Note 6. Research and Development Costs

In 2022, Lightbridge entered into agreements with INL, in collaboration with the DOE, to support the development of Lightbridge Fuel™. These framework agreements use an innovative structure and consist of an “umbrella” Strategic Partnership Project Agreement and an “umbrella” Cooperative Research and Development Agreement (CRADA), each with BEA, the DOE’s operating contractor for INL, with an initial duration of seven years. Throughout the duration of these umbrella agreements, all R&D work contracted with BEA is through the issuance of project task statements.

It is anticipated that the initial phase of work under the two agreements will culminate in irradiation testing in the Advanced Test Reactor (ATR) of fuel samples using enriched uranium supplied by the DOE. The initial phase of work aims to generate irradiation performance data for Lightbridge’s delta-phase uranium-zirconium alloy relating to various thermophysical properties. The data will support fuel performance modeling and regulatory licensing efforts for the commercial deployment of Lightbridge Fuel.

It is anticipated that subsequent phases of work under the two umbrella agreements will include post-irradiation examination of the irradiated fuel samples, loop radiation testing in the ATR, and post-irradiation examination of one or more uranium-zirconium fuel rodlets, as well as transient experiments in the Transient Reactor Test Facility at INL.

On March 25, 2021, the Company was awarded a second voucher from the DOE’s GAIN program to support development of Lightbridge Fuel™ in collaboration with the Pacific Northwest National Laboratory (PNNL). The scope of this project was to demonstrate Lightbridge’s nuclear fuel casting process using depleted uranium, a key step in the manufacture of Lightbridge Fuel™. On July 14, 2021, the Company executed a CRADA with the Battelle Memorial Institute (Battelle), Pacific Northwest Division, the operating contractor of the PNNL, in collaboration with the DOE. The total project value was $0.7 million, with three-quarters of this amount expected to be paid by the DOE for the scope of work performed by PNNL and the remaining amount provided by Lightbridge, by providing in-kind services to the project. PNNL has completed a contract extension with the Company for one month to complete the final report related to this PNNL GAIN voucher in December 2022. The PNNL Gain voucher project was completed on January 31, 2023. For the years ended December 31, 2022 and 2021, the Company recorded $0.4 million and $0.1 million of contributed services - research and development, respectively. The Company recorded the corresponding amount as research and development expenses for the work that was completed by Battelle.

On December 19, 2019, the Company was awarded its first voucher from the DOE’s GAIN program to support development of Lightbridge Fuel™ in collaboration with INL. The scope of the project included experiment design for irradiation of Lightbridge metallic fuel material samples in the ATR at INL. On April 22, 2020, the Company entered into a CRADA with BAE, the operating contractor of INL, in collaboration with the DOE. Signing the CRADA was the last step in the contracting process to formalize a voucher award from the GAIN program. The voucher award could only be used to conduct the experiment defined in the CRADA. All work was completed on this GAIN voucher in the third quarter of 2021. This experiment design formed the basis of the Company’s current and future efforts with the INL. The Company had no cash payment obligations related to the GAIN voucher, but did provide in-kind services consisting of project management, quality assurance, and technical oversight under the CRADA. The DOE incurred payment obligations to BAE, related to the work done under the GAIN voucher. For the year ended December 31, 2021, the Company recorded approximately $0.4 million of contributed services - research and development for work that was completed that caused the DOE to incur payment obligations related to the GAIN voucher. The Company had no payment obligations related to the GAIN voucher. This amount was recorded as contributed services - research and development in the Other Operating Income section of the consolidated statement of operations and the corresponding amount was recorded as research and development expenses.

The R&D services provided under the GAIN vouchers were utilized by the Company in its ongoing development of its next generation nuclear fuel technology. The Company believes that the amounts paid by the DOE to BEA and Battelle for the service provided does not differ materially from what the Company would have paid had it directly contracted for these services for its R&D activity.