The transcript of the latest Centrus Q2 conference call is...

The transcript of the latest Centrus Q2 conference call is available:

https://seekingalpha.com/article/4624012-centrus-energy-corp-leu-q2-2023-earnings-call-transcript

Significant passages for GLE are:

Dan Poneman

The Department of Energy has made a multibillion-dollar commitment to 9 different HALEU fuel reactor designs and critically need the HALEU to support reactor demonstrations and fuel qualification for those reactors. The overall need for HALEU, even for just the first round of demonstration reactors significantly exceeds what we can produce from the demonstration cascade. So a great deal, more capacity will be needed and soon. In June, the Department of Energy issued a draft request for proposals outlining a program to purchase up to 145,000 kilograms of HALEU over a 10-year period.

Fully implementing this program would require significantly more money than Congress has thus far appropriated but the inflation reduction act signed last year included an important $700 million down payment on that effort. We look forward to applying whenever that RFP is issued, and we believe that we have a compelling case to make since we have the only site in the United States licensed for HALEU production and can expand HALEU production quickly. A commercial scale cascade with 120 centrifuges can produce about 6 metric tons per year.

We can place the first online within 42 months of securing funding and can deploy an additional HALEU cascade every 6 months after that. We have not seen any faster timetable in the industry and speed is a crucial factor here since reactor developers need significant quantities of HALEU in the next few years. We have consistently said that establishing a domestic HALEU supply chain will require a public-private partnership, and we are doing our part. Just last month, we took an important step towards securing additional private sector support for a potential expansion of HALEU production.

As many of you know, on July 17, and Centrus and TerraPower, a leading nuclear innovation company founded by Bill Gates announced that we have signed an MOU to accelerate joint efforts to create domestic commercial scale HALEU production. With support from the Department of Energy, TerraPower is building a commercial scale Natrium reactor in Kemmerer, Wyoming. Under this MOU, our two companies are evaluating how to expand our capacity in Piketon, so that we can deliver HALEU in the quantities and on the time line necessary to support the '23 operation date for the Natrium reactor."

In Q&A

"Rob Brown

Just wanted to clarify on the DOE draft proposal. What's sort of the draft RFP what's sort of the time line on getting the next steps there and you see at this point? And then in general, what's sort of the kind of methodology that the DOE starting to coalesce around in terms of the support of these sort of commitments to buy by materials? Or are they capital commitments upfront? Or how is it sort of shaking out at this point?

Dan Poneman

Rob, as always, it's a great question, but I'm pretty consistent not speaking on behalf of the U.S. government because I'm not part of it anymore. I would just say that in terms of the time line, everyone is very aware of the requirements in the Energy Act of 2020 to have HALEU available for the use of these advanced reactors. Those reactors are supposed to begin operations later this year. So people are looking at 2026, 2027. But in terms of the actual process, as you know, they issued this draft RFP, I think it was around June 6. We had to get our comments in around July 6. Typically, it takes some time to go over the comments. My understanding is that there were a lot of robust comments.

The structure of the program, Rob, I think, remains in question. There is -- if you look at the RFP, a number of considerations in terms of what burden will fall on the shoulders of the contractor. The decision by the department to buy the end product or to buy just the separate work component and the HALEU aspect of it, not the LEU pedote a number of issues that are, I think, being reviewed and studied and we're eager to see that come out, but I would not be able with confidence to predict when the department will act because that's ultimately up to that.

Rob Brown

And I understand it's hard to predict the sort of government steps. But on the current contract you have Phase 2, where are you at in terms of capacity to fulfill that 900 kilograms per year. Can you do that with what you've got? Or do you need to add capacity there?

Dan Poneman

No, we can do that. The way it breaks down, basically, this first phase, Phase I this very modest 20-kilogram production, that's basically to show that it works, right? And of course, the significant thing about that is the only portion of this contract that is cost share. So once we're passed Phase I and Phase II and the 16 machines are indeed sufficient, Rob, to produce the 900kg that are pledged under that contract, then those will operate and they can produce that quantum in that amount of time. Obviously, as I said in my remarks, our ambition is to make a lot more.

And for that, we will, in fact, need to expand. And it's our hope that we're going to do that and to put these additional tranches that come out in chunks of like 120 machines each and each one of those cascades can, in turn, produce 6 metric tons and per year. And therefore, that's assuming 4.95% feedstock, therefore, within 42 months. If you add a 1 ton effectively 900 kilograms got to a ton, plus 6 tons, that would be 7 tons, and then we put another cascade on another 120 machines and reached 6 months thereafter. So within 48 months, just on the new build, we could have effectively 12 metric tons of capacity production."