Westwater Resources, Inc. (Nasdaq:WWR) (the
“Company”), an energy metals exploration and development company,
announced today its results for the third quarter of fiscal year
2017, and also discussed its business outlook and its energy metals
business development for the remainder of 2017 and calendar year
2018.
Christopher M. Jones, President and Chief
Executive Officer, said, “Continued work to strengthen our
financing capacity and lithium projects portfolio, a clay deposit
discovery, reclamation success in Texas and a strong working
capital position combine to give us a robust platform for growth
well into 2018. Also, Cameco’s surprise announcement
suspending production at two operations on November 8, effectively
removing over 8% of the world’s production of uranium, has resulted
in an immediate 10% increase in the price of uranium. This is
good for the uranium industry.”
Highlights for 3Q-2017 and to
Date
- The Company changed its name from Uranium Resources to
Westwater Resources on August 21.
- We completed our Phase 1 exploration drilling and acquired
water rights at the Columbus Basin lithium brine project in
Nevada.
- We announced positive lithium results at the Sal Rica Project
in Utah.
- We announced the discovery of a new calcium montmorillonite
clay deposit at our Tulu Tepe property in Turkey.
- We entered into a common stock purchase agreement (“CSPA”) with
Aspire Capital Fund, LLC (“Aspire Capital”) to sell up to $22.0
million in the aggregate of the Company’s common stock on an
ongoing basis over a term of 30 months. The Company will
control the timing and amount of sales to Aspire Capital, and at a
price based on market prices at that time.
- Pursuant to the CSPA, on September 27, 2017, Aspire Capital
made an initial purchase of 1,428,571 shares of common stock for
which the Company received net proceeds of $2.0 million.
- The Company terminated its listing on the Australian Stock
Exchange (“ASX”) as part of our continuing cost reduction
process.
- Cash and working capital balances at September 30, 2017 were
$7.2 million and $8.2 million, respectively.
Financial Overview
- Net cash used in operations. Net cash used in operating
activities was $8.9 million for the nine months ended September 30,
2017, as compared with $9.8 million for the same period in
2016. The decrease of $0.9 million in cash used is mostly due
to a decrease in interest expense of $0.3 million, an increase in
interest income of $0.4 million and an aggregated decrease in
operating expenses of $0.3 million.
- Operating expenses. For the three and nine months ended
September 30, 2017, mineral property expenses increased by $0.3
million and $0.7 million, respectively, from the corresponding
periods during 2016. For the three-month period, exploration
costs increased by $0.3 million. For the nine-month period,
exploration costs increased by $0.5 million, Rosita restoration
costs increased by $0.2 million and land and maintenance costs
increased by $0.3 million, and Temrezli standby costs decreased by
$0.3 million. For the three months ended September 30, 2017,
general and administrative charges decreased by $0.2 million
primarily due to decreases in salaries expense and stock
compensation expense, which were partially offset by an increase in
legal, accounting and public company expenses. For the
nine-month period, general and administrative charges decreased by
$1.1 million primarily due to decreases in stock compensation
expense, salaries, consulting and professional services.
- Net loss. Consolidated net loss for the three months
ended September 30, 2017, was $3.0 million, or $0.12 per share, as
compared with $3.7 million, or $0.38 per share for the same period
in 2016. For the three-month period, the decrease of $0.7
million from the prior period was mostly the result of a decrease
in interest expense of $0.7 million. For the nine months, the
loss was $3.8 million, or $0.16 per share, as compared with $12.6
million, or $1.81 per share for the same period in 2016. The
decrease of $8.8 million from the prior period was mostly the
result of a gain on the disposal of our Churchrock and Crownpoint
projects of $4.9 million, a decrease in interest expense of $2.2
million, a decrease in the impairment of uranium properties of $0.5
million, a decrease in general administrative expenses of $1.1
million, a decrease in commitment fees of $0.3 million and a
decrease of $0.1 million due to a loss on the sale of marketable
securities in 2016. Offsetting these amounts was an
increase in mineral property expenses of $0.7 million.
- Cash and working capital. Continued working capital
improvements resulted in an improved cash balance of $7.2 million
at September 30, 2017 and working capital of $8.2 million compared
to a working capital deficit of $4.3 million at December 31,
2016. The increase in working capital of $12.5 million during
the nine months was primarily due to the completion of two equity
offerings in the first quarter of 2017, net proceeds of $2.0
million from common shares sold to Aspire Capital in the third
quarter of 2017 and the completion of the sale of our Churchrock
and Crownpoint projects to Laramide in January 2017. The cash
balance as of October 31, 2017 was $6.1 million.
- Shares outstanding. Total shares outstanding as of
November 9, 2017 were 27,612,624.
Table 1: Financial Summary
(unaudited)
($ and Shares in 000's, Except Per Share) |
9-Mo 2017 |
3Q 2017 |
2Q 2017 |
1Q 2017 |
9-Mo 2016 |
3Q 2016 |
2Q 2016 |
1Q 2016 |
9-Mo Variance |
3-Mo Variance |
Net Cash Used in Operations |
$ |
(8,876 |
) |
$ |
(2,542 |
) |
$ |
(3,047 |
) |
$ |
(3,287 |
) |
$ |
(9,854 |
) |
$ |
(4,614 |
) |
$ |
(3,035 |
) |
$ |
(2,205 |
) |
-10 |
% |
-45 |
% |
Mineral Property Expenses |
$ |
(3,637 |
) |
$ |
(1,316 |
) |
$ |
(1,552 |
) |
$ |
(769 |
) |
$ |
(2,908 |
) |
$ |
(1,039 |
) |
$ |
(1,138 |
) |
$ |
(731 |
) |
25 |
% |
27 |
% |
General and Administrative, including Non-Cash Stock Comp |
$ |
(4,976 |
) |
$ |
(1,700 |
) |
$ |
(1,608 |
) |
$ |
(1,668 |
) |
$ |
(6,035 |
) |
$ |
(1,883 |
) |
$ |
(2,007 |
) |
$ |
(2,145 |
) |
-18 |
% |
-10 |
% |
Net Income/(Loss) |
$ |
(3,778 |
) |
$ |
(2,983 |
) |
$ |
(2,639 |
) |
$ |
1,844 |
|
$ |
(12,624 |
) |
$ |
(3,744 |
) |
$ |
(4,607 |
) |
$ |
(4,273 |
) |
-70 |
% |
-20 |
% |
Net Income/(Loss) Per Share |
$ |
(0.16 |
) |
$ |
(0.12 |
) |
$ |
(0.11 |
) |
$ |
0.09 |
|
$ |
(1.81 |
) |
$ |
(0.38 |
) |
$ |
(0.75 |
) |
$ |
(0.86 |
) |
-91 |
% |
-68 |
% |
Weighted Avg. Shares Outstanding |
|
23,764 |
|
|
25,037 |
|
|
24,615 |
|
|
21,602 |
|
|
6,964 |
|
|
9,741 |
|
|
6,152 |
|
|
4,968 |
|
241 |
% |
157 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Business Update
Lithium Business
Over the past year, WWR has expanded its energy metals business
by leveraging its existing business operations and technical
capabilities. Those efforts have resulted in the acquisition
of three lithium brine exploration projects -- Columbus Basin, Sal
Rica, and now Railroad Valley -- totaling over 36,730 acres of
mineral claims and representing one of the largest lithium brine
exploration holdings in North America.
WWR will integrate its newest property, known as the Railroad
Valley Project, into the Company’s ongoing lithium exploration
activities in Nevada and Utah. Studies underway for the
project include additional surface sediment sampling, and
acquisition of relevant geophysical data generated from both
historical and current oil exploration within the basin for
reinterpretation. Further exploration work will be dependent
on results from these studies.
Water rights are critical to the production of brines, and water
law in the dry southwest United States is robust. In
order to secure WWR’s ability to produce any brines found on its
Columbus Basin Project, the Company has successfully acquired all
of the remaining water rights in this basin. Applications for
water rights are in queue for the Sal Rica and Railroad Valley
projects to secure WWR’s production capacity in those basins should
economic quantities of brines be discovered there.
On July 31, 2017, the Company announced the commencement of
exploration drilling at the Columbus Basin lithium brine
project. On October 31, 2017, the Company announced that
Phase 1 drilling was complete with the following results:
- Three core holes were completed at the 14,200-acre Columbus
Basin Project for a total of 3,870 ft. of drilling. The
maximum drilled depth was 1,680 ft. and fluids with high total
dissolved solids (TDS) were identified in all three holes.
- In-house laboratory work performed at our Kingsville, Texas
facility returned lithium concentrations of up to 43 parts per
million (ppm) and boron concentrations of up to 173 ppm.
- Planning is underway for a Phase 2 exploration program at the
Columbus Basin Project. Westwater also notes that brines have been
discovered near our claims by Caeneus Minerals Ltd. (“Caeneus”)
with reported concentrations of up to 95.9 ppm lithium and 1,100
ppm boron at depths of 260-340 feet. As a result of our results and
those reported by Caeneus, Westwater has filed a Notice of Intent
to drill with the Bureau of Land Management (BLM) on the nearby
Nina Claim Block of our Columbus Basin Project. Westwater
will drill this block as part of the Phase 2 exploration
program.
The Company is in the process of applying for an exploration
permit on its Sal Rica Project. Earlier sample results
indicate widespread lithium values. The intent of the new
program at Sal Rica will be to further define the extent and
quality of lithium in brines, and is scheduled for early 2018,
depending upon the timing of receipt of permits to drill there.
Uranium Business
Continuing reclamation work at our Texas
properties has resulted in the approval by the Texas Commission on
Environmental Quality (“TCEQ”) on July 28, 2017 of bond reduction
in the amount of $318,000 at the Rosita project. In addition,
subsequent to the end of the quarter on November 6, the TCEQ
advised Westwater that groundwater restoration at the Vasquez
Project was deemed complete. This now paves the way for final
plugging and reclamation of the site. These important milestones
for the Company demonstrate our continuing commitment to the
communities where we work, and is a testament to the hard and
high-quality work by our team in Texas.
Further to the successful environmental work,
the Company secured the following:
- A $200,000 bond release for relinquishment of the
Cebolleta/Juan Tafoya Project exploration license after
certification by the State of New Mexico that no disturbance had
occurred; and
- A $50,000 bond release for the successful reclamation of a
circa 1980’s uranium pilot plant after certification by the State
of Wyoming.
Clay Business
Westwater announced the discovery of over 400,000 tons of high
quality calcium montmorillonite clay at its Tulu Tepe site in
Turkey. This clay is currently being tested for
suitability in industrial and consumer applications. Testing
is expected to be completed in the fourth quarter of 2017,
whereupon markets for the clay can be evaluated and targeted.
Corporate Business
On September 25, 2017, the Company entered into the CSPA with
Aspire Capital to sell up to $22.0 million in the aggregate of the
Company’s common stock on an ongoing basis when required by the
Company over a term of 30 months. The Company will control
the timing and amount of sales to Aspire Capital, and at a price
based on market prices at that time. As consideration for
Aspire Capital entering into the purchase agreement, the Company
issued 880,000 shares of its common stock to Aspire Capital.
The shares of common stock subject to the CSPA were registered
pursuant to the Company’s effective shelf registration statement on
Form S-3.
On September 27, 2017, pursuant to the CSPA and after
satisfaction of certain commencement conditions, Aspire Capital
made an initial purchase of 1,428,571 shares of common stock for
which the Company received net proceeds of $2.0 million.
There were no other sales of common stock pursuant to the CSPA and
as of November 10, 2017, $20.0 million of the aggregate $22.0
million remained available for future sales under the CSPA.
On October 20, 2017 the Company terminated its listing on the
Australian Stock Exchange (“ASX”). Trading volumes had
significantly diminished since the original listing in November
2015, as the majority of ASX shareholders had transferred their
shares to the Nasdaq stock exchange and capital raising efforts in
Australia had been unsuccessful. Shareholders on the ASX were
given the option of transferring their ownership interest to
NASDAQ. The Company will save costs of approximately $50,000
annually as a result of the delisting.
Outlook 2017 and 2018
The Company’s current cash, plus funding
available under the Cantor ATM Sales Agreement and the Aspire
Capital CSPA, is expected to fund critical operations through
year-end 2017 and into the third quarter of 2018. As an
exploration and development company with no current production, the
Company expects to obtain additional capital market financing,
including the possible further sale of non-core assets, to fund its
lithium exploration program and to operate the Company through
2018. The Company’s goals for the remainder of 2017 and 2018 are as
follows:
- Lithium: Continue to develop and implement
exploration plans for the Company’s lithium assets in Nevada and
Utah.
- Uranium: Maintain our low-cost uranium
portfolio and continue reclamation work in Texas.
- Ongoing Cost Rationalization Efforts: Continue
to reduce operating and general and administrative
expenditures.
- M&A Efforts Continue. Maintain an
opportunistic posture in mergers and acquisitions by focusing on
low-cost, high value development opportunities in the resource
sector.
About Westwater Resources
WWR (formerly Uranium Resources, Inc.) is
focused on developing energy-related metals. The Company has
developed a dominant land position in three prospective lithium
brine basins in Nevada and Utah in preparation for exploration and
potential development of any lithium resources that may be
discovered there. In addition, WWR remains focused on
advancing the Temrezli in-situ recovery (ISR) uranium project in
Central Turkey when uranium prices permit economic development of
this project. WWR controls extensive exploration properties in
Turkey under eight exploration and operating licenses covering
approximately 39,000 acres (over 16,000 ha) with numerous
exploration targets, including the potential satellite Sefaatli
Project, which is 30 miles (48 km) southwest of the Temrezli
Project. In Texas, the Company has two licensed and currently idled
uranium processing facilities and approximately 11,000 acres (4,400
ha) of prospective ISR uranium projects. In New Mexico, the Company
controls mineral rights encompassing approximately 186,000 acres
(75,300 ha) in the prolific Grants Mineral Belt, which is one of
the largest concentrations of sandstone-hosted uranium deposits in
the world. Incorporated in 1977, WWR also owns an extensive
information database of historic drill hole logs, assay
certificates, maps and technical reports for uranium properties
located in the Western United States.
Cautionary Statement
This news release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are subject to
risks, uncertainties and assumptions and are identified by words
such as “expects,” “estimates,” “intent,” “projects,”
“anticipates,” “believes,” “should,” “could,” “will,” and other
similar words. All statements addressing events or developments
that the Company expects or anticipates will occur in the future,
including but not limited to statements relating to the Company’s
growth, developments at the Company’s projects, including future
exploration costs and results, intent and timing of new and
existing programs and testing, expected savings from delisting from
the ASX and the Company’s liquidity and cash demands, including
future capital markets financing and disposition activities, are
forward-looking statements. Because they are forward-looking,
they should be evaluated in light of important risk factors and
uncertainties. These risk factors and uncertainties include,
but are not limited to, (a) estimated or expected net cash used in
operations, mineral property expenses, general and administrative
expenses, net loss, and cash and working capital positions for the
twelve months ended December 31, 2017, (b) the Company’s ability to
raise additional capital in the future; (c) spot price and
long-term contract price of uranium, lithium and calcium
montmorillonite clay; (d) risks associated with the Company’s
foreign operations, (e) operating conditions at the Company’s
projects; (f) government and tribal regulation of the uranium
industry, the lithium industry, and the power industry; (g)
world-wide uranium and lithium supply and demand, including the
supply and demand for lithium-based batteries; (h) maintaining
sufficient financial assurance in the form of sufficiently
collateralized surety instruments; (i) unanticipated geological,
processing, regulatory and legal or other problems the Company may
encounter in the jurisdictions where the Company operates,
including in Texas, New Mexico, Utah, Nevada and Turkey; (j) the
ability of the Company to enter into and successfully close
acquisitions or other material transactions; (k) the results
of the Company’s lithium brine exploration activities at the
Columbus Basin, Railroad Valley and Sal Rica Projects, (l) the
ability of the Company to negotiate an extension on the Cebolleta
lease and (m) other factors which are more fully described in the
Company’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, and other filings with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties
materialize, or should any of the Company’s underlying assumptions
prove incorrect, actual results may vary materially from those
currently anticipated. In addition, undue reliance should not be
placed on the Company’s forward-looking statements. Except as
required by law, the Company disclaims any obligation to update or
publicly announce any revisions to any of the forward-looking
statements contained in this news release.
Westwater Resources Contact: Christopher M.
Jones, President and CEO 303.531.0480
Jeff Vigil, VP Finance and CFO 303.531.0481
Email: Info@WestwaterResources.netWebsite:
www.WestwaterResources.net
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