Company: LEU
Filing Date: 2025-02-07
Form Type: 10-K
Source: 0001065059-25-000006
Chunk: 4

Company: CENTRUS ENERGY CORP
Filing Date: 2025-02-07
Form: 10-K
Item: Item 1
Chunk 4
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stration Contract are ongoing. Because of 5B Cylinder supply issues, the DOE elected to change the scope of the HALEU Demonstration Contract and transitioned the operational portion of the contract to the HALEU Operation Contract after a competitive solicitation on November 10, 2022 with work starting on December 1, 2022. The initial base contract value was approximately $150.0 million in two phases through 2024. Phase 1, which was completed in November 2023, included an approximately $30.0 million cost-share contribution from Centrus matched by approximately $30.0 million from the DOE to complete construction of the cascade support systems, begin operations and produce the initial 20 kilograms of HALEU UF6.

Phase 2 of the contract includes continued operations and maintenance and production for a full year at an annual production rate of 900 kilograms of HALEU UF6. DOE owns the HALEU produced from the demonstration cascade. Under Phase 2, Centrus is being compensated on a cost-plus-incentive-fee basis, with an initial Phase 2 contract value of approximately $90.0 million. DOE has increased the Phase 2 contract value and related funding to $129.0 million and extended the Phase 2 period of performance to June 30, 2025. Pursuant to an amendment to our lease for the Piketon facility, the DOE has assumed all D&D liabilities arising out of the HALEU Operation Contract.

Under the HALEU Operation Contract, DOE is contractually obligated to provide the 5B Cylinders necessary to collect the output of the cascade, but supply chain challenges created difficulties for DOE in securing enough 5B Cylinders for the entire production year under Phase 2. To support the DOE in mitigating the risk of delays in delivery of 5B Cylinders, the Company received technical direction and a contract modification from the DOE to allow it to procure compliant 5B Cylinders and components from a third party but the shortage of 5B Cylinders slowed the production rate which has since been mitigated. The contractual obligation to furnish compliant 5B Cylinders under the HALEU Operation Contract continues to rest with the DOE. During time periods when 5B Cylinders were insufficient, the Company was able to continue operations of the cascade, but did not produce HALEU as it did not have cylinders to store the enriched uranium. For further details refer to Part 1, Item