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®. Lightbridge Corporation (NASDAQ: LTBR) Investor Presentation - May 2012. Safe Harbor Statement. - PowerPoint PPT Presentation
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®
®
Lightbridge Corporation (NASDAQ: LTBR)Investor Presentation - May 2012
®®
This presentation includes or incorporates by reference statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements include, but are not limited to, information or assumptions about revenues, gross profit, expenses, income, capital and other expenditures, financing plans, capital structure, cash flow, liquidity, management’s plans, goals and objectives for future operations and growth. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project,” “continue,” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties, and others factors which are, in some cases, beyond our control and which could materially affect actual results, levels of activity, performance or achievements. These risks and uncertainties include, but are not limited to, the factors mentioned in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2011, and other risks mentioned in our other reports filed with the Commission.
The forward-looking statements contained in this presentation are made only of this date, and Lightbridge Corporation is under no obligation to revise or update these forward-looking statements.
Safe Harbor Statement
2
® 3
Lightbridge Overview
Nuclear fuel
designs
Nuclear advisory services
®
Washington DC
Abu Dhabi
Moscow
London
NASDAQ: LTBR
® 4
Why Invest in Lightbridge?
Increasedpoweroutput/
Improvedeconomics
Plug & playEnhanced
proliferationresistance
Reducedspent fuelquantities
Limited competition – LTBR Fuel Designs
Superior investment
returns
Advisory services
Highly experienced management team, strategic advisors and technical teams
Increasedsafety
Proprietary technology – Strong patent portfolio
®
Nuclear Energy Forecast & Market Drivers
5
New marketCapital cost per MWe
Fuel supply diversity
Existing marketPower uprates
Longer fuel cycles
Source – Fortune Mag., IAEA, WNA, NRC, IAEA World Energy Outlook 2011
73%The estimated increase in nuclear power generation globally by 2035. Nukes’ share of total power generated is projected to be 13%, the same as in 2009.
435The number of reactors in operation
worldwide.
63The number of nuclear reactors under
construction today. China is building 26 while India has six under way.
®
Lightbridge: Advancing Nuclear Energy
6
Levelized Costs1 ($/MWh)
Environmental (CO2 lbs/MWh)
10% uprate with Lightbridge metallic fuel2
CoalNatural Gas
Wind
Solar
Nuclear
200
150
100
50
250
1. Levelized Cost of Electricity for new generation sources in 2015. Source EIA “Annual Energy Outlook 2011” and EPRI “Program on Technology Innovation”2. Operating nuclear power plant uprate with Lightbridge fuel can provide approximately 23 $/MWh electricity generation costs
0 1,200 2,500
®
Limitation of Renewables
7
Source – Wall Street Journal
770 SQ. Miles – Rhode IslandTo generate an equivalent amount of electricity as a typical nuclear plant, you’d need to
cover about 770 square miles of land with wind turbines, an area slightly smaller than Rhode Island.
37 Million Acres – IllinoisReplace one-tenth of U.S. oil consumption with fuel derived from switch grass would require
cultivating some 37 million acres of land, an area roughly the size of Illinois.
130 Million tons of Coal AshAmerican commercial nuclear-power has produced 62,000 tons of high-level waste over its
entire history. Roughly the size of a football field 20 feet deep. U.S. coal fired plants generate about 130 million tons of coal ash per year.
®
Comparison to Standard Fuel Rod
8
D 3 8 .1 9 m m
D 2 8 .3 6 m m
D 1 9 .5 0 m m
Standard Cylindrical Oxide Fuel Rod Cross-Section Lightbridge metallic fuel rod cross-section®
D
d
® 9
Fuel Design Evolution – Seed & Blanket to All-Metal
Thorium-based seed & blanket
All-metal fuel
Seed
Metallic
Uranium
Blanket
Oxide
Uranium
Blanket
Oxide
Uranium
All-Metal
Metallic
Uranium
Seed
Metallic
Uranium
Uranium-based seed &
blanket
®
Improved Plant Economics
• Increased revenue and improved operating margins of existing nuclear power plants
• Reduced total levelized cost per kilowatt-hour for new build reactors
• Increased competitiveness of nuclear power versus other energy sources
Increased Power Output from
Plant
• 10-17% power uprate and 24 month fuel cycles for existing PWRs• Up to 30% power uprate for new build PWRs• Applicable to light water based SMRs and BWRs
LTBR Fuel Technology Value Proposition
10
• Fuel enables the supply chain to deliver more power from the same capacity
• Reduced fuel fabrication costs
Increased Supply Chain Efficiency
• Reduced volume of spent fuel• Enhanced proliferation resistance of spent fuel
Improved Spent Fuel
Management
®
Increased Heat
Transfer
• Higher thermal conductivity improves the rate at which heat from the fuel can be transferred to the coolant
• Increased fuel rod surface area (~35-40% greater) provides increased safety margin
• Improved coolant mixing due to helical twist
Lower Operating
Temperature
• Average operating temperature of ~ 370 oC, i.e. “cold fuel”• Reduces the amount of sensible heat that must be removed at
reactor shutdown • Improves fission product retention and mitigates fuel swelling
• Metallurgical bonding of fuel to cladding improves strength• Fuel rod integrity substantially reduces radioactive source term in
the event of cladding breach
Improved Fuel Rod Integrity
LTBR Fuels - Key Safety Benefits
11
® 12
LTBR Metallic Fuel - Safety Benefits
Structural integrity
Improved heat transfer
Reduced operating
temperature1200°C -1300°CConventionalFuels
340°C – 380°CLTBR Fuels
®
Nuclear Power Market Size and Growth Projections
59%21%
8%
6% 5%
Global Market by Reactor Type
Pressurized Water ReactorsBoiling Water ReactorsRussian-designed Pressurized Water ReactorsHeavy Water ReactorsOther
Source – World Nuclear Association’s Reactor Database
13
2011 2025 20300
100
200
300
400
500
600
700
800
130220 237
Target Market for 10% Power UprateGlobal Market Size (All Reactor Types)
GWe
554614
World Nuclear Association’s Reference Scenario
CAGR of 2.8% for 2011-2030
364
Source – The Global Nuclear Fuel Market. Supply and Demand 2011-2030, World Nuclear Association, August 2011
®
Revenue Model for 10% Power Uprate Fuel Variant
Incremental Annual Revenue for an 1,100-MWe Plant with a 10% Power Uprate and 24-Month Cycle
14
Wholesale Electricity Price of $55/MWh
Incremental revenue from a 10% power uprate $48M
Incremental revenue from switching to a 24-month cycle $8M
Estimated cost savings from having fewer outages $4M
Total incremental annual gross revenue and cost savings to utility $60M
Lightbridge’s Royalty Fee as a Percentage of Incremental Gross Revenue
Annual Revenue to Lightbridge per 1,100-MWe Plant
5% $3.0M
8% $4.8M
10% $6.0M
®
Licensing Revenue Projections for 10% Power Uprate Fuel
20% 30% 40%$0M
$100M
$200M
$300M
$400M
$500M
$600M
$700M
$800M
$176M$265M
$353M
$106M
$159M
$212M
$71M
$106M
$141M
LTBR Projected Annual Revenue
10% Royalty Fee of Incremental Gross Revenue to Utility
8% Royalty Fee of Incremental Gross Revenue to Utility
5% Royalty Fee of Incremental Gross Revenue to Utility
Captured Share of Target Market for 10% Power Uprates
$353M
$530M
$706M
Wholesale Electricity
Price of $55/MWh
Note: The above revenue numbers include an escalation factor of 3% per year. The 20-40% market share of the PWR target market for 10% power uprates represents approximately 8-16% of the entire projected global market size in 2025.
15
®
IRR - Power Uprate Fuel
20% 30% 40%0%
10%
20%
30%
40%
50%
60%
70%
39%44%
49%
+7%+7%
+7%+3%
+3%
+4%
LTBR Projected Internal Rate of Return
10% Royalty Fee of Incremental Gross Revenue to Utility
8% Royalty Fee of Incremental Gross Revenue to Utility
5% Royalty Fee of Incremental Gross Revenue to Utility
Captured Share of Target Market for 10% Power Uprates
49%54%
60%
Wholesale Electricity
Price of $55/MWh
16
Note: The above internal rate of return numbers are based on projected technology licensing revenue, R&D expenditures and allocated corporate overhead expenses from 2012 to 2030. An escalation factor of 3% per year is applied to all revenue and cost figures.
®
Fuel Development & Commercialization Timeline
17
Demonstratefull-length
rodfabrication
Completetest reactorirradiations
Begin lead test assembly
(LTA) operation
Begin test reactor
irradiation
Complete regulatorylicensing of lead test
assemblies
Complete 1st cycle
of LTA operation
Complete 2nd cycle
of LTA operation
Begin commercial operation
2012 20222014 2016 2018 2020
Commercialization of Fuel Designs
® 18
Nuclear Fuel – Commercialization Strategies “Push, Pull & Government”
Demand® Fabricator Power producers
Economics
Safety, non-proliferation,
waste
Commercialize
® 19
Our Place In The Nuclear Space – Advisory Services
New Program Strategy and
Planning
National InfrastructureDevelopment
Nuclear Power Plant
Operation
Nuclear Power Plant
Construction
Site Decommissioning
®
World class experience
Government RegulationsGeneration
® 20®
Advisory Services – Client Success Stories
Oman
Saudi Arabia
Bahrain
Kuwait
QatarU.A.E
® 21
Advisory Services – Market Penetration & Teaming Approach
®
® 22
LTBR - Management Team
James D. Guerra, CPAChief Operating &
Financial Officer
Seth GraeChief Executive Office &
President
Ambassador Thomas Graham, Jr.
Chairman of the Board
Andrey Mushakov, PhDExecutive VP/ International
Nuclear Operations
James MaloneChief Nuclear Fuel
Development Officer
Jon JohnsonSenior Vice President,
Nuclear Regulatory Expert
® 23
LTBR - Strategic Advisors
Sir Ronald Grierson
Simon Murray, CBE
Kathleen KennedyTownsend
Hans Blix, PhD
Norton Shapiro, PhD
Sam Vaidyanathan, PhD
® 24
LTBR - Nuclear Utility Fuel Advisory Board (NUFAB)
• Lightbridge recently announced the formation of a Nuclear Utility Fuel Advisory Board (NUFAB) composed of leading nuclear utilities.
• The objective and purpose of the board is to further strengthen dialogue with global nuclear utilities and provide their input into Lightbridge's nuclear fuel development and commercialization efforts.
• The initial members of NUFAB include top fuel managers from Exelon Generation Co., Dominion, Duke Energy, and Southern Company.
• Lightbridge plans to expand NUFAB to include representatives from additional nuclear utilities in the future.
® 25
Why Invest in Lightbridge
Increasedpoweroutput/
Improvedeconomics
Plug & playEnhanced
proliferationresistance
Reducedspent fuelquantities
Limited competition – LTBR Fuel Designs
Superior investment
returns
Advisory services
Highly experienced management team, strategic advisors and technical teams
Increasedsafety
Proprietary technology – Strong patent portfolio
®
Lightbridge Corporation – Key Contacts
26
Lightbridge Key Contact Information
US Headquarters1600 Tysons Blvd.Suite 550McLean, VA 22102USA+1.571.730.1200
Seth GraePresident & Chief Executive [email protected]
James D. GuerraChief Operating and Financial [email protected]
Andrey MushakovExecutive Vice President, International Nuclear [email protected]
Jon JohnsonSenior Vice President Advisory [email protected]
Gary SharpeInvestor [email protected]
®®
Appendix
® 28
LTBR - Key Technical Milestones in 2012-2013
Provides fuel samples for
irradiation testing
Confirm US fuel fabrication
process for the metallic fuel technology
(MFT)
Demonstrate the performance of
MFT under prototypic operating
conditions of Western-type
PWRs.
Full-length fuel rods will be
manufactured for fabrication
process demonstration
and out-of-reactor tests
Technical milestone
Milestone significance
Fabrication of semi-scale fuel
samples for irradiation in test
reactors
Short-term irradiation of
samples in the Advanced Test
Reactor at Idaho National
Laboratory
Begin long-term loop irradiation in prototypic PWR
operating conditions
Fabrication of full-length fuel
rods
®
Seth Grae
Chief Executive Office & PresidentLightbridge Corporation
Ambassador Thomas Graham, Jr.
Executive Chairman of the BoardLightbridge Corporation
James D. Guerra, CPA
Chief Operating & Financial OfficerLightbridge Corporation
• Chairman of the Board of the Cypress Fund for Peace and Security• Former senior U.S. diplomat, world-renowned expert on nuclear non-
proliferation• Involved in every major arms control/non-proliferation agreement for the past
35 years• Advisor to five US presidents on nuclear non-proliferation
• Former Vice President of Finance for Exelon Nuclear• Former Vice President of Finance and CFO of Exelon Business Services
Company• Former Vice President of Finance, Treasurer and Controller of Grupo Dina• Senior management positions with AT&T, Citigroup, and Beatrice Companies
5
Lightbridge Management Team
29
• Member of the Civil Nuclear Trade Advisory Committee to the US Secretary of Commerce
• Member of the Suppliers Advisory Committee of the Nuclear Energy Institute• Member of the Governing Board of the Bulletin of the Atomic Scientists• Former Co-Chair of the American Bar Association’s Committee on Arms Control
& Disarmament
®
Sir Ronald Grierson, Chairman of the Committee
• Co-Chairman of the Blackstone Group’s International Advisory Board• Former Chairman of the General Electric Company plc (UK) 1968 -1996• Served on the Boards of Chrysler Corp., R.J. Reynolds, Nabisco, W.R. Grace &
Co., British Aircraft Corp., International Computers Ltd.• Former Managing Director of S. G. Warburg
5
Lightbridge Senior Advisors
30
Simon Murray, CBE • Non-Executive Chairman of Glencore, the world's largest diversified commodities trader
• Chairman and founder of the General Enterprise Management Services (GEMS) a private equity firm in Hong Kong, former Executive Chairman of the Asia Pacific Division of Deutsche Bank, Former CEO of Hutchison Whampoa
• Board member – Vodafone, Richemont and Cheung Kong Holdings, Ltd.
Kathleen Kennedy Townsend• Former Lieutenant Governor of Maryland• Past deputy assistant attorney general in the Clinton Administration’s
Department of Justice
Hans Blix, PhD • Former Foreign Minister of Sweden• Served for sixteen years as the Director General of the International Atomic
Energy Agency• Former chief weapons inspector and executive chair of the U.N. Monitoring,
Verification, and Inspection Commission in Iraq
®
• 33-year veteran of Westinghouse Electric Co. where he was Vice President for New Plants and was in charge of the successful construction and installation of nuclear power plants in numerous countries.
• Past Vice President for Engineering at Westinghouse, where he directed all design, analysis and safety evaluation for new nuclear power plants and new product development
Ernie Kennedy
Senior Vice President, Nuclear Deployment & Program ManagerGeneration Consulting
Jon Johnson
Senior Vice President, Nuclear Safety and Regulatory ExpertRegulatory Consulting
• Former Deputy Director of the Nuclear Regulatory Commission’s (NRC) Office of Nuclear Reactor Regulation
• Oversaw inspection, licensing, assessment, and event response at all 104 commercial and 26 research nuclear reactor facilities in the United States
• Regulatory agencies around the world have looked to Mr. Johnson for advice on reactor safety design, operation, and oversight matters, including the United Arab Emirates' Federal Authority for Nuclear Regulation, the Canadian Nuclear Safety Commission, and the Japanese Nuclear Safety Institute
Kevin Yessian
Vice President, Consulting
Sandy McWhirter
Vice President, Consulting
5
• Former President and Chief Operating Officer of Holtec Manufacturing – Dry cask nuclear waste container manufacturer
• Former Vice President for nuclear supply management at Exelon Nuclear
• Former UKAEA (United Kingdom Atomic Energy Authority) International Marketing Director
• Developed nuclear projects in locations such as Russia, Ukraine, South Korea, and Romania
Advisory Services - Leadership
31
®
• Four decades of high-level experience in the nuclear industry• Former Vice President, Nuclear Fuel, Exelon Generation where he was
responsible for procurement (uranium, conversion, enrichment and fuel fabrication) for seventeen operating nuclear reactors - PWRs and BWRs
James Malone
Chief Nuclear Fuel Development Officer
Andrey Mushakov, PhD
EVP, International Nuclear Operations
Russian Federation Office
Alexei Morozov, PhD – Managing Director
Senior Nuclear EngineersValeri Kevrolev, PhD Sergei Bashkirtsev
• Primary liaison between Lightbridge and the Russian nuclear organizations• 10+ years with Lightbridge
• Russian employees of Lightbridge International Holding, LLC - Moscow• 2 PhD’s, 1 Master Degree In Nuclear Engineering from the Kurchatov
Institute• 90+ Years combined experience in the Russian nuclear program• Experts in neutronics, thermal hydraulics, nuclear fuel performance and
advanced reactor and fuel designs
5
Nuclear Fuels Management Team
32
Norton Shapiro, PhD • 30+ years of nuclear experience at Westinghouse and ABB Combustion Engineering, including former Chairman of Westinghouse’s Technical Review Committee
Sam Vaidyanathan, PhD • 30+ years of nuclear fuel research and development experience at GE Nuclear Energy
Aaron Totemeier
Director of Fuel Cycle Technology & Fuel Fabrication
• PhD candidate in nuclear engineering at Texas A&M University• Expertise in material aspects of the nuclear fuel cycle including fuel design,
fabrication, performance analysis and reprocessing technology
®
Advisory Services – Regulatory
Key Lightbridge Regulatory Expertise
Lightbridge has unique international nuclear talent and experience to meet the specific needs of clients
• Regulatory Processes
• Inspection Processes and Practices
• Safety/Security Analyses Review
• Regulatory Organization
• Safety Culture
• Cyber and Physical Security
• International Nuclear Law and IAEA Conventions
• International Cooperation Agreements
• Regulatory Management and Quality Requirements
• Operator License Requirements
• Proliferation Considerations
• Nuclear Licensing Issues
• Training and Qualifications
• Siting Characterization
• Import/Export Requirements
• Legal Considerations
• Design Certification Reviews and Assessments
33
®
Advisory Services – Nuclear Generation
• Project Development• Project Management• Schedule Development• Technology Assessment• Quality Programs• Safety Analyses• Organization Definition• Risk Analyses• Licensing Engineering• Construction Management• Operations Assessment
• Supply Management• Cost Analyses and Estimating• Contracting• Nuclear Liability • Export Controls• Commercial Licensing • Safety Culture• Root Cause Analyses• Site Assessments• Waste Management • Training
Key Lightbridge Nuclear Generation Expertise
Lightbridge has unique international nuclear talent and experience to meet the specific needs of clients
34
®
+1.571.730.1200 [email protected] www.ltbridge.com