5E Advanced Materials, Inc. Common Stock M&A announcement

Paul? Good afternoon, and thank you for joining us today and thank you for making time for what we believe is one of the most important events in this company's history.

Last week, we announced that we have completed our acquisition of the assets and operations of Searles Valley Minerals. The purchase was completed through a court-supervised sale process under Section 363 of the US Bankruptcy Code, following entry of a sale order by the bankruptcy court in satisfaction of other customary closing conditions. This transaction transforms 5E from a pre-revenue development company into a revenue-generating American producer of boron and critical minerals. There are two things I want shareholders to take away from today's call. First, we acquired an operating business where we see a clear path towards approximately $40 million of steady-state consolidated adjusted EBITDA through three identifiable operating levers: price, cost, and volume.

Second, we acquired a much broader critical mineral platform with additional opportunities in borates, lithium, sulfate of potash, and tungsten that are not included in that base plan. That combination, an operating reset which we believe we can execute today, and significant optionality beyond the base plan is what makes this transaction so important for 5E. In the simplest terms, up until last week, 5E was a company with a significant boron deposit working towards commercial production at Fort Cady. With the completion of this transaction, we are now also the operator of a working industrial minerals complex that produced more than 1 million short tons of borates, salt, sodium sulfate, and soda ash in its last fiscal year.

While we are excited about the base industrial minerals business we have acquired, we view this acquisition as a critical mineral platform that in addition to the boron, includes lithium, SOP, and tungsten, which we'll discuss in detail later. As of today, we have two Southern California production complexes, 129 miles apart, operating under one integrated commercial organization with one mission: secure domestic supply of critical minerals. Let me walk through the transaction itself before I get into the rationale for the transaction and provide a more detailed introduction of Searles Valley Minerals. The acquisition closed last Thursday, following entry of a sale order by the bankruptcy court and satisfaction of other customary closing conditions.

Total consideration was comprised of $3.4 million in cash, plus 8.3 million shares of our common stock, and an unsecured 5-year promissory note of approximately $6.2 million, and the assumption of specified liabilities. I want to be direct about one point here because it matters. Identified legacy environmental liabilities, including CARB greenhouse gas allowance obligations, remained with the seller's estate under the transaction structure. Those liabilities did not transfer to 5E, and with the bankruptcy sale order and the state's resolution with CARB, 5E received a fresh start with the state of California and will be treated as a new covered entity within the Cap-and-Invest program. This was intentional and a specific term for this transaction, not an afterthought. The clean start goes well beyond the CARB.

This was a Section 363 asset purchase, not an acquisition of the old SVM corporate balance sheet. We acquired the operating assets, selected only the contracts we desired, and assumed only specified liabilities. The legacy debt capital structure, historical creditor, and workers' compensation claims, and other excluded liabilities remain with the bankrupt estate, while many uneconomic legacy contracts were rejected or left behind through the bankruptcy process. We believe we are taking over an industrial and critical mineral platform that is substantially cleansed of the leverage and contractual overhang of the predecessor. That platform includes three processing sites, 54 megawatts of on-site cogeneration capacity, the Trona Railroad, the water utility, mineral tenure and brine rights, real property, wells, pipelines, utilities, laboratories, equipment, and an experienced workforce. This is infrastructure built over generations with hundreds of millions of dollars of historical capital invested.

With total consideration paid for the acquisition equal to approximately $22.9 million when measured against SVM's gross fixed assets, the transaction value is approximately $0.05 on the dollar before assigning any value to the mineral resource base or the optionality we'll discuss today. Put simply, we bought the operating platform, not the old balance sheet. I also want to take a moment to thank the Searles Valley Minerals team, including Dennis Cruise and his colleagues, for their partnership throughout this process, along with the previous owner of Searles Valley Minerals, who's now 5E's third largest shareholder. With this closing, we have inherited an experienced, capable operating workforce of approximately 257 employees, and we are now looking forward to working alongside them, restoring all borate operations to scale, and expanding the critical minerals portfolio. So why are we doing this?

For years, 5E's mission has been to secure a domestic supply of boron, which the United States Department of the Interior added to its Critical Minerals List last year, along with other adjacent critical industrial minerals. This transaction advances that mission immediately. There is more than 150 years of production heritage at Searles Lake, low disturbance solution mining with roughly 75% of depleted brine returned to the lake bed, and integrated logistics through short line rail with access to the Port of Long Beach. Just as important, we know this market.

Through our operations at Fort Cady, we have already qualified our boric acid with many customers across multiple market segments, and our commercial plan is grounded in the structure of the borate market itself, with significant global borate producers, Rio Tinto, U.S. Borax, and Eti Maden, operating at what we believe is high utilization and no material capacity additions expected over the medium term. This acquisition will advance 5E to become yet another significant borate producer in that market and the only American-owned operator. As a refresher for newcomers to the borate market, the borate market has two primary global producers. Boron is irreplaceable in glass, fertilizers as a micronutrient, insulation, and critical to nuclear energy, semiconductors, defense, and permanent magnets.