Announces Joint Development Agreement
with SK On, a Leading Electric Vehicle Battery
Manufacturer
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 first
quarter results for the period ended March 31, 2023 and provide
business and financial updates.
Joint Development Agreement with SK On
Westwater Resources has entered into a Joint Development
Agreement (“JDA”) with SK On, a leading electric vehicle (“EV”)
battery manufacturer, under which the parties will work together to
ensure that the Coated Spherical Purified Graphite (“CSPG”) planned
to be produced at the Company’s Kellyton Graphite Processing Plant
(the “Kellyton Plant”) can be used as a high-performance anode
material for SK On’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 Plant for SK On’s batteries.
SK On currently operates two EV battery plants in Commerce,
Georgia. The South Korean battery maker is also building three EV
battery plants in the U.S. as part of a joint venture with Ford
Motor Co., and pursuant to which SK On and Ford plan to operate two
battery plants in Glendale, Kentucky, and one factory in Stanton,
Tennessee. Additionally, SK On recently announced that it has
agreed with Hyundai Motor Group to establish an EV battery plant in
Bartow County, Georgia, through a joint venture.
“The JDA with SK On is another major advancement in Westwater’s
graphite business, and we are extremely excited to partner with a
leading global battery manufacturer like SK On,” said Terence
Cryan, Westwater’s Executive Chairman. “Following the passage of
the Inflation Reduction Act, many battery manufacturers are seeking
to secure North American anode material from our Kellyton
Plant.”
Construction Progress at the Kellyton Plant
During the first quarter of 2023, the Company continued
construction activities related to Phase I of its Kellyton Plant,
including the receipt of additional long-lead equipment components,
further work on underground utilities, and the construction and
assembly of plant buildings. As of the date of this press release,
five processing buildings have been completed and are ready for
equipment installation to begin.
Construction Financing Update
Westwater is continuing its efforts to close a financing
transaction for $150 million of private debt, which would cover the
balance of the estimated Phase I capital requirements. As of March
31, 2023, Westwater had a cash balance of $39.7 million and a
working capital balance of $22.7 million. As of March 31, 2023, the
Company has approximately $182 million of cash spend remaining
related to Phase I of the Kellyton Plant.
Financial Summary
($ in thousands, Except Share and Per
Share Amounts)
Q1
2023
Q1
2022
Variance
Net Cash Used in Operations
$(2,956)
$(2,701)
9%
Net Cash Used in Investing Activities
$(33,960)
$(12,123)
180%
Net Cash Provided by Financing
Activities
$1,424
$15,524
(91%)
Product Development Expenses
$(490)
$(233)
110%
General and Administrative Expenses
$(2,402)
$(2,211)
9%
Net Loss
$(2,390)
$(2,809)
(15%)
Net Loss Per Share
$(0.05)
$(0.08)
(38%)
Avg. Weighted Shares Outstanding
49,443,120
36,757,352
35%
- Net cash used in operations increased $0.3 million
during the first quarter of 2023, compared to the same period in
2022 due primarily to the purchase of feedstock inventory of $2.0
million. This increase in feedstock inventory was partially offset
by higher interest income of $0.6 million, and a decrease in
prepaid deposits compared to an increase in prepaids and other
assets in the first quarter of 2022.
- Net cash used in investing activities of $34.0 million
for the first quarter of 2023, relates to construction spend for
Phase I of the Kellyton Plant. Since beginning construction of
Phase I of the Kellyton Plant in the fourth quarter of 2021, we
have incurred approximately $102.4 million of capital costs, which
is comprised of $89.3 million in investing cash outflows and the
remainder included in the Company’s working capital liabilities as
of March 31, 2023.
- Net cash provided by financing activities decreased
$14.1 million during the first quarter 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 first quarter of
2023 increased by $0.3 million compared to the same period in 2022.
The increase in Product development expenses primarily relates to
additional sample production for potential customers during the
first quarter of 2023. We expect to continue to incur product
development expenses as customers request additional samples and we
work to contract our planned CSPG production from Phase I of the
Kellyton Plant.
- General and administrative expenses increased by $0.2
million during the first quarter of 2023, compared to the same
period in 2022. The increase is due primarily to increased
personnel costs of approximately $0.3 million of severance expense
related to the CEO change in January 2023. These increases were
partially offset by a benefit in stock-based compensation related
to stock award forfeitures that occurred during the first quarter
of 2023.
- Consolidated net loss for the first quarter of 2023 was
$2.4 million, or $(0.05) per share, compared to a net loss of $2.8
million, or $(0.08) per share, for first quarter of 2022. The $0.4
million decrease in net loss was due primarily to higher interest
income earned on our cash balance of $0.6 million and lower
exploration costs as well as lower legal costs related to the
Company’s arbitration against the Republic of Turkey; partially
offset by the higher product development and general and
administrative expenses discussed above.
- Cash and working capital as of March 31, 2023, were
$39.7 million and $22.7 million, respectively, which represent
respective decreases of $35.5 million and $28.3 million, compared
to December 31, 2022. The decrease in cash was primarily due to
capital expenditures of $34.0 million and cash used in operations
of $3.0 million; partially offset by cash provided from financing
activities. The decrease in working capital was due primarily to
cash spend during the first quarter of 2023; partially offset by
lower current liabilities as of March 31, 2023, compared to
December 31, 2022.
Conference Call
Management will host a conference call to discuss these results
on May 11, 2023, at 11:00 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: 0058
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,
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 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
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) 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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