Hello, and welcome to FREYR Q3 2021 Earnings Release and Conference Call. Throughout the call, all participants will be in listening-only mode. And afterwards, there will be a question-and-answer session. Today, I am pleased to present our first speaker, Vice President or Investor Relations, Jeffrey Spittel, please begin your meeting.

Good day and welcome everyone TO FREYR Battery's third quarter earnings conference call. With me today on the call are Tom Jensen, our Chief Executive Officer; and Steffen Føreid, our Chief Financial Officer. During today's call management may make statements related to our business that are forward-looking under Federal securities laws, and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of material risks and other important factors that could affect our actual results, please refer to our filings with the Securities and Exchange Commission, which are available on the Investor Relations section of our website and the earnings press release issued earlier today. Additional information will be made available in our quarterly report on Form 10-Q for the quarter ended September 30, 2021 and other reports that we may file with the SEC. With that, I'll turn the call over to Tom.

Thank you, Jeff. And good morning, good afternoon and good evening, wherever you might be dialing in from. It's a pleasure of course for me to be having this second earnings call for a third quarter earnings, and to give you important updates on the progress of our business. And to just sort of skip through to the most important part. We are experiencing tremendous commercial momentum in the rollout of clean battery solutions worldwide. And I'm very happy to be speaking to you today to give you more insight into all the hard work that the passionate and dedicated people at FREYR have been working on since the last earnings call. FREYR is making a significant progress towards our commercialization efforts. We are making commercial and strategic progress across the board. We're building out the operational foundation to deliver an increasing number of battery cells into an exponentially booming market. And we're developing and financing our expansions to scale to basically ensure that we can be relevant for the customers in time. So we are today announcing that we're negotiating offtake agreements in excess of 150 GWh in cumulative volumes between 2023 and 2030. This will start deliveries already in 2023 and increase on an annualized basis leading up to 2030. In addition to this we have a broad and expanding pipeline of opportunities across all market segments. And I'll go into depth around our focus on the customer front. Earlier this year in October, we announced the joint venture that we have established with Koch Strategic Platforms. We're progressing into development of that joint venture and we'll get back to how we are thinking about expanding, capacity expansion to build into this exponentially growing customer base. We are also then accelerating our capacity expansion also in Finland, which…

Thank you, Steffen. So to summarize and to sort of take you through our current priorities, we are on-track to establish 83 GWh of annualized capacity of clean battery cell solutions by 2028. We can now deploy opportunities not only in Norway, which we’re well advanced in developing, but also in Finland and United states. And we will be looking into acceleration options for establishing that capacity, building on the knowledge and the footprint that we are establishing in Norway. We see very strong customer traction building and we are very pleased today to announce initial insights into our customer funnel which now already have 9 customer engagements in offtake agreement discussions, 2 of which are in very advanced stages. In combination, these 9 agreements add up to more capacity that we are developing in Gigafactory 1 and 2. We will keep adding momentum to that across the ESS and commercial mobility segments and also expand into the EV market as we're moving towards the Final Investment Decision for Gigafactory 1 and 2 in Norway. It's important for us to diversify our production footprint and this is also something that our customers are valuing greatly. To have a localized production footprint gives opportunity to have security of supply in local markets which is going to be increasingly important for many of the large companies that we are in dialogue with across the ESS, commercial mobility and EV spectrum. Finally, we are extremely preoccupied with driving capital efficiency. And as our CFO alluded to, we will be pursuing sustainably linked financing options and also have a diversified capital base over time. We will optimize plant configurations and supply chain to generate strong returns. Having a localized and decarbonized supply chain is fundamentally important to drive down costs but also to drive down the CO2 footprint on the lifecycle basis of the batteries we produce, which ultimately is going to be core to the decarbonization of transportation and energy systems globally, the market segment in which we are fundamentally delivering world leading solutions into. So with that, I open up for any questions or comments that any of our investors might have. But we are super excited about the progress to-date. And we look forward to keeping you up to speed on a running basis or progress moving forward. Thank you for your attention.

[Operator Instructions] Our first question comes from Evan Silverberg with Morgan Stanley.

Hi, all. Evan Silverberg on behalf of Adam Jonas. I'm curious if you guys could give some commentary on global supply chains and what you guys are seeing. Obviously, it’s been headlines a lot lately. Curious if there's any risk to that to 2, 2.5 ‘22 start for the Customer Qualification Plant? And then Gigafactories 1 and 2?

Thank you, Evan. Great to hear your voice again. So various -- good question of course. Not surprised that you're posing it. So as I tried to allude to in the presentation, we will be having 13 different suppliers into our Customer Qualification Plant. And all the volumes that we require are secured for 5 of them. And we are in closing stages with the remaining 8. So we don't see any risk of any supply shortage of materials going into the Customer Qualification Plant which as you know is scheduled to come on stream in the second half of next year. Now include the total, that is a smaller volumetric requirement of raw materials and when we move to the Gigafactory 1 and 2 scheduled to start a production in the second half of 2023, we would obviously need to scale up that supply chain. That is something that we've already started on quite a long time ago, both looking into the existing qualified suppliers, and how we can debottleneck and scale up their supply into our facilities. But coupled with that, we are in advanced stages with multiple different parties on the cathode active material side, anode active material side, electrolytes, copper foil, lithium hydroxide, lithium carbonate, anything and everything we need for LFP batteries and NMC batteries for a localized production footprint over time. So, so far, we are confident that we're going to be able to either scale up existing suppliers that are approved, get to the sense we're in process and/or combining that with localized developments, be it with existing cathode or anode material providers that are already present in the European realm or Asian suppliers that wants to establish presence either in Finland or in Norway. So all-in-all, we are confident that we're going to be able to unlock the raw material supply chain. But as has been pointed out by many people, and stakeholders in the battery industry, this is a fundamentally important area for the whole battery industry to focus on. And we are collaborating with other cell providers and other sort of stakeholders to ensure that timely and sufficient raw material capacity is added in time for the battery cells to come online.

One more follow-up if you don't mind. Specifically within the United States, labor has been a big topic lately. Can you give a little commentary on how the hiring has been going and any overall color on the Norwegian labor market right now?

So, clearly, competence is going to be critical for any business that is scaling as rapidly as ours. Now FREYR is in this peculiar or not peculiar, but special situation that we were in our own earnest, very startup company at the beginning of the year. We're still a startup company, but we’ve eight-folded capacity in the last 10 months. And that has, of course, required a lot of effort. But it just shows that we have been able to tenfold our own capacity, be it from small base, but with relevant competence, across project execution, operational excellence, battery cell and product engineering, et cetera. And we're continuing that journey to expand our capacity base on a running basis. Now, when it comes to the U.S., I think it's a little bit too early for me to have any very specific news on this beyond the fact that we have started our joint venture approach together with Koch Strategic Platforms. So we’ve populated the initial work, leading up to concept selection and ultimate Final Investment Decision for the first Gigafactory development for the joint venture in the U.S. sometime next year. And we are of course leveraging the Koch Strategic Platforms and Koch network as much as we can. But we will obviously also now and have started the outreach to various different locations and jurisdictions where we are investigating the potential establishment of capacity. And so far, the interest in what we're doing is very strong. But we do not underestimate the challenge of attracting the appropriate level of competence, nor do we underestimate the need for us to also educate, let's call it operators from other industries. But so far, so good, I would say of them. But this is a topic that, you should pay attention to it because we are paying attention to it. And we will not underestimate the challenge.

Our next question comes from Greg Lewis with BTIG. Please go ahead.

Greg?

[Operator Instructions]. We will move on to the next question for now, that is from Maheep Mandloi from Credit Suisse. Please go ahead.

Maybe we can just start on the customers over here. So thanks for the clarifications on those 2, on the ESS and the energy industry. Can you just talk about the other 7 in the early stages, which end markets do they serve and how do you think about kind of their customer qualification process, their supply qualification process, timelines? Thanks.

Yes. So great. So let me generally speak about the 9, right? 2 of them are more advanced and they are in the ESS realm. But among the 9, there is both ESS and commercial mobility customers, and it's both LFP, but predominantly LFP batteries but also NMC based batteries. So, that's why we're also excited about the cobalt agreement with Glencore. So, generally speaking, the process is as is with conventional batteries, you go through the ABCD cycle. We already have the opportunity to provide, of course based off on the 24M process, but also sample cell not only from 24M but also from select sister or brother licensees that we have in Asia. And we have also strengthened our relationships with them. And then as the Customer Qualification Plant comes online, we will obviously go further into the ABCD, SOP kind of qualification process with batteries produced on site. So, the general nature of the qualification process in the ESS space and in the commercial mobility space is generally shorter and quicker than that of the automotive space, even though there are initiatives ongoing in the EV space as well, to try to shorten the timeline for the qualification processes, and that is done through a combination of materials, but also through advanced, let's call it algorithmic data modeling and sort of early monitoring of cycle life and performance metrics on the cells that they come out of production. And the sort of final thing I'd like to say about that is, I think it's fair to assume that the 24M production platform is a faster production platform, which allows us to iterate faster and also allows us to generate data quicker. So, over time we do believe that this technology could also enable us to actually shorten the qualification timelines by providing data and comfort around the solutions earlier and quicker than that has been the norm in the conventional technology today. So again, 9 customers, ESS, commercial mobility, but in the 25 top customer prospects that come on top of that all under NDA and all in technical review and discussions as we speak. This also pertains to the EV industry. So, we are quite excited about the development, and looking forward to keeping our investors and of course the broader constituency updates about progress on the customer side as we move towards the end of the year.

And if I may just move on to the big giga line on Giga 2, can you maybe just talk about like what's driving that higher throughput? It was interesting you talked about more than 13 GWh. Can you quantify how much that is and what's driving it? And just to also understand the CapEx needs for the 2 Giga factories combined now?

Yes. So we are moving towards the Final Investment Decision and we will be making the Final Investment Decision in the first half of next year or sooner rather than later, but we need to go through a number of different steps to ensure that we can optimize both the total cost of it in a let’s call it inflationary environment. So we're trying to sort of avoid of course the worst impacts of that but anyone with a virtual screen, obviously, realize that we have been through a fairly hectic inflationary time. And now certain of the input factors and costs that go into perhaps are starting to normalize. So we're trying to optimize for the cost structure there. So we're not going to go out with any updated CapEx numbers at this time. But when it comes to the configuration itself, and we have made the concept selection, so obviously, we have been learning quite a lot from the Customer Qualification Plant development and the design phase, if you like, of the casting unit cell assembly machine, which is the heart of the transplant process, and, let's call it, relevant upstream and downstream developments that go with that. That has allowed us also to in iterative dialogues with our customers, which we've been quite clear on in previous conversations with our investors, but this is an iterative process where we come with this new lithium ion battery solution that’s staying in the existing realm, offering the opportunity to build larger electrodes and better electrodes with more energy carrying material in it. So that has then allowed us to optimize the size of the cells that we intend to produce. And that increase in size of cells, coupled with the increase speed that we think we can implement in the 24M Technology, allows us to increase throughput of the combined facility. In addition to this, we are adding a module facility. So we're building modules to pack around the cells, which is increasingly important for many of our ESS customers. That module facility is a CapEx-light facility, I mean relative to the battery cell facilities, but adds roughly 30% in revenue on top of the cell revenue that we will get from the cells. And that improves the margin picture for the totality of the equation. So when it comes to the excess throughput capacity that we're going to come -- that’s going to come out to it and we're not ready yet to sort of quantify that specifically, but it is in the double-digit percent increase for sure. How much up we're going to end up at? Is still sort of a macro optimization. So we'll come back to the market when we have more precision around that, which will be -- we will be announcing leading up to and concluding with the Final Investment Decision again in the first half of next year.

And just one last one from me on the -- I assume the cash usage in the near-term for Q4, should we expect the same 30 million range for cash burn and similar run rate until the Gigafactories start on a quarterly basis?

Yes. So generally speaking, as our CFO alluded to in the call, we will roughly have the same SG&A burn in the fourth quarter as we have in the third quarter. But maybe it's Steffen you want to add some color to this, so the CFO can comment additionally on this. Steffen? Steffen Føreid: Yes, I can do that. Thank you. So that's correct. Approximately the same G&A in the fourth quarter. But I'll just like to make the point that in the 30 million, that includes about almost 10 million in share-based compensation, right? So the cash effect is less, but approximately the same level.

Our next question comes from Jacob Green with BTIG.

Hi, guys. Sorry, I was having some technical issues, but just a quick one for me. So looking at your offtake agreements and your prospective offtake agreements for 150 GWh, is there any way to think about the cumulative demands over a time period? Any way to think about that?

Yes. So just to be clear, the 150 GWh is a cumulative demand from these 9 customer engagements between 2023 and 2030. And by 2030 or leading up to 2030, I should say, the total demand actually exceeds the capacity that we aim to produce from Gigafactory 1 and 2 as we see it today. And when we couple that with the accelerating momentum that we're seeing from the top 25 customer list, that triggers us to develop more Gigafactories as soon as we can in Norway, Finland and United States. But there is -- I mean, the market short, as we have been talking about for quite some time, maybe in particular, in the ESS and commercial mobility space is increasingly being manifested. And our customers are increasingly worried or preoccupied with securing supply as quickly as they can, also from localized sources of production. So, that is a very good situation of course, from a battery cell producer’s point-of-view. But it also underpins or underscores the challenge that the battery industry will have moving forward that a market short environment while positive from any aspects does underpin the fact that shortage of batteries can be a function of shortage of raw materials, et cetera, as also alluded to in previous question. So, we will now accelerate across the board. We have had this value chain approach all along, that is now bearing fruits, I should say, both in terms of partnerships establishment upstream from cell production, but also when we're branching out into module and pack partnerships, and module production as well with our Gigafactory 1 and 2 development that is increasing the opportunity to sort of develop tailor-made solutions to a larger extent for our customers. And the final thing, having the opportunity to diversify geographically and…

Great. Great. Thank you for that. And then as far as the supply of -- your cobalt supplier, Glencore for the 1,500 metric tons, is there any way to think about that and the gigawatt hours of battery produced?

Well, I mean, they are basic rules of thumb, right, on this one, in terms of how much cobalt you need into NMC811 type solutions. And it's probably the NMC811 solution that we will be producing for the customer base in question. We don't want to be very specific on this as of just yet. But I can say that, for the cobalt that we have secured is currently sufficient to provide the cobalt needs for the NMC volumes that we aim to produce in Gigafactory 1 and 2. But it's not more than just about. So -- but that is of course a good starting point for us. We do see a lot of LFP demand coming, and of course the 24M Technology is chemistry flexible, so we can produce both. We will obviously tailor-make production lines to LFP and then tailor-make production lines to NMC. Even though we can't swap flexibly between them, we would like to avoid that to ensure that we have the absolute highest up time in each of the production lines that we have. But right now, the cobalt supply is sufficient for the NMC based volumes that is in our let's call it offtake agreement definition as we see it today. But this will probably also increase, we do believe that, NMC. We will have a role to play also in ESS and mobility and of course the EV solutions moving forward, even though LFP is more and more important for a broader variety of market verticals and segments. So all-in-all a good step forward on the commercial front and a good step forward on the operational facing front and a good step forward on the raw material supply front.

We have no further questions. I hand it back to our speakers.

Thank you, operator and thank you everyone for your interest today. We look forward to catching up with you over the remainder of the year, both virtually and now in-person on the conference circuit on the road. So we'll see you all soon. And please feel free to reach out to us with additional questions and feedback. Thank you very much. This will conclude the call.