Agreement with Global Electric Vehicle
Battery Manufacturer
Announces Increased Throughput and
Significantly Enhanced Project Economics for Kellyton Graphite
Processing Plant
$150 Million Non-Binding Term Sheet for
Private Debt that Would Fund the Balance of Phase I Capital
Requirements
Westwater Resources, Inc. (NYSE American: WWR), an energy
technology and battery-grade natural graphite development company,
is pleased to announce its year-end 2022 results and provide
various strategic, operational and financial updates.
Agreement with EV Battery Manufacturer
Westwater Resources has entered into an agreement with a Tier 1
battery manufacturer for electric vehicles. Under the agreement,
the parties will work together to ensure that the Coated Spherical
Purified Graphite (“CSPG”) that is expected to be produced at the
Kellyton Graphite Processing Plant can be used as a
high-performance anode material for the customer’s batteries.
Subject to those efforts, the parties expect to negotiate another
agreement that will allow for the sale of potentially all graphite
anode material from the Kellyton Graphite Processing Plant for
those batteries.
“Following the passage of the Inflation Reduction Act, many
battery manufacturers have sought to secure North American anode
material. We are pleased to be part of that solution and believe
this agreement is a significant step in the process,” said Terence
Cryan, Westwater’s Executive Chairman. “We are excited by the
continued progress being made in our engagement with potential
customers, and this agreement, and are anticipating making a joint
announcement with our partner later this month. At that time, we
expect to be in position to provide further details.”
Optimized DFS to Increase Throughput and Significantly
Enhance Project Economics for Kellyton Graphite Processing
Plant
In response to increasing customer demand and strong market
conditions for CSPG, the Company is also announcing that it has
optimized the original Definitive Feasibility Study (“DFS”) to
increase the expected throughput for Phase I of the Kellyton
Graphite Plant which also results in associated capital and
operating efficiencies. As a result of this work with our
third-party engineering firm, the Company is more than doubling its
expected CSPG production in Phase I resulting in a significant
enhancement to the estimated economics of Phase I of the Kellyton
Graphite Plant compared to the original DFS.
The Company now expects the total Phase I capital requirements
for the Kellyton Graphite Plant to be approximately $271 million,
resulting in:
- More than doubling the expected annual production of CSPG to
7,500 metric tons and total annual production across all products
to 16,000 metric tons.
- More than tripling the expected pre-tax net present value
(“NPV”) to approximately $417 million (at an 8% discount
rate).
- Nearly tripling the total estimated cumulative pre-tax cash
flows to $1.9 billion over a project life of 35-years.
- Increasing the Phase I estimated internal rate of return
(“IRR”), on a pre-tax basis, from 15.0% to 24.7%, a 65%
increase.
The Company also is increasing the planned production capacity
for its Phase II expansion of the Kellyton Graphite Plant. Prepared
at a pre-feasibility level, the Phase II expansion is subject to
its own DFS and securing the necessary funding.
- Estimated capital costs for both Phase I and Phase II are
estimated to be $736 million.
- More than doubling the expected annual production of CSPG to
40,500 metric tons and total annual production across all products
to 86,500 metric tons.
- Nearly tripling the expected pre-tax NPV to approximately $2.2
billion (at an 8% discount rate).
- Total estimated cumulative pre-tax cash flows to increase by a
factor of nearly three to $10.3 billion over a project life of
35-years.
- Increasing the estimated IRR, on a pre-tax basis, from 20.5% to
approximately 36.3%, a 77% increase.
“Great work by the Westwater team has resulted in significant
improvements to the project economics for the Kellyton Graphite
Plant,” said Frank Bakker, President and CEO. “We expect to begin
testing and commissioning at the Plant in late 2023, and first
production from Phase I is expected in the first half of 2024,
subject to closing on the additional funding needed to complete
construction. Additionally, we expect to complete the Phase I
optimization in the second half of 2024. We believe that increasing
our production capacity will allow us to position Westwater to play
a more significant role in the domestic battery-grade graphite
market.”
Construction Financing Update
Westwater is also announcing today that it has signed a
non-binding, non-exclusive indicative term sheet for $150 million
of private debt, which would cover the balance of the Phase I
capital requirements and is targeting to close in the second
quarter.
“We finished the year with a cash balance of $75.2 million and a
working capital balance of $51.0 million,” said Steve Cates, CFO
and SVP-Finance. “Since beginning construction of Phase I of the
Kellyton graphite plant in the fourth quarter of 2021, we have
incurred approximately $76.4 million of costs, which is comprised
of $55.3 million in cash outflows and the remainder included in the
Company’s working capital liabilities as of December 31, 2022.”
Financial Summary
($ in thousands, Except Share and Per
Share Amounts)
FY
2022
FY
2021
Variance
Net Cash Used in Operations
$(13,176)
$(16,916)
(22%)
Net Cash Used in Investing Activities
$(52,790)
$(2,108)
n/m
Net Cash Provided by Financing
Activities
$25,869
$83,992
(69%)
Product Development Expenses
$(1,145)
$(5,975)
(81%)
General and Administrative Expenses
$(9,902)
$(8,875)
12%
Net Loss
$(11,121)
$(16,144)
(31%)
Net Loss Per Share
$(0.25)
$(0.49)
(49%)
Avg. Weighted Shares Outstanding
44,909,500
32,653,089
38%
- Net cash used in operations decreased $3.7 million
during the year ended December 31, 2022, compared to the prior
year, due primarily to lower product development expenses,
arbitration costs, and exploration expenses. These decreases were
offset partially by the gain recognized on the sale of equity
securities in 2021, and the purchase of feedstock inventory in the
fourth quarter. The feedstock inventory is expected to be utilized
for testing and commissioning later this year and to produce
additional product samples for our customers.
- Net cash used in investing activities of $52.8 million
for the year ended December 31, 2022, relates to construction spend
for Phase I of the Kellyton graphite plant.
- Net cash provided by financing activities decreased
$58.1 million during the year ended December 31, 2022, compared to
the prior year due to lower sales of shares under our equity
financing facilities.
- Product development expenses for the year ended December
31, 2022, were $1.1 million, a decrease of $4.8 million compared to
the prior year. Product development costs for fiscal year 2022
primarily relate to continued product development, product
optimization costs, and continued sample production of
battery-grade anode material for evaluation by potential customers.
Product development costs for the year ended December 31, 2021,
were primarily comprised of expenses for our definitive feasibility
study related to Phase I of the Kellyton Graphite Plant and our
graphite processing pilot program that were both completed in
2021.
- General and administrative expenses increased by
approximately $1.0 million for the year ended December 31, 2022,
compared to the prior year. The increase is due primarily to
increased personnel costs of approximately $0.8 million, as the
Company continues to build its team, and higher costs related to
the Company’s sales and marketing efforts of $0.2 million in the
current year.
- Consolidated net loss for the year ended December 31,
2022, was $11.1 million, or $0.25 per share, compared to a net loss
of $16.1 million, or $0.49 per share, for 2021. The $5.0 million
decrease in net loss was due primarily to lower product
development, arbitration, and exploration expenses, and higher
interest income of $1.1 million; offset partially by an increase in
general and administrative expenses, and a realized gain of $2.1
million related to equity securities sold in the fourth quarter of
2021.
- Cash and working capital as of December 31, 2022, were
$75.2 million and $51.0 million, respectively, which represent
respective decreases of $40.1 million and $59.3 million, compared
to December 31, 2021. The decreases in cash and working capital
were due primarily to capital expenditures of $52.8 million and
cash used in operations of $13.2 million, as well as an increase in
working capital liabilities due primarily to Phase I construction
of $20.3 million. These decreases were partially offset by cash
provided from financing activities.
Conference Call
Management will host a conference call to discuss these results
on March 7, 2023, at 9:30 AM EST.
The dial-in numbers are: Canada/USA TF: 1-800-319-4610
International Toll: +1-604-638-5340 Callers should dial in 5-10 min
prior to the scheduled start time and simply ask to join the
call.
A live webcast of the conference call presentation will also
be available at www.westwaterresources.net
For a replay of the call: Canada/USA TF: 1-855-669-9658
International Toll: +1-412-317-0088 Replay Access Code: 9748
About Westwater Resources, Inc.
Westwater Resources, Inc. (NYSE American: WWR), an energy
technology company, is focused on developing battery-grade natural
graphite. The Company’s primary project is the Kellyton graphite
processing plant that is under construction in east-central
Alabama. In addition, the Company’s Coosa graphite deposit is the
most advanced natural flake graphite deposit in the contiguous
United States and located across 41,965 acres (~17,000 hectares) in
Coosa County, Alabama. For more information, visit
www.westwaterresources.net.
Cautionary Statement Regarding Forward-Looking
Statements
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,"
“intensified”, “scheduled,” “targets” and other similar words.
Forward looking statements include, among other things, statements
concerning potential debt financing, the construction and operation
of the Company’s Kellyton graphite plant, the Company’s Coosa
graphite deposit, and the costs, schedules, production and economic
projections associated with them. The Company cautions that there
are factors that could cause actual results to differ materially
from the forward-looking information that has been provided. The
reader is cautioned not to put undue reliance on this
forward-looking information, which is not a guarantee of future
performance and is subject to a number of uncertainties and other
factors, many of which are outside the control of the Company;
accordingly, there can be no assurance that such suggested results
will be realized. The following factors, in addition to those
discussed in Westwater’s Annual Report on Form 10-K for the year
ended December 31, 2022, and subsequent securities filings, could
cause actual results to differ materially from management
expectations as suggested by such forward-looking information: (a)
our ability to finance growth plans and raise debt or equity
capital; (b) 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; (c) the effects, extent and timing of
additional competition in the markets in which we operate; (d) the
ability to obtain contracts with customers; (e) available sources
and transportation of graphite feedstock; (f) the ability to
control costs and avoid cost and schedule overruns during the
development, construction and operation of the Kellyton graphite
plant; (g) the ability to construct and operate the Kellyton
graphite plant in accordance with the requirements of permits and
licenses and the requirements of tax credits and other incentives;
(h) effects of inflation and rising interest rates; (i) the
availability and supply of equipment and materials needed to
construct the Kellyton graphite plant; (j) stock price volatility;
(k) government regulation of the mining and manufacturing
industries in the United States; (l) unanticipated geological,
processing, regulatory and legal or other problems we may
encounter; (m) the results of our exploration activities at the
Coosa graphite deposit, and the possibility that future exploration
results may be materially less promising than initial exploration
results; (n) any graphite or vanadium discoveries at the Coosa
graphite deposit not being in high enough concentration to make it
economic to extract the metals; (o) the potential effects of the
continued COVID-19 pandemic; (p) currently pending or new
litigation or arbitration; and (q) our ability to maintain and
timely receive mining, manufacturing, and other permits from
regulatory agencies.
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Westwater Resources, Inc. Email:
Info@WestwaterResources.net
Investor Relations Email:
Investorrelations@WestwaterResources.net
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