Lightbridge Corp ($LTBR) shares exploded this morning, trading four million shares in the first hour after sitting dormant for years. Lightbridge revealed via press release that the Nuclear Regulatory Commission (NRC) had received a joint letter from four large electric utility companies. This letter was being submitted in advance of an expected application to the NRC in 2017 for use of the Lightbridge fuel lead test assemblies in an "operating US pressurized water reactor as early as 2020." The Commission posted the utilities' expression of interest in Lightbridge's fuel and supporting documents on its official web site.
The surprise to investors was reflected in the sheer volume of trades today because volume had been only about 40,000 per day, but during morning trading today Lightbridge had four million in the first hour. It’s hard for me to believe no one saw this coming, and Lightbridge is a speck of a company with a market cap of just $40M – meaning that any of these electric companies could write a check for the entire company and the patents associated with the technology. This is what all the volume is about – I don’t think it’s about the revenue the company intends to garner over time, but the fact that someone will step in to buy them.
The Illuminating Technology Behind Lightbridge
The unique part of the technology Lightbridge is developing revolves around an “advanced metallic nuclear fuel rod that utilizes a unique fuel composition fuel rod geometry to provide increased safety margins and improved economics for Light Water Reactors,” according to a PDF in the recent press release.
The press went on to say “The Lightbridge® advanced metallic fuel rod has significantly improved strength and robustness compared to conventional pellet-in-tube fuel designs. This is largely due to the fact that the fuel rod is monolithic and each component shares all mechanical loads, greatly reducing the importance of the cladding as pertains to maintaining structural integrity and fuel coolability. The increased mechanical toughness of the fuel, along with a simplified fuel rod fabrication process results in a fuel that is much less likely to undergo damage from mishandling during fabrication, transportation, and fuel maneuvers on site”.
Lightbridge will get much attention today as an active high percentage upside mover. I think it’s very risky to short shares at $2.00, and adding the difficulty in getting a borrow (the ability to short shares) will keep shares higher, but the real story is uncovering who the electric utilities are who jointly submitted the letter which has yet to be disclosed. Once this is out it will make more sense who the likely suitor for Lightbridge will be.
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