Terrestrial Energy (NASDAQ:IMSR) reported second-quarter progress across its engineering, regulatory, supply-chain and commercial-development programs, while outlining updated unit economics for its IMSR small modular reactor plant design.
Chief Executive Officer Simon Irish said the company continues to execute against the three pillars of guidance it established in March: engineering and regulation, supply-chain development, and commercial-project development. He also emphasized the company’s capital-light business model, under which it does not plan to build, own or operate IMSR plants itself.
Engineering, Regulatory and Site Development Progress
On the regulatory front, the NRC issued a Safety Evaluation Report on May 12 approving Terrestrial Energy’s Topical Report covering its Postulated Initiating Events methodology. Irish said the approval followed a previous Safety Evaluation Report on the company’s principal design criteria. Both analyses can be referenced in future applications without reevaluation, according to the company.
The company continued graphite irradiation testing at the NRG Petten test reactor in the Netherlands. During the quarter, Terrestrial Energy expanded the testing program by adding irradiation cycles, which contributed to changes in research and development spending.
Terrestrial Energy also announced an engineering service agreement with Zachry Nuclear to support development activities at Texas A&M University’s RELLIS campus. The work includes site characterization and data collection for a potential NRC construction permit application for a commercial IMSR plant at the site.
In June, Terrestrial Energy signed ground lease and research agreements with Texas A&M for exclusive use of a 77-acre RELLIS site. Irish said the agreements create a path for site characterization and environmental evaluations ahead of potential construction.
Commercial Pipeline and Riot Platforms Relationship
In May, Terrestrial Energy announced a relationship with Riot Platforms involving the potential supply of electricity for data-center operations. The companies intend to identify an initial site as part of a program targeting 4 gigawatts of IMSR generation capacity to support Riot’s data-center operations.
Irish said the relationship would use a feature of the IMSR design allowing the non-nuclear thermal and electric portions of the facility to be customized. The company expects the plant’s non-nuclear “back end” could initially use natural gas to produce steam and supply commercial power before nuclear systems enter service.
He characterized the approach as a capital-efficient dual-fuel arrangement, rather than a combined-cycle gas plant. Terrestrial Energy expects that standard industrial equipment used in the non-nuclear portion could allow power generation to begin within five years, while nuclear generation would provide longer-term clean, firm power.
Following the Riot relationship, Terrestrial Energy said the indicative capacity of its commercial-project pipeline rose to 7.8 GW. The company identified data centers, industrial process heat and replacement of retiring coal capacity as its primary commercial market verticals.
Updated Economics and Fuel Strategy
Terrestrial Energy updated its estimated lifetime economics for each IMSR unit following engineering work conducted over the past year, including work related to TEFLA. Irish said the revised model does not reflect a change in the company’s business approach, but rather an iteration of its estimates.
- Estimated cumulative lifetime revenue per unit increased to approximately $2.7 billion from $2.1 billion.
- Blended gross profit margin increased to 33% from 22% in the prior model.
- The company estimates 79% of unit revenue would occur after plant construction through long-term supply contracts.
- Core-unit supply is expected to represent 58% of revenue, while fuel-salt supply would account for 21%.
- The estimated serviceable addressable market through 2050 increased to $2.3 trillion from $1.9 trillion.
The company plans to manufacture and supply IMSR Core-units and major reactor components that are designed for replacement every seven years over a plant’s 56-year design life. Irish said this would imply 16 Core-units and about $1.6 billion in cumulative revenue from that activity. The company estimated gross margins of 33% for Core-unit supply and 40% for fuel supply.
Irish also highlighted the IMSR’s liquid-fuel approach. He said the company’s fuel-production process does not require the third manufacturing step needed to create physical fuel assemblies or TRISO fuel elements for solid-fuel reactors. Terrestrial Energy plans to use low-enriched uranium, or LEU enriched to less than 5%, rather than high-assay low-enriched uranium, or HALEU.
The company is working with Westinghouse on supply of enriched uranium tetrafluoride, which would be combined with fluoride carrier salts to produce IMSR Fuel Salt. Irish said the approach requires one fuel-production plant for the company’s process and avoids certain cost and complexity associated with physical fuel manufacturing.
Cash Position and Spending Outlook
Chief Financial Officer Brian Thrasher said Terrestrial Energy ended the quarter with $283.4 million of cash equivalents and short- and long-term investments, compared with $289.9 million at the end of the first quarter.
Quarterly cash burn was $6.4 million, or roughly $2.2 million per month, down from $7.9 million, or $2.6 million per month, in the first quarter. Thrasher attributed the decline largely to the timing of testing activities.
Research and development expense declined by about $1.1 million sequentially, reflecting timing and scope changes in testing programs. General and administrative expense rose about $700,000, primarily due to a $500,000 increase in stock-based compensation associated with expanding headcount.
Thrasher said the company expects cash burn to increase in the second half as it advances RELLIS site analysis, testing programs, project activities and organizational development. The company reported no change in its issued and outstanding share count during the quarter, though its fully diluted share count increased by about 300,000 shares due to stock-option grants. Thrasher said Terrestrial Energy had no debt and modest current liabilities and lease obligations.
About Terrestrial Energy (NASDAQ:IMSR)
Terrestrial Energy Inc produces carbon free nuclear energy in North Carolina and internationally. The company was founded in 2013 and is headquartered in Charlotte, North Carolina.
