Westwater Resources, Inc. (“WWR” or “the Company”) (Nasdaq:
WWR), an energy materials development company, today announced
its results for the third quarter of fiscal year 2018, along with a
business outlook and new developments in its energy materials
business for the remainder of 2018 and calendar year 2019.
Christopher M. Jones, President and Chief Executive Officer of
WWR, commented, “We are continuing to work towards the development
of battery grade graphite production capacity through our Coosa
Graphite Project, with a goal to advance cash flows for Westwater
Resources into 2021. This will place WWR in the battery graphite
market, enabling us to make products for all types of batteries,
including lithium ion batteries that are driving the transportation
market, as well as most other batteries throughout the marketplace
- from alkaline power cells, lead acid batteries, to all types of
rechargeable and non-rechargeable lithium batteries. At the same
time, we are developing our lithium exploration effort, which
provides us a second line of development for similar markets that
our graphite will serve (transportation, lithium ion batteries,
etc.). In addition, we retain our leverage to the rising uranium
price with properties and facilities in New Mexico and Texas.”
GRAPHITE BUSINESS DEVELOPMENT:
- We have over 2 dozen NDAs in place for
discussions with potential customers.
- On Oct. 24, 2018, WWR announced the
successful production of over 4 kilograms of Purified Micronized
Graphite (“PMG”). PMG is used as a conductivity enhancement
material for a variety of battery applications. Electrical
performance testing by an independent lab confirmed that the PMG
performs as well as expected. Samples of PMG are being tested by
two potential customers.
- Work continues with business, state and
local officials in Alabama to site, permit and explore business
incentives.
- The Company gave a well-received
presentation at Benchmark Mineral Intelligence’s ‘Graphite + Anodes
2018’ Conference, on October 23rd in Newport Beach, California. The
presentation included a Company overview and an update on
Westwater’s graphite business for potential customers.
LITHIUM EXPLORATION PROJECTS:
- On March 24, 2018, the Company
exercised an option to acquire 76 unpatented placer mining claims
covering an area of approximately 3,040 acres within the Columbus
Salt Marsh area of Esmeralda County, Nevada.
- The Company continues to develop its
water rights positions and geological knowledge on its three highly
prospective lithium-enriched brine properties in Nevada and Utah,
USA.
URANIUM PROJECTS:
- On Sept. 21st, 2018 the Company made
public an analysis of the current uranium market that backs up the
Company’s belief that a continued rise in uranium prices is likely.
The analysis notes that spot market prices for uranium concentrate
are up from $17/lb. to $27.50/lb. since 2016 and have increased
almost $5/lb. in 2018 alone. Market volumes for uranium concentrate
are almost 57 million pounds so far in 2018, the highest spot
market volume since 1992. This makes it clear there is strong
interest in securing uranium supplies at lower prices as a hedge.
Five-year futures have also risen to $35/lb. since August.
- On June 20, 2018, the Turkish
government notified the Company that the mining and exploration
licenses for its Temrezli and Sefaatli projects located in Turkey
have been revoked and potential compensation has been proffered. We
will continue to investigate the legality of this action and what
remedies, including compensation, might be available.
- Continued restoration/reclamation
activities are ongoing in South Texas. Work continues to complete
reclamation at Rosita in Production Areas 1 & 2 and reclamation
at Vasquez.
- The Company published a new technical
report outlining resources on its property holdings at Ambrosia
Lake in New Mexico.
- The US Environmental Protection Agency
(EPA) has recently withdrawn a rule change proposed in 2017 for
groundwater restoration that would have raised costs for the
uranium industry with almost no benefit to the environment if
enacted. WWR is currently involved in two uranium reclamation
projects, and this EPA decision is an important sign that future
reclamation operations will not be impacted by poorly conceived
rules. WWR is committed to the safety of the environment and
the public, and fully supports compliance with sensible and
effective regulations.
- Texas Supreme
Court Success: After a nine-year legal dispute with Kleberg
County, Westwater has prevailed at the Texas Supreme Court,
enabling future reclamation of some of our wellfields at our
Kingsville Dome site.
CORPORATE ACTIVITIES:
- Karli Anderson
Joins WWR’S BOD: The Company announced that Karli Anderson
had been appointed to the Board of Directors as of September 18,
2018. Anderson, 45, most recently served as Vice President Investor
Relations for Royal Gold, Inc (NASDAQ: RGLD), a precious metals
stream and royalty company with over 190 properties across six
continents. Previously, Karli was a Senior Director of Investor
Relations for Newmont Mining Corporation (NYSE: NEM), one of the
world's largest gold mining companies. Karli also serves on the
Board of Directors of the Women’s Mining Coalition.
- M&A
Efforts: WWR maintains an opportunistic posture in mergers
and acquisitions by focusing on low-cost, high-value development
opportunities in the resource sector.
- Cost
Rationalization Efforts: The Company continues to seek to
reduce operating and general and administrative expenditures.
- Property
Monetization: On January 5, 2018, Laramide Resources Ltd.
(“Laramide”) made the first required $1.5 million principal payment
to Westwater on its original $5.0 million promissory note,
consisting of $0.75 million in cash and the issuance of 1,982,483
of Laramide’s common shares. Laramide also made interest payments
in 2018 of approximately $0.4 million in cash.
- Equity Capital
Raises: In 2018 to date, the Company has raised net proceeds
of $7.8 million, comprised of $1.3 million from sales of stock
pursuant to the Company’s Stock Purchase Agreements with Aspire
Capital (now canceled), $3.6 million from sales of stock from the
Company’s ATM facility with Cantor Fitzgerald and a registered
direct offering of $2.9 million from the sale of common stock and
pre-funded warrants to Aspire Capital which closed on June 14,
2018. All pre-funded warrants were exercised in August 2018.
Key Financial Highlights
Table 1: Financial Summary
($ and Shares in 000's, Except Per
Share)
3Q 2018
3Q 2017
3Q Variance
9
Mos2018
9
Mos2017
9
MoVariance
Net Cash Used in Operations $ (2,943 )
$ (2,542 ) 16 % $ (9,032 )
$ (8,876 ) 2 % Mineral Property Expenses
$ (955 ) $ (1,316 ) -27 %
$ (2,706 ) $ (3,637 ) -26
% General and Administrative, including Non-cash Stock Comp
$
(1,803
)
$
(1,700
)
6
%
$
(5,662
)
$
(4,976
)
14
%
Net Loss $ (3,137 ) $ (2,983 )
5 % $ (27,012 ) $ (3,778 )
615 % Net Loss Per Share $ (0.06 )
$ (0.12 ) -50 % $ (0.68 )
$ (.16 ) 325 % Avg. Weighted Shares
Outstanding
51,118
25,037
104
%
39,750
23,764
67
%
- Net cash used in
operations. Net cash used in operating activities was $2.9
million in 3Q-2018, compared to $2.5 million in 3Q-2017. For the 9
Months-2018, net cash used in operating activities was $9.0 million
compared to $8.9 million for 9 Months-2017. The increases for both
periods reflect increases in cash used for general working capital
requirements.
- Operating
expenses. Mineral property expenses decreased by
approximately $0.4 million for 3Q-2018 from 3Q-2017. The decrease
was primarily due to a reduction in exploration activities in the
lithium projects. For the 9 Months-2018, mineral property expenses
decreased $0.9 million from the same period in 2017. The decrease
was mostly the result of a reduction of exploration activities in
the lithium projects of $0.6 million and a reduction in land
holding costs for the Cebolleta and Juan Tafoya uranium properties
of $0.4 million. General and administrative expenses, however,
increased by $0.1 million and $0.7 million for the 3Q-2018 and 9
Months-2018 periods, respectively, as compared with the
corresponding periods in 2017. The increase of $0.1 million for
Q3-2018 was due to an increase in stock compensation expense. The
increase of $0.7 million for 9 Months-2018 was due to increases in
salaries and payroll burden of $0.3 million and consulting and
professional expenses of $0.4 million, primarily related to
post-acquisition Alabama Graphite operations. Additionally, stock
compensation expense increased by $0.2 million as compared to the
corresponding period in 2017. These increases were partially offset
by a decrease in legal, accounting and public company expenses of
$0.2 million.
- Net loss.
Consolidated net loss for the three months ended September 30, 2018
was $3.1 million, or $0.06 per share, as compared with a loss of
$3.0 million, or $0.12 per share for the same period in 2017. The
increase in our consolidated net loss from the respective prior
period was primarily the result of an increase in loss on sale of
marketable securities of $0.4 million and an increase in general
and administrative expenses of $0.1 million. These increases were
mostly offset by a decrease in mineral property expenses of $0.4
million. Consolidated net loss for 9 Months-2018 was $27.0 million,
or $0.68 per share, as compared with $3.8 million, or $0.16 per
share for the same period in 2017. The increase in the consolidated
net loss of $23.1 million was the result of the combination of the
$18.0 million impairment charge for the Temrezli and Sefaatli
uranium mineral interests recorded in 2018 plus a one-time gain of
$4.9 million from the sale of the Churchrock and Crownpoint
projects recorded in 2017.
- Cash and working
capital. The Company’s cash balance and working capital was
$1.4 million and $0.9 million, respectively, at September 30, 2018.
This compares to working capital of $3.9 million at December 31,
2017. The $3.0 million decrease in working capital was due to $1.5
million in loan advances and acquisition costs for the acquisition
of Alabama Graphite, a $0.4 million reduction in accounts payable
and continued funding of operating losses from the sale proceeds of
available-for-sale marketable securities of $0.8 million and from
notes receivable proceeds of $1.1 million.
- As of October 31, 2018, the Company
held cash and cash equivalents totaling approximately $1.7 million.
The Company’s working capital, along with the anticipated funding
from the Company’s financing agreements described in the Company’s
Form 10-Q filed on November 7, 2018, is expected to provide the
necessary liquidity through January 31, 2020.
- Shares
outstanding. Total shares outstanding at October 31, 2018
were 66,332,617.
About Westwater Resources
WWR is focused on developing energy-related materials. The
Company’s battery materials projects include the Coosa Graphite
Project and the associated Coosa Graphite Mine located across
41,900 acres (17,000 ha) in east-central Alabama. In addition, the
Company maintains lithium mineral properties in three prospective
lithium brine basins in Nevada and Utah. WWR’s uranium projects are
located in Texas and New Mexico. In Texas, the Company has two
licensed and currently idled uranium processing facilities and
approximately 11,000 acres (4,400 ha) of prospective in-situ
recovery uranium projects. In New Mexico, the Company controls
mineral rights encompassing approximately 188,700 acres (76,394 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 as Uranium Resources, Inc., WWR also owns an
extensive uranium information database of historic drill hole logs,
assay certificates, maps and technical reports for the Western
United States. For more information, 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,” 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 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, the future production of graphite,
including on a pilot scale, and future sales of graphite, including
as a first mover for key components of electrical storage devices,
the expected demand for and price of uranium, 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) the Company’s ability to successfully integrate the
acquired graphite business into its own, and the risk that
additional analysis of the Coosa Graphite Project may result in
revisions to the findings of WWR’s initial optimization study; (b)
the Company’s ability to raise additional capital in the future;
(c) spot price and long-term contract price of graphite, lithium
and uranium; (d) risks associated with our operations; (e)
operating conditions at the Company’s projects; (f) government and
tribal regulation of the graphite industry, lithium industry,
uranium industry, and the power industry; (g) world-wide graphite,
lithium and uranium 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 or intends to operate,
including in Alabama, Texas, New Mexico, Utah and Nevada; (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, and the possibility
that future exploration results may be materially less promising
than initial exploration results; (I) any graphite, lithium or
uranium discoveries not being in high enough concentration to make
it economic to extract the metals; (m) currently pending or new
litigation or arbitration; and (n) 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. The
results of the initial optimization study are preliminary in nature
and subject to revision following WWR’s further analysis of the
Coosa project.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181108005193/en/
Westwater Resources Contact:Christopher M. Jones,
303-531-0480President & CEOorJeff Vigil, 303-531-0481VP Finance
&
CFOInfo@WestwaterResources.netorInvestor
Relations Contact:Porter, LeVay and RoseMichael Porter,
212-564-4700Westwater@plrinvest.com
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