Welcome to the FREYR First Quarter 2023 Earnings Conference Call. My name is Bruno, and I'll be the operator for today. [Operator Instructions]. I will now hand over to your host, Jeffrey Spittel, Vice President of Investor Relations. Please go ahead.

Good morning, good afternoon and good evening. Welcome to FREYR Battery First Quarter 2023 Earnings Conference Call. With me today on the call are Tom-Einar Jensen, our Chief Executive Officer; Jan Haugan, our Chief Operating Officer; Oscar Brown, our Chief Financial Officer; Jeremy Bezdek, President of FREYR Battery U.S. and EVP of Global Corporate Development. During today's call, management may make forward-looking statements about our business. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from expectations. Most of these factors are outside FREYR's control and are difficult to predict. Additional information about risk factors that could materially affect our business are available in FREYR's S-1, and annual report on Form 10-K filed with the Securities and Exchange Commission, which are available on the Investor Relations section of our website. With that, I'll turn the call over to Tom.

Thank you, Jeff, and good morning, good afternoon or good evening wherever you might be around the world. Again, it's a true honor and pleasure for us to present this first quarter and 2023 Earnings Call. This is now FREYR's eighth earnings call since we went public on the New York Stock Exchange on July 8, 2021, which is less than 2 years ago. We will take you through all the notable updates since our last earnings call. This is yet another quarter with significant milestones achieved in a highly dynamic environment. And with the commissioning of the CQP. Momentum is even stronger than before on multiple fronts. Today, we will take you through the activities in February with a core focus on the activities at the CQP as we move towards FREYR's battery production. We will also dive into specifics around Giga America and the emerging response from Norway and the European government in response to the Inflation Reduction Act. There is a distinct and growing realization from regulators around the world that the energy transition is increasingly urgent and that it can only happen with large volumes of batteries included. Batteries are indeed becoming the new oil. A decentralized, decarbonized and democratize battery supply is becoming the most significant business opportunity in the decade to come. Today, we will show you that we continue our relentless journey towards a deep industrialization partner of choice strategy on both sides of the Atlantic as we enter into the production phase of the SemiSolid production platform. Seven weeks ago, FREYR had opened up our customer qualification plans in Mo i Rana, Norway. This marks the start of the commissioning of a world first next-generation battery production facility at gigawatt-hour scale. I am very proud of the team in FREYR who have…

Thanks a lot, Tom, and hello to everybody listening on the earnings call. I'm now going to give you the latest update on our operations. And as a regular and recurring topic, safety first. I'm glad that I can say that we have another quarter without any reported serious safety incidents. However, we have reported one incidence of in late April, in addition to the 3 that we have reported in the first quarter. All four hypotension incidents or hypos as we label them, were related to lifting operations by subcontractors at the construction site in Mo i Rana. The last one was still being [indiscernible] 400 kilos that came in contact with [indiscernible] and fell to the ground from a 3.5-meter height level. Luckily, nobody was hurt. Investigations of these incidents are carried out by independent experts and we are openly sharing the key evaluations and learnings with all our contractors and partners. And we are now intensifying our efforts to gather reports of unwanted incidents to enhance our ability to predict potential safety risks in the future. We have currently around 170 people working at our two sites in Mo i Rana. Approximately 70 of those are at the customer qualification plan and close to 100 at the construction site for Giga Arctic. We plan to sustain that level of activity until the summer vacation in July. FREYR Operations Group comprises nearly 50 individuals in Mo i Rana representing 16 nationalities. And we have been transparent in our previous earnings calls that we are not immune to the challenges of the place. We have a complex deliveries from 16 different global suppliers, these suppliers were performing individual factory acceptance test, and we are now well into the final site acceptance testing after having installed a mechanically completed [indiscernible]…

Thank you, Jan Arve. It is definitely an exciting and interesting time to be in the energy transition space and specifically with the great opportunities that are in front of us as a company. The strategic partners with which we are involved bring capability and momentum that help us define our role and pursue success in this generational transition. As we discussed in February, during our fourth quarter update call, we were evaluating options to accelerate the Giga America project. The team over the last 3 months have devised the project plan that will enable us to bring 2.5 gigawatt-hours of capacity online by the summer of 2025. Followed soon after by the larger plant that we have been discussing previously with the start of production during the summer of 2026. We are labeling the combination of these two projects as Phase 1 as we, of course, have additional visions of growth for the Giga America business and specifically for the Georgia site. But we are dividing Phase 1 into Phase 1a and 1b to reflect the two different financing processes with different starter production timing. The total capacity of the cumulative Phase 1 is 38 gigawatt-hours, as Tom had mentioned before. To fund the CapEx needed for Phase 1a, we have initiated a formal process working with a financial adviser where we have engaged multiple strategic partners within the fair ecosystem as potential strategic investors after project entity. We are striving to fund all the CapEx requirements of that phase through this formal funding process. Currently, we have multiple parties in the data room and conducting due diligence, and we hope to be able to update our progress over the coming weeks and months. We have completed the financial model for the entirety of Phase 1 broken out between…

Thanks a lot, Jeremy. And now to Slide 12. Our team managing our strategic sourcing progress further in securing our raw materials. For our CQP, all materials are secured, materials for the ramp up are now stored at our warehouse in Mo i Rana site. FREYR has increased efforts in developing a more regionalized supply chain as reflected on the risks related to global supplies or raw materials to the battery production side. FREYR has increased the effort in developing a more regionalized supply chain as we reflect on the risks related to the global supplies of raw materials to the battery production. As noted in the previous earnings calls, FREYR has a joint development agreement with Finnish Minerals Group of Finland. The ambition of this partnership is to develop a business case for energy plant outside the City of Vaasa in Finland as a common approach. We have also secured a major share of our raw materials needed for the Giga Arctic. To prepare for Giga America acceleration, we have started the process to set new volumes by approaching close to 20 suppliers, including some of the U.S. based. Expanding our contracts made already for Giga Arctic to global supply contracts, including Giga America has been our focus. Our suppliers are reacting very positive and see that this is an additional chance for them. Thus, we expect that we can and will secure raw material contracts for Giga America before the final investment decision. As can be seen from this slide, #12, we are in dialogue with several suppliers for alternative sourcing and the technical qualification of alternative products and materials is well underway in FREYR's [indiscernible] facilities in Fukuoka, Japan as well as in collaboration with 24M investment. So by this, I hand the word over to Oscar, who will give us a financial update.

Great. Thank you, Jan Arve. Moving now to Slide 13, the financial update slide of the earnings deck. I will review our financial results for the first quarter of 2023 as well as provide an update on our financing initiatives. For the first quarter ended March 31, 2023, FREYR reported a net loss of $13 million or $0.09 a share compared with a net loss of $35 million for the same period last year. The net loss improvement for the company's most recent quarter compared to last year was a result of a slight positive noncash gain on our warrant liability fair value adjustment due to changes in our stock price from the end of the year versus the first quarter and a noncash loss last year. In addition, the company reported a $16 million foreign currency transaction gain for the first quarter of 2023 on the back of a strong U.S. dollar versus a slight loss for the same period in 2022. More importantly, the company reported higher general and administrative expenses as well as higher research and development costs for the first quarter compared with the same quarter last year. Logically, this is a function of our large organization which is managing more products around the world. The first quarter of each year is also cost heavy compared with the remaining quarters of the year due to costs related to year-end audits and other onetime costs and accruals. For the full year of 2023, we continue to expect our overhead costs to remain around the previously disclosed run rate of less than $95 million per year at the company's current level of activity. This activity is supporting the accelerated development and project level financing of Giga America, completing and ramping operations of the customer qualification plan continuing the…

Thank you, Oscar, Jeremy and Jan Arve. My job is becoming increasingly easier with such a dedicated professional and capable team. Thank you to you all and all the FREYR employees for all the hard work you put in every day. As you have heard, we're moving forward at full speed towards large-scale battery production based on the urgent need for sustainable development. Speed, scale and sustainability was, is and will continue to be the strategic pillars of the company as we accelerate towards clean battery solutions. We have the people, we have the assets, we have the technology, we have the market, and we have momentum. As always, we will focus on what we can improve. Keep an opportunistic approach to value creation, augment our industrialization partner of choice approach and constantly add partners, customers, investors and professionals. Let me now move to the final slide before Q&A and also for my sincere gratitude and appreciation to all of our investors and shareholders. But stated, we are hosting FREYR's Inaugural Capital Markets Day on June 27 at the New York Stock Exchange, Chapter 2 in FREYR's development. We are excited about inviting our investors and shareholders to this event 2 years after that special moment when I press the green button on the balcony. We will provide live stream from the customer qualification plan and showcase live battery manufacturing of the SemiSolid production platform and show updates on the Giga Arctic construction. We aim to set a new benchmark in how a battery company should communicate milestones and technology progress as the nascent factory industry will benefit from increased understanding and insights across the entire ecosystem. We will therefore deep dive into technical milestone and catalyst. Provide in-depth reports on our increasing and accelerating strategic, commercial and financing efforts and maybe just maybe provide a surprise or 2. Finally, I would like to thank our investors for your support and your patience. We will revert with invitations and further details, but stay tuned. We are coming to a theater near you. My final advice to you all is as always to stay long or should I rather say, go longer. Life is not boring and definitely not intended to be short. With this, let me hand back over to Jeff or the operator to guide us through the Q&A. Thank you for your attention. Jeff?

Thanks, Tom. Operator, we're ready to open up the line for questions.

[Operator Instructions]. Our first question comes from Gabe Daoud from TD Cowen.

Thanks for all the great detail and prepared remarks. I was hoping maybe -- can I just get a clarification or maybe just a little bit more color on when we could expect fully automated self production from CQP? Is it -- I guess, is it 3Q at this point?

Well, thank you for that question. As we are stating in our prepared remarks, we are getting ready to produce the first active electrodes, both cathode and anodes and then we will gradually produce more and more of them. As you know, when we're scaling a battery facility with a first-in-kind technology, even though it's already a triple-digit megawatt power scale in production in Japan, we are increasing the automation speed and increasing the size of the facility to gigawatt-hour scale. So we want to sort of take the steps forward to ensure that we get everything right. So we will start off by producing active electrodes within a matter of weeks, then we will gradually increase that and will improve the machinery. So during the course of the year, we will definitely be speeding our production, speeding up battery cell manufacturing and getting into the catalysts and milestones that we require to satisfy the conditions precedent in the offtake agreements that we have. Exactly when we will have fully automated production at what speed and what yield and what uptime is something that we will provide more color around in our Capital Markets Day update. But it's definitely going to be a gradual approach. The good news is, we are getting ready to produce the first active electrodes with this new larger thicker electrode and battery that we are producing in the customer qualification plant and as we have all moving forward, we will provide additional updates as to when you can expect increase speed, increase yields, increased uptime and reduced scrap rates, et cetera. This is something that we will get back to in more detail during the Capital Markets Day on the 27th of June.

That's super helpful. Looking forward to those details. Okay. And then maybe just shifting to Giga America, mentioned the two new phases here just splitting out between Phase 1a and 1b. So for 1a, the first two lines, so do we just think about it as maybe $125 million or so for those two lines? And just given prior comments on CapEx requirements per gigawatt hour of output. So $125 million for those two lines? And then how much should we expect FREYR to sell down in terms of ownership of those two lines.

Well, so -- and Jeremy, you can weigh in here, but just sort of a general comment. So as we are alluding to, we are now announcing a 10 production line total facility. It will be built in two phases. And obviously, there will be certain upfront investment costs and infrastructure costs and building costs, et cetera. Where we'll host the first two initial lines, and then we will upgrade those gradually, and then we will add additional 8 lines on top of that and of course, build more upstream and downstream equipment as we go along. We are not guiding specific CapEx at this point, but we will be providing more color and detail around that as we are focusing the FID. But maybe, Jeremy, you can talk a little bit more about the quantum of capital that we're targeting to raise and provide some more nuance to this to our investors.

Sure. Happy to do that, Tom. And Gabe, to your question, this financing process that we're -- we have undergone and kicked off about, I guess, it was almost a month ago now, we're hoping to raise north of $800 million, but that is obviously not just CapEx related. It includes the burn rate over the next several years for the Giga America facility. It also includes some of the pre-spend infrastructure for the second plant, as we talked about. Working capital requirements for the project and not to mention, I mean, we're building a big team. We have 20 U.S. employees today, and we'll be building to 300 employees over the next couple of years. And so costs associated with that. So as Tom said, we'll be providing guidance on the CapEx later but included in that raise will be, again, all at the project level. And so we're excited about the engagement we've had so far, both with strategic partners and some financial sectors as well.

Just to give you some context, Gabe, the customer qualification plant is a single line facility with limited upstream and downstream, and it's a brownfield because it's not meant to run 24/7 and that kind of budget you just referenced is more in line with the CQP. And again, this is a 2-line full capacity, full upstream and downstream meant around 24/7 commercial kind of operations. So it will be bigger than that, obviously.

Yes. Got it. Got it. Okay. All that makes perfect sense. Just the last one for me. But the Slide 9, we talked about the NPV coming from IRA tax credit. Could you maybe just give us a little bit more color around that, any expectations or what the assumptions are in terms of FREYR keeping the entire credit or you're sharing that amongst some other parties? Just any more help there on that $2.5 billion of NPV from IRA would be helpful.

Yes. So maybe I can just give some color on it. So we've modeled, of course, our perception of the market moving forward. We fundamentally believe in a structural market short environment, and particularly in the energy storage space. So we are thinking merchant pricing at least for the initial phase of the project since we're going to project-level equity financing going into it. We are assuming a set of CapEx numbers that we are now validating and updating and benchmarking to global benchmarks. We're also seeing some deflationary pressure happening in the market, and we're trying to capture that as we're sort of building out larger facilities. And as you can imagine, we will be parallel developing, as we mentioned, both Giga Arctic and Giga America that gives us also purchasing power in terms of how we are sourcing our production line equipment and moving forward generally in that. We will, of course, when we enter into project finance for the subsequent phase, Phase 1b and the larger 8-line facility, part of that will be DOE loan supported as well as project finance supported. So we have reflected the lower, let's say, pricing that we probably have to accept when we enter into longer offtake agreements to support the project finance of that phase of the project. When it comes to the division of the Production Tax Credits, it's a little bit too early to tell how that will sort of play itself out. What we are observing in the market is that our customers, which is important to note, now have quite deep incentives to develop stand-alone battery storage projects, which, by the way, the two of which is a record high both stand-alone battery storage projects as well as solar plus storage project, and that is pre-IRA.…

The only just nuance I would add is that the $2.5 billion of the $8 billion, we are assuming full realization of both the self-production credit and the module production credit in that number. So that's what's in the model today. That's my clarification.

Our next question comes from Gregory Lewis from BTIG.

Yes. Thank you, and good morning, good afternoon, everybody. Tom, thank you for the slide on outlining the strategy for Giga America. I was hoping for a little bit more clarity around Phase 1a in terms of the size. It seems like the nameplate capacity for that line is a little bit smaller than it seems like it's going to be in the back as we kind of move forward. Any kind of color around that? Was that kind of a function of speed to market? Available of the supply chain supporting that, funding? Any kind of color you can give around that, just given that it seems Phase 1a is a little bit smaller than what the average line is going to be going forward?

Yes. Thanks, Greg. So just a quick response to this. So bear in mind that the 24M technology as any -- well, not any, but most battery technologies are sort of generations of the production technology. And those generation have a tendency to increase in speed of production over time. Of course, there are intrinsic limitations to conventional technology in terms of how much active material you can push through the system. We are starting up with what we label generation 2, and that is what we have the factor built at the customer qualification plan. That is a certain speed of production when it's operating at major capacity. Then we are implementing as we are also describing in the materials to Generation 3, which is a significant increase in speed of production. And that, of course, increases the throughput speed of an installed capital expenditure unit. So the first two production lines after upgrade is more like 8 gigawatt hours of capacity when it sort of turns into Generation 3. So that's a little bit more color around that. And as mentioned on the CapEx side, principally, we will, of course, raise at the project level, the equity required to build the initial 2 production lines of Generation 2. We will also upgrade those production lines at a later stage, which is also embedded in what we're raising capital for. And then we will gradually replace the Generation 2 lines with Generation 3 lines. They're also in mind for your benefit that we are producing LFP batteries, large pouch based cells which we will ultimately embed into modules for largely speaking, the energy storage market, but also increasingly for e-mobility applications as we announced in January this year, our first sort of conditional offtake agreements in that regard. So that's a little bit how you should think about this. So if you average out what we have stated before relative to a number of production lines, I agree that 2.5 gigawatt hour seem low, but that is because it's only in brackets Generation 2 which will be upgraded to Generation 3. And then it's LFP versus NMC, which, of course, is the same as we've said before, but that also has a certain impact on the energy density that flows through the system. So hopefully, that provides you additional color.

Our next question comes from Philipp Koenig from Goldman Sachs.

I guess my first question is on the progress of the CQP. Sort of when do you envisage that you can post finishing the actuals, when can you send those sample cells to your customers and reach the validation level that will sort of unlock the final investment decision for Giga Arctic, sort of how many months out are we from that point in time? And what is sort of the visibility that you have on that process? And my second question is on the U.S. part on that Phase 1a. I guess how dependent is that facility and that financing from -- on a project level coming and how dependent is that on progress on the CQP as well as that sort of interlinked in the same way and we can sort of think about a similar time line? And then my last question is just on the CMD, will that be very much focused on the technology, whether it be more focused on Giga America? Sort of any more color on the event would be much appreciated.

So when it comes to -- I mean I was trying to answer that question on a previous question, I guess, in terms of moving from commissioning the customer qualification plans to electrode production to high-speed throughput of, let's call it, qualified batteries that unlocks conditional offtake agreements and therefore, financing. So we are moving into that production phase now. And as mentioned, we are weeks away from producing our first active electrodes, meaning that we can charge and discharge batteries essentially from products that we are producing at CQP. Then we will, in a careful manner, increase the number of electrode pairs that we're producing, putting them into an increasing number of batteries and increasing the speed at which we're producing the . During that time, we will encounter issues and challenges that we have foreseen. And as we've mentioned before, we have identified more than 1,500 potential standard operating procedures to sort of rectify potential errors in production as we move along. So we're well prepared for the issues that come. But it's a little bit hard to sort of be very specific on when exactly we will have a sufficient amount of testable batteries that will unlock the offtake agreements, but we're definitely in the coming weeks and months going to increase that speed quite dramatically speed in terms of producing testable batteries. We're also, of course, integrating our customers deeply into the testing regimes that we're doing on site. We're obviously also going to do third-party testing of the same batteries. So you should expect that our timelines for unlocking additional financing is in the coming weeks and months is really where we are. When it comes to them, your second question, how does this sort of filter through to the project level financing of Giga…

[Operator Instructions]. Our next question comes from Julien Smith from Bank of America.

This is [indiscernible] on for Julien. Just a follow-on, I think, to one of the earlier questions that was raised on the NPV math you guys have done here. When we think about the distribution of the $2.5 billion of tax credits, I mean, how much of that is reflecting in Phase 1a versus 1b presumably 1a as a bit of an outsized advantage given it's running ahead. I'm just curious if you can speak to sort of timing and how quickly that NPV would move around depending on your FID timing.

Yes. Thank you for that question. Jeremy, do you want to chime in on this one.

Yes, sure. So we have looked at in the model a breakdown of the credits coming in that make up that $2.5 billion. We see -- it's roughly -- I mean, keep in mind, it's not only just timing, but it's also capacity. And so while yes, 1a does have an advantage from a timing standpoint, it's likely only to be about 1 year versus the capacity delta for 1b. So we actually see it about trying to do math in public here. I think it's like 70% of that, maybe 65% to 70% of that $2.5 billion is in the 1b project with the remainder coming in the 1a project. So again, when you look at 38 gigawatt hours of capacity and you have 8 of it coming in 1a after the upgrade. And of course, that upgrade happens a little bit later in timing. So you have the smaller capacity early which, again, the whole point of this acceleration plan is to go get those credits and the margin associated with the business in Phase 1a and being able to do that earlier than what we had originally planned. And so it's all sort of a net add to the project, but the breakdown is about 65% to 70% and 1b of the credit and the rest coming in 1a.

That's super helpful color. Maybe shifting back to Giga Arctic. You guys made a series of mentions around sort of your capital spending cadence. I think, Tom, you mentioned you expect something as early as summer not to hold your feet to the FREYR, but we're pretty close to summer. What exactly are you waiting for? If we can just throughout the broad-based question, and then how do you think about whatever that is translating to how you're willing to allocate capital given all the sort of multivarious things you guys are going on?

Yes. So I guess you're referring to the IRA response from the Norwegian government linked up to the EU response under the temporary crisis transition framework. And as we have alluded to in the presentation material, of course, the European Union did come out with their, let's say, high-level responses to the Inflation Reduction Act earlier this year. That is now starting to manifest itself into specific support packages for Giga factories being developed in countries like Germany, France and Spain. And all of these were announced last week towards the end of last week, still a little bit unclear as to the detailed specifics of it, what we're talking about support packages for giga factories in the billions. The Norwegian government, which, of course, we have a very strong and close relationship with, have -- since they launched their national battery strategy at the Giga Arctic site less than 1 year ago have clearly stated that the Norwegian support packages will align very closely with those of the European Union. So we think the support packages that we're now seeing is a reference to what you should be expecting from the Norwegian government. We, of course, have been quite specific in our dialogue with them as to what we believe are competitive support packages to unlock the scaling of Giga factories for the kind that we are building. And we have been provided with formal feedback that such clarity will be provided to us before the summer. Before the summer in this context, it's probably by the end of the second quarter. But before the summer is what we have technically been communicated. So these are weeks away from having more clarity on this. And it comes to the second part of your question, as we've also been quite clear on in Oscar's remarks, in particular, we are prudent when it comes to releasing and spending capital even though we have a strong balance sheet, we clearly need to raise additional capital for the projects that we are seeking to build, specifically Giga Arctic and Giga America. We've spoken at length at Giga America on the project level equity raise there. And for Giga Arctic, we are with government support moving towards unlocking the project finance later this year. So depending on what support package comes through, we will then evaluate what that is, and then we will be back to the market with our specifics in terms of how we push that project forward. But in the meantime, we are continuing to develop it at so-called measured pace. So as you will see, and you can see from the materials, the plant is developing, and it's becoming a large facility -- and we're obviously going to continue to move forward on it, but in close lockstep with the development of the incentive tax coming from the government.

We currently have no further questions. So I would like to hand the call back to Jeffrey Spittel for final remarks. Please go ahead.

Thanks, Bruno. Thank you, everybody, for your time and attention and the thoughtful questions. We'll be available for follow-ups for the rest of the day and the week. And we will see you on the road very soon. And then, of course, we're looking forward greatly to hosting everybody at the New York Stock Exchange on the 27. We'll speak to you soon. Thanks.