10-K: 5E Advanced Materials: Fort Cady Project Advances Amidst Funding Challenges

5E Advanced Materials progresses its Fort Cady boron and lithium project with a $435 million Phase 1 capital estimate, targeting 2028 commercial production, despite ongoing significant losses and substantial doubt about its ability to continue as a going concern.

Summary

• 5E Advanced Materials is a development-stage company focused on becoming a global leader and supplier of refined borates and advanced boron derivative materials, aiming to enable decarbonization, increase food security, and ensure domestic supply of critical materials.
• The company holds 100% rights to the 5E Boron Americas (Fort Cady) Complex in Southern California, which was designated as Critical Infrastructure by the Department of Homeland Security in 2022.
• A Preliminary Feasibility Study (PFS) issued in August 2025 for Phase 1 of the Fort Cady Project estimates a capital cost of approximately $435 million, including $55 million for contingency and $13 million for owner's costs.
• The PFS outlines 5.3 million short tons (MST) of boric acid proven and probable reserves with an average grade of 8.03% (B2O3) and an initial 39.5-year life of mine, utilizing an in-situ leaching (ISL) mining method.
• The Project also includes a complementary lithium resource, with 169 thousand short tons of measured plus indicated mineral resource of lithium carbonate equivalent.
• The company is currently operating a Small-Scale Facility (SSF) at the Project, producing approximately one short ton of boric acid per day, which is used for customer qualification and to inform the design of the commercial-scale facility.
• As of September 2025, approximately 14 customers in 8 diverse market segments have successfully qualified the company's boric acid.
• Initial commercial production from Phase 1 is targeted for the second half of calendar year 2028.
• The company incurred a net loss of $31.555 million for the year ended June 30, 2025, and has an accumulated deficit of $231.6 million.
• There is substantial doubt about the company's ability to continue as a going concern, requiring additional financing within the next 12 months.
• Recent financing activities in fiscal year 2025 included equity offerings and convertible note issuances, providing approximately $35.3 million in proceeds before issuance costs.
• The company received a non-binding Letter of Interest from the Export-Import Bank of the United States (EXIM) for a potential loan-backed guarantee of up to $285 million for the commercial-scale facility.

Sentiment

Score: 4

Explanation: The company is a development-stage entity with significant operational progress, including successful SSF operation and customer qualification, and has secured substantial mineral reserves. However, it faces critical financial challenges, including recurring net losses, a large accumulated deficit, and explicit 'substantial doubt about its ability to continue as a going concern.' Project timelines have been delayed, and future financing remains uncertain, despite recent capital raises and a non-binding EXIM LOI. The competitive landscape is also challenging.

Positives

• Successful operation of the Small-Scale Facility (SSF) since April 2024, providing critical data for commercial-scale design and customer qualification.
• First batch of boric acid produced at the SSF, with samples sent to potential customers since July 2024.
• Approximately 14 customers in 8 diverse market segments have successfully qualified the company's boric acid as of September 2025.
• A leading global specialty glass manufacturer successfully produced specialty glass using the company's boric acid, performing as well as or better than competitors.
• Successful international shipment and handling trial of boric acid to Taiwan, demonstrating product quality for the specialty glass market.
• Preliminary Feasibility Study (PFS) completed in August 2025, demonstrating a world-class resource and reserve, and a clear direction for the business.
• PFS established 5.3 million short tons of boric acid proven and probable reserves with a 39.5-year life of mine for Phase 1.
• The Project is underpinned by a rare colemanite borate deposit, believed to be one of the largest known new deposits globally, with a complementary lithium resource.
• Designation as Critical Infrastructure by the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency in February 2022, highlighting strategic importance.
• In-situ extraction method is expected to be more environmentally friendly, with closed-loop water recycling and less land disturbance.
• Strategic hires of Mark Zamek and Kenneth Hoo as VPs of Commercial Products, bringing extensive industry experience.
• Successful 2025 Out-of-Court Restructuring, converting outstanding convertible notes into equity and eliminating the Minimum Cash Covenant.
• Received a non-binding Letter of Interest from EXIM for a potential loan-backed guarantee of up to $285 million for the commercial-scale facility.
• Significant increase in combined measured and indicated mineral resources by 203% compared to the prior year, due to increased mineral tenure.

Negatives

• Substantial doubt regarding the company's ability to continue as a going concern due to recurring net operating losses and insufficient cash.
• Accumulated deficit of $231.6 million as of June 30, 2025.
• Incurred significant net operating losses since inception and anticipates continued losses for the foreseeable future.
• Limited operating history in the minerals industry and no material revenues from mineral product sales to date.
• The company will need to obtain substantial additional financing to continue as a going concern and advance development, which may not be available on acceptable terms or at all.
• The EXIM Letter of Interest is non-binding and does not guarantee funding.
• The ongoing operation of the SSF is maintenance-intensive and requires incurring operating costs and potentially additional capital expenditures.
• The approach of operating the SSF in parallel with FEL-2 engineering carries a higher risk of re-work and increased design costs for the commercial-scale complex.
• Target for initial commercial production from Phase 1 has been delayed from fiscal year 2026 to the second half of calendar year 2028.
• The mining industry is highly competitive, with a global duopoly (Eti Maden and Rio Tinto Borax) controlling 80-85% of the market, potentially putting the company at a significant disadvantage.
• The economic feasibility study in the Preliminary Feasibility Study has not accounted for the impact of existing or future tariffs, which could materially increase construction costs.
• Significant turnover in senior management team and across the organization, potentially creating instability and loss of institutional knowledge.
• The company does not employ individuals with significant experience in information security, cyber risk management, and cyber incident response, relying on third-party vendors.
• Incurred income tax expense of $179 thousand in FY2025 due to cancellation of debt income not fully offset by net operating losses.
• Reduction in workforce in November 2024, reducing headcount by approximately 40%.
• Litigation with a previous construction contractor, with the contractor requesting $5.5 million in counterclaims.

Risks

• There is substantial doubt regarding the ability to continue as a going concern.
• Need to obtain additional financing to continue as a going concern and advance development and operations.
• Significant net operating losses since inception and anticipated for the foreseeable future.
• Future performance is difficult to evaluate due to limited operating history.
• Inability to continue operating the SSF or complete further technical and economic studies may impact the Project.
• Significant capital investment in the Project, with uncertainties and future operating risks.
• Limited history of mineral production and potential inability to successfully achieve business strategies, including downstream processing ambitions.
• Inability to develop or acquire certain intellectual property required to implement business strategy.
• Third parties may claim infringement on their proprietary intellectual property rights, leading to costly litigation.
• Business activities are in the development stage, with no assurance of commercial development.
• Mineral resource and reserve estimates are inherently uncertain and subject to significant change.
• Estimates relating to Project development and mine plan are uncertain, potentially leading to higher costs and lower economic returns.
• Dependence on a single mining project (Fort Cady Project).
• Long-term success depends on achieving and maintaining profitability and positive cash flow.
• Growth depends on continued demand growth for end-use applications requiring borates, lithium, and related minerals.
• Inability to enter into and deliver product under supply agreements.
• Inaccurate estimates and assumptions for planning may adversely affect future growth rate.
• Cost and availability of electricity and natural gas are subject to volatile market conditions.
• Inadequate infrastructure may constrain future mining operations.
• Uncertain global economic conditions could materially adversely affect business, including product pricing.
• Macroeconomic risks (inflation, recession, policy changes) could affect demand and operations.
• Government efforts to combat inflation could lead to higher financing and Project completion costs.
• Subject to strict laws governing business practices (anti-bribery, anti-corruption, export control), with non-compliance being costly.
• Title to mineral properties and related water rights is complex, with risk of title deficiencies.
• Challenges to mining claims could adversely affect operations and financial condition.
• Restrictions on ability to obtain, recycle, and dispose of water may impact development plans.
• Subject to various environmental, operational, and land-use regulations, which could affect growth.
• Mining industry is cyclical, and market fluctuations could adversely affect business.
• Fluctuations in the value of the United States dollar relative to other currencies may adversely affect business.
• Risks relating to mining, exploration, development, and mine construction.
• Mineral exploration and development are subject to extraordinary risks (e.g., serious injury/death, geological hazards, pollution liability).
• Proposed facilities or operations could be adversely affected by natural or human causes outside of control (e.g., natural disasters, wars, health epidemics, cyber threats).
• Shortage of skilled technicians and engineers may increase operating costs.
• Changes in U.S. trade policies (e.g., tariffs) could materially increase construction costs.
• Shortage of equipment or disruption in supply chain could adversely affect operations.
• Disruptions in production at proposed facilities may have a material adverse impact.
• Failure by vendors or suppliers to use legal or ethical business practices may adversely affect business.
• Competition with and new production of borates and other minerals from current or new competitors in the market could adversely affect prices and business.
• Industry consolidation may result in increased competition.
• Significant environmental and government regulations, with substantial compliance costs.
• Increased costs and liability from generation and disposal of certain wastes.
• Land reclamation requirements may be burdensome on financial position.
• Physical consequences of climate change could have a material adverse effect on properties and business activities.
• New or evolving sustainability and climate-related disclosure obligations could result in additional costs, litigation, or reputational risk.
• Required to obtain, maintain, and renew governmental permits, a process which is often costly and time-consuming.
• Litigation or arbitration proceedings may be commenced, with adverse rulings affecting business.
• Vulnerable to risks associated with operating in a single geographic region and concentrating capital investment in California.
• Operation or development of facilities could be adversely affected by local communities and/or other stakeholders.
• Current plans to continue to invest significant amounts of capital in exploration activities involve many uncertainties and risks that could prevent realization of profits or result in total/partial loss of investment.
• Future success depends on continuing efforts of management and key employees, and ability to attract and retain highly-skilled personnel and senior management.
• Need to increase organization size and potential inability to manage growth effectively.
• Directors and officers may in the future be in a position of a conflict of interest.
• Significant turnover in senior management team and across the organization.
• May acquire additional businesses or assets, form joint ventures or make investments in other companies in the future that may be unsuccessful and may harm operating results and prospects.
• Could be subject to information technology system failures, network disruptions, and breaches in data security.
• Largest stockholders control a significant percentage of voting power and may be able to exert significant control over the direction of business.
• Exercise of outstanding warrants will dilute the ownership interest of existing stockholders or may otherwise depress the price of Common Stock.
• Market price and trading volume of Common Stock and CDIs may be volatile and may be affected by economic conditions beyond control.
• Incur significant costs as a result of being publicly traded in both the United States and Australia.
• Incur increased costs as a U.S. listed public company, and management is required to devote substantial time to new compliance initiatives and corporate governance practices.
• An active trading market for Common Stock and CDIs may not be sustained and the trading price for Common Stock and CDIs may fluctuate significantly.
• Do not anticipate paying dividends on Common Stock in the foreseeable future; capital appreciation, if any, will be the sole source of gain.
• If securities or industry analysts do not publish research or reports about business, or if they issue an adverse or misleading opinion regarding stock, the market price and trading volume of Common Stock and CDIs could decline.
• As an emerging growth company and smaller reporting company, the company is able to avail itself of reduced disclosure requirements, which may make Common Stock and CDIs less attractive to investors.
• If the company experiences any material weaknesses in the future or otherwise fails to develop or maintain an effective system of internal controls, it may not be able to accurately report financial condition or results of operations.
• Disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
• Certificate of Incorporation and Bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that shareholders may consider favorable.
• Raising additional capital could adversely affect the voting power or value of Common Stock and CDIs.
• The company has in the past and may again in the future receive a notice of the failure to satisfy a continued listing rule from Nasdaq.
• Sales by existing shareholders can reduce the market price of Common Stock and CDIs.
• The company is a holding company and depends on its subsidiaries to generate cash to fund operations and expenses.
• Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings, which could limit shareholders' ability to obtain a favorable judicial forum for disputes.

Future Outlook

The company plans to continue operating its Small-Scale Facility (SSF) to gather data, refine commercial-scale wellfield design, and optimize byproduct production (calcium chloride and gypsum). The SSF is expected to be decommissioned upon advancing to commercial construction. The long-term strategy includes opportunistically developing downstream advanced boron materials processing capabilities and economically accretive byproducts like lithium carbonate. The company aims to establish competitive market positions in high-value, high-margin markets that support decarbonization, food security, and national defense. It intends to secure offtake agreements and commercial partnerships, and invest in R&D. The target for initial commercial production from Phase 1 of the Fort Cady Project is the second half of calendar year 2028, with a final investment decision expected in mid-2026. The company will submit a final mine plan to the EPA based on horizontal well performance and expects to finalize closure of existing impoundments in 2025 or 2026. The company plans to adopt new accounting standards for income tax disclosures in fiscal year 2026 and is evaluating others for fiscal year 2027.

Management Comments

• Our vision is to safely process borates and other industrial materials through sustainable best practices and a continuous improvement mindset.
• We believe that the additions of Mr. Zamek and Mr. Hoo to our team will progress our vision of becoming a leading global supplier of borates and other industrial materials.
• We believe that the progress observed in our customer qualification efforts will facilitate discussions with stakeholders about funding options for Phase 1 of the commercial facility and securing commercial contracts for our future products.
• We believe the PFS demonstrates a world-class resource and reserve, managements firm understanding and direction for the business, which can position the company to achieve profitability, generate cash flow, and reduce risk.
• We believe that the information, data and operating results that have come, and will come, from the operation of the SSF will enable us to design the most efficient commercial-scale facility with optimized project economics.
• We believe the LOI demonstrates a growing awareness and commitment by the U.S. government to securing an integrated boron supply chain.
• We do not believe that there are other existing environmental, permitting, legal, socio-economic, marketing, political, or other factors that might materially affect the in-situ mineral reserve estimate.

Industry Context

The global boron market is characterized by a duopoly, with Eti Maden and Rio Tinto Borax collectively supplying 80-85% of the total demand, and Eti Maden alone accounting for approximately 60%. This concentration creates significant supply risks, which 5E Advanced Materials aims to address by becoming a U.S.-based source of boron and lithium. The company anticipates substantial demand growth for borates and advanced boron materials, driven by global decarbonization efforts, government incentives for domestic manufacturing, and applications in critical sectors such as solar, wind, neodymium-ferro-boron magnets, lithium-ion batteries, semiconductors, aerospace, military, and automotive. The company's Fort Cady Project, based on a rare colemanite deposit, is strategically positioned to capitalize on these trends, similar to how the lithium market evolved a decade prior. However, the highly competitive nature of the mining industry, with established and well-funded competitors, poses a significant challenge.

Comparison to Industry Standards

• The Project deposit is a rare colemanite borate deposit, believed to be one of the largest known new deposits of colemanite globally, positioning the company uniquely in the market.
• The Preliminary Feasibility Study (PFS) was prepared in accordance with SEC's Mining Disclosure Rules and Regulation S-K 1300, aligning with current industry and global regulatory practices and standards, including the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code).
• The capital estimate accuracy range for the PFS is +/25%, which is consistent with industry standards for an Association for Advancement of Cost Engineering Class 4 estimate for projects at the PFS stage.
• During customer qualification trials, the company's boric acid product performed as well as or better than products from other suppliers (unnamed) across various attributes for specialty glass manufacturing.
• The global boron market is dominated by a duopoly, Eti Maden and Rio Tinto Borax, who together supply approximately 80-85% of global demand, with Eti Maden alone supplying about 60%. This indicates a highly concentrated market where 5E Advanced Materials would be a new, smaller entrant.
• The in-situ leaching (ISL) mining method planned for the Project has been utilized for several decades in the production of other minerals like uranium, salt, bromine, potash, and soda ash, and was developed at the Project property in the 1980s, suggesting a proven, albeit specialized, industry technique.

Management Changes

Corporate Governance

Legal Proceedings

• On July 17, 2023, the company filed a complaint against a previous construction contractor in the U.S. District Court for the Central District of California, Eastern Division, alleging numerous breaches of contractual obligations related to the construction of the Small-Scale Facility (SSF).
• On August 10, 2023, the contractor filed a counterclaim for alleged breaches of contract by the company, requesting approximately $5.5 million in relief.
• The company has filed a response disputing the counterclaims, and discovery is ongoing.
• Mediation between the company and the contractor in July 2025 did not result in a resolution.
• An estimate of reasonably probable outcomes for this litigation cannot be made at this time.
• The company anticipates that it and its subsidiaries may from time to time become subject to various claims, legal proceedings, governmental inspections, audits, or investigations arising in the ordinary course of business.

Related Party Transactions

• Bluescape Special Situations IV (Bluescape), Meridian Investments Corporation (Meridian), and Ascend Global Investment Fund SPC for and on behalf of Strategic SP (Ascend) are the largest stockholders, collectively holding approximately 68.7% of outstanding shares as of August 31, 2025.
• These parties also hold warrants to purchase an aggregate of 5,632,692 shares of Common Stock.
• The 2025 Out-of-Court Restructuring involved the issuance of 13,586,524 shares of Common Stock to Bluescape and Ascend in exchange for all outstanding Convertible Notes.
• Bluescape and Ascend purchased 1,408,173 shares of Common Stock for $4.9 million and received 5,632,692 Restructuring Warrants in the March 2025 Subscription.
• Bluescape and Ascend were key participants in the August 2024 Equity Offering, September 2024 Notes, and January 2025 Notes.
• Pursuant to the Fourth Amended and Restated Investor and Registration Rights Agreement (IRRA), each of Ascend and Bluescape has the right to designate two directors to the Board as long as they beneficially own 25% of Common Stock, and one director for as long as they own 10%.
• Joshua Malm, the Chief Financial Officer, Treasurer, and Corporate Secretary, has an Independent Contractor Agreement with Malm Consulting LLC, dated September 9, 2024.

Stakeholder Impact

• Shareholders face potential dilution from past and future equity raises and warrant exercises, significant control by largest stockholders (68.7% voting power), volatility in stock price, and no anticipated dividends. There is also a risk of delisting if Nasdaq requirements are not met.
• Employees experienced a strategic reduction in workforce (40% headcount reduction) in November 2024. The company's success depends on attracting and retaining skilled technicians and engineers, with potential for increased operating costs due to labor shortages.
• Customers are positively impacted by the progress in customer qualification for boric acid, with 14 customers successfully qualifying, and the potential for securing commercial contracts for future products.
• Suppliers and creditors are affected by the company's dependence on various supplies and equipment, with risks of shortages or price fluctuations. There is also potential impact from ongoing litigation with a previous construction contractor.
• Local communities near the Project are targeted for positive impact through job creation, specialized training, local procurement, and investment in an economic development zone. However, there is potential for disputes regarding land use or environmental impacts.
• Regulatory bodies are actively involved in the company's operations, as it is subject to extensive federal, state, and local environmental and operational regulations, requiring ongoing permitting processes and compliance.

Next Steps

• Continue to operate the Small-Scale Facility (SSF) to produce additional boric acid for potential customers.
• Advance the design of the commercial-scale wellfield and operating methods.
• Refine the production process for calcium chloride and gypsum.
• Progress FEL-3 engineering for Phase 1 of the commercial-scale complex.
• Optimize well-field design and operating plan to reduce future mining capital and operational expenditures through various drilling techniques.
• Pursue and optimize infrastructure capital expenditures for the larger-scale facility (e.g., water resources, power, natural gas connection, access roads).
• Further define the advanced boron materials strategy, including engineering and repurposing the SSF once sufficient data has been obtained.
• Submit a formal application to EXIM during the second half of calendar year 2025.
• Target a final investment and construction decision for Phase 1 of the commercial-scale complex during the middle of calendar year 2026.
• Target initial commercial production from Phase 1 in the second half of calendar year 2028.
• Apply for a new or amended Waste Discharge Requirements (WDR) order from LRWQCB for the proposed commercial-scale facility's evaporation ponds.
• Submit a final mine plan to the EPA for review based on the performance of the horizontal-side track IR Wells.
• Finalize closure of existing impoundments and the 1988 WDR later in 2025 or 2026.
• Negotiate contracts for a portion of initial boric acid production in commercial Phase 1.
• Deliver larger volumes of boric acid from the SSF to customer production facilities for product validation.
• Continue to evaluate byproduct selection to maximize future economics.
• Assess potential impacts of new or evolving sustainability and climate-related disclosure regimes.

Key Dates

Recommendation

The company explicitly states "substantial doubt regarding our ability to continue as a going concern" and has incurred significant net operating losses ($31.555 million in FY2025, $231.6 million accumulated deficit). While operational progress is noted with the SSF and customer qualification, and some capital has been raised, the need for "substantial additional funding" that "may not be available on acceptable terms, if at all" presents an existential risk. The project's commercial production is still years away (H2 2028 target), requiring significant further capital ($435 million for Phase 1). The high level of financial uncertainty and the explicit going concern warning make this a high-risk investment, warranting a "sell" recommendation for a seasoned investor prioritizing capital preservation and clear financial viability.

Keywords

Boron, Lithium, Critical Materials, Mining, SEC Filing, 10-K, Fort Cady, California, In-situ Leaching, Boric Acid, Advanced Materials, Mineral Resources, Mineral Reserves, Small-Scale Facility, Commercial Production, Financial Reporting, Corporate Governance, Risk Management, Capital Raise, Nasdaq, ASX, ESG, Decarbonization, Supply Chain, Specialty Glass, Fertilizers, Defense, Electric Vehicles