Good morning, good afternoon, and good evening to wherever you are in the world. My name is Nick Lawson. I’m the CEO of OceanWall. I’m delighted to welcome you to the ASP Isotopes fiscal year 2024 results webinar. We’re delighted to have with us Paul Mann, Chairman and CEO, and Dr. Hendrik Strydom, who’s ASPI’s Chief Technology Officer. Firstly, gentlemen, congratulations on this morning’s press release regarding Ytterbium-176, an incredible milestone for you. Before you tell us more about that, can you take us through the 2024 results, please? And also a review of Q1 ’25, your outlook for 2025, and then give some commentary on, today’s announcement, please. So, gentlemen, over to you.
Yeah. Thanks, Nick, for hosting this call. I’m joined here by Dr. Hendrik Strydom, who is our Chief Technology Officer and I'll let him introduce himself in a moment. Anyway, we're a NASDAQ-listed company; if you could just look at the forward-looking statements and disclaimers in our 10-K alongside this webinar that would be great. It contains a lot of information in our 10-K which was published last night. So yeah, the fourth quarter was exactly our expectations, PET Labs a fairly stable business and, you know, $4.2 million of revenue for the year. Nothing unusual is really happening so far this year. We haven't given guidance. We don't expect to give guidance for this year and I can't give guidance for the first quarter on this conference call because it obviously would not be appropriate. But the main financial point for me was the starting up of three manufacturing plants to start commercial production. None of them go easily but they all went, and so the Carbon-14 plant obviously had a feedstock issue in terms of getting the feedstock from Canada. That arrived in early February and that plant is now enriching Carbon-14. We still need to get our second batch of feedstock into this so I think this should arrive by the end of March to be able to make it through the storm and that should arrive fairly soon. The Silicon-28 plant had a number of challenges while we were commissioning. We've got an incredible engineering team and they were able to work through those challenges. One example was the cryogenic pump is supposed to produce helium at minus 120 degrees C. We need that in order to recycle cyanide out of the plant and balance the plant. We got down to minus 90 degrees C. So we got delayed a couple of weeks, got the OEM supply out and then they've got it fixed. A couple of compressors, the impellers broke. Again we've got a great team of engineers, they repaired those impellers and got it working. So I think it's pretty incredible the engineering team we've built over the last three years down here in South Africa and the challenges they're able to deal with and just work through. Then Ytterbium-176 also had its fair share of problems as well. The mass spectrometer didn't work, and we spent three weeks struggling with that. The vacuum pumps were inaccurate. We again took a few weeks struggling through those, and finally at the finest point we announced that we successfully enriched Ytterbium-176, and we've started enriching for commercial samples now. So those are the main highlights in my opinion, Nick, for the quarter. I'll hand over to you for any questions now.
Okay. So I've got a couple of questions that are coming in. In terms of the first one, in layman's terms, can you explain what the relevance of enriching Ytterbium is to enriching Uranium, please?
Hendrik, do you want to answer this question or…? So they're probably more similar than different I would say. Ytterbium and Uranium have different spectroscopies. Ytterbium has five isotopes whereas Uranium has only two significant ones. So it's easier to enrich a product where you've only really got two isotopes rather than five. Ytterbium's a bit quicker than Uranium but Uranium has to be vaporized at a higher temperature, so different materials are required in the production vessel. And also Uranium is radioactive. And I guess also the spectroscopy in terms of 3,000 Kelvin in the ground state is less, which is one of the problems very often is that it's really extra challenging.
Yeah, I think firstly if you go back to the lasers, lasers since the '80s and '90s have developed. They've been used in the semiconductor industry. They've got a high spec to them and that suits us very well. So we buy off-the-shelf lasers today, no development there. What we do to the lasers is to shape the beam. I think that's the big difference. But going towards Uranium, yes, in the ground state at 3,000 Kelvin, not that many atoms are in the useful states there. So you need to address the spectroscopy and get hold of all the U-235 atoms.
Okay, so questions are coming in. Obviously everyone's aware that there's a Q&A button on the Zoom function. We've got 197 participants. So we'll do this fast and furious, Paul, as well. What are your expected revenues for ASPI in 2025 if you can talk about that and will you reach free cash flow positive by the end of the year?
So we haven't given guidance for the year. We don't intend to give guidance on this call. But you know if you look at the contracts that we've signed, you should be able to add them up and work out what our annualized run rate would be from the facilities. For Ytterbium you might get maybe a kilogram per year of production. We've said think about $20,000 a gram for Ytterbium. For Carbon-14 we've said that we have a take-or-pay contract for a minimum of $2.5 million a year. But perhaps we'll do more than $2.5 million. They can take more. They've certainly shipped feedstock for more than $2.5 million of product this year. So maybe that's slightly over $2.5 million. Then we've got two small orders right now for Silicon-28. We'd expect to get some more orders over the next few months. We're talking to three or four additional customers who we expect to place orders. Also I think our two customers who've already signed up want to increase the size of their orders this year as well. So that kind of gives you an idea of what ASPI will do. Then Pet Labs did $4 million last year. That should grow nicely this year because we've invested heavily in that business. In terms of free cash flow, if you add those revenues up and compare to our cash operating expenses, you'll see we should get cash flow positive during the second half of the year.
The press release said the company anticipates now being able to proceed with the plans to construct the Nickel-64, the Gadolinium-160 and the Lithium-6 plants. Can you give some guidance on the timing of the construction around those plants, please?
Yes, so Hendrik and his team built the adjoining plant in just two months. It took six months for procurement, but two months to actually put it all together and construct it. Then they spent about six months commissioning it and fighting through various small problems that occur during the early stages of any plant startup. So I'd like to think we have the first plant kind of coming into action later on this year. We'll see. It depends on the government. We require export permits from certain countries to ship lasers into South Africa. We've got an import permit to bring it into South Africa. That can take some time. They're out of our control. We've already applied for the export permits in the countries we need them from. And so we'll wait and see how long it will take.
Hendrik, so the press release talks about the expectation with Ytterbium-176 getting to 99.75%. What's the nameplate on the facility? And how quickly do you expect samples to be approved?
Well, to get to 99.75% in one step is not impossible. We do it in batches. So the first batch works up to 88% or 90%. That takes a long time. Then the last bit takes about a day to get to 99.75%.
So yeah, we haven't given guidance on when we're going to ship it. I think we've said in the first half of the year, probably till the end of the second quarter.
Okay, given the small modular reactor race in the U.S., are there any plans or ambitions to expand manufacturing enrichment capabilities in North America?
So absolutely, we have plans to do that. It's likely we'll try and have a partner model rather than doing it alone. In South Africa, we've partnered up with Necsa, the South African Nuclear Engineering Corporation. We may well partner up in the United Kingdom with a partner there. We'd like to partner up with somebody in the United States as well to help through the regulation and licensing challenges. Constructing any form of uranium or nuclear plant, it's the licensing and the regulation side that takes the time. That's the longest part of the process.
Is there— I mean, I sort of know the answer to this. Can you give any comment on the timing of the QLE spinout?
Yeah, we haven't given any guidance there as well. What we have said is that we'd like to do it when two things have happened. The first is that we had to identify the location where we'd build the first uranium plant. We've announced that; that's now located in South Africa. We're working hard with Necsa now to secure the appropriate licenses and permits that we need to build that plant, to build the test batches and do the research there. The second for me was to see line of sight to cash flow break-even at the ASPI Isotopes side. Now we've got three plants up and running. I think that box has been ticked as well. So I'd like to think we do it as soon as possible. We need to file some documents with the SEC and they get reviewed by the SEC; it's sort of a 30 to 60 day process. So we could be doing it quite soon.
Yeah. And I think you and I can maybe mention that the appetite obviously by the investment banks, this hits the absolute sweet spot in terms of the sort of energy transition profile for large investment banks. Another question: have you signed any supply agreements for Ytterbium? Are you still on pace to sell a kilogram this year? And the price reference here is $20,000 a gram. Is that still correct?
So discussions with customers are around $20,000 a gram. Customers would want to have a sample before they place an order. What the customer will have to do is check when they evaluate it for neutron production that they are able to turn to Lutetium-177 and not get any long-lived isotope produced. So what's more important in the spec is not Ytterbium-176 being over 99.5%; it's actually how low Ytterbium-171 is. They're going to want to see that. I'm very confident about the spec, but I haven't got the finalized cert yet. They're going to want to see that before they can sign up to a supply agreement or an order. We've got a lot of interest in Ytterbium. We probably have two kilograms of indicated demand already from customers.
I'm just going to jump a couple of questions, because there's quite a few on Ytterbium. So you mentioned the ability to scale up the Ytterbium-176 plant by adding additional vessels. Is that still something you expect to do?
It is, yes. Whether we do it in the existing building or whether we do it in a new building, we'll have to wait and see. But again, it doesn't take long to add more vessels. What are your thoughts on that, Hendrik?
Yeah, that's the easy part. When the beam goes through the first vessel, you have very little of the light left, and you have a lot of laser light left for a number of passes to follow.
It's sort of a question you've sort of answered, Hendrik, around the number of passes to get to 99.75%. Are there any technical limitations to reaching that? And how many additional passes do you have to do?
We haven't disclosed the number of passes we have to do. Hendrik, any technical challenges there?
No, I mean, in single runs, we've demonstrated about 90% enrichment already. But then you also do a little bit of polishing runs, so you actually need to have a sweet spot where you run your batches.
And what do you think the actual demand is for Ytterbium-176 in the market?
Yeah, that's a difficult one to answer. Right now, we've clearly got interest for two kilograms from various customers. Pluvicto has only been launched recently and it's still growing strongly; there are lots of clinical trials to expand the number of indications for Pluvicto. In addition, there are a number of companies developing radiotherapeutics using Ytterbium-176 as well. I think we're in the early stages of the product cycle. We'll have to wait and see how big it actually ends up in the coming years.
So in terms of ramping production, is it going to be a function of the demand you see for it, or do you have plans to ramp up production?
Okay, regarding production we are ramping up.
So we're coming back now a little bit to the financials and also to the contracts with the SMR company. Given your expansion plans for the second half, do you expect to be doing another equity raise?
Yeah, I think if you look at our balance sheet on December 31, we've never had that much cash on our balance sheet at the end of the year. If you look at how much operating cash flow we spent last year, it was about $58 million. So we finished the year with about four years of operating cash burden sitting on the balance sheet. We hope to get cash flow breakeven or better in the second half of the year. When you look at the capital cost of building these laser plants, it's not that significant. Our internal capital needs are pretty modest. The Ytterbium-176 plant probably came in at about maybe $3 million; we spent $2.5 million initially and had about $0.5 million of capital exit in the final few months. These plants are large but not expensive.
Okay, before we get on to TerraPower, a couple of questions around the QLE convertible note. Any progress around the note? Also today a new subsidiary was added as part of the scene in the 10-K, QLE TP Funding LLC. Can you talk a little bit about what that is, what that subsidiary is for, and also any progress on the QLE convertible note?
So in terms of the progress on the QLE convertible note, I think that will convert into QLE stock on the spinout. There's not much progress to make on the convert itself until the spinout. In terms of that new subsidiary, ASPI TP Funding LLC, it's difficult for me to really comment in detail because I wasn't actually aware that was in there. When we fund the South African plant, it's likely our partner will want to fund it via a U.S. entity, not via a South African entity. So that is an entity that's set up to receive capital to flow into South Africa to build a uranium facility.
Okay, so into TerraPower now. Lots of questions here in terms of the current status of the contract, things like the prepayment timelines, and the sort of bigger question of TerraPower as a U.S. partner.
So we're talking to a number of potential U.S. partners, one of whom is likely to be TerraPower. They clearly have a good relationship with the U.S. government, the DOE, and the nuclear regulator. The other potential partners are closer to the uranium enrichment cycle. In terms of the status of contracts and such, we will announce to the market when we sign a definitive supply agreement and a definitive investment agreement, which is what we are working on at the moment. Supply agreements and investment agreements are quite challenging to put together and they take a long time. By way of example, you need to specify who's shipping the product, who takes title of the product, when and where, who is supplying the feedstock and what the feedstock will look like, the spec of the feedstock, the final specification and the form in which it's going to be supplied, and how it's going to be shipped. There's an awful lot of information that has to go into a supply agreement, and we're working on that at the moment.
In the meantime, Oklo have made no secret of their respect for your business and vice versa. What's your relationship with Oklo like?
I can't really talk about potential customers or partners specifically because we sign NDAs with most of our customers. I like Oklo; I think Oklo is a great company, they have a great SMR and they may be among the first to market with their SMR. They've got a strong business model and a large backlog of customers.
Okay, we'll move on from that. Two questions about permitting: the first one's about regulation. You and I had an amazing meeting a couple of months ago in Pretoria with Necsa. What are your relationships like, or how are the regulatory discussions going with the South African government at the moment?
They're going really well, and I was actually invited to Pelindaba with the government ministers just last week to celebrate the 60th birthday of the SAFARI reactor. We have regular calls with Necsa. Each team brings different skills. We bring the technology and the engineers able to design and build the facility, but Necsa has a huge amount of experience in regulatory, licensing, and permitting. We're talking to the regulator at the moment about what to do, and we have the first test bench ready to go. We're building the second test bench at the moment. It'd be great if we could get those done in the first half of this year and start production in the second half of the year.
And just in Pelindaba, you've talked in the past that there are shovels in the ground. Can you slightly expand on that?
Yeah, so we need to build two test benches to test our enrichment processes at Pelindaba. The first is built, the second is not yet built. It's being procured and constructed, and we'll announce to you when the second one is built and when we get the permits to go in and start enriching product there.
And then, Iceland — can you give us an update on where we are with permitting in Iceland, and also when will the building of the plant start?
Discussions with the Icelandic regulators are going very well. I went to Iceland in January for a couple of days to meet with government ministers. We got a great reception. They're very excited about us coming to Iceland to build medical isotope facilities and facilities that enable next-generation semiconductors.
There's some questions — lots of questions, actually — that refer to things that have already been asked. There will be transcripts and this is being recorded so you'll be able to see answers to those questions. What is your vision for the company's growth over the next three to five years? Are there any specific milestones you aim to achieve?
We've got internal targets which we haven't communicated externally. Our goal is to build many more isotope enrichment facilities — some in South Africa, some in other countries — and expand our footprint into other regions. If we do that, hopefully the P&L will follow.
Headcount changes in the next 12 months — do you have some idea of headcount now and where you see yourself in the next 12 months?
Right now we were at about 130-something on December 31, and now we're at about 150. We probably need to add a few more people still. They will come in over the next couple of quarters. We have enough headcount now to operate the existing facilities that we have. They're fully staffed, and so we're carrying the cost of those through most of last year. We'll selectively add more people. The big hires we need to make this year are a Head of Medical Isotope Sales in the United States and Europe, and a Head of Electronic Gases Sales globally. Those are the main hires we're ready to make now. We held off making big hires until we were in production, and now we are ready to make those hires.
Okay, so there's quite a few questions. I'm going to be a bit fast and furious here, Paul and Hendrik. When do you actually think you'll start enriching product in Pelindaba?
That's out of my control. It comes down to the regulator. I'd like to think we can do it this year, but I can't make guarantees because it comes down to the NNR, which is the National Nuclear Regulator. They've been very supportive. This is classified as a high-impact project for the country and it's getting a lot of attention from the government and regulators, so hopefully they'll be forthcoming and cooperative.
How are the market prices changing in the three producing isotopes at the moment?
Carbon-14 is fixed at $24,000 a gram, and that's a take-or-pay contract at that price. Ytterbium we've had pushback from customers when we talked about $20,000 a gram, but there seems to be demand at that price. Silicon-28 is the one where I think we will lower the price a bit. We're talking about $0.5 million a kilo up until now. I think we can bring that price down to try to push more demand into the marketplace and encourage more use of Silicon-28. If we can build the Silicon-28 market in Iceland at the right scale, I'd like to make it something closer to $20 a gram — that's still around 75% gross margin, but that's some years away.
Okay, we had the Fuzzy Panda issue back in November last year, which we've sort of got over intellectually, but in terms of sell-side coverage, would it be great to get more sell-side coverage to lend more credence to the story? Any updates here?
I've talked to a number of investment banks. I was in New York a few weeks ago talking to many investment banks. Fingers crossed. Let's wait and see; hopefully yes.
At the Cyclotron Centre in Norway, are there any collaborations? What's the current relationship there, and are there any ongoing collaborations?
We sign NDAs with customers, so I can't talk about detailed discussions, but we know the Norway Cyclotron Centre very well. It's a really good center. It supplies most of Norway with PET isotopes and R&D is done there as well. It's a great group of scientists and an impressive facility.
With Molybdenum, Mo-99 and Mo-100 in Richmond, are there any potential partnerships with U.S. organizations in enrichment development there?
We are having discussions with potential U.S. partners there. That's the biggest commercial opportunity we have in medical isotopes. It will take a while to get into, but there are customers that want to take Mo-100 or Mo-98 and convert it into Mo-99.
I'm not going to ask this as a question, but a lot of people are keen that we get financial results in a more timely manner. How would you respond to that?
Last year, before Heather joined as CFO, we missed two deadlines by about three or four days. This time we filed on time, March 21st. Heather's doing a great job. She's putting in place a lot of the controls, procedures and processes we need to be SOX 404A and 404B compliant, and with that comes more automated, better invoicing. Down here in South Africa, a lot of invoicing is still done on paper, so it takes time for auditors and accountants to gather those pieces of paper and put them into financial statements.
Okay, thank you. Are you seeing any new emerging competitors with the market opportunity ex-Russia?
No, we're not seeing new large competitors. There are a couple of small universities and some grants in play for Ytterbium-176, but for Silicon-28 and Carbon-14, we haven't seen significant new entrants. Silicon-28 is interesting: in theory, many producers can make silicon tetrafluoride, but semiconductor companies can't get it to 6N purity easily and to the right die yield, so producing at scale for semiconductor requirements has been challenging.
So obviously there's been a lot of press at the weekend about Novartis and Pluvicto. Do you want to talk about how many new contracts you expect to sign in Silicon-28 in the coming year?
For Silicon-28, we're talking with four or five customers right now, and you'd expect to sign contracts with many of them at some point.
Questions about the short interest in the stock: it's now at about 30%, which is strong bearish sentiment. The stock is down 50% since the Fuzzy Panda report. Is there any message you would like to give to short sellers and naysayers?
A lot of these short positions are quant-driven, based on algos that look for growth stocks pre-revenue exhibiting certain characteristics. Short interest in many new stocks is pretty high. If you look at peers, there's often significant short interest. There's a large distribution among shorts. We continue to focus on execution and building the business.
Okay, a couple more questions. When will we get independent commercial third-party confirmation that enriched silicon is 150% more efficient than unenriched silicon?
I don't know. It's unlikely that Intel, TSMC and similar customers will publish the results they get in their research facilities. There are some scientific papers that state those numbers, and experiments have been done, but I'd be surprised if our industrial customers publish their work.
Okay, relatively close to the end: one last question about capacity utilization of Pet Labs for radiochemistry isotopes. Can it be increased at low cost?
We're increasing it. Pet Labs is running flat out — four production runs a night currently, which is substantial. We've added a cyclotron into the Pet Labs building; we're waiting for final approval from the regulator, which should come in the next few weeks. That could start producing more commercial products and ease supply shortages. Our spect lab received its commercial assets last week, so we should see good growth in Pet Labs with those new assets coming on stream.
Lots of questions again about the spinout of QLE — we've talked about that already. What is your view of post-enrichment, i.e., after nuclear irradiation of isotopes?
I don't really have a detailed view on post-irradiation enrichment. We make stable isotopes and supply customers, many of whom then irradiate them. We also perform irradiation at Pet Labs when appropriate.
Someone here who's been following you said the balance sheet used to keep you up at night. Now you're producing isotopes. What keeps you awake now?
Competing against governments is always a concern. One of our main potential advantages is that our capital cost to build a plant is low. If competitors receive large government subsidies to build very capital-intensive solutions, that could challenge our advantage. Hopefully governments will be restrained about giving away a lot of free money to competitors. It feels like there's more mature decision-making now than there was two years ago.
Great. One final thing: there's lots of people asking about analyst coverage. There is a hosting channel called Curation Connect which has an excellent ASPI page giving relevant information in short form, long form video, links to reporting accounts, videos Paul has done, and expert views. It's curationconnect all one word dot com. Hendrik and Paul, that was excellent. The news coming out is excellent. The critics are being answered. We've got our results out on time as well. Everything's progressing in the right way. I'd like to thank you for your time. We'll probably look to try and do this in a couple of months' time again. Thank you all for attending.
Thank you for your questions, and thank you to the audience for listening and for your interest. Thank you.
Thank you.