Estimated Pre-tax NPV of $229 Million and
Pre-tax IRR of 26.7%
Coosa is the Largest, Most Advanced Graphite
Deposit in the Contiguous U.S.
Westwater Resources, Inc. (“Westwater” or the “Company”) (NYSE
American: WWR), an energy technology and battery-grade natural
graphite development company, today announced the availability of
an Initial Assessment, with an economic analysis (“IA”), for the
Company’s Coosa Graphite Deposit located in Coosa County, Alabama
(the “Coosa Deposit”).
Frank Bakker, President and Chief Executive Officer of
Westwater, stated “The Coosa Deposit is an important asset, not
only to Westwater, but we believe a critical asset to the future
domestic graphite supply chain. We believe that our Coosa Deposit
is the largest and most advanced natural graphite deposit in the
lower 48 states. With estimated pre-tax NPV of $229 million,
estimated pre-tax internal rate of return of 26.7%, and estimated
free cash flow of $714 million, the Coosa Deposit continues to be
an attractive asset for Westwater and its stockholders.”
“The IA was based on drilling results from less than 10% of the
Coosa Deposit acreage and did not consider any potential benefit
from vanadium previously discovered, resulting in an estimated
pre-tax NPV that is 6x greater than the market cap of Westwater as
of December 12, 2023,” concluded Mr. Bakker. “We believe there is
the potential for additional value creation at the Coosa Deposit
through expansion to supply Westwater’s graphite concentrate needs
for many years as well as the broader North American graphite
industry that is under development. Westwater has begun a process
to seek strategic investments to explore, develop, and unlock the
potential additional value at the Coosa Deposit,” stated Mr.
Bakker.
The IA was completed as a Technical Report Summary (“TRS”),
disclosing Mineral Resources, including an economic analysis, for
the Coosa Deposit, in accordance with SK-1300. The TRS was
completed on behalf of Westwater by SLR International Corporation
(“SLR”) with an effective date of December 11, 2023, and filed by
Westwater on Form 8-K with the Securities and Exchange Commission
(“SEC”) on December 13, 2023. SLR qualifies as a Qualified Person
as defined under Item 1302 of Regulation S-K.
Background:
- As a U.S. domestic and domiciled company, Westwater reports all
mineral resources in accordance with Item 1300 of Regulation S-K
(“S-K 1300”);
- S-K 1300 was adopted by the SEC to modernize mineral property
disclosure requirements for mining registrants and to align U.S.
disclosure requirements more closely for mineral properties with
current industry and global regulatory standards.
About the Coosa Deposit
The Coosa Deposit is located at the southern end of the
Appalachian Mountain range in the western part of Coosa County,
Alabama. The deposit area is approximately 50 miles south-southeast
of the city of Birmingham and 23 miles south-southwest of the town
of Sylacauga. Westwater holds the mineral rights to approximately
41,965 acres under a long-term lease. The Coosa Deposit is located
in the flake graphite belt of central Alabama, also known as the
Alabama Graphite Belt, in parts of townships T. 21 N., T. 22 N., T.
23 N., and T. 24 N. and ranges R. 16 E., R. 17 E., R. 18 E., and R.
19 E.
This TRS was prepared to add an economic analysis update to the
previously completed TRS by SLR, with an effective date of November
30, 2022 (the “2022 TRS”). The Mineral Resource estimate reported
in the 2022 TRS remains unchanged. The Mineral Resource estimate in
the 2022 TRS is based on 205 drill holes totaling 39,434 ft. Based
on a 1.98% graphitic carbon (Cg) cut-off grade Indicated Mineral
Resources total 26.0 million short tons (Mst) at an average grade
of 2.89% Cg for a total of 754,000 short tons (st) Cg. Inferred
Mineral Resources are estimated as 97.0 Mst at an average grade of
3.08% Cg for a total of 3.0 Mst Cg.
Mineral Resources
The TRS and IA were prepared in accordance with the regulations
set forth in S-K 1300 with the objective of disclosing the Mineral
Resources at the Coosa Deposit, with an economic analysis. Based on
the density of drilling, continuity of geology and mineralization,
testing, and data verification, the Mineral Resource estimates meet
the criteria for Indicated or Inferred Mineral Resources as
summarized in the TRS and IA.
Estimated Mineral Resources, as initially reporting in the 2022
TRS, are summarized in the following table for Indicated and
Inferred Mineral Resources, respectively, at a 1.98% Cg cut-off
grade. Mineral Resources were estimated separately for each
mineralized horizon. Mineral Resources are not Mineral Reserves and
do not have demonstrated economic viability. However,
considerations of reasonable prospects for economic extraction were
applied to the Mineral Resource calculations within the TRS.
Classification
Redox Boundary
Tonnage (Mst)
Grade Cg (%)
Contained Cg (Mlb)
Contained Cg (000 st)
Recovery (%)
Total Indicated
26
2.89
1,509
754
87.4
Total Inferred
97
3.08
5,996
2,998
87.4
Notes:
- The S-K 1300 definitions were followed for Mineral
Resources.
- Mineral Resources are constrained within a Whittle pit shell
using a cut-off grade of 1.98% Cg.
- Mineral Resources are estimated using a long-term graphite
price of US$1,100/st.
- Bulk density ranges from 1.68 t/m3 to 3.03 t/m3 (0.05 st/ft3 to
0.09 st/ft3).
- Mining dilution equals 5.0%.
- Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.
- Numbers may not sum due to rounding.
- Mineral Resources are 100% attributable to Westwater.
Preliminary Economic Analysis – Base Case
The estimated base case economics in the IA is based on
Indicated (11%) and Inferred (89%) Mineral Resources. The following
table presents a summary of results for the estimated base
case.
Item
Unit
Value
Cg Price
$/st
998
Cg Concentrate Sales
Mst
2.26
Total Gross Revenue
US$ M
2,254
Total Operating Costs
US$ M
(1,204)
Operating Margin
US$ M
1,050
Development Capital
US$ M
(152)
Sustaining Capital
US$ M
(142)
Final Closure/Reclamation
US$ M
(43)
Total Capital
US$ M
(336)
Pre-tax Free Cash Flow
US$ M
714.1
Pre-tax NPV @ 8% discount rate
US$ M
229.2
Pre-tax IRR
%
26.7
After-tax Free Cash Flow
US$ M
608.2
After-tax NPV @ 8%
US$ M
190.2
After-tax IRR
%
24.2
The above estimated base case economics in the IA was based on
the following key assumptions:
Revenue
- Mineralized Material Inventory used for life of mine (LOM)
planning: 72.7 Mst at 3.21% Cg with 2.33 Mst of contained Cg (65.9
million tonnes at 3.21% Cg with 2.11 million tonnes contained Cg),
100% attributable to Westwater
- An average of 9,100 st (8,200 tonnes) mill feed per day mining
from open pit for 4 Mst (3 million tonnes) per year
- Mill recovery averaging 92%.
- 95% C concentrate grade at 100% payable
- Average annual Cg concentrate sales: 103,000 stpa (93,000
tonnes per year)
- Graphite price (CIF Kellyton Plant): US$998/st
($1,100/tonne)
- Transport to Kellyton Plant (CIF): $10.69/st
($11.90/tonne)
Costs
- Pre-production period: 24 months
- Mine life: 22 years
- Life of mine production plan as summarized in the TRS
- Mine life capital totals $293 million, including $142 million
of sustaining capital
- Final end of mine reclamation and closure costs: $43
million
- Average operating cost over the mine life is $15.41/st milled
($16.99/tonne milled)
Taxation and Royalties
- Royalties: Merchant 0.5% NSR up to a maximum of $150,000;
Lessor 2% NSR
- Coosa County Severance Tax: $5/st concentrate
($5.51/tonne)
- 10 year Modified Accelerated Cost Recovery System (MACRS)
depreciation method was used with total allowance of $286.3 million
taken during the LOM
- Percentage depletion method (14% for graphite) was used with
total allowance of $305.4 million taken during the LOM
- Loss Carry Forwards - Income tax losses may be carried forward
indefinitely but may not be used for prior tax years
- Federal tax rate of 21%, Alabama state income tax rate of
6.5%
Readers are cautioned that the IA is preliminary in nature. It
includes Inferred Mineral Resources that are considered too
speculative geologically to have modifying factors applied that
would enable to be categorized as Mineral Reserves. There is no
certainty that the economic analysis in the IA will be realized.
The technical information in this news release has been reviewed by
SLR, a Qualified Person as defined under Item 1302 of Regulation
S-K.
About Westwater Resources, Inc.
Westwater Resources, Inc. (NYSE American: WWR), an energy
technology and battery-grade natural graphite development company,
is focused on developing battery-grade natural graphite.
Westwater’s primary project is the Kellyton Graphite Plant that is
under construction in east-central Alabama. In addition,
Westwater’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.
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 “believes,”
“estimated,” “continues,” “potential,” “prospects,” and other
similar words. Forward-looking statements in this release include,
among other things: the conclusions made in the IA for the Coosa
Deposit; the quantity and grade of resources included in resource
estimates; the accuracy and achievability of projections included
in the IA; the Company’s ability to carry on exploration and
development activities; and the price of graphite. Westwater has
completed an IA to define the graphite resource, including economic
analysis, at its Coosa Deposit in accordance with applicable SEC
regulations, including S-K 1300. Pursuant to S-K 1300, mineral
resources are not mineral reserves and do not have demonstrated
economic viability. The Company’s mineral resource estimates,
including estimates of the graphite resource, are based on many
factors, including assumptions regarding extraction rates and
duration of mining operations, and the quality of in-place
resources. Accordingly, there is no certainty that all or any part
of the economic analysis or graphite mineral resource identified by
Westwater’s IA will be converted into one or more economically
extractable mineral reserves. Westwater cautions that there are a
number of important factors that could cause actual results to
differ materially from the forward-looking information that has
been provided. Investors are 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 Westwater;
accordingly, there can be no assurance that such suggested results
will be realized. Additional risks facing Westwater‘s future
prospects are discussed in the Westwater Resources, Inc. Annual
Report on Form 10-K for the year ended December 31, 2022, and
subsequent securities filings.
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Westwater Resources, Inc. Email:
Info@WestwaterResources.net
Investor Relations Email:
Investorrelations@westwaterresources.net
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