Greetings, and welcome to the 5E Advanced Materials Shareholder Update Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Davis Snyder, with Investor Relations. Thank you, Mr. Snyder. You may begin.
Good afternoon. Thank you for joining us today for 5E Advanced Materials Investor Update Conference Call. During this call, management will be referencing our recent press releases and company developments, and a webcast presentation that can be found in the Investor Relations section of our website. If anyone needs a copy of the supplemental presentation, you may contact Alpha IR Group at feam@alpha-ir.com. Please turn to slides 2 and 3 of the presentation, where we've presented our legal disclaimers. We want to remind everyone that remarks made on today's conference call will contain forward-looking statements, including our aim to achieve a successful recapitalization plan restructuring and future results, costs, production capacity, market dynamics, liquidity, cash spending, and other items. Our actual results may differ materially and adversely from those projected or discussed in these forward-looking statements.
Additional information concerning factors that could cause the results to differ materially and adversely from these forward-looking statements are contained in prior press releases, as well as the disclosures in our public filings with the SEC, including our Preliminary Proxy Statement related to the special meeting of shareholders to approve the out-of-court restructuring. The company is under no obligation to update forward-looking statements. Today's call may also include a discussion of non-GAAP financial measures, as that term is defined in Regulation G. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. This afternoon's conference call is led by 5E's Chief Executive Officer, Susan Brennan, and Chief Financial Officer, Paul Weibel. Given the current proxy process that is underway, we will only be offering management commentary today and will not be hosting a Q&A session.
Please turn to slide four of the PowerPoint, and I'll now turn the call over to Susan. Susan?
Thank you, Davis, and thank you everyone for joining us today. We are hosting this special call for our investors and analysts to provide an update on a number of key developments. Today, we are going to discuss some of the critical milestones that the company has recently achieved and what that means for our go-forward strategy. We will provide an action-based roadmap detailing the launch of operations at our small-scale boron facility. We will then follow that with a more detailed discussion of the company's liquidity position, the restructuring agreement, and the business's future capital needs. And finally, we will walk through the details of our upcoming special meeting and how our shareholders can cast their votes to approve the recapitalization plan. First, I am proud to say that since we last spoke in August, 5E Advanced Materials has now obtained EPA approval, which marks significant progress.
This was admittedly a long process, but as soon as we had authorization to conduct the step rate testing, our team moved quickly and delivered it ahead of schedule, which helped us secure the approval in this calendar year. Simply put, this EPA approval means we have a license to operate and can, with the benefit of our pre-planning, launch mining operations. These mining operations will make us the first commercial-scale boric acid producer in decades, providing a potential springboard for the creation of meaningful value of our shareholders and stakeholders. This brings us to an important inflection point in the business, so let's talk briefly about the next steps and where we are from a liquidity position. In the interest of transparency, 5E currently has approximately $4 million of cash on hand.
To turn on operations and ramp mineral production, we will obviously need to engage with both short-term and long-term strategic capital providers, including offtake players. The proposals we are asking you to vote on now will allow us to address our short-term funding needs and begin operations, while also providing an important bridge towards solving our long-term liquidity needs. Along these lines, 5E has already begun to schedule roadshows with supportive investment banks to promote and broaden our capital opportunity set. Given the fundamentally strong boric acid demand dynamics, near-term operating facility and permits in hand, we believe we have a strong and compelling value proposition to offer, which includes the potential for over $100 million per year in EBITDA when we achieve commercial production at scale. Please turn to slide five of the PowerPoint.
What we have immediately ahead of us in the first calendar quarter of 2024 is a graduated operating plan, bridging us from today to being fully operational in our small-scale facility and producing boric acid by the beginning of April. Our operating timeline, which has 4 major milestones, is as follows: In the first week of January, we will begin conditioning the well field by injecting fluids, which officially marks the commencement of our mining operations. Next, we will initiate the production of PLS, the liquid that contains boron and lithium, over the following 6-7 weeks. As we pull the solution out of the ground, we will concurrently look to convert the PLS into boric acid and lithium carbonate at laboratory scale. Third, we will concurrently complete the necessary remaining internal electrical work at the processing plant.
This electrical work is scheduled to take place from early January through February. 5E is positioned to process our mining solution by the end of calendar year Q1. Lastly, and after the completion of electrical work, we will commission the final areas of the processing plant, where we expect to produce boric acid and lithium carbonate from the plant itself. All actions between now and the beginning of April have one goal in mind, to quickly bring the small scale boron facility online and into production. With the timelines of operations established, I'd like to have Paul walk through our new financing plans. Paul?
Thanks, Susan. Please turn to slide 6 of the presentation. I will now provide a brief background and walk through the proposed transaction Restructuring Support Agreement that was announced last week, and discuss future financing plans now that we have the EPA authorization in hand. Beginning this past spring, 5E worked to identify appropriate funding solutions to address our liquidity profile. With the EPA approval still an open item, capital providers were reluctant to invest. As time progressed, even with the cost savings measures implemented, 5E approached our $10 million liquidity covenant and began discussions with our senior secured lender. The combination of the EPA status and the approaching liquidity floor required a commercial resolution, and we believe the proposed recapitalization plan is the optimal available strategic alternative.
As detailed in our December 6 press release, 5E, its secured lender, and a group of strategic investors, agreed to a path providing for a restructuring and funding package. This package, which was approved unanimously by our board of directors, grants relief from the $10 million liquidity covenant and provides for an injection of immediate capital to allow for the commencement of mining operations and to work to solve our Restructuring Support Agreement allows existing investors to approve this path by voting yes at our special meeting. As part of the recapitalization plan, the company could issue up to 35 million of new equity common stock with a $10 million backstop, and the new equity investor group will acquire 50% of the outstanding secured debt.
These shares will be priced at $1.025 per share, a price that we derived based on a 50% discount to the pre-announced 5-day trailing VWAP of 5E common stock. This equity issuance will be conducted in a private placement. In conjunction with the new equity issuance, the company's senior secured convertible notes will then be amended in the following ways: First, the conversion rate of the senior secured convertible note will be amended from $17.60 to $1.54. Second, 5E will receive a waiver of the existing minimum liquidity covenant through June 28, 2024. We had previously announced a temporary waiver of this condition as we worked to finalize the restructuring. Effective June 28, 2024, the liquidity covenant returns at $7.5 million, down from $10 million.
Restructuring Support Agreement calls to restate and amend the senior secured convertible note, which will remove the forced conversion feature, extend the maturity term by one year to August 2028, and step up the paid-in-kind interest rate from 6% to 10% to align with current market conditions. Now that we have walked through the pertinent details of what would change in our convertible note, I think it is important to outline the critical project development steps that the new equity capital may fund. Please turn to slide 7 of the presentation. Susan already outlined the operational roadmap earlier, and the new equity capital will immediately assist in funding that plan. Production of boric acid and lithium carbonate begins to unlock the value demonstrated in our Technical Report Summary.
Additionally, this capital will be deployed towards expanding the existing infrastructure and advancing our ability to grow the business to a commercial scale. As a reminder, in phase one of the project, after we have achieved the commencement of mining at the small scale facility, we'll be targeting commercial production of 90,000 short tons of boric acid and 1,100 short tons of lithium carbonate, potentially scaling to produce an estimated $101 million in annual EBITDA in the first full year of that commercial production. Further, the new equity capital will be deployed towards optimizing cost data for FEL-2 engineering after operation of the small scale facility, so that the company can move to a feasibility level study and advance the business.
As we bring our mineral resources out of the ground, we'll be positioned to take boric acid and put it through various product qualification processes with future customers. The product validation process is a key component to building these future co-commercial relationships. Having boric acid directly in our future customers' hands provides us with the opportunity to develop a tight set of customer technical specifications and positions us well relative to industry competition. Please turn to slide 8. Since early this year, we have been exploring capital and financial solutions to adequately fund our project to a commercial scale. Now, with the EPA in hand, an illustrative case may include a blended composition of funding sources, spanning across equity investment, project financing and debt, and mineral rights and royalty programs.
As we progress towards commercial production, we will be more strongly positioned to access funding with various government departments and federal agencies. Success here is likely to result in lower cost debt, grants, or project financing, helping to not only reduce our overall cost of capital, but boost project IRRs, particularly as the project scales and advances towards new expanded phases. To complete the proposed Restructuring Support Agreement, we have initiated a special shareholder vote. We filed our definitive proxy on December 18, and we'll hold the special meeting on January 12 next year. The date of record for this meeting is December 6. Please understand, we will need a favorable shareholder vote to facilitate this financing. If the vote fails, given 5E's liquidity position, we will have no other strategic alternative other than to file Chapter 11 bankruptcy.
Now, let me turn it back to Susan.
Thank you, Paul. Please turn to slide 9. The overall mining and battery material sector faced significant challenges in 2023, and 5E was no exception. We've seen lower commodity prices, higher interest rates, failed mergers and acquisitions, and in particular, a very difficult environment for small and micro-cap companies to raise capital. It's taken significant hard work and sacrifice by this team to persevere through these challenging macro headwinds. While we cannot predict the future market conditions, I believe we stand at a critical inflection point in our life cycle. Let me summarize. The long-awaited EPA approval authorizes 5E to commence mining and plant operations. Our proposed recapitalization plan, which was unanimously approved by our board of directors, is the optimal solution to solve our short-term funding needs. We have an aggressive 3-month plan to commission the plant and finally start production.
That initial production will support not only the advancement of what we anticipate will be a robust commercial program, but also should facilitate for long-term capital solutions, as Paul outlined. Most importantly, our long-term investment thesis and the robust project economics that we have projected are expected to remain intact. The materials that we will produce will play an important role in the U.S. reshoring boron and lithium, decarbonization, and the domestic production required for the clean energy economy. With our multi-stage project execution model, 5E is focused on becoming a globally significant advanced material business with an overall projected life of mine revenue of $37 billion. We need your support to bring the company's vision to a reality. We implore our stockholders to vote in favor of the various proposals at the upcoming special meeting. I'd like to end on slide 10.
As always, I'd like to thank the entire 5E Advanced Materials team for their dedication and hard work. This team has worked incredibly hard to operate on very tight budgets and timelines for the last few months, and I cannot thank them enough. We look forward to what we believe will be a very exciting year in 2024, as we seek to build long-term value for our shareholders. I am strongly asking for your support and your positive vote. This could-