Company Expanding Battery Graphite
Manufacturing Business with Pilot Program
Westwater Has Developed A New, More
Sustainable Processing Method for Purification of Graphite
Battery Graphite Market Expected to Grow at
an Annual Rate of 20% Over the Next 10 Years
Westwater Resources, Inc. (Nasdaq: WWR), an explorer and
developer of U.S.-based mineral resources essential for batteries
for energy storage, today announced its results for the year ended
December 31, 2020.
“2020 was an immensely successful year for us. We sold our
uranium assets and commenced graphite production with our Pilot
Program, and as a result, we are now focused on processing
battery-grade graphite products for an energy-dependent world,”
said Chris Jones, CEO of Westwater Resources. “This major step into
the energy storage economy, which aligns with electrification and
decarbonization transitions around the world, is critical to our
success and has the potential to provide remarkable new value to
our Shareholders. The Westwater team is experienced and has the
strengths needed to execute a business plan that manufactures
battery graphite products, while keeping our promise to be
environmentally sensitive and sustainable. Westwater expects to be
producing commercial quantities of battery-grade graphite in
2023.”
BUSINESS UPDATE
Graphite
Graphite has become essential to people – it is used in products
that touch almost every aspect of life, including airplanes, cars,
flashlights, laptops, smartphones, and smoke detectors. The
battery-grade graphite market has been growing with no signs of
slowing. Westwater is now positioned to benefit from this growth
with its battery-grade graphite. The United States has no
domestically sourced and processed graphite production, and
Westwater can provide a domestic battery-grade source of this
important material. The Company has developed a patent-pending
proprietary process for the purification of graphite; this process
is anticipated to be environmentally safe and cost-efficient,
giving Westwater a distinct advantage over its competitors. A
definitive feasibility study is expected to be completed in
mid-2021 for our commercial processing plant, which is planned for
startup in late 2022.
Vanadium
Vanadium is a lightweight metal used in the construction
industry, in high strength steel alloys and in large grid storage
batteries. Vanadium batteries are also used in solar and wind power
generators to make their installations more reliable electricity
providers. Currently 85 percent of all vanadium is imported into
the United States from South Africa, China and Russia. There is no
significant production of vanadium currently in the United States.
Over the last several years, Westwater has discussed and updated
the marketplace with regard to its vanadium mineralization. During
the first half of 2021, the Company anticipates drilling various
targets on its Coosa property to expand its knowledge of the
project’s geology, examine the core and/or cutting results for
mineral constituents and evaluate its economic potential.
U.S. Critical Minerals List
Both graphite and vanadium have been listed on the U.S.
Government Critical Minerals List because they are “essential to
the economic and national security of the United States.” Priority
is being given to these minerals by the U.S. Government.
Recent News
On January 5, 2021, Westwater announced the sale of all of its
uranium assets located in New Mexico and Texas to enCore Energy
Corp. of Vancouver, British Columbia, Canada, a Toronto Venture
Exchange-listed company (TSXV:EU). Total consideration accruing to
Westwater from the deal is $1.8 million in enCore shares (2,571,598
shares), representing a 1.5% ownership of enCore, and two royalties
from future production from the New Mexico uranium properties.
enCore also assumed the asset retirement obligation on all
remaining uranium reclamation activities associated with the Texas
uranium assets in the amount of approximately $5.2 million. All
performance bonds for the Texas uranium properties have been
transferred to enCore as of December 31, 2020, as well as the
release of $0.7 million in restricted cash collateral to Westwater
as a result of the transfer of the performance bonds. Westwater is
retaining its uranium interests in the Republic of Turkey, which
are subject to an ongoing international arbitration proceeding.
On December 7, 2020, Westwater provided an update on progress at
its pilot plant operations at Dorfner Anzaplan’s facilities near
Amberg, Germany, as well as at facilities in Frankfurt, Germany,
Chicago, Illinois and Buffalo, New York. This pilot program,
performed at several individual facilities has produced high
quality battery-grade graphite products which were previously
produced at a bench scale. Westwater intends to sell these three
battery-grade graphite products: ULTRA-PMG™, ULTRA-CSPG™ and
ULTRA-DEXDG™.
FINANCIAL SUMMARY
“We significantly strengthened our balance sheet during the
fourth quarter of 2020 with the sale of our uranium business and
disposal of its legacy asset retirement obligation liabilities, and
with the addition of over $50 million to our treasury,” said Jeff
Vigil, CFO of Westwater. “Our successful strategic shift to battery
materials has resonated with investors and the capital markets,
reflective in the increase in our market capitalization from $7
million beginning 2020 to $95 million ending 2020, and $260 million
as of February 12, 2021. With an additional $50 million added to
the treasury since the end of 2020, we are on the path towards
raising the necessary financial resources to direct at our graphite
beneficiation business plan.”
Table 1: Financial Summary
($ in 000's, Except Per Share)
FY
2020
FY
2019
Variance
Net Cash Used in Operations (1)
$(15,183)
$(10,049)
51.1%
Product Development Expenses
$(4,049)
$(116)
n/m
General and Administrative Expenses
$(5,678)
$(4,474)
26.9%
Net Loss from Continuing Operations
$(13,912)
$(6,004)
131.7%
Net Loss from Discontinued Operations
$(9,662)
$(4,561)
111.8%
Net Loss (1)
$(23,574)
$(10,565)
123.1%
Net Loss Per Share (1)
$(2.68)
$(5.39)
-50.3%
Avg. Weighted Shares Outstanding
8,799,190
1,961,086
348.7%
(1) Includes discontinued
operations.
Net Cash Used in Consolidated Operations
Net cash used in operating activities, including discontinued
operations, was $15.2 million for the year ended December 31, 2020,
compared with $10.0 million for 2019. The $5.2 million increase in
cash used was primarily due to a $3.9 million increase in product
development expense and $1.3 million increase in general and
administrative expense.
Product Development Expenses from Continuing
Operations
For the period ended December 31, 2020, $4.0 million was spent
on product development. Of this amount $3.2 million was related to
the design, construction and operation of Westwater’s graphite
processing pilot program; the remainder was attributable to product
testing, labor and other miscellaneous items.
General and Administrative Expenses from Continuing
Operations
General and administrative expenses for 2020 increased by
approximately $1.2 million, to $5.7 million, as compared to $4.5
million in 2019. The increase was primarily related to increased
graphite sales and marketing costs including recruiting and hiring
a Sales & Marketing executive, a near doubling of Directors
& Officers liability insurance premiums and an increase in
stock compensation expense.
Net Loss from Continuing Operations
The net loss from continuing operations was $13.9 million and
$6.0 million for the 12 months ended December 31, 2020 and 2019,
respectively. The $7.9 million increase compared to 2019 was
primarily due to an increase of $4.0 million for product
development costs, $1.2 million in corporate general and
administrative expenses and $2.7 million for loss on disposal of
uranium assets resulting from resolution of enCore Energy
transaction issues and final negotiations in the fourth quarter of
2020.
Net Loss from Discontinued Operations
The net loss from discontinued operations was $9.7 million and
$4.6 million for the 12 months ended December 31, 2020 and 2019,
respectively. The $5.1 million increase from 2019 was primarily due
to a $5.2 million impairment charge on uranium assets recorded in
the third quarter of 2020 after the announcement of a binding
letter of intent to sell the uranium assets to enCore Energy.
Cash and Working Capital
As of December 31, 2020, and December 31, 2019, the Company’s
cash balance was $50.3 million and $1.8 million, respectively. The
significant increase in 2020 was due to capital raises in October
2020 utilizing the Company’s financing facilities with Cantor
Fitzgerald & Co. and Lincoln Park Capital LLC. In addition,
from January 1 to February 11, 2021, the Company raised another
$50.3 million with these financing facilities. As of February 11,
2021, the Company’s cash position was $101 million.
These funds are to be used to fund the ongoing operations of the
Company, development of the graphite business, and to provide a
portion of the capital funding required to build the production
plant.
Shares Outstanding
Total shares outstanding are 29.4 million at February 11,
2021.
CONFERENCE CALL
Westwater Resources will hold a conference call to discuss its
financial results for the year ended December 31, 2020, and the
business outlook for the remainder of the year. The conference
call will be held on Tuesday, February 16, 2021 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 position,
including the status of the construction of its pilot plant, and
the U.S. 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 5927
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. 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 future demand for and price of
graphite, the Company’s growth, developments at the Company’s
projects and the output expected therefrom, including relating to
the pilot program and proposed commercial plant and production of
battery graphite products, the timing and occurrence of positive
cash flow from the Company’s projects, 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 spot price
and long term contract price of graphite (both flake graphite
feedstock and purified graphite products) and vanadium, and the
world-wide supply and demand of graphite and vanadium; (b)
government regulation of the mining and manufacturing industries in
the United States; (c) operating conditions at our mining and
manufacturing projects; (d) unanticipated geological, processing,
regulatory and legal or other problems we may encounter; (e) the
results of our exploration activities, and the possibility that
future exploration results may be materially less promising than
initial exploration results; (f) any graphite or vanadium
discoveries not being in high enough concentration to make it
economic to extract the metals; (g) our ability to finance our
growth plans; (h) currently pending or new litigation or
arbitration; (i) our ability to maintain and timely receive mining,
manufacturing, and other permits from regulatory agencies; and (j)
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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version on businesswire.com: https://www.businesswire.com/news/home/20210216005360/en/
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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