Westwater Resources Announces Q2 2023 Business and Financial Updates
- Construction activities at the Kellyton Plant progressing well with the completion of primary plant buildings and equipment installation
- Positive feedback received from SK On on product samples, plans to supply mass production sample later this year
- LOI signed with Dainen Material Co., Ltd. for supply and purchase of CSPG
- Preliminary economic assessment for Coosa Graphite Deposit underway
- Efforts to secure financing for Kellyton Plant ongoing
- None.
Westwater Begins Equipment Installation at the Kellyton Graphite Plant
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
Financial Summary
($ in thousands, Except Share and Per Share Amounts) |
Q2 2023 |
Q2 2022 |
Variance |
Net Cash Used in Operations* |
|
|
|
Net Cash Used in Investing Activities* |
|
|
|
Net Cash Provided by Financing Activities* |
|
|
( |
Product Development Expenses |
|
|
|
General and Administrative Expenses |
|
|
|
Net Loss |
|
|
|
Net Loss Per Share |
|
|
–% |
Avg. Weighted Shares Outstanding |
51,120,597 |
47,083,720 |
|
* Presented on a year-to-date basis. |
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Net cash used in operations increased
during the first half of 2023, compared to the same period in 2022 due to an increase in other long-term assets of$3.0 million primarily related to purchases of raw material inventory, higher product development expenses of$2.5 million , and higher general and administrative expenses of$1.1 million . These increases were partially offset by higher interest income of$0.2 million earned on the Company’s cash balance.$0.9 million -
Net cash used in investing activities increased
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.$27.0 million -
Net cash provided by financing activities decreased
during the first half of 2023, compared to the same period in 2022, due to lower sales of shares under our equity financing facilities.$21.6 million -
Product development expenses for the second quarter of 2023 increased by
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.$0.8 million - 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.
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Consolidated net loss for the second quarter of 2023 increased
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.$0.4 million -
Cash and working capital as of June 30, 2023, were
and$17.3 million , respectively, compared to$11.8 million and$75.2 million at December 31, 2022. The decrease in cash was primarily due to capital expenditures of$51.0 million and cash used in operations of$51.9 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.$8.9 million
Live Conference Call
Management will host a conference call to discuss these results on August 15, 2023, at 11:00 AM Eastern time.
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1-800-319-4610 (
USA andCanada ) - 1-604-638-5340 (International)
- Conference ID: Westwater Resources Conference Call
- Webcast: westwaterresources.net/investors/presentations-events/
Conference Call Replay
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1-855-669-9658 (
USA andCanada ) - 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
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
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Westwater Resources, Inc.
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Investor Relations
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Source: Westwater Resources, Inc.
FAQ
What is the progress on the construction activities at the Kellyton Plant?
What feedback has Westwater received from SK On?
What is the LOI signed by Westwater with Dainen Material Co., Ltd. for?
What is the current status of the preliminary economic assessment for the Coosa Graphite Deposit?