Item 1.01 Entry into Material Agreement
On November 30, 2022, American Centrifuge Operating, LLC, a Delaware limited
liability company ("ACO") and a wholly-owned subsidiary of Centrus Energy Corp.
("Centrus"), signed a definitized contract (the "Contract") with the United
States Department of Energy (the "Department") to pioneer production of
High-Assay, Low-Enriched Uranium ("HALEU") at its facility leased from the
Department in Piketon, Ohio. As previously disclosed by Centrus on the Current
Report on Form 8-K filed on November 14, 2022, with the Securities Exchange
Commission, ACO was selected for the competitively-awarded contract by the
Department on November 10, 2022. As part of a previous, cost-shared contract
awarded in 2019, Centrus has been deploying its AC100M advanced uranium
enrichment centrifuges in Piketon and has secured a license amendment from the
U.S. Nuclear Regulatory Commission (the "NRC"), making it the only NRC-licensed
HALEU production site in the world.
The base contract value is approximately $150 million in two phases through
2024. Phase One includes an approximately $30 million cost share contribution
from Centrus matched by approximately $30 million from the Department to finish
construction, bring the cascade online, and demonstrate production of 20
kilograms of 19.75% enriched HALEU by December 31, 2023.
In Phase Two of the Contract, ACO will continue production for a full year at an
expected annual production rate of 900 kilograms of HALEU. The Department will
own the HALEU produced from the demonstration cascade and Centrus will be
compensated on a cost-plus-incentive-fee basis, with an expected Phase Two
contract value of approximately $90 million, subject to appropriations. The
Contract also gives the Department options to obtain up to nine additional years
of production from the cascade beyond the base contract on a cost plus incentive
fee basis; those options are at the Department's sole discretion and subject to
the availability of Congressional appropriations.
Further, on November 30, 2022, United States Enrichment Corporation, a Delaware
corporation ("Enrichment"), a wholly-owned subsidiary of Centrus, entered into
an Amendment to the Lease Agreement ("Lease Amendment") between Enrichment and
the Department for the lease of the gas centrifuge enrichment plant facilities
in Piketon, Ohio, for the American Centrifuge plant and related personal
property (the "GCEP Lease"). ACO is a sub-lessee of the GCEP Lease.
Pursuant to the amendment, the Department agreed to assume all liabilities for
the decontamination and decommissioning of the facilities and equipment
installed and any work performed, under the Contract with the Department. The
amendment also provided for the term of the GCEP Lease, which currently expires
December 31, 2025, to be automatically extended in the event the Department
exercises its option(s) to extend the term of the Contract beyond the completion
of Phase Two, the expiration of the lease term shall extend to one calendar year
beyond the last day of the applicable Contract option period. Except for these
amendments, all other terms of the GCEP Lease, as amended, remain unchanged.
The foregoing descriptions of the Contract and the Lease Amendment do not
purport to be complete and are qualified in their entirety by the text of the
Contract and the Lease Amendment, copies of which are expected to be filed as
exhibits to Centrus' annual report on Form 10-K for the year ending December 31,
2022.
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Centrus, or its subsidiaries, are also a party or parties to a number of other
agreements or arrangements with the United States government, as described in
Centrus' annual report on Form 10-K and other filings with the Securities and
Exchange Commission.
Item 7.01 Regulation FD Disclosure
On December 1, 2022, Centrus issued a press release announcing the event
described in Item 1.01 of this report. A copy of this press release is included
as Exhibit 99.1 to this report.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1,
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liabilities under that Section and shall not be deemed to be incorporated by
reference into any filing of Centrus under the Securities Act of 1933 or the
Exchange Act. A copy of the press release issued by Centrus in relation to the
services agreement is furnished herewith pursuant to Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
99.1 Press Release dated December 01, 2022
101 Cover Page Interactive Data File (embedded within the Inline XBRL Document)
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