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Good afternoon, and thank you for joining us today for 5E Advanced Materials Fiscal Third Quarter 2026 conference call and shareholder update. During today's call, management will reference the company's quarterly report on Form 10-Q for the quarterly period ended March 31st, 2026, which is available in the investor relations section of the company's website. For a copy of the Form 10-Q, you may also contact PRA Communications at [email protected].

As a reminder, remarks made on today's conference call will contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding expected future results, costs, production capacity, market dynamics, capital expenditures, liquidity, cash spending, finance objectives and options, customer demand, purchase order commitments, offtake arrangements, customer qualification activities, commercialization strategy, development plans, engineering and project financing activities, including FEED-related work and the timing and scope of future engineering phases, advancement of supply chain initiatives and products, the potential benefits of our AF, ASX delisting, the potential applications of our products across energy, defense, and industrial markets, government-based financing opportunities, including EXIM-related diligence, the company's ability to continue operating the small scale facility and developing the project and potential development of advanced boron derivative products, including metaboric acid and ferroboron.

These statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to differ materially and adversely from those projected or discussed. Additional information concerning factors that could cause actual results to differ materially and adversely from these forward-looking statements is contained in our disclosures and public filings with the SEC, including our Form 10-Q for the quarter ended March 31, 2026. The company undertakes no obligation to update forward-looking statements except as required by law. Today's call may also include a discussion of non-GAAP financial measures, as that term is defined in Regulation G. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. This afternoon's conference call is hosted by 5E's Chief Executive Officer, Paul Weibel.

Management will first lead off the call by making prepared comments, after which we will open up the call for your questions. I'll now turn the call over to Paul. Paul?

Good afternoon, and thank you for joining us today. The 3rd quarter of fiscal 2026 was a pivotal one for 5E Advanced Materials and one in which the team delivered a number of important operational milestones. Most importantly, we signed our 1st offtake heads of agreement with a domestic and industrial end user of boric acid. The agreement is for 7,500 tons of boric acid per year, with optionality to increase supply to 10,000 tons per year. The agreement is a long-term with fixed pricing, annual escalation, and an initial 5-year term with an automatic renewal for up to 10 years. This agreement represents a major milestone for the company and the countless hours that our team has spent cultivating relationships with potential end users.

It sends a clear message to the market that our products meet industry specifications and end users desire a new market supplier. While a definitive purchase agreement is expected to be finalized in conjunction with project finance diligence, this is an important step in the process of converting customer interest into commercial terms with price and quantity specified that can support lender diligence and underwriting.

Apologies, Paul. We seem to have lost your audio. Are you still connected?

Can you hear me?

Yes, I can hear you now.

This offtake comes following a customer roadshow that 5E's team undertook in March, where we met with key decision-makers at 12 end users and distributors of boric acid across various industrial market segments. The purpose of the roadshow was to provide an in-person 5E project update, as well as understand each customer's business, their technical requirements, logistic needs, and discuss contract terms. The key message that we took away from these end users is that there is a growing urgency to develop a new, resilient, and reliable domestic supply chain. Multiple customers requested proposals and commercial terms, with the first agreement now signed. As a result, we strongly believe today's announced offtake is the first within an expanding pipeline of additional offtakes to come.

We have various proposals at different stages, and over the coming weeks and months, we expect to continue advancing additional offtake agreements with bankable terms that are intended to underpin project debt financing. Our near-term commercial objective is clear. Continue converting demand into agreements with bankable terms while maintaining discipline on pricing, counterparty quality and long-term project value. A second important operational milestone that was achieved during the third quarter was our successful development of a metaboric acid. Metaboric acid enables 5E to offer a high value specialty boric acid and uniquely positions 5E to deliver a boric acid with higher grades of B2O3. Thanks to our highly talented in-house R&D team, we believe we have produced a stable, free-flowing metaboric acid, achieving approximately 80% B2O3 equivalent content. Metaboric acid provides an option for potential customers seeking higher boron content products.

For context, in today's market, boric acid is 56.3% B2O3 and boron oxide is approximately 98% B2O3. Typically, boron oxide is selling for 3 to 4 times the price of boric acid. For example, if boric acid is sold for $1,000 per ton and boron oxide is sold for $3,000 per ton, and boric acid is 56.3% B2O3 and boron oxide is 98% B2O3, there is a stoichiometric price for an intermediary product with 80% B2O3, where we believe we can achieve a higher price point somewhere in between. Hypothetically speaking, a contract for 10,000 tons of boric acid with a fixed price of $1,000 per ton would potentially yield $10 million in future annual revenue.

A 10,000 ton contract for metaboric acid could yield an equivalent stoichiometric price relative to boric acid of $1,750 per ton, or a contract yielding approximately $17.5 million in future revenue. There is also a logistical advantage whereby the cost to ship 10,000 tons is the same for both boric acid and metaboric acid, where the metaboric acid ultimately drives the same shipping costs as boric acid, yet is a much more valuable contract. This accomplishment solidifies the next step in becoming the U.S.'s only domestically owned, vertically integrated producer of boron and high-value advanced boric acid products from mine to end products. Given this technological advancement, we filed a provisional patent application to protect the company's intellectual property and enable additional commercialization pathways.

Secondary trials are ongoing and samples have been provided to end users for testing and qualification with the expectation that we can contract on this product. We are working to advance commercial discussions with prospective customers. Importantly, this work will also give us the optionality to pursue higher value product pathways in parallel with, and potentially ahead of, the full scale commercial product. In February of this year, we announced the kickoff of a ferroboron product trial program in which we are evaluating production of magnet grade ferroboron, crucial to the U.S. specialty steel and permanent magnet supply chains. At this point in time, initial crucible testing has commenced, and over the coming weeks, we expect to produce a magnet grade ferroboron and provide samples to various customers. This program comes on the heels of collaboration with potential magnet producers.

Ferroboron is used in the creation of specialty steel and permanent magnets destined to numerous high-demand market segments, including high efficiency electric motors, wind turbines, industrial automation and defense systems. Global magnet supply chains remain highly concentrated. Recent export controls and geopolitical friction are forcing customers to focus on resilient U.S. domestic magnet supply chains as an alternative to Chinese imports. This trial reflects our strategy to expand beyond first derivative borate products and into high-value performance materials, supporting our long-term revenue mix and strategic relevance to growing market segments. The team will continue to aggressively market our product offering. In June, our commercial team will begin marketing in Asia with a goal of replicating what we are now executing in real time in the U.S. market.

Our objective will be to introduce 5E as a viable supplier of borate products, discuss our range of product offerings, and to lay the foundation for contract proposals. As the domestic boric acid market has slipped into a supply deficit, we believe tightening will transition to Asia for the upcoming contracting season. We now have a growing ability to provide a portfolio of borate products to a global customer base. All of the previously mentioned accomplishments have been underpinned by the company's strong cash balance, supported by a successful four times oversubscribed $36 million public equity offering that closed in early February. This capital raise demonstrated strong support from capital markets for our vision and growth strategy. This bolstered 5E's balance sheet and has enabled us to focus on delivering meaningful catalysts centered on commercial contracts and financing readiness to develop the Fort Katy project.

As we think about longer term financing needs, we recently attended the Export-Import Bank of the United States annual conference, where we met with delegates to discuss 5E's longer term project finance needs and the expected offtake agreements that will underpin a Make More in America project finance debt facility, as well as our current application under EXIM's Engineering Multiplier Program, where loan proceeds can be applied to valid FEED engineering expenditures. I'm pleased to report that active diligence is progressing for the EMP loan and that we maintain a bi-weekly call cadence to work through real-time deliverables. Historically, this quarter's milestones are important because they directly support the work required to advance the project towards its next phase.

Our focus is on continuing to convert customer interest into increasingly financiable commercial agreements, advancing active lender and government financing diligence, and completing the technical, commercial, and execution readiness work necessary to support the next phase of engineering when the appropriate conditions are in place. While there is still work ahead, we believe the progress made this quarter meaningfully de-risks the project, delivers catalyst, strengthens our financing pathway, and reinforces our confidence in Fort Katy as an economic and investable domestic boron platform. Our third quarter efforts and accomplishments have enabled us to take major steps forward in our strategy of becoming a mine-to-market supplier of borate and advanced boron derivative products.

With a diversified portfolio of borate products, our first product offtake agreement in place, a pipeline of others being stage-gated towards signature, the supportive undercurrent of boron market dynamics, and supportive U.S. legislation and domestic policy, we believe we have a solid foundation to continue de-risking the project while diligently pre-preparing for the next phase of engineering and financing for phase 1 of the Fort Cady project. We believe these efforts will deliver shareholder value. With that, we are ready to open up the call for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Once again, that will be star one on your phone at this time if you wish to ask a question. There were no questions currently from the lines. I will now hand the call back to Paul Weibel.

Thank you to everyone for joining today. We look forward to keeping you updated as the next milestones come in, advancing through additional customer offtakes, engineering, project financing, and phase one construction readiness. Thank you, and have a great day.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Good afternoon. Thank you for joining us today for 5E Advanced Materials Fiscal Second Quarter Conference Call. During this call, management will be referencing our Form 10-Q that can be found in the Investor Relations section of our website. For a copy of our Form 10-Q, you may contact PRA Communications at [email protected] or go to our Investor Relations page on our website. As a reminder, the remarks made on today's conference call will contain forward-looking statements, including our expectation of future results, costs, production capacity, market dynamics, liquidity, cash spending, financing, objectives, and options, and other items. Our actual results may differ materially and adversely from those projected or discussed in these forward-looking statements. Additional information concerning factors that could cause the results to differ materially and adversely from these forward-looking statements are contained in our disclosures in our public filings with the SEC. The company is under no obligation to update forward-looking statements. Today's call may also include a discussion of non-GAAP financial measures, as that term is defined in Regulation G, non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. This afternoon's conference call is hosted by 5E's Chief Executive Officer, Paul Weibel. Management will first lead off the call. By making some prepared comments, after which we will open the call to your questions. I'll now turn the call over to Paul.

Good afternoon, everyone, and thank you for joining us today. The second fiscal quarter of 2026 marked another step forward in a transformational year for 5E Advanced Materials and for boron in the United States. Q2 was defined by execution, validation and advancement turning the strategic momentum we discussed last quarter into tangible progress across financing, customer engagement, critical minerals awareness, resource expansion and project readiness. Last quarter, we spoke about alignment, alignment between market fundamentals, U.S. industrial policy the 5E's position as the most advanced domestic foreign development assets. This quarter, that alignment was translated into measurable progress. Before diving into the details, let me briefly summarize this quarter's key highlights. First, we continue to advance federal financing engagement building on boron's designation as a critical mineral and deepening discussions across multiple agencies aligned with critical minerals, supply chain security and advanced manufacturing. Second, we made further progress on customer validation, expanding to successfully complete a full-scale glass trial, which has progressed commercial discussions with future customers following our initial large-scale shipment and successful trial. Third, we advanced engineering and pre-FID work streams, maintaining alignment with our objective of reaching a final investment decision. And finally, we continued strengthening the long-term foundation of the Fort Cady Project, including mineral tenure, substantial increase in our mineral resource estimate, technical differentiation as we filed an omnibus patent that covers our in-situ leaching mining process and strategic positioning as a next-generation boron producer. Altogether, these milestones reinforce that 5E is moving decisively from development towards execution. I want to start again with the market backdrop because it continues to underpin the fundamental economic opportunity in front of us. The global borates market remained structurally tight with Turkey, controlling approximately 70% of global reserves and approximately 65% of global production. Turkey is to boron what China is to rare earths. The U.S. legacy supply continues to face rising costs, declining grades and limited flexibility, while demand for boron-based materials continues to expand across energy transition technologies, advanced manufacturing, national defense and to high-performance glass and ceramics. What has become increasingly clear through customer discussions and trials is that security of supply, jurisdiction diversification and reliability now matter as much as price, which all play directly to Fort Cady strikes. Fort Cady is a long-life, scalable U.S.-based asset that aligns with national supply chain priorities. Since boron's conclusion on the USGS Critical Minerals list, engagement with strategic stakeholders has increased. The designation has moved boron and Fort Cady from a niche industrial mineral conversation into a broader national supply chain discussion. That is an important shift and one that continues to open doors. Building on what we outlined last quarter, we made additional progress across federal financing pathways. We remain engaged with the U.S. export Import Bank under the make -- more in America framework, where 5E holds a previously issued letter of interest. During the quarter, we further advanced discussions about how Fort Cady aligns with U.S. export competitiveness, downstream manufacturing and supply chain resilience. We also progressed work related to the XM engineering multiplier program, which is designed to support advanced engineering activities on a non-dilutive basis. This effort was slightly delayed given the fall of 2025 government shutdown, but we will formally kick off with XM underwriting team next week. As a reminder, this program has the potential to fund a significant portion of our FEED activities and further derisk the project ahead of FID. In parallel, we continue to evaluate opportunities across the Department of Energy's loan programs office, the Office of Strategic Capital and the U.S. Development Finance Corporation. Each of these frameworks are now directly accessible as a result of boron's critical mineral designation. As part of our federal engagement, we submitted a detailed application to the Department of Energy's mines of the future, NOFO, which provides non-dilutive funding for projects, piloting advanced mining and processing technologies. Fort Cady aligns with eight of the nine DOE focus areas in this NOFO, demonstrating that we are not just a boron development project, but a technology forward next-generation critical minerals platform. The DOE is expected to announce winners next month. While the program is highly competitive, Fort Cady's technical sophistication, strategic partners and alignment with U.S. priorities makes 5E a compelling candidate. With the DOE expected to announce winners next month, our objectives remain clear. To construct a capital-efficient financing strategy that strengthens the balance sheet and supports long-term shareholder value. Operationally, the Fort Cady project continues to progress in line with our development road map. As discussed previously, our pre-feasibility study confirmed a strong economic foundation, including a nearly 40-year mine life based only on our proven and probable mineral reserves and compelling project economics based solely on Phase 1 of the development cycle. That foundation continues to guide our engineering and our execution strategy. During Q2, our team continued advancing fee-related work streams. Refining process design, infrastructure planning and execution sequencing. These efforts are focused on ensuring that Fort Cady is construction ready, not just permitted or engineered on paper. In parallel, we advanced initiatives to strengthen long-term mineral tenure to find and expand our mineral resources and began laying the groundwork for a portfolio of intellectual property related to our proprietary in-situ recovering and processing approaches. As the largest chlorate producer in the U.S. undergoes strategic review, we believe the IP for our recovery and processing technology can play a pivotal role in expanding the resource life and improving economics at this producer. While the Omnibus patent was a strategic move with the anticipation that our IP can be accretive to the strategic review process. These efforts are designed to protect competitive advantages and support scalable long-term growth. On the commercial front, Q2 represented continued momentum following the successful shipment and trial for the glass trial, we expanded engagement with additional customers across multiple applications. And this now includes specialty applications such as Ferroboron, a critical component and permanent magnet manufacturing. Importantly, commercial discussions for boric acid are now increasingly centered on commercial structures and long-term supply relationships rather than just technical qualifications. Each successful trial, shipment and validation milestone brings us closer to offtakes. As we look toward the remainder of fiscal 2026, our priorities remain focused. First, we'll progress customer engagement towards commercial discussions, converting validation and discussion into structured offtake agreements. Second, we'll execute our pre-FID and FEED work streams with discipline, ensuring 4K is the next long term borate producer in the United States. Third, we will continue advancing non-dilutive federal financing pathways, leveraging the critical minerals designation to access larger and more strategic pools of capital. Layered on these three objectives will be the specialty boron work stream where Ferroboron has become a priority with the goal of providing magnet-grade Ferroboron to potential customers for testing in late spring. We remain committed to moving methodically, derisking each stage of development and building a project that is durable, scalable and strategically aligned with U.S. priorities. In closing, Q2 reinforced that 5E is moving decisively from development towards execution. We operate in a market that values a secure fully integrated domestic supply chain, and we are aligned with U.S. policy priorities. With these tailwinds, 5E is positioned to become the next major U.S. boron producer creating long-term value for shareholders. Thank you to our employees, partners and shareholders for your continued support. We look forward to updating you again as we continue advancing towards construction and commercial production. With that, we are ready to open up the line to any questions.

[Operator Instructions] Okay. There are currently no questions in the queue. I'd like to turn the floor back over to Paul for any closing remarks.

Thank you, everyone, for joining us today. We believe 5E has a rare opportunity to become the next major boron producer globally and the leading domestic supplier in the United States. Fort Cady is a long-life asset with a clear development path, and we remain focused on executing responsibly and creating long-term value. We appreciate your continued interest and support, and we look forward to speaking with you again.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

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 of Strategic Capital and the International Development Finance Corporation. 3, continued customer validation with full-scale product testing underway with multiple Tier 1 specialty glass manufacturers. 4, progress on feed engineering, supported by our application to the XM engineering multiplier program for a $10 million loan facility. And finally, we remain on track towards final investment decision in 2026. These achievements built directly on what we discussed during our year-end 2025 call. Our foundation is strong, our milestones are stacking and we're steadily moving towards construction readiness. Before turning to our progress, I want to briefly address the broader borates market because understanding that context helps highlight the opportunity 5E is stepping into. Legacy producers continue to face rising operating costs, decreasing grades and depleting reserves that have created a market opportunity for 5E a new generation boron company to be built on innovation, operating efficiency and long-term resilience. Market research, insight and customer discussions highlight a clear tightening of supply and demand in the borates market with an expectation of demand outpacing supply. Demand for borate materials continues to accelerate across EVs, wind, nuclear energy, semiconductors, defense applications, ceramics and specialty glass, exactly where Boron's thermal, optical, density and hardness properties are essential. 5E is uniquely positioned to step in and fill the market deficit with a project that has logistical advantages and a flow sheet and process that is modern, low cost and high value underpinned by resilient domestic boron supply that supports both commercial and national priorities. Market participants are increasingly viewing 5E as a strategic partner for the future. When combined with the U.S. Critical Minerals designation, these market dynamics further strengthens 5E's position and reinforce Ford Cady's importance to the U.S. supply chain security. As the only pure-play U.S. advanced stage domestic boron asset, Ford Cady now qualifies for several federal funding and grant programs designed to rebuild American mineral supply chains. These include the U.S. export import bank, where 5E already holds a $285 million letter of interest under the Make more in America initiative a program specifically created to support U.S. manufacturing exports, infrastructure and supply chains. XM's engineering multiplier program, where we have applied for a $10 million loan that has the possibility to finance a significant portion of our feed activities on a non-diluted basis. The Office of Strategic Capital and the U.S. Development Finance Corporation, where Executive Order 14241 to find a mineral largely with reference to the USGS list. The executive order delegates the Defense Production Act, lending and investment authorities to the Secretary of War and the CEO of the DFC and requires the establishment of certain mineral funding mechanisms including the Department of War Office of Strategic Capital. The 1 big beautiful Bill Act of 2025, authorized $5 billion for investments in critical mineral supply chains -- sorry, $5 billion for investments in critical mineral supply chains made pursuant to the industrial base fund and up to $100 billion in principal amount of direct loans and guaranteed loans for critical minerals and relative industries and projects. The Department of Energy's loan program office, where in addition to Title 17, the innovative energy and innovative supply chain prongs are enhanced by this designation given the explicit reference to the statutory reference of critical minerals being the USGS list. 5E is ideally positioned to benefit as a shovel-ready advanced stage project aligned with national priorities. Access to these programs has the potential to strengthen our balance sheet reduce equity dilution and accelerate execution. That's a direct result of the federal government recognizing what we've built and our strategic domestic resources and reserves ready to move into production. Operationally, our team continues to execute with precision, maintaining strong alignment with our milestones and reinforcing the quality of our technical and commercial foundation. As we discussed last quarter, our pre-feasibility study confirms strong project economics, a 39.5 year mine life and 19.2% pretax IRR and a pretax NPV of $725 million for only Phase 1 of the -- Ford Cady project. Those fundamentals continue to anchor our forward plan. We've now successfully qualified our high-purity boric acid with multiple customers across sectors, including specialty glass, fiber glass, ceramics, agriculture, defense and advanced materials. Most notably, we have advanced to full-scale testing and furnace trials with a Tier 1 specialty glass manufacturer, following the successful shipment of 20 tons of boric acid from the Port of Los Angeles to Taiwan, I can confirm that as of last week, the shipment had arrived in Taiwan and will be deployed in a live testing environment in the near term. Additionally, we supplied an additional 1,000 pounds of boric acid to a domestic boron carbide manufacturer. China currently controls much of the boron carbide supply chain, and we're excited to do our part in reassuring domestic boron carbide production as it is critical to our national defense. On the back of the 20-ton shipment, we're also preparing additional product shipments for other LCD glass producers, reinforcing both the scalability and reliability of our operation. Each one of these milestones build customer trust and advances us towards long-term offtake agreements, a key bridge between development and commercial operations. Looking at the market opportunity, the critical minerals designation aligns perfectly with broader U.S. industrial policy. Boron is essential to technologies that support advanced manufacturing and enable the energy policy objectives. Everything from permanent magnets, semiconductors, EVs, wind turbines and defense armor systems to advanced glass and composites, which 5E position as a strategic enabler within multiple national frameworks. From a development standpoint, our trajectory remains clear. We are nearing completion of field ready engineering deliverables, advancing strategic financing discussions and negotiating offtake terms. Each step brings us closer to our goal of a 2026 final investment decision. As we move through these milestones, our goal remains consistent with what I outlined in our previous call. To progress methodically derisk every stage and build a capital structure that supports long-term value creation. The remainder of fiscal year 2026 will be focused on 3 primary priorities: 1, securing non-dilutive U.S. capital support through XM, OSC, DFC and DOE programs. While skeptics may have heard this previously from 5E, the [ RESI ] designation is a major catalyst and milestone to having a much more broader and in-depth discussion on financing our project and providing access to larger pools of capital; 2, advancing customer agreements in commercial offtake contracts where we expect a more detailed negotiation to commence before year-end. And 3, executing a rigorous and diligently planned feed and brief FID work streams to ensure we are construction ready in 2026. Additionally, we have commenced the work stream to upgrade our mineral resource statement on the back of securing and recording the remaining federal load claims for the rest of the colemanite mineralization of the deposit. Further, we have begun steps to build a portfolio of intellectual property on our proprietary mining techniques and processing solutions. These steps position 5E to cement our mineral tenure for the long term, become the premier ISL borate producer in the United States and transition confidently into construction and, ultimately, commercial production, delivering long-term value for our shareholders and strengthening America's domestic mineral independents. In closing, this quarter truly represents an inflection point, one that underscores our growing momentum, validates our strategy and sets the stage for sustained growth and value creation. The federal recognition of boron as a critical mineral validates years of technical work, market engagement and policy advocacy. It affirms that what we're building at Ford Cady matters, not just commercially, but strategically. As I said on our last call, this is a story of proof, not potential. And now with federal alignment and growing customer attraction, we're proving that 5E is positioned to become America's trusted borate supplier of Advanced Materials. Thank you to our employees, partners and shareholders for your continued commitment. We're building something rare and a foundation for America's energy and Advanced Materials future. With that, we'll open up the call to any questions.

[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.