5E Advanced Materials(US:FEAM)2025-09-29 20:01Financial Overview - The Preliminary Feasibility Study (PFS) indicates a capital estimate of approximately $435 million for the Phase 1 development of the Fort Cady Project, which includes a 15% contingency of about $55 million and owner's costs of approximately $13 million[393]. - The financial model in the PFS was based on a third-party market study evaluating future supply and demand for the boric acid market[393]. - The company reported a net loss of $31.56 million for the year ended June 30, 2025, a 49% improvement from a net loss of $62.01 million in 2024[432]. - Total costs and expenses for the year ended June 30, 2025, were $43.72 million, a 22% increase from $35.86 million in 2024[432]. - The gain on extinguishment of debt for the year ended June 30, 2025, was $17.3 million, resulting from the Exchange Transaction and the derecognition of $82.4 million in Convertible Notes[441]. - Interest income decreased by $149 thousand, or 59%, for the year ended June 30, 2025, corresponding to a decrease in average cash and cash equivalent balances[439]. - Interest expense increased by $0.3 million, or 4%, for the year ended June 30, 2025, primarily due to less interest capitalized to construction-in-progress and an increase in the principal balance of Convertible Notes[448]. - As of June 30, 2025, cash and cash equivalents were $3.8 million, with a working capital deficit of $1.8 million, compared to $4.9 million and a deficit of $2.9 million as of June 30, 2024[451]. - The company has not generated revenues since inception and has relied on equity financing and equity-linked instruments to fund operations[452]. Production and Development - The PFS established approximately 5.3 million short tons of boric acid reserves with an average grade of 8.03% (B2O3) and an initial life of mine of 39.5 years[392]. - The company optimized production rates of boric acid to one short ton per day at the small-scale facility (SSF) and improved the quality and consistency of production[397][398]. - The company plans to reach initial commercial production from Phase 1 in the second half of calendar year 2028[394]. - The company is targeting to install 27 horizontal wells for the proposed commercial-scale wellfield, with performance data expected to inform the final mine plan submitted to the EPA[396]. - The company aims to develop a commercial-scale facility for the production of borates, calcium chloride, and gypsum, aligning with its mission to support decarbonization and food security[391]. Financing Activities - The net proceeds from the August 2024 Equity Offering were approximately $3.0 million after deducting fees and expenses[411]. - The company issued new senior secured convertible notes totaling $5.0 million, with net proceeds of approximately $4.7 million after costs[413][414]. - The company raised approximately $6.4 million from the May 2025 Subscription, selling 1,984,709 shares at $3.55 per share[419]. - The August 2025 Equity Offering generated approximately $8.31 million before expenses, with 2,374,481 shares sold at $3.50 per share[420]. - The company completed multiple financing transactions, including the August 2024 Equity Offering and the March 2025 Subscription, aimed at strengthening its balance sheet[455]. - The company anticipates needing additional financing within the next 12 months to meet ongoing obligations and continue operations[464]. - The company plans to explore various financing strategies, including equity or debt financing and strategic alliances, to support business growth[465]. - The company is targeting a formal application to EXIM for a potential debt facility of up to $285 million for the Boron Americas Complex, expected in the second half of 2025[423][425]. Operational Efficiency - A strategic reduction in workforce reduced headcount by approximately 40%, saving about $1.1 million in operating expenditures during the second half of fiscal year 2025[407]. - For the fiscal year 2025, small-scale facility operating costs increased by $2.9 million, or 201%, compared to the prior year, primarily due to increased salaries and benefits, raw materials, and maintenance costs[434]. - General and administrative expenses decreased by $8.4 million, or 37%, for the year ended June 30, 2025, mainly due to the reclassification of salaries related to the small-scale facility and a reduction in headcount[436]. - Research and development expenses were $0 for the year ended June 30, 2025, compared to $45 thousand in the prior fiscal year, as engagements with Georgetown University and Boston College were completed[437]. - Depreciation and amortization expense increased by $14.8 million, or 286%, for the year ended June 30, 2025, due to the commencement of operations of the small-scale facility[438]. Cash Flow and Liquidity - For the fiscal year ended June 30, 2025, net cash used in operating activities was $23.6 million, a decrease of 12% compared to the prior year[458]. - Cash flows used for investing activities decreased by 73% to $2.0 million, primarily related to engineering services for the FEL-2 program[459]. - Cash flows provided by financing activities increased by 32% to $24.5 million, driven by various equity offerings and note issuances[460]. - Material short-term cash requirements include general and administrative expenses, engineering costs for the commercial-scale facility, and working capital needs[463]. - There is substantial doubt regarding the company's ability to continue as a going concern without securing additional financing[466]. - The company anticipates needing additional financing to continue as a going concern for at least one year after the report date, with substantial doubt regarding its ability to secure such funding[422]. Stock and Compliance - The company executed a 1-for-23 reverse stock split on February 14, 2025, to regain compliance with Nasdaq listing requirements[426][427]. - The company has entered into an equity distribution agreement allowing for the sale of up to $15.0 million of common stock, which was terminated without penalties[468].