Company Will Update Investors on Its Coosa
Graphite Project and Ongoing Construction of Pilot Plant in
Germany
Westwater Resources (NASDAQ: WWR), an energy materials
development company, today announced its results for the third
quarter ended September 30, 2020 and provided an update on its
materials development business.
Founded four decades ago and originally incorporated to mine
uranium, Westwater Resources has been reinvented as a 21st century
energy materials development company focused on the production of
battery-grade graphite. The Company’s Coosa Graphite Project is the
most advanced graphite project in the United States and, when
developed, will produce high purity battery-grade graphite, a
material that is essential for the components of high-technology
energy applications such as electric automobiles.
Westwater recently announced delivery of 30 metric tonnes of
natural flake graphite concentrate at pilot plant contractor
Dorfner Anzaplan’s facility in Hirschau, Germany. This material is
being utilized in the Company’s pilot plant facilities presently
under construction in Germany, upstate New York and Illinois.
Operation of the pilot plants is expected to commence this month
and continue through March 2021.
Westwater continues to develop a proprietary process for the
production of non-Chinese battery-grade graphite. The Company has
filed a provisional patent application with the U.S. Patent and
Trademark Office for its proprietary graphite purification
technology, which produces battery-grade graphite with a more
sustainable environmental footprint than that produced in China.
Independent performance testing of Westwater’s ULTRA-CSPG™ (Coated
Spherical Purified Graphite or "CSPG”) material produced in a
laboratory setting shows that it performs as well or better than
benchmark commercially available natural flake and synthetic
materials. Independent performance testing of Westwater’s
ULTRA-PMG™ (Purified Micronized Graphite or “PMG”) material has
also shown outstanding resistivity values as a conductivity
enhancer.
During the third quarter, Westwater added to its management team
by appointing Jay Wago as Vice President of Sales and Marketing.
Mr. Wago has years of solid experience in the battery materials
business, and he has been tasked with bolstering the Company’s
marketing strategy to create greater awareness of Westwater’s
American-made graphite battery material to end-users worldwide. The
Westwater marketing team, under Mr. Wago’s direction, is working to
place battery-grade graphite products produced during the pilot
plant program in the hands of potential customers.
On September 8, 2020, Westwater entered into a Letter of Intent
to sell its U.S. uranium business to enCore Energy Corp. of
Vancouver, BC, a Toronto Venture Exchange-listed company
(TSX.V:EU). Westwater will receive approximately $2 million in
shares of enCore stock and will retain royalty interests on its
former New Mexico properties. This sale is expected to eliminate
approximately $4 million in annual expenditures by the Company and
nearly $7.8 million in liabilities based on September 30, 2020 book
values. The transaction is expected to close on or before December
31, 2020. Westwater will retain its interests in its uranium
business that is the subject of an international arbitration with
the Republic of Turkey.
On September 30, 2020, the U.S. President issued an executive
order addressing the threat to the United States domestic supply
chain of reliance on critical minerals from foreign adversaries and
declaring such reliance a national emergency. The critical minerals
referred to in the executive order were previously identified by
the Department of Interior in May 2018, and include both natural
graphite and vanadium. The executive order highlights the
importance of Westwater’s plans to develop the Coosa Graphite
Deposit in east-central Alabama, where the Company has also
discovered widespread and significant levels of vanadium
mineralization. In 2021, Westwater expects to commence further
exploration for vanadium at the Coosa Graphite Project.
“Our management team possesses a unique combination of battery
materials knowledge and extensive project-execution experience
alongside manufacturing and processing expertise. This expertise
spans everything from graphite to precious metals to energy
materials,” said Chris Jones, CEO of Westwater Resources. “Coupled
with decades of capital markets experience, we have what we need to
build a powerful presence in the new energy marketplace. In the
third quarter of 2020 we reached a number of significant
milestones, and I believe these milestones position our Company for
growth throughout 2021. We continue to execute our business plan
without pause.”
FINANCIAL SUMMARY
Table 1: Financial Summary
(000's, Except Per Share)
3Q
2020
3Q
2019
3Q Variance
9-Mos
2020
9-Mos
2019
9-Mos
Variance
Net Cash Used in Consolidated
Operations
$ (4,069)
$ (2,868)
42%
$ (10,134)
$ (7,192)
41%
Product Development Expenses
$ (1,641)
$ (19)
n/m
$ (1,942)
$ (51)
n/m
General and Administrative
$ (1,536)
$ (1,003)
53%
$ (4,106)
$ (3,583)
15%
Net Loss from Continuing Operations
$ (3,362)
$ (1,170)
187%
$ (6,932)
$ (4,731)
47%
Net Loss from Discontinued Operations
$ (6,389)
$ (664)
862%
$ (8,573)
$ (3,052)
181%
Net Loss
$ (9,751)
$ (1,834)
432%
$ (15,505)
$ (7,783)
99%
Net Loss Per Share
$ (1.23)
$ (0.95)
29%
$ (2.63)
$ (4.66)
-43%
Weighted Avg. Shares Outstanding
7,905
1,931
309%
5,906
1,649
258%
- Net Cash Used in Consolidated
Operations. Net cash used in all operating activities
was $10.1 million for the nine months ended September 30, 2020, as
compared with $7.2 million for the same period in 2019. The $2.9
million increase in cash used in operating activities was primarily
due to increased graphite product development expenses, general and
administrative expenses and arbitration costs in 2020 compared to
2019. The increase of $1.2 million in cash used during the
three-months ended September 30, 2020 compared to the prior year
three-month period was primarily due to expenditures for graphite
product development activities.
- Product Development
Expenses. For the three and nine months ended September
30, 2020, product development expenses from continuing operations
increased by $1.6 million and $1.9 million, respectively, from the
corresponding periods in 2019. Management’s decision to discontinue
uranium and lithium operations in the third quarter of 2020 in
favor of expanding the Company’s graphite business has allowed for
the investment of an additional $1.6 million during the quarter for
product development costs, including pilot plant planning and
graphite product testing as part of its Coosa Graphite
Project.
- General and Administrative
Expenses. General and administrative expenses from
continuing operations for the three-and-nine-months ended September
30, 2020 increased by $0.5 million from their respective periods in
2019. The increase was due primarily to a reversal of executive
bonuses of approximately $0.4 million which lowered costs in
2019.
- Net Loss from Continuing
Operations. Represents operating activities related
primarily to the Company’s graphite business, corporate general and
administrative costs and arbitration costs related to the Company’s
damages claim against the Republic of Turkey. The increase in net
loss of $2.2 million for both the three-and-nine-month periods
ended September 30, 2020 compared to the respective prior year
periods in 2019 was primarily due to increased graphite product
development costs for product testing and pilot plant planning, and
increased arbitration costs.
- Net Loss from Discontinued
Operations. The uranium and lithium businesses have been
combined and reported as discontinued operations due to the
decision to sell the uranium business and discontinue investment in
the lithium business, both actions undertaken in the third quarter
of 2020 to orient additional resources to the graphite business.
Net loss from discontinued operations was $6.4 million and $8.6
million for the three-and-nine-month periods ended September 30,
2020, respectively. The $5.7 million and $5.5 million increases
from the respective prior periods in 2019 were largely due to a
$5.2 million impairment charge recorded against uranium property,
plant and equipment in the third quarter of 2020 as a result of the
terms of sale of the uranium assets and liabilities to enCore
Energy Corp.
- Cash and Working Capital from
Continuing Operations. At September 30, 2020 the
Company’s cash balances were $5.5 million and working capital from
continuing operations was $2.9 million. The Company’s cash balance
at October 31, 2020 was $53.3 million. Management believes the
significant treasury balance has mitigated the Company’s capital
risk through 2021 as the Company’s 2021 non-discretionary budget,
budgeted graphite pilot plant program and the remaining budgeted
product development initiatives are now fully funded. The Company
is pursuing project financing to support primary funding of the
capital expenditures for construction of the commercial plant set
to occur in the second half of 2021.
- Shares Outstanding. Total
shares outstanding are 19,021,859 at November 12, 2020.
Conference Call & Webcast Information
The conference call will be held on Thursday, November 12, 2020
at 11:00 am Eastern time (9:00 am Mountain Time).
DIAL-IN NUMBERS 1-800-319-4610 (US and Canada)
1-604-638-5340 (International) Conference ID: Westwater Resources
Conference Call
Hosting the call will be Christopher M. Jones, President and
Chief Executive Officer of Westwater Resources, who will be joined
by Jeffrey L. Vigil, Vice President-Finance and Chief Financial
Officer, and Dain McCoig, Vice President of Operations. Mr. Jones
will present an overview of the Company’s business, including
progress on the sale of its uranium business, and an update on the
Coosa Graphite Project, including the status of the construction of
the pilot plant and the federal government’s recent ruling on
graphite. Mr. Vigil will review the financial results and the
financial condition of the Company and Mr. McCoig will be available
for questions as part of the call.
The conference call and presentation will also be available via
a live webcast through the Company’s website,
www.WestwaterResources.net. A replay of the call will be available
on the Company’s website for a limited time and by phone using the
details below:
REPLAY NUMBERS 1-855-669-9658 (U.S. and Canada)
1-412-317-0088 (International) Replay Access Code 5521
About Westwater Resources
Westwater Resources (NASDAQ: WWR) is focused on developing
energy-related materials. The Company’s battery-materials projects
include the Coosa Graphite Project — the most advanced natural
flake graphite project in the contiguous United States — and the
associated Coosa Graphite Deposit located across 41,900 acres
(~17,000 hectares) in east-central Alabama. Commencement of pilot
plant operations is scheduled for the fourth quarter of 2020,
producing ULTRA-PMGTM, ULTRA-DEXDGTM and ULTRA-CSPGTM in quantities
that facilitate qualification testing by potential customers. For
more information, please visit www.westwaterresources.net.
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," "projects," "anticipates," "believes," "could,"
“scheduled,” and other similar words. All statements addressing
events or developments that WWR expects or anticipates will occur
in the future, including but not limited to the closing of the
transaction with enCore Energy Corp., the commencement of
operations at the Company’s proposed pilot plant facilities, future
production of battery graphite products, and activities involving
the Coosa Graphite Project and the Coosa Graphite Deposit. 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) the Company’s
ability to successfully construct and operate a pilot plant capable
of producing battery grade materials in quantities and on schedules
consistent with the Coosa Graphite Project business plan; (b) the
Company’s ability to raise additional capital in the future
including the ability to utilize existing financing facilities; (c)
spot price and long-term contract price of graphite and vanadium;
(d) risks associated with our operations and the operations of our
partners such as Dorfner Anzaplan, including the impact of COVID-19
and its potential impacts to the capital markets; (e) operating
conditions at the Company’s projects; (f) government and tribal
regulation of the graphite industry and the vanadium industry; (g)
world-wide graphite and vanadium supply and demand, including the
supply and demand for energy storage batteries; (h) unanticipated
geological, processing, regulatory and legal or other problems the
Company may encounter in the jurisdictions where the Company
operates or intends to operate, including but not limited to
Alabama; (i) the ability of the Company to enter into and
successfully close acquisitions or other material transactions,
including the proposed transaction to sell uranium assets in Texas
and New Mexico to enCore Energy; (j) any graphite or vanadium
discoveries not being in high-enough concentration to make it
economic to extract the minerals; (k) currently pending or new
litigation or arbitration; and (l) 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.
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Westwater Resources
Christopher M. Jones, President & CEO Phone: 303.531.0480
Jeffrey L. Vigil, Vice President Finance & CFO Phone:
303.531.0481 Email: Info@WestwaterResources.net
Product Sales Contact: Jay Wago, Vice President – Sales and
Marketing Phone: 303.531.0472
Email: Sales@westwaterresources.net
Investor Relations Porter, LeVay & Rose Michael
Porter Phone: 212.564.4700 Email: Westwater@plrinvest.com
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