RECENTLY COMPLETED MILESTONES AND ONGOING FUEL DEVELOPMENT ACTIVITIES

A. Fuel technology development and demonstration activities:

• In 2010, we began working with Texas A&M University and Idaho National Laboratory (“INL”) on the continued development of our technology. Following an extensive independent technical evaluation by INL of the Texas A&M University-led joint proposal for capsule irradiation testing of our metallic fuel samples in the Advanced Test Reactor (ATR) at INL, the US Department of Energy (“DOE”) approved the project in June 2010. During the second quarter of 2011, we were informed by INL that we might be able to skip capsule irradiation testing of our metallic fuel samples and proceed with loop irradiation, which is a critical path item in our fuel development program schedule. In the third quarter of 2011, the team completed a preliminary scoping study confirming, in principle, the feasibility of performing irradiation of our metallic fuel samples in the ATR. As a result, INL has now begun performing a more detailed technical design of the experiment and specific operating conditions. This detailed analysis will provide input into a safety analysis report, which is key prerequisite for the irradiation experiment. We expect the safety analysis to be completed in 2012.
• Continued planning and preparations for loop irradiation testing of the Lightbridge-designed metallic fuel samples in the MIR research reactor at Research Institute of Atomic Reactors (Dimitrovgrad, Russia).  The planning and preparatory work is currently underway.  We expect to begin negotiations of a specific agreement for the planned loop irradiation testing with RIAR in the first half of 2012.
• Began negotiations with a US fuel fabrication partner relating to metal fuel fabrication process development and demonstration work in the United States.  We expect the negotiations to conclude later this year.
• Lightbridge has recently received a letter from the US Department of Energy (DOE) confirming that our proposed collaborative projects with Russian State Atomic Energy Corporation “Rosatom” fall under the 123 agreement that we understand has satisfied Rosatom’s requirements.  The DOE letter was one of the key prerequisites for Rosatom before commercial negotiations relating to our proposed collaboration could commence.
• Completed a preliminary core design for our selected PWR reference plant operating at a 17% power uprate and an 18-month fuel cycle using Lightbridge-designed all-uranium seed and blanket fuel.  We now plan to perform further optimization studies for the core design.

B. Expansion of intellectual property portfolio:

• In the second calendar quarter, Lightbridge was granted a Eurasian patent that covers our thorium-based seed and blanket fuel assembly design for Russian-type VVER-1000 reactors. Countries that are signatories to the Eurasian Patent Convention include Russia, Kazakhstan, Belarus, Azerbaijan, Armenia, Turkmenistan, Tajikistan, Kyrgyz Republic, and Republic of Moldova.  Of these countries, Russia and Kazakhstan are of key importance to Lightbridge and will be our top priority as far as patent maintenance is concerned.  The new patent extends patent protection for that fuel design to 2027, which is well beyond the 2014-2015 when the original patents covering that fuel design are set to expire.
• In the 3rd quarter of 2011, we received a notice of allowance from the U.S. Patent and Trademark Office for a patent application covering a locking mechanism for a seed-and-blanket fuel assembly. The patent will issue on February 14, 2012 (US Patent No. 8,116,423) and will provide protection for the locking mechanism invention in the United States from its issuance until December 2028. We have also filed counterpart foreign patent applications for this invention, and will file an additional international PCT patent application for an improved locking mechanism in early 2012.
• In the 4th quarter of 2011, we received a notice of allowance from the Ukrainian patent office for a patent application covering a thorium-based seed and blanket fuel assembly design for VVER reactors. The patent is expected to be issued in several months and will provide protection in Ukraine from its issuance until December 2027.
• Filed an international patent application under the Patent Cooperation Treaty for Lightbridge’s all-uranium seed and blanket and all-metal fuel technologies as well as national phase patent applications in key countries based on the 2008 Patent Cooperation Treaty application that covers the thorium-based seed and blanket fuel technology for Western-type pressurized water reactors. Once granted, the new patents would extend patent protection for these fuel designs to 2028-2030.

C. Industry outreach efforts:

• In the 4th quarter of 2011, we established a Nuclear Utility Fuel Advisory Board (NUFAB). The objective and purpose of NUFAB is to further strengthen our dialogue with global nuclear utilities, consistent with U.S. export control laws, and provide their input into our nuclear fuel development and commercialization efforts. The current NUFAB members include top nuclear fuel managers from Exelon, Duke Energy, Dominion, and Southern Company.

D. Presentation at industry conferences and technical publications:

• In the 4th quarter of 2011, we prepared and submitted a technical article for publication in a peer-reviewed journal. We will provide an update once the article is published.
• Presented at the Nuclear Power Prospect Conference in Beijing
• Presented at the World Nuclear Fuel Cycle 2011 conference in Chicago, Illinois (USA) organized by the World Nuclear Association and Nuclear Energy Institute
• Presented a paper at the annual meeting of the American Nuclear Society in Hollywood, Florida (USA)
• Presented at 15th International Conference on Emerging Nuclear Energy Systems in San Francisco, California (USA) hosted by the American Nuclear Society, Lawrence Livermore National Laboratory, and the National Ignition Facility
• Presented a paper at the Future of Nuclear Energy conference organized by Argonne National Laboratory and the University of Chicago
• Presented at the MENA Nuclear Construction Conference in Dubai (UAE)
• Presented at the 2nd China International Nuclear Symposium in Hong Kong