™ will add incremental electricity at a lower levelized cost than any other means of generating baseload electric power, including any renewable, fossil, or hydroelectric energy source, or any traditional nuclear fuel.

Emerging nuclear technologies that many in the industry believe have the potential to generate significant amounts of power include SMRs, which are now in the development and licensing phases.

We expect that Lightbridge Fuel™ can provide SMRs with all the benefits our technology brings to large reactors, with the benefits being more meaningful to the economic case for deployment of SMRs.

Lightbridge Fuel™ is expected to generate more power in SMRs than traditional nuclear fuels, which will help decarbonize sectors that are now powered by fossil fuels.

We expect that our ongoing research and development (R&D) initiatives will be compatible with Lightbridge Fuel™ powering SMRs for multiple purposes.

The first SMRs that could use our fuel are expected to begin operations as early as 2028.

We have built a significant portfolio of patents reflecting years of R&D, and we anticipate testing our nuclear fuel through third party vendors and others, including the United States Department of Energy (DOE) national laboratories.

Currently, we are performing the majority of our R&D activities with DOE national laboratories and are working on additional contracts with them for future scopes of R&D work.

Emerging nuclear technologies that many in the nuclear power industry believe have the potential to help drive growth in nuclear power include small modular reactors (SMRs), which are now in the development and licensing phases.

We expect that Lightbridge Fuel™ can provide SMRs with all the same benefits our technology brings to large reactors, with such benefits being even more meaningful to the economic case for deployment of SMRs, including potential load following capability when included on a low-carbon electric grid with renewable energy sources.

We expect Lightbridge Fuel™ to generate more power in SMRs than traditional nuclear fuels, which will help decarbonize sectors that are now powered by fossil fuels.

We expect that our ongoing research and development (R&D) initiatives will lead to Lightbridge Fuel™ powering SMRs for multiple purposes.

The first SMRs are expected to begin operations as early as 2029.

Currently, we are performing the majority of our R&D activities with the DOE’s national laboratories.

Our Nuclear Fuel

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In 2010, we announced the concept of all-metal fuel (i.e., non-oxide fuel) for use in currently operating and new-build reactors.

Our focus on metallic fuel is based on listening to the voices of prospective customers, as nuclear utilities have expressed interest in the improved economics and enhanced safety that we believe metallic fuel will provide.

We are also now listening to industrial companies that are expressing interest in SMRs to power their own industrial facilities.

We have reimagined nuclear fuel from scratch, using advanced science and engineering.

Our focus on metallic fuel was inspired by listening to the voices of prospective customers, as nuclear utilities expressed interest in the improved economics and enhanced safety that we believe metallic fuel will provide.

The fuel in a nuclear reactor generates energy in the form of heat.

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Conventional oxide fuel used in existing commercial reactors is nearing the limit of its design and licensed burnup and power density capability.

As a result, further optimization to (i) increase power output from the same core size and (ii) improve the economics and safety of nuclear power generation using conventional oxide fuel technologies is limited.

As a result, further optimization is needed to (i) increase power output from the same core size to improve the economics, and (ii) enhance the safety of nuclear power generation where using conventional oxide fuel technologies is limited.

A new fuel is needed to bring enhanced performance to reactors large and small.

We are working to develop Lightbridge Fuel™ to meet that goal.

As the nuclear industry prepares to meet the increasing global demand for electricity production, longer operating cycles and higher reactor power outputs have become a much sought-after solution for the current and future reactor fleet.

As the nuclear power industry prepares to meet the increasing global demand for electricity production, nuclear utilities are seeking longer operating cycles and higher reactor power outputs for current and future reactor fleets.

We believe our proprietary nuclear fuel designs have the potential to improve the nuclear power industry’s economics by:

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New build nuclear reactors could also benefit from the reduced upfront capital investment per kilowatt of generating capacity in the case of implementing a power uprate.

In addition to projected electricity production cost savings, we believe our technology can result in utilities or countries needing to deploy fewer new reactors to generate the same amount of electricity (in the case of a power uprate), resulting in significant capital cost savings.

In addition to projected electricity production cost savings, we believe our technology may allow utilities or countries to deploy fewer new reactors to generate the same amount of electricity (in the case of a power uprate), resulting in significant capital cost savings.

For utilities or countries that already have operating reactors, we expect that our nuclear fuel could be utilized to both increase the power output of those reactors as well as enable them to load follow with electric grid demands, which have become increasingly variable with large additions of intermittent renewable generation.

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According to the U.S.

Energy Information Administration, nuclear power provided 4.6% of the world’s total energy from all sources in 2020, including approximately 10.5% of global electricity generation.

According to the WNA, as of January 2022 there were currently 437 operable nuclear power reactors worldwide, mostly light water reactors, with the most common types being PWRs, including Russian-designed water-cooled, water-moderated energetic reactors (VVERs), and boiling-water reactors (BWRs).

Energy Information Administration, nuclear power provided approximately 4.6% of the world’s total energy from all sources in 2020, including approximately 10.5% of global electricity generation.

According to the World Nuclear Association (WNA), as of January 2022 there were 438 operable nuclear power reactors worldwide, mostly light water reactors, with the most common types being PWRs, including Russian-designed water-cooled, water-moderated energetic reactors (VVERs), and boiling-water reactors (BWRs).

Nuclear power provides a non-fossil fuel, low-carbon energy solution that can meet baseload electricity needs.

Of the world’s existing reactors currently in operation, PWRs account for approximately 70% of the net operating capacity, with BWRs being the second most prevalent and accounting for approximately 14%.

Of the world’s reactors currently in operation, PWRs account for approximately 70% of the net operating capacity, with BWRs being the second most prevalent and accounting for approximately 14%.

Of the nuclear reactors currently under construction, approximately 70% are PWRs with a rated electric power output of 1,000 megawatts or greater.

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Many of these passive systems rely on a combination of gravity, natural convection, and/or resistance to high temperatures.

We initially focused our fuel design on existing U.S.

PWRs because they represent a large market segment for which Lightbridge Fuel™ could provide significant economic and safety benefits through a power uprate up to 10% along with an operating cycle extension from 18 to 24 months, or a power uprate of 17%, as described below, without extending the cycle length.

We estimate that in order to produce all the clean energy that the world will need in 2050 (the seminal year for climate change according to the Intergovernmental Panel on Climate Change) using nuclear power, it would require the equivalent of about an additional 20,000 reactors with generating capacities of 1,000 megawatts of electricity each.

Realistically, the industry will not grow from approximately 440 to over 20,000 of these reactors during this timeframe.

We expect that the net worldwide growth in the number of large reactors between now and 2050 will be fewer than 200, with most new plants built by China and Russia, making them difficult for Lightbridge Fuel™ to reach.

Existing large reactors can present an additional market opportunity for Lightbridge Fuel™ but cannot by themselves move the needle on climate change.

In contrast, SMRs can be pivotal contributors to preventing further climate change, while providing the necessary energy capacity to meet global energy needs.

Large reactors have considerable capital costs and must operate at full power 24/7 to be profitable.

Due to their modular construction and smaller size, SMRs are expected to have much lower capital costs per unit, thus making their deployment easier to finance by private and government sectors.

Furthermore, one of the limiting factors relating to existing large reactors is their inability to load follow efficiently.

Load following means increasing or decreasing power as other electricity sources, mostly wind and solar power, come on and off the electric grid.

Natural gas plants are currently used to back up wind and solar generation since these plants can easily increase or decrease the energy they generate based on need.

SMRs are expected to have the ability to reduce their power (i.e., by shutting down or reducing the power output of some units while running the other units at full power) while the wind is blowing, or the sun is shining.

We believe that Lightbridge Fuel™ will allow SMRs greater flexibility in changing power levels, making it easier for SMRs to replace natural gas to load follow with renewables, helping to expand markets for renewables and SMRs together as countries seek to decarbonize energy generation.

Other components of the reactor would also need to be designed to handle the changes in power, and we believe that it is feasible, with fuel power ramp or transient capability being one of the current limiting factors to nuclear power plants balancing with wind and solar.

We expect that Lightbridge Fuel’s™ most significant economic benefit will be its ability to provide a 30% power uprate.

We are developing our fuel technology for application in various types of water-cooled reactors, including existing or future light water reactors, which include water-cooled small modular reactors, as well as for Canada Deuterium Uranium (CANDU)-type pressurized heavy water reactors.

The existing U.S.

fleet of nuclear reactors represents a large market segment for which Lightbridge Fuel™ could provide significant economic and safety benefits through a power uprate up to 10%, along with an anticipated operating cycle extension from 18 to 24 months, or a power uprate of 17%, as described below, without extending the cycle length.

We believe that Lightbridge Fuel’s™ most significant economic benefit may be its ability to provide a 30% power uprate.

However, the existing large reactors cannot realize that benefit because their systems are not designed to handle that much of an increase in power.

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Only newly designed large reactors may benefit from the full 30% greater power available from Lightbridge Fuel™.

While we believe that only a limited number of new, large reactors will be built, we expect that much larger numbers of SMRs will be deployed in the future.

While we believe that only a limited number of new, large reactors will be built, we expect that much larger numbers of SMRs that can utilize our fuel will be deployed in the future.

Target Market for Lightbridge Fuel™

Our target market segments include water-cooled commercial power reactors, such as PWRs, BWRs, VVER reactors, CANDU heavy water reactors, water-cooled SMRs, as well as water-cooled research reactors.

We are currently focused on prioritizing opportunities with SMRs in the near-term.

In 2021, our SMR target market saw an increase in interest in North America and Europe, as evidenced by Ontario Power Generation selecting the BWRX-300 SMR for the Darlington new nuclear site, which will work with GE Hitachi Nuclear Energy to deploy the reactor.

Canada’s first commercial, grid-scale, SMR could be completed as early as 2028.

In addition, according to WNA, a subsidiary of Synthos, a chemical manufacturing company headquartered in Poland, began screening sites for SMRs in Poland and has signed agreements related to SMR development with GE Hitachi Nuclear Energy, Tractebel, and Ultra Safe Nuclear Corporation, which could ultimately replace coal units at the Pątnów power plant.

Our target market segments include water-cooled commercial power reactors, such as PWRs, BWRs, VVERs, CANDUs heavy water reactors, water-cooled SMRs, as well as water-cooled research reactors.

Nuclear Power as Clean and Low Carbon Emissions Energy Source

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At the same time, the event has brought a greater emphasis on safety to the forefront that may be beneficial to us because our metallic fuel provides improved safety and fuel performance during normal operation and design-basis accidents.

Growing Importance of Energy Security

We believe that Russia’s invasion of Ukraine has made clear the need for countries to wean off dependency on fossil fuels from countries that can threaten their national security.

Oil and natural gas prices have increased significantly since Russia commenced its invasion in early 2022 and many countries have imposed sanctions upon Russia in response.

European countries are responding by rethinking their plans for nuclear energy by either keeping existing nuclear power plants running or moving ahead with plans for new plants or both.

The United Kingdom is deploying new nuclear power plants.

Belgium has decided to reverse its decision to close all of its nuclear plants in the wake of Russia’s invasion of Ukraine.

It has become clear that a stable domestic energy supply ensures energy security and provides the strongest protection against energy price volatility.

Increasingly, policymakers view nuclear energy as critical to a secure energy future.

Anticipated Safety Benefits of Lightbridge Fuel™

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operates at lower operating temperatures than current conventional nuclear fuel, contributing to lower stored thermal energy in the fuel rods;

Is not expected to generate explosive hydrogen gas under design-basis accidents when there is a loss of coolant in the reactor;

it is therefore not expected to generate explosive hydrogen gas under design-basis accidents when there is a loss of coolant in the reactor;

enhances structural integrity of the nuclear fuel rods;

has lighter and stiffer fuel assembly, which may contribute to improved seismic performance;

May buy more time to restore active cooling in the reactor during Beyond Design-Basis events, defined by the U.S.

Nuclear Regulatory Commission (US-NRC) as “accident sequences that are possible but were not fully considered in the design process because they were judged to be too unlikely.”

Due to the significantly lower fuel operating temperature and higher thermal conductivity, our metallic nuclear fuel rods are expected to provide major improvements to safety margins during certain off-normal events.

The US-NRC licensing processes require engineering analysis of a large break loss-of-coolant accident (LOCA), as well as other scenarios.

The US Nuclear Regulatory Commission (NRC) licensing processes require engineering analysis of a large break loss-of-coolant accident (LOCA), as well as other scenarios.

The LOCA scenario assumes failure of a large water pipe in the reactor coolant system.

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Lightbridge Spent Fuel - Proliferation Resistance

The April 2018 issue of Nuclear Engineering and Design, a technical journal affiliated with the European Nuclear Society, included an article stating that after analyzing Lightbridge’s fuel, the authors concluded that any plutonium extracted from Lightbridge’s spent fuel would not be useable for weapon purposes.

The April 2018 issue of Nuclear Engineering and Design, a technical journal affiliated with the European Nuclear Society, included a peer-reviewed article stating that after analyzing Lightbridge’s fuel, the authors concluded that any plutonium extracted from Lightbridge’s spent fuel would not be useable for weapon purposes.

We anticipate the following proliferation resistance advantages for our metallic fuel:

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therefore, our spent fuel would be unsuitable as a source for weapon purposes.

We are currently exploring potential plutonium disposition benefits of our metallic nuclear fuel technology.

Our fuel potentially could be used to dispose of plutonium from reprocessed used reactor fuel, utilizing the plutonium to generate electricity.

Our fuel potentially also could be used to dispose of plutonium from nuclear weapons.

Development of Lightbridge Fuel™

Recent Developments

GAIN Vouchers

DOE awarded the Company a Gateway for Accelerated Innovation in Nuclear (GAIN) voucher in 2019 for the experiment design for irradiation of material samples of Lightbridge metallic fuel in the Advanced Test Reactor (ATR) at Idaho National Laboratory (INL).

On April 22, 2020, we entered into a Cooperative Research and Development Agreement (CRADA) with Battelle Energy Alliance, LLC, the DOE’s operating contractor at INL and the project commenced in the second quarter of 2020 and was completed during the third quarter of 2021.

This experiment design forms the basis of our current and future efforts with the INL.

The total project value provided by the DOE was approximately $0.5 million.

The DOE awarded us a second voucher from the GAIN program to support development of Lightbridge Fuel™ in collaboration with Pacific Northwest National Laboratory (PNNL).

The scope of the project is to demonstrate Lightbridge’s nuclear fuel casting process using depleted uranium, a key step in the manufacture of Lightbridge Fuel™.

HALEU Consortium Membership

To support establishment of domestic high-assay low-enriched uranium (“HALEU”) infrastructure, the DOE announced on December 7, 2022 the creation of a HALEU Consortium.

According to the DOE, the purposes of the HALEU Consortium include:

(i) Provide the Secretary of Energy HALEU demand estimates for domestic commercial use, (ii) Purchase HALEU made available to members for commercial use under the Program, (iii) Carry out demonstration projects using HALEU under the Program, and (iv) Identify actionable opportunities to improve the reliability of the HALEU supply chain.

On December 15, 2022, the Company submitted a formal request to the DOE to join the HALEU Consortium to mitigate HALEU supply risk.

On January 12, 2023, the Company received written confirmation from the DOE of Lightbridge’s membership in the HALEU Consortium.

Idaho National Laboratory Agreements

In the second half of 2022 Lightbridge entered into agreements with Idaho National Laboratory (INL), in collaboration with the DOE, to support the development of Lightbridge Fuel™.

The framework agreements use an innovative structure and consist of an “umbrella” Strategic Partnership Project Agreement (SPP) and an “umbrella” Cooperative Research and Development Agreement (CRADA), each with Battelle Energy Alliance, LLC (BEA), the DOE’s operating contractor for INL, with an initial duration of seven years.

We anticipate that the initial phase of work under the two agreements that has been released will culminate in irradiation testing in the Advanced Test Reactor (ATR) of our fuel material samples, known as fuel material coupons, using enriched uranium supplied by the DOE.

The initial phase of work aims to generate irradiation performance data for Lightbridge’s delta-phase uranium-zirconium alloy relating to various thermophysical properties.

The data will support fuel performance modeling and regulatory licensing efforts for commercial deployment of Lightbridge Fuel™.

We anticipate that subsequent phases of work under the two umbrella agreements that have not yet been released may include post-irradiation examination of the irradiated fuel material coupons, loop irradiation testing in the ATR, and post-irradiation examination of one or more uranium-zirconium fuel rodlets, as well as transient experiments in the Transient Reactor Test Facility (TREAT) at INL.

MIT Study - Lightbridge Fuel™

In June 2022, the DOE selected Lightbridge Fuel™ to participate in a study led by the Massachusetts Institute of Technology (MIT) to investigate the performance and economics of accident tolerant fuels for light water cooled SMRs.

Amongst other objectives, one of the objectives of this project is to simulate the fuel and safety performance of Lightbridge Fuel™ in an SMR designed by NuScale Power and provide a scoping analysis of longer-term advanced fuel forms to improve the safety and economics of SMRs.

The DOE’s Nuclear Energy University Program awarded $800,000 to MIT with the goal of bringing collaborative teams together to solve complex problems to advance nuclear technology and understanding.

The duration of this work is expected to be approximately 3 years.

The amount of financial benefit to Lightbridge from this DOE grant to MIT cannot be quantified.

Second DOE Award from the Gateway for Accelerated Innovation in Nuclear

The DOE awarded us a second voucher from the Gateway for Accelerated Innovation in Nuclear (GAIN) program to support development of Lightbridge Fuel™ in collaboration with Pacific Northwest National Laboratory (PNNL).

The scope of the project was to demonstrate Lightbridge’s nuclear fuel casting process using depleted uranium, a key step in the manufacture of Lightbridge Fuel™.

On July 14, 2021, the Company executed a CRADA with the Battelle Memorial Institute, Pacific Northwest Division, the operating contractor of the PNNL, in collaboration with the DOE.

The project commenced in the third quarter of 2021 and is expected to be completed by the third quarter of 2022.

The total project value is approximately $0.7 million, with three-quarters of this amount provided by DOE for the scope performed by PNNL.

On May 11, 2021, we announced successful demonstration of the co-extrusion process for three-lobe, six-foot rods using nuclear-grade zirconium alloy in the cladding and in the displacer, and surrogate metallic materials that mimic important characteristics of uranium and zirconium alloy contained in our metallic nuclear fuel rods.

This demonstration of Lightbridge’s proprietary manufacturing process uses an internally developed and patented high-temperature coextrusion process.

The six-foot length of the surrogate rods is the typical length of the fuel rods used by the SMRs now in development and licensing.

Future fabrication of high-assay low-enriched uranium (HALEU) rodlets for loop irradiation testing in the Advanced Test Reactor, and ultimately commercial-length HALEU fuel rods, will use similar processing techniques to create Lightbridge Fuel™.

Performing these initial fabrication development activities with surrogate materials allows Lightbridge to use a broader range of suppliers and is a cost-effective approach as it does not require uranium material.

We expanded our patent portfolio by successfully obtaining 7 new patents in 2021 in the United States and other key foreign countries.

The new patents will help safeguard the Company’s intellectual property, which is an integral component of the Company’s plans to monetize the Lightbridge Fuel™ technology.

The project commenced in the third quarter of 2021.

In December 2022, PNNL signed a one-month contract extension with the Company to complete the final report related to this PNNL GAIN voucher, which extended the period of performance to January 31, 2023.

The work under this contract was completed in 2022, and a final report was issued by PNNL on January 31, 2023.

The total project value was $0.7 million, with three-quarters of this amount provided by the DOE for the scope performed by PNNL.

Under this GAIN Voucher, we worked with PNNL to develop a casting process utilizing its existing equipment.

As part of the scope, several castings were performed and the cast ingots analyzed.

In an iterative process, the casting methodology was modified based on the characterization results as part of process demonstration to achieve acceptable results with PNNL’s existing equipment.

The results of this work will help to inform a final process suitable to produce fuel material coupons for our upcoming irradiation tests.

Future Steps Toward Our Fuel Development and Timeline For The Commercialization of Our Nuclear Fuel Assemblies

We anticipate near-term fuel development milestones for Lightbridge Fuel™ over the next 2-3 years will consist of the following.

Complete the scope of work relating to the recent second GAIN Voucher award in collaboration with PNNL.

Enter into an agreement to manufacture our nuclear fuel material samples for test reactor irradiation.

Continue to develop and optimize our nuclear fuel manufacturing processes using depleted or natural uranium.

Initiate the design and manufacturing of a multi-lobe fuel rod with enriched uranium for irradiation experiments in a test reactor.

The long-term milestones towards development and commercialization of nuclear fuel assemblies include, among other things, irradiating nuclear material samples and prototype fuel rods in test reactors, conducting post-irradiation examination of irradiated material samples and/or prototype fuel rods, performing thermal-hydraulic experiments, performing seismic and other out-of-reactor experiments, performing advanced computer modeling and simulations to support fuel qualification, designing a lead test assembly (LTA), entering into a lead test rod/assembly agreement(s) with a host reactor(s), demonstrating the production of lead test rods and/or lead test assemblies at a pilot-scale fuel fabrication facility and demonstrating the operation of lead test rods and/or lead test assemblies in commercial reactors.

There are inherent uncertainties in the cost and outcomes of the many steps needed for successful deployment of our fuel in commercial nuclear reactors, which makes it difficult to predict the timing of the commercialization of our nuclear fuel technology with any accuracy.

However, based on our best estimate and assuming adequate R&D funding levels, we expect to begin demonstration of lead test rods and/or possibly lead test assemblies with our metallic fuel in commercial reactors by the early 2030s and begin receiving purchase orders for initial fuel reload batches from utilities 15-20 years from now, with final qualification (i.e., deployment of our nuclear fuel in the first reload batch) in a commercial reactor taking place approximately two years thereafter.

We are exploring ways of shortening this timeframe that may include securing access to expanded irradiation test loop capacity in existing or new research reactor facilities both within the United States and overseas.

We anticipate fuel development milestones for Lightbridge Fuel™ over the next 2-3 years will consist of the following:

kick off SPP/CRADA work at INL leading to irradiation testing in the ATR of our fuel material coupons using enriched uranium supplied by INL.

conduct a feasibility study for the use of our nuclear fuel in CANDU heavy water reactors.

conduct a front-end engineering and design (FEED) study for a Lightbridge pilot-scale fuel fabrication facility.

demonstrate extrusion with our uranium-zirconium fuel alloy and produce fuel material coupons for irradiation testing.

The long-term milestones towards development and commercialization of nuclear fuel assemblies include, among other things, irradiating nuclear material samples and prototype fuel rods with enriched uranium in test reactors, conducting post-irradiation examination of irradiated material samples and/or prototype fuel rods, performing thermal-hydraulic experiments, performing seismic and other out-of-reactor experiments, performing advanced computer modeling and simulations to support fuel qualification, designing a lead test assembly (LTA), entering into a lead test rod/assembly agreement(s) with a host reactor(s), demonstrating the production of lead test rods and/or lead test assemblies at a pilot-scale fuel fabrication facility and demonstrating the operation of lead test rods and/or lead test assemblies in commercial reactors.

There are inherent uncertainties in the cost and outcomes of the many steps needed for successful deployment of our fuel in commercial nuclear reactors, which makes it difficult to accurately predict the timing of the commercialization of our nuclear fuel technology.

However, based on our best estimate and assuming adequate R&D funding levels, we expect to begin demonstration of lead test rods (LTRs) and/or possibly LTAs with our metallic fuel in commercial reactors in the 2030s and begin receiving purchase orders for initial fuel reload batches from utilities 15-20 years from now, with deployment of our nuclear fuel in the first reload batch in a commercial reactor taking place approximately two years thereafter.

We are exploring ways of shortening this timeframe that may include securing access to expanded irradiation test loop capacity in existing or new research reactor facilities.

Certain Challenges and Uncertainties

government funding support

Presently, our ability to fund our fuel development program at a level necessary to adhere to our projected fuel development timelines is severely limited due to funding constraints.

This is in addition to our corporate overhead and other fixed costs, such as in-house project management and project control personnel.

As a result, we believe seeking and securing significant U.S.

government funding to support our fuel development program is essential for us to be successful in our fuel development and commercialization efforts.

We expect significant government funding opportunities to go toward SMRs in the coming years, which may help accelerate our projected fuel development timelines by up to a few years for SMR applications.

Availability of suitable test loops in the ATR

After the Halden research reactor was shut down in 2018, we embarked on a global search for an alternative for loop irradiation testing of our metallic fuel rods.

Ultimately, we chose the ATR at INL and applied to the DOE for and won two GAIN Vouchers.

Our initial understanding was that we would have access to a government funded PWR water test loop in the ATR to generate sufficient data to support our LTA testing and potentially eliminate the need for LTR testing in a large commercial reactor.

However, availability of irradiation test loops for fuel in the ATR has become limited and highly competitive, limiting how much nuclear fuel can be inserted into the reactor as well as its duration in the reactor.

If new test loops are not added to the ATR, loop irradiation testing in the ATR may not provide sufficient data to justify regulatory approval for LTA testing in a large commercial PWR in a commercially feasible timeframe.

This would likely necessitate an extra fuel development step of LTR testing in a large commercial PWR in addition to the ATR loop testing before LTA testing could commence.

As a result, our fuel development timelines are 15-20 years before we expect to secure our first orders for fuel batch reloads in large commercial PWRs, unless we can access significantly increased test loop capacity.

Consequently, the projected fuel development costs make it unfeasible for Lightbridge to fund this fuel development effort on its own.

Partnerships with fuel vendors and nuclear utilities

The ability to design and fabricate the LTAs and engagement with a nuclear utility that is willing to accept our LTAs, is required to demonstrate our nuclear fuel in a commercial reactor.

In the U.S., the nuclear fuel fabricator and the nuclear utility will be primarily responsible for securing the necessary regulatory licensing approvals for the LTA operation.

We plan to also build relationships with SMR reactor and fuel vendors, as well as existing and/or potential SMR utility customers.

Supply chain infrastructure for HALEU

Establishment of required supply chain infrastructure to support high-assay low-enriched uranium metallic fuel is a necessary step in the commercialization of our nuclear fuel.

Existing commercial nuclear infrastructure, including conversion facilities, enrichment facilities, de-conversion facilities, fabrication facilities, fuel storage facilities, fuel handling procedures, fuel operation at reactor sites, used fuel storage facilities and shipping containers, were designed and are in most cases currently licensed to handle uranium in oxide form with enrichment up to 5% in the isotope uranium-235.

Our fuel designs for light water reactors are expected to use uranium metal with uranium enrichment levels up to 19.75% and would therefore require certain modifications to existing commercial nuclear infrastructure to enable commercial nuclear facilities to receive and handle our fuels.

Those nuclear facilities will need to complete a regulatory licensing process and obtain regulatory approvals in order to be able to process, handle, or ship uranium metal with enrichment levels up to 19.75% and operate commercial reactors and spent fuel storage facilities using our metallic fuel.

Need for experimental data on our metallic fuel

There is a lack of publicly available experimental data on our metallic fuel.

We will need to conduct various irradiation experiments to confirm fuel performance under normal and off-normal reactor conditions.

Loop irradiation in a test reactor environment prototypic of commercial reactor operating conditions and other experiments on unirradiated and irradiated metallic fuel samples will be essential to demonstrate the performance and advantages of our metallic fuel.

We are planning loop irradiation testing of our metallic fuel samples in the ATR at INL as part of this effort.

Need for development of new analytical models to support our metallic fuel

Existing analytical models may be inadequate to fully analyze our metallic fuel.

New analytical models, capable of accurately predicting the behavior of our metallic fuel during normal operation and off-normal events, may be required.

Experimental data measured from our planned irradiation demonstrations will help to identify areas where new analytical models, or modifications to existing ones, may be required.

Need to develop and demonstrate a qualified fabrication process for our metallic fuel rods

Demonstration of a qualified fabrication process both for semi-scale irradiation fuel rod samples and subsequently for full-length (12-14 feet) metallic fuel rods for large PWR LTAs and shorter length for SMRs (~6 feet) is required.

Past operating experience in icebreaker reactors with differently shaped fuel rods with a similar metallic fuel composition involved fabrication of metallic fuel rods up to 3 feet in length.

Fabrication of full-length (approximately 12 to 14 feet) PWR metallic fuel rods for large PWRs has yet to be fully demonstrated.

In 2021, we demonstrated the co-extrusion of full-length rods using surrogate materials (i.e., rods which replaced the uranium component with a suitable physical analogue).

Coextrusion is the primary forming operation in the manufacturing of our fuel and this demonstration was an important milestone on the path to developing and qualifying the full manufacturing process for actual fuel rods with enriched uranium.

We plan to commence a FEED study for a Lightbridge pilot-scale fuel fabrication facility in 2023.

Please see Item 1A.

Risk Factors in this Annual Report on Form 10-K for a discussion of certain risks that may delay or impair such developments including without limitation the availability of financing and the many risks inherent in developing a new type of nuclear fuel.

Impact of COVID-19 to our Business

The recent COVID-19 pandemic has continued to impact our business operations for the year ended December 31, 2021.

The future impacts of the COVID-19 pandemic on our financial position, results of operations and future liquidity and capital resources availability is unknown and uncertain.

In an effort to protect the health and safety of our employees, we took proactive, aggressive action from the earliest signs of the outbreak in China, including working from home and curtailing employee travel.

In an effort to contain COVID-19 or slow its spread, governments around the world had also enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities.

We will continue to actively monitor the COVID-19 pandemic and may take further actions altering our business operations that we determine are in the best interests of our employees and stakeholders, or as required by federal, state, or local authorities.

It is not clear what the potential effects any such alterations or modifications may have on our financial position, results of operations or liquidity, including the effects on our employees and future prospects, including our R&D activities for the fiscal year 2022 and beyond.

Future Potential Collaborations and Other Opportunities

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Over the past several years, the ATF program has received significant DOE funding support and initial interest from utility customers seeking ATF demonstration programs in their operating reactors.

For example, in January 2022, Southern Nuclear has agreed to load four lead test assemblies with a chromia and alumina doped ATF design.

Similar ATF concepts are being tested by GE Nuclear, TVEL, and others.

For example, in January 2022, Southern Nuclear agreed to load four lead test assemblies with a chromia and alumina doped ATF design.

Similar ATF concepts are being tested by GE Nuclear, and others.

When the DOE originally launched the ATF program, the program was focused solely on achieving enhanced safety benefits, such as extra “coping time” during severe accidents.

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That said, we believe Lightbridge Fuel™ remains the only advanced light-water reactor fuel in development that can provide power uprates, cycle length extensions, improved safety, and load following in a single product as desired by the utilities.

The above developments make prioritizing existing large PWRs less attractive than we had previously expected.

Depending on the ultimate outcome of ATF technologies and government funding available to support advanced fuel technologies for existing large PWRs, this market segment could become more accessible again in the future.

However, in the near-term, we believe that a realignment of our corporate initiatives with a focus on SMRs could lead to more beneficial, valuable, nearer-term opportunities for Lightbridge.

We believe the 30% power uprate our fuel could provide to a new SMR designed to accommodate the full power uprate could reduce the upfront capital investment per kilowatt and generate positive incremental profit margin for SMR plants.

At the same time, due to fuel design constraints, we do not expect ATF technologies to achieve the same power uprate capability in SMRs.

This could give Lightbridge strong competitive advantages over ATF in this market segment.

Nuclear power faces competition from other sources of electricity as well, including natural gas, which in recent years has been the cheapest option for power generation in the U.S.

Nuclear power faces competition from other sources of electricity as well, including natural gas, which at times in recent years has been the cheapest option for power generation in the U.S.

and has resulted in some utilities abandoning nuclear initiatives.

Other sources of electricity, such as renewables like wind and solar, may also be viewed as safer than nuclear power, although we believe that generating nuclear energy with Lightbridge Fuel™ is the safest way to produce baseload electricity in suitable power reactors.

To the extent demand for electricity generated by nuclear power decreases, the potential market for our nuclear fuel technology will decline.

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However, the availability of uranium metal enriched to 19.75% in the isotope uranium- 235 is currently limited to small quantities sufficient only for research and testing purposes.

Deployment of our fuel will necessitate increasing enrichment level from 5% up to 19.75% at enrichment facilities, as well as deployment of de-conversion/metallization capability at a commercial scale, as well as the design and licensing of a shipping container capable of accommodating fuel assemblies with uranium metal enriched up to 19.75%.

Deployment of our fuel in light water reactors will necessitate increasing enrichment level from 5% up to 19.75% at enrichment facilities, as well as deployment of de-conversion/metallization capability at a commercial scale, and the design and licensing of a shipping container capable of accommodating fuel assemblies with uranium metal enriched up to 19.75%.

We expect that utilities will contract with nuclear fuel fabricators to order nuclear fuel assemblies, and then ship the completed nuclear fuel assemblies to the reactor sites.

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Governmental authorizations may be required before we can export our services or technology or collaborate with foreign entities.

US-NRC regulations at 10 C.F.R.

NRC regulations at 10 C.F.R.

Part 110 govern the export and import of nuclear equipment and material.

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Utilities that operate nuclear power plants that may utilize the fuel produced by these fuel fabricators require specific licenses relating to possession and use of nuclear materials as well as numerous other governmental approvals for the ownership and operation of nuclear power plants.

Certain Challenges and Uncertainties

government funding support

Presently, our ability to fund our fuel development program at a level necessary to adhere to our projected fuel development timelines is severely limited due to internal funding constraints.

This is in addition to our corporate overhead and other fixed costs, such as in-house project management and R&D personnel.

As a result, we believe seeking and securing significant U.S.

government funding to support our fuel development program is essential for us to be successful in our fuel development and commercialization efforts.

Prioritization of SMRs over existing large reactors, along with the significant government funding opportunities we expect to go toward SMRs in the coming years, may help accelerate our projected fuel development timelines by up to a few years for SMR applications.

Availability of suitable test loops in the ATR

After the Halden research reactor was shut down in 2018, we embarked on a global search for an alternative for loop irradiation testing of our metallic fuel rods.

Ultimately, we settled on the ATR at INL and applied to DOE for and won two GAIN Vouchers.

However, availability of irradiation test loops for fuel in the ATR has become limited and highly competitive, limiting how much fuel material can be inserted into the reactor as well as its duration in the reactor.

This would likely necessitate an extra fuel development step of LTR testing in a large commercial PWR in addition to the ATR loop testing before LTA testing could commence.

Consequently, the projected fuel development costs make it unfeasible for Lightbridge to fund this fuel development effort on our own.

Partnerships with fuel vendor and nuclear utility

The ability to design and fabricate the LTAs and engagement with a nuclear utility that is willing to accept our LTAs, is required to demonstrate our nuclear fuel in a commercial reactor.

In the U.S., the fabricator and the utility will be primarily responsible for securing necessary regulatory licensing approvals for the LTA operation.

With a shift in focus toward SMRs, we plan to build additional relationships with SMR reactor and fuel vendors, as well as existing and/or potential SMR utility customers.

Supply chain infrastructure for HALEU

Establishment of required supply chain infrastructure to support high-assay low-enriched uranium metallic fuel is a necessary step in the commercialization of our nuclear fuel.

Our fuel designs are expected to use uranium metal with uranium enrichment levels up to 19.75% and would therefore require certain modifications to existing commercial nuclear infrastructure to enable commercial nuclear facilities to receive and handle our fuels.

Need for experimental data on our metallic fuel

There is a lack of publicly available experimental data on our metallic fuel.

We will need to conduct various irradiation experiments to confirm fuel performance under normal and off-normal reactor conditions.

We are planning loop irradiation testing of our metallic fuel samples in the ATR at INL as part of this effort.

Need for development of new analytical models to support our metallic fuel

Existing analytical models may be inadequate to fully analyze our metallic fuel.

New analytical models, capable of accurately predicting the behavior of our metallic fuel during normal operation and off-normal events, may be required.

Experimental data measured from our planned irradiation demonstrations will help to identify areas where new analytical models, or modifications to existing ones, may be required.

Need for development and demonstration of qualified fabrication process for our metallic fuel rods

Demonstration of a fabrication process both for semi-scale irradiation fuel samples and subsequently for full-length (12-14 feet) metallic fuel rods for large PWR LTAs and shorter length for SMRs (~6 feet) is required.

Past operating experience in icebreaker reactors with differently shaped fuel rods with a similar metallic fuel composition involved fabrication of metallic fuel rods up to 3 feet in length.

Fabrication of full-length (approximately 12 to 14 feet) PWR metallic fuel rods for large PWRs has yet to be fully demonstrated.

In 2021, we demonstrated co-extrusion of full-length rods using surrogate materials (i.e., rods which replaced the uranium component with a suitable physical analogue).

Settlement of Arbitration

On February 11, 2021, the Company entered into a settlement agreement (the “Settlement Agreement”) with Framatome SAS and Framatome Inc.

(together, “Framatome”), resolving the pending claims and counterclaims between the parties in arbitration and judicial proceedings related to the parties’ inactive joint venture, Enfission, LLC.

Under the terms of the Settlement Agreement, all joint venture agreements were terminated and the joint venture was dissolved.

Lightbridge paid Framatome approximately $4.2 million for outstanding invoices for work performed by Framatome and other expenses incurred by Framatome.

Enfission was dissolved on March 23, 2021 and a certificate of cancellation was filed with the state of Delaware on December 17, 2021.

Legal Proceedings , for more information.

Our Intellectual Property

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Human Capital Management

As of December 31, 2021, we had six full-time employees and utilized a network of independent contractors, outside agencies and technical facilities with specific skills to assist with various business functions including, but not limited to, corporate, financial, personnel, research and development, and communications.

As of December 31, 2022, we had five full-time employees and utilized a network of independent contractors, outside agencies and technical facilities with specific skills to assist with various business functions including, but not limited to, corporate, financial, personnel, research and development, and communications.

This allows us to draw upon resources that are specifically tailored to our internal and client needs.

The Company’s headquarters are in Reston, Virginia.

We continue to conduct business with substantial modifications to employee travel and work locations due impacts of COVID-19.

Our mission is to help the world combat climate change and meet its energy goals.

The Company’s headquarters is in Reston, Virginia.

Our mission is to help the world combat climate change and meet energy goals.

We are passionate about understanding the needs of our society, and we work hard to develop our next generation nuclear fuel.

We also believe that supporting our team with a wonderful work environment supports and powers us to accomplish our goals.

We also believe that supporting our team with a wonderful work environment supports and empowers us to accomplish our goals.

The Company’s human resource professional is a resource available for employees regarding the development of their careers and training.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business