Westwater Begins Equipment Installation at
the Kellyton Graphite Plant
Westwater Resources, Inc. (NYSE American: WWR), an energy
technology and battery-grade natural graphite development company
(“Westwater” or the “Company”), is pleased to announce its second
quarter results for the quarter ended June 30, 2023 and to provide
business and financial updates.
Construction Progress at the Kellyton Plant
During the second quarter of 2023, Westwater continued
construction activities at the Kellyton Graphite Processing Plant
(“Kellyton Plant”), including the receipt of additional long-lead
equipment components, completing the erection of five of six
primary plant buildings, and installation of overhead cranes ahead
of equipment installation. As of the date of this press release,
Westwater has constructed and is currently operating its research
and development laboratory (“R&D Lab”). The R&D Lab allows
Westwater to continue product development and optimization under
the Joint Development Agreement (“JDA”) with SK On, and to perform
additional quality control tests. It also affords greater
flexibility to optimize future samples in accordance with customer
specifications. Further, in August, Westwater began installing
spheronizers and shaping mills in its shaping building.
Customer Engagement
As previously announced, Westwater entered into a JDA with SK
On, a leading electric vehicle (“EV”) battery manufacturer. Work
under the JDA began at the end of the first quarter and continues
as the parties work together to ensure that the Coated Spherical
Purified Graphite (“CSPG”) planned to be produced at the Kellyton
Plant can be used as high-performance anode material for SK On’s
batteries.
SK On has provided positive feedback on recent samples produced
by Westwater, and the Company plans to supply a mass production
sample to SK On later this year. “We are extremely pleased with the
significant progress made with SK On under the JDA, and the
performance of our product samples,” said Frank Bakker, Westwater’s
President and Chief Executive Officer. Westwater is currently
negotiating a definitive sales agreement of CSPG with SK On.
Westwater continues to engage with other potential customers. On
June 7, 2023, Westwater announced the execution of a letter of
intent (“LOI”) with Dainen Material Co., Ltd. (“Dainen”) for the
supply and purchase of CSPG. As is standard, the LOI is subject to
customary conditions and specifications that will be included in a
future definitive agreement.
Dainen offers high-performance, natural graphite anode materials
to leading Japanese manufacturers of automotive lithium-ion
batteries. If the parties are able to come to terms on an
agreement, Westwater would supply CSPG to Dainen from the Kellyton
Plant.
Coosa Graphite Deposit Update
During the second quarter, Westwater began a preliminary
economic assessment (“PEA”) for the Coosa Graphite Deposit. The PEA
will expand on the Technical Report Summary (“TRS”) that was
prepared as an initial assessment in accordance with S-K 1300 and
filed with the SEC on Form 8-K on December 6, 2022. The PEA will
include an economic assessment based on the TRS and an initial mine
plan. Westwater expects to complete and disclose the results of the
PEA in the fourth quarter of 2023.
Until the Coosa Graphite Deposit comes online, Westwater
believes it has secured sufficient supply of natural graphite
concentrate feedstock for the Kellyton Plant pursuant to a supply
contract with Syrah Resources Limited.
Construction Financing Update
Westwater continues its efforts to close a financing
transaction, to fund the balance of the estimated capital
requirements for the initial phase of the Kellyton Plant. “The
interest in funding our project remains strong. We are engaged with
multiple potential lenders and are in negotiations on deal
structure and terms with a subset of those parties,” said Steve
Cates, Westwater’s Chief Financial Officer and SVP – Finance.
“While the credit markets have been tight in recent months, there
are lenders wanting to invest in the energy transition. Based on
our lender engagement, we believe finalizing a definitive sales
agreement is a critical piece needed to secure the additional
funding to complete the initial phase of the Kellyton Plant.”
As of June 30, 2023, Westwater had a cash balance of $17.3
million and spent $107.3 million since beginning construction of
the Kellyton Plant. Westwater continues to estimate the total costs
of the initial phase of the Kellyton Plant to be $271 million.
Financial Summary
($ in thousands, Except Share and Per
Share Amounts)
Q2
2023
Q2
2022
Variance
Net Cash Used in Operations*
$(8,920)
$(5,911)
51%
Net Cash Used in Investing Activities*
$(51,858)
$(24,853)
109%
Net Cash Provided by Financing
Activities*
$2,871
$24,509
(88%)
Product Development Expenses
$(1,208)
$(367)
229%
General and Administrative Expenses
$(2,675)
$(2,644)
1%
Net Loss
$(3,626)
$(3,155)
15%
Net Loss Per Share
$(0.07)
$(0.07)
–%
Avg. Weighted Shares Outstanding
51,120,597
47,083,720
9%
* Presented on a year-to-date basis.
- Net cash used in operations increased $3.0 million
during the first half of 2023, compared to the same period in 2022
due to an increase in other long-term assets of $2.5 million
primarily related to purchases of raw material inventory, higher
product development expenses of $1.1 million, and higher general
and administrative expenses of $0.2 million. These increases were
partially offset by higher interest income of $0.9 million earned
on the Company’s cash balance.
- Net cash used in investing activities increased $27.0
million during the first half of 2023, compared to the same period
of 2022. The increase in investing cash outflows is due to
continued construction of the initial phase of the Kellyton
Plant.
- Net cash provided by financing activities decreased
$21.6 million during the first half of 2023, compared to the same
period in 2022, due to lower sales of shares under our equity
financing facilities.
- Product development expenses for the second quarter of
2023 increased by $0.8 million compared to the same period in 2022.
The increase in Product development expenses primarily relates to
additional sample production for potential customers and work being
performed under the JDA with SK On. We expect to continue to incur
product development expenses as customers request additional
samples, and in some cases larger samples, as we work to contract
our planned CSPG production from Phase I of the Kellyton
Plant.
- General and administrative expenses remained essentially
flat during the second quarter of 2023, compared to the same period
in 2022, due primarily to Westwater holding or reducing overhead
costs while seeking the additional financing needed for the
construction of the initial phase of the Kellyton Plant.
- Consolidated net loss for the second quarter of 2023
increased $0.4 million compared to second quarter of 2022. The
increase in net loss was due primarily to higher product
development costs during the period; partially offset by higher
interest income earned on our cash balance.
- Cash and working capital as of June 30, 2023, were $17.3
million and $11.8 million, respectively, compared to $75.2 million
and $51.0 million at December 31, 2022. The decrease in cash was
primarily due to capital expenditures of $51.9 million and cash
used in operations of $8.9 million; partially offset by cash
provided from financing activities. The decrease in working capital
was due primarily to cash spend during the first half of 2023;
partially offset by lower current liabilities as of June 30, 2023,
compared to December 31, 2022.
Live Conference Call
Management will host a conference call to discuss these results
on August 15, 2023, at 11:00 AM Eastern time.
- 1-800-319-4610 (USA and Canada)
- 1-604-638-5340 (International)
- Conference ID: Westwater Resources Conference Call
- Webcast:
westwaterresources.net/investors/presentations-events/
Conference Call Replay
- 1-855-669-9658 (USA and Canada)
- 1-412-317-0088 (International)
- Access Code: 0311
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," “planned,” "projects," "anticipates," "believes,"
"could," “intensified”, “scheduled,” “targets” and other similar
words. Forward looking statements include, among other things,
statements concerning the JDA and future agreements with SK On, the
LOI and future agreements with Dainen, and the supply contract with
Syrah Resources, as well as the potential debt financing, the
construction and operation of the Company’s Kellyton graphite
processing 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
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
processing plant; (g) the ability to construct and operate the
Kellyton graphite processing 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 processing
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)
currently pending or new litigation or arbitration; (p) our ability
to maintain and timely receive mining, manufacturing, and other
permits from regulatory agencies; and (q) other factors which are
more fully described in our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, and other filings with the SEC.
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Westwater Resources, Inc. Email:
Info@WestwaterResources.net
Investor Relations Email:
Investorrelations@westwaterresources.net
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