Good day, and welcome to the 5E Advanced Materials Earnings Conference Call. [Operator Instructions] After the prepared remarks we will open the floor for a question-and-answer session. Please note, today's call is being recorded. Before we begin, I would like to remind everyone that today's discussion will include forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially. For more information on these risks, please refer to the company's filings with the Securities and Exchange Commission. 5E Advanced Materials undertakes no obligation to update or revise any forward-looking statements. At this time, I would like to turn the call over to Paul Weibel, Chief Executive Officer of 5E Advanced Material. Paul, please go ahead.

Thank you, and good afternoon, everyone, and thank you for joining us today. Fiscal 2026 is shaping up to be a pivotal year for 5E, a year defined by momentum, achievement meaningful progress toward establishing ourselves as a leading U.S. borate producer. We've reached what is, for us, the most significant moment in both domestic borate market and the evolution of supportive U.S. policy. Boron, the fifth element on the periodic table is now officially recognized as a U.S. critical mineral. On November 7, the U.S. Geological Survey and the Department of the Interior formerly added boron to the final 2025 Critical Minerals list. That recognition is a major validation of our strategy, confirming what we've long advocated that boron is a cornerstone of America's energy policy, national defense and high-technology sectors, while also being essential to glass, ceramics and agriculture. There is a clear necessity to secure and maintain a reliable domestic borate supply chain and for the U.S. to remain an important global exporter of high-quality borates. 5E is a proud leader in the effort to maintain the United States position of strength in the borates market and with this designation, we believe it brings meaningful economic advantages that include expanded access to federal funding and financing as well as strategic partnerships that will accelerate the development path for Ford Cady. Before I dive deeper into what this means for 5E, let me summarize the quarter's key highlights. First and foremost, is that boron was added to the U.S. Critical Minerals list which confirms the importance of Ford Cady's positioning as the leading advanced stage boron project in the U.S. 2, the addition of boron to the list expands our eligibility for federal funding programs including USXM, the Department of Energy's Loan Programs Office, Department of Wars Office…

[Operator Instructions] Our first question is coming from Tate Sullivan of the Maxim Group.

And Paul, congratulations on having boron beyond the critical mineral list, and [ also ] you highlighted the potential in your last call and how you were part of that process. So congratulations. Is part of being on that list, is there any word from -- or previous comments from the Defense Logistics Agency that boron that there may be government stockpile boron going forward? Or any boron derivatives?

I think the trend has been to in the past, stockpile carbide on the USGS commodity summary, there was a pretty large award, maybe about 1 year, 1.5 years ago to a company through DPA for domestic production of boron carbide obviously, that's a supply chain that's dominated by China. That customer has reached out to a couple of the other borate producers kind of our understanding has been a bit ignored. And so we partnered with them went through the initial qualification process with smaller samples and now they are piloting production, looking to move to full scale and that was 1,000 pounds as part of that pilot process. And I think, listen, there's -- so to get back to your question, I think the stockpiling of carbide has occurred in the past not sure, if there's stockpiling right now, especially given what is happening on the midstream with that producer, but I think the plan is to ultimately get off of China and domesticate that supply chain.

And then separately in the 10-Q, I saw some language about the horizontal wells -- 2 horizontal wells that you're drilling. Is that for resource expansion and definition work? Is that for flow testing and have you started flow testing if that is part of the process?

No, this is actually validating the commercial design. So we drilled in July into early August to horizontal lateral. So we had 4 injection recovery wells and about maybe each of those wells were going down to about 1,500 feet total depth vertically. And we have at about 1,080 feet below ground. We've sidetracked off those 2 wells with 1,500 foot laterals. We got a minor modification from EPA to get commission to do that. Our commercial mine plan contemplates 4,000-foot laterals. So we're kind of -- as you think about scaling and proof of concept. And so we've run about 6 or 7 cycles on those wells. And the results have been really good. One of the things that as we're coming up on 2 years of operating the small-scale facility here in January. And 1 of the things we saw with the vertical wells is you'd have head grades that would be consistently at 5% and then they jump to 7%, 8% and then back down to 3%. You had a bit of variance. And from a geology perspective, our deposit was a late millions of years ago and it evaporated and it's pretty homogeneous. It's about the mineralized zone is 1,300 to 1,500 feet underground. And that gives us the ability to take a horizontal well and run kind of for a couple of thousand feet through high-grade colemanite zones. So what has happened now as we've tested these wells, all samples, right from a head grade and boron percentage and solution, the variance has like gone away. And there's a much higher rate of efficiency from a mining process and that we're consistent. And as you think about your design going into feed engineering, the basis you're going to give your EPC contractor we now have a really high degree of confidence on what that bell curve looks like from a boron in solution percentage as well as our metal and purities and our calcium to boron ratio. So it really gives -- it just gives us a much better position to have a successful feed program and ultimately design a plant at commercial scale that's going to work.

Our next question is coming from Heiko Ihle of HC Wainwright.

Paul, it's [ Chase ]. Heiko is on the plane right now listening to the webcast.

No problem. Chase, how are you?

Great. Earlier on the call, you discussed several government programs that supported Boron. Can you give us some color on maybe the percentage or in dollar terms that you think we could see from such programs? It seems pretty pertinent given the long-term demand drivers are pretty obvious.

Yes. Great question. Listen, I think now that you have this critical minerals designation, it really opens up all aspects of the capital structure from the loans to what you saw what happened with [indiscernible] where they came in and now they're a 10% shareholder and they did the preferred. So I think I would get asked previously at different conferences and as we're talking to investors, is that a possibility? And my kind of first response was, listen, we need to get the government to acknowledge boron as critical mineral. So now that we've done that, I think we can really have a much more in-depth discussion on, hey, what's the right loan we want to go after. We have the LOI with XM, but now you can kind of run parallel processes. As you go get the debt, and obviously, the debt helps geared IRRs. So you can optimize your cash flows through the loans, but then you can have the conversation about, hey, what does the balance of the equity look like? And could you have a conversation with OSC on potentially providing some of that capital. And so now on the back of that, like, I would say, like -- we have a $435 million capital estimate like that's the sky is the limit. In the interim, there's had a call today on we are a member of Cornerstone Consortium. What we're doing on the well field side is both innovative and just on an extent -- we're proving that the horizontal -- we know the vertical wells work. We're proving that the horizontal wells are actually a better design, and the results are already speaking for themselves. But hey, can we go get smaller wells now through cornerstone on the mining side. And I think on the back of some of these executive orders that kind of came out earlier in the year, now you're getting through CRs have been passed. You can -- people returning to their guests, you can actually go have those conversations.

Absolutely. One more question. You mentioned some of the fluctuating head grades on the call. From a geological point of view, what exactly is this based on? And how does it impact your internal model as you mentioned, having more clarity on the bell curve to see what's going on?

Great technical question there. So when we say high grade we're talking about what's the boron percentage by weight in solution that's coming and being extracted from underground to surface. And so -- when we start an injection recovery cycle to go mine the bond, we're starting for our permit with 95% water, 5% hydrochloric acid. And just HCL, it's no different than the muriatic acid I put in my swimming pools as a conditioner. But that with the water and increases in temperature, creates the ability to leach the colemanite. And so when we inject, we let that then sit underground, what happens in that a 24- to 48-hour time period is that HCL reacts to colemanite and dissolves the minerals. And so when we come up above ground, what ends up happening is we catch multiple samples of solution. We send them to our lab on site, and we run an ICP analysis on that. And what happens is you can see what's your HCL concentration in that solution. And so when you -- before you injected, you started at 5%. And when we test in the lab, it's about 0.25% to 0.5% HCL. So that HCL has now been reactive and replaced with dissolved boron and solution. And because boron is super soluble, i.e. with temperature, the more you can dissolve the better head grade you can get, we -- you can supersaturate and outperform on the mining side. And so our base case assumes 9% to 10% head grade. We've proven the solubility curve out on the low end. And ultimately, what we're focusing here on the next like 1.5 month, 2 months is really bedding that out on the commercial design. So economics for the PFS remain intact. And I think we -- we've had some really initial good results, where we've gotten kind of right around that 7% head grade. And -- but we're limited today on the temperature we can actually inject at the small scale facility. And so one of the items, and this is kind of a teasing out like the next call is like we have downhole heaters on order. They're used in oil and gas and every day, they can get up to actually 300 degrees C. That's not the temperature we need to mine at. We're going to kind of hang it right around 160 to 180 degrees at.

[Operator Instructions] Our next question is coming from Dmitry Silversteyn of Water Tower Research.

Quick question. When you talk about -- you talked about one of your goals for 2026 is to secure offtake contracts and you're working right now to have your products trialed. Is there, in your mind, a sort of percentage of your annual production that you would like to have under offtake agreements and long-term contracts at what level would you feel comfortable deploying capital and how do you see maybe a steady-state business operating between offtake agreements and selling on the spot market?

Great question, Dmitry. Glad to have you on the line. Yes, I think the first kind of group we proposed to, they were -- we pitched about 20% of our production, so about 24,000 metric tons. There's 2 or 3 other customers in queue. I think what we'd like to get to is a bankable portfolio that consists about 70% of our production under offtake agreement, maybe 75%. And then you want to take advantage of the spot market and specifically distribution because they are not bankable customers, but they ultimately do provide a higher price in the spot market, that's how you can -- there's boron is using 300-plus applications and the way you can kind of scale is ultimately through those distribution channels, where you have smaller participants buying it, but they're buying at much higher prices. And so from as we're thinking about that offtake portfolio, you target 70% of the 130,000 tons under contract and then you keep another 25% to 30% for the spot market. Understood.

That's very helpful. And then just a point of clarification. When you talk about making the final decision by the end of 2026 or talking about offtake contracts by the end '26? Do you mean your fiscal year or the calendar year?

Great question. So that was a reference to calendar year 2026.

Thank you very much. Well, there are no further questions at this time. I will now turn the call back over to Paul for any closing remarks.

Thank you, everyone, for your time, interest in dialing today for our Q1 2026 call. We have a tremendous opportunity in front of us to become the newest borate producer in the world. We have a proven asset and a strategy to modularly expand the asset over the next several years. We're looking forward to sharing this journey with all of you in the coming quarters, and thank you for dialing in. Have a great day.

Thank you, Paul, and thank you to everyone for joining today's call. This concludes today's conference. You may now disconnect.