Westwater Resources (WWR) Q1 2025 Earnings Call May 27, 2025 01:00 PM ET Company Participants Frank Bakker - President, CEO & DirectorSteven Cates - SVP of Finance, CFO & TreasurerRandy Baron - Portfolio ManagerTerence Cryan - Executive Chairman Conference Call Participants Heiko Ihle - MD & Mining AnalystPeter Gastreich - Managing Director - Energy and Sustainability Analyst Operator Thank you for standing by. This is the conference operator. Welcome to the Westwater Resources Inc. First Quarter twenty twe ...

Westwater Resources (WWR) Q1 2025 Earnings Call May 27, 2025 01:00 PM ET Speaker0 Thank you for standing by. This is the conference operator. Welcome to the Westwater Resources Inc. First Quarter twenty twenty five Business Update Conference Call. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Frank Pauper, President and CEO. Please go ahead, ...

Summary of Westwater Resources (WWR) Conference Call - May 27, 2025 Company Overview - **Company**: Westwater Resources Inc. (WWR) - **Industry**: Graphite production, specifically for battery anode materials Key Points and Arguments Project Updates - The qualification line at the Kelantan graphite processing plant has been successfully commissioned, producing over 800 kilograms of CHPG sample [3][4] - The qualification line can process approximately one metric ton of CFGB battery material daily, with the mainline expected to produce 12,500 metric tons per day upon Phase one completion [4] - The total cost for Phase one is estimated at CHF $245 million, with 85% of the necessary equipment already secured [4][21] - Commercial production at the Callenton facility is anticipated to begin in 2026 [4] Market Position and Demand - 100% of Phase one production capacity is already committed through existing offtake agreements, with strong demand for Phase two output of 37,500 metric tons per year [7] - Customer interest in domestically produced battery anode materials remains strong, aligning with U.S. policy goals to onshore sourcing and manufacturing of critical minerals [5][6] Financing and Supply Chain - The company is working on securing a secured debt facility to cover the remaining costs of Phase one, with a strategic priority on financing reflecting market demand [10] - Recent protests at the current feedstock supplier have temporarily slowed processes, but operations are expected to resume in June [11][12] - Westwater is diversifying its supply chain by evaluating non-Chinese feedstock sources and is close to securing a backup supply agreement [12][27] Challenges and Risks - The unexpected withdrawal of an offshore institutional investor from the financing syndication has caused delays, but the company is now working with multiple lenders [10][11] - The evolving tariff landscape may impact Phase one costs, although the company believes it is somewhat shielded from inflation due to the majority of equipment already purchased [21][22] Future Opportunities - The company received a letter of interest from the Export-Import Bank, which could provide additional funding for advancing its business beyond Phase one [36][38] - The potential for additional funding from the Export-Import Bank is being explored, although it is not currently needed to complete Phase one financing [36][41] Additional Important Information - The qualification line's operation is critical for gaining experience ahead of full operations, which is seen as a game changer for the company [18][19] - The company remains committed to transparency and operational discipline while navigating opportunities and challenges in the market [13][43]

Production and Capacity - Westwater expects the Kellyton Graphite Plant to produce 12,500 metric tons of CSPG per year in Phase I, primarily for lithium-ion batteries[87] - Westwater has secured offtake agreements for 100% of its anticipated Phase I production capacity and a portion of anticipated Phase II production capacity[89] - The company produced over an 800 kg sample of CSPG for pre-production cell trials during the first quarter of 2025[94] Financial Performance - Net loss for the three months ended March 31, 2025, was $2.7 million, a decrease from a net loss of $2.9 million for the same period in 2024[113] - Net cash used in operating activities was $2.3 million for the three months ended March 31, 2025, a decrease of $0.5 million compared to the same period in 2024[118] - Net cash provided by financing activities increased by $3.7 million for the three months ended March 31, 2025, due to increased shares sold under the ATM Sales Agreement and 2024 Lincoln Park PA[122] Funding and Financial Challenges - The company is working to complete a secured debt facility for approximately $150 million to finance the completion of Phase I of the Kellyton Graphite Plant[96] - The Company's planned non-discretionary expenditures for one year exceed the cash on hand as of the date of the Interim Financial Statements[124] - The Company has faced challenges in securing additional financing due to market volatility, higher interest rates, and uncertain economic conditions[126] - The ability to raise additional funds under the ATM Sales Agreement may be limited by the Company's market capitalization, share price, and trading volume[126] - Construction activities related to the Kellyton Graphite Plant have been significantly reduced until additional funding is secured[124] Cash Position - As of March 31, 2025, the Company's cash balance was approximately $3.3 million[125] - During the three months ended March 31, 2025, the Company sold 2.5 million shares of Common Stock for net proceeds of $2.0 million and approximately 3.8 million shares for net proceeds of $2.6 million[125] - The Company has approximately $49.9 million remaining available for future sales under the ATM Sales Agreement[125] Supply Chain and Geopolitical Risks - The U.S. is almost 100% dependent on imports for battery-grade graphite, highlighting the geopolitical risks and supply-chain vulnerabilities[105][107] - Westwater is at an advanced stage in securing a backup feedstock supplier due to recent protests affecting its primary supplier[97] Forward-Looking Statements and Risks - Forward-looking statements regarding funding adequacy and operational timelines are subject to various risks and uncertainties[129] - The Company cautions that actual results may differ materially from forward-looking statements due to factors such as inflation, supply chain disruptions, and geopolitical issues[130] - The Company has no off-balance sheet arrangements[128]

Financial Performance - For the year ended December 31, 2024, the consolidated net loss from continuing operations was $12.7 million, or $0.22 per share, compared to a net loss of $7.8 million, or $0.15 per share in 2023, reflecting a $4.9 million increase in losses [255]. - Net loss increased to $12,657,000 in 2024 from $7,751,000 in 2023, representing a rise of about 63% [298]. - Basic and diluted loss per share rose from $0.15 in 2023 to $0.22 in 2024, an increase of approximately 47% [298]. - The Company recognized a total other expense of $1.2 million for the year ended December 31, 2024, compared to other income of $2.4 million in 2023 [389]. - The Company reported a net loss of $4.98 million for the battery-grade graphite segment in 2024, compared to a net loss of $5.97 million in 2023 [416]. Cash Flow and Liquidity - Net cash used in operating activities for the year ended December 31, 2024, was $5.8 million, a decrease of $5.6 million compared to 2023 [262]. - Cash and cash equivalents decreased significantly from $10,852,000 at the end of 2023 to $4,272,000 at the end of 2024, a drop of approximately 61% [302]. - As of December 31, 2024, the Company had cash balances of $4.3 million and current liabilities exceeded current assets [335]. - The Company expects to continue incurring cash losses due to construction activities at the Kellyton Graphite Plant until operations commence [336]. - The Company has relied on equity financings, debt financings, and asset sales since 2009 to fund its operations [339]. Production and Development - The anticipated annual offtake volume for CSPG natural graphite anode products is 10,000 mt in 2026 and 15,000 mt from 2027 to 2031 under the Offtake Agreement with FCA [242]. - Westwater has secured offtake agreements for 100% of its anticipated Phase I production capacity from the Kellyton Graphite Plant [244]. - The qualification line at the Kellyton Graphite Plant is expected to produce approximately 1 mt per day of CSPG once fully operational [250]. - The company continued construction activities related to Phase I of the Kellyton Graphite Plant during 2024 [303]. - The Company has received all necessary permits to complete the construction of Phase I of the Kellyton Graphite Plant, including air and stormwater permits [411]. Expenses and Costs - General and administrative expenses for the year ended December 31, 2024, were $10.0 million, an increase of approximately $0.2 million compared to the prior year [258]. - Operating expenses decreased from $13,271,000 in 2023 to $11,468,000 in 2024, a reduction of approximately 14% [298]. - Capital expenditures for 2024 were $6,146,000, down from $58,295,000 in 2023, indicating a significant reduction of about 90% [302]. - Product development expenses for the years ended December 31, 2024, and 2023, were $1.2 million and $2.9 million, respectively, indicating a decrease of approximately 58.6% year-over-year [326]. - Stock-based compensation expense for the year ended December 31, 2024, was $1.3 million, compared to $0.8 million in 2023, reflecting a 62.5% increase [383]. Assets and Liabilities - Total current assets decreased from $11,614,000 in 2023 to $4,863,000 in 2024, a decline of approximately 58% [297]. - Total liabilities increased from $9,388,000 in 2023 to $13,235,000 in 2024, marking a growth of about 41% [297]. - Total stockholders' equity fell from $140,443,000 in 2023 to $133,122,000 in 2024, a decrease of about 5% [300]. - The net book value of property, plant, and equipment increased to $137.868 million as of December 31, 2024, from $132.400 million as of December 31, 2023 [347]. - The Company reported accrued liabilities of $2.1 million, an increase of 24.1% from $1.7 million in 2023 [359]. Financing and Debt - The company has executed a term sheet for a $150 million secured debt facility to complete the construction of Phase I of the Kellyton Graphite Plant [251]. - A term sheet has been executed with a global financial institution for a secured debt facility, but no assurance can be given that financing will be available [271]. - The Company is exploring alternative project financing options, including project debt and joint ventures, to fund the construction of the Kellyton Graphite Plant [270]. - The Company has committed to purchase up to $30.0 million of its common stock under the 2024 Lincoln Park PA [340]. - The Company has approximately 9.5 million shares of common stock available for future sales under the 2024 Lincoln Park PA, with a total commitment of up to $30.0 million [377]. Inventory and Write-downs - The Company recognized a $1.0 million write-down of inventory for the year ended December 31, 2024, based on net realizable value [283]. - The Company values its inventory at the lower of cost or net realizable value, with write-downs reported as a component of costs applicable to sales [282]. - The company reported a write-down of raw material inventory of $1.0 million in 2024, while there was no write-down in 2023 [390]. - The Company completed agreements to sell a portion of its raw material inventory, recognizing sales of $3.6 million in 2024, up from $0.1 million in 2023 [389]. Regulatory and Market Considerations - The Company anticipates that U.S. regulations regarding graphite extraction may evolve but does not foresee any unique adverse impacts on its operations [407]. - The Company’s proprietary purification process for graphite is subject to a patent application filed with the U.S. Patent and Trademark Office [408]. - The company evaluates its long-lived assets for impairment when events indicate that carrying amounts may not be recoverable, considering significant negative impacts in market price or demand for graphite [316]. - The company’s estimates of future cash flows for impairment assessments require significant management judgment and are subject to risks and uncertainties [318]. - The Company has not recorded revenues from operations since 2009, raising substantial doubt about its ability to continue as a going concern [288].

Production and Offtake Agreements - Westwater expects the Kellyton Graphite Plant to produce 12,500 metric tons of CSPG annually in Phase I, primarily for lithium-ion batteries [88]. - The company has entered into a binding off-take agreement with Hiller Carbon for the supply of Graphite Fines, expecting production of approximately 14,000 metric tons per year [89]. - Under the Offtake Agreement with FCA, the anticipated annual offtake volume is 10,000 metric tons in 2026, increasing to 15,000 metric tons from 2027 to 2031 [90]. Construction and Financing - Westwater has reduced the estimated cost of Phase I construction to $245 million, a decrease of 9.6% from the previous estimate of $271 million [93]. - As of September 30, 2024, the company has incurred approximately $121.5 million in costs related to the construction of Phase I of the Kellyton Graphite Plant [95]. - The company expects to require approximately $124 million to complete construction of Phase I, with production anticipated to begin in 2026, subject to securing financing [95]. - The qualification line at the Kellyton Graphite Plant is expected to be operational in Q4 2024, producing approximately 1 metric ton of CSPG per day for customer qualification [96]. - Westwater has executed a term sheet for a $150 million secured debt facility to complete the construction of Phase I of the Kellyton Graphite Plant [99]. - The company is considering alternative financing sources, including project debt and joint ventures, to fund the construction of the Kellyton Graphite Plant [123]. Financial Performance - The net loss for the three months ended September 30, 2024, was $3.1 million, a decrease from a net loss of $3.5 million for the same period in 2023 [111]. - The net loss for the nine months ended September 30, 2024, was $9.8 million, compared to a net loss of $9.5 million for the same period in 2023 [112]. - Product development expenses for Q3 and the first nine months of 2024 were $0.3 million and $0.9 million, respectively, a decrease of $0.7 million and $1.8 million compared to the same periods in 2023 [113]. - Exploration expenses for Q3 and the first nine months of 2024 decreased by $0.1 million and $0.2 million, respectively, compared to the same periods in 2023 due to lower personnel costs [114]. - Net cash used in operating activities for the first nine months of 2024 was $3.8 million, a decrease of $8.4 million compared to the same period in 2023, primarily due to cash collected on sales of raw material inventory [117]. - Net cash used in investing activities decreased by $51.8 million for the first nine months of 2024 compared to the same period in 2023, attributed to lower capital expenditures [118]. - Net cash provided by financing activities decreased by $3.0 million for the first nine months of 2024 compared to the same period in 2023, due to fewer shares sold under the ATM Sales Agreement [119]. - As of September 30, 2024, the company's cash balance was approximately $4.5 million, with $7.8 million remaining available for future sales under the ATM Sales Agreement [122]. - The company has registered approximately 10.5 million shares of common stock available for future sales under the 2024 Lincoln Park PA, which allows for up to $30.0 million in purchases [122]. - The company expects to continue incurring losses until operations commence at the Kellyton Graphite Plant, relying on debt and equity financing for funding [123]. - The company has not recorded revenue from operations since 2009, and as of September 30, 2024, current liabilities exceeded current assets [120].

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Offtake and Procurement Agreements - Westwater entered into an Offtake Agreement with FCA, committing to supply 10,000 mt of CSPG natural graphite anode products in 2026 and 15,000 mt annually from 2027 to 2031[64] - The Company signed a Procurement Agreement with SK On, with a forecasted volume of 10,000 mt of CSPG in the final year of the agreement[65] Kellyton Graphite Plant Production and Costs - Westwater expects the Kellyton Graphite Plant to produce 12,500 mt per year of CSPG in Phase I, a 67% increase from previous estimates[72] - The Company has incurred $120.4 million in construction costs for Phase I of the Kellyton Graphite Plant, with an estimated $150 million required to complete construction[70] - Westwater anticipates beginning production in 2026, subject to securing additional financing[70] - Net cash used in investing activities decreased by $48.6 million for the six months ended June 30, 2024, as the company reduced construction activity for the Kellyton Graphite Plant[90] Financial Performance and Expenses - Westwater reported a net loss of $6.7 million for the six months ended June 30, 2024, compared to a net loss of $6.0 million in the same period in 2023[84] - Product development expenses decreased by $1.1 million for the six months ended June 30, 2024, due to the use of the in-house R&D Lab for sample processing[85] - Other expense, net increased by $1.4 million to $1.0 million for the three months ended June 30, 2024, and by $1.9 million to $0.9 million for the six months ended June 30, 2024, due to lower interest income and higher expenses related to inventory sales and write-downs[88] Cash Flow and Financing - Net cash used in operating activities decreased by $3.7 million to $5.2 million for the six months ended June 30, 2024, primarily due to reduced raw material inventory purchases and third-party service expenses[89] - Net cash provided by financing activities decreased by $2.2 million for the six months ended June 30, 2024, due to fewer shares sold under the ATM Offering Agreement and lower trading volumes[91] - The company's cash balance was $3.2 million as of June 30, 2024, with $0.8 million raised from selling 1.8 million shares under the ATM Offering Agreement[95] - The company expects to continue incurring losses until operations commence at the Kellyton Graphite Plant, relying on debt and equity financing to fund construction[96] - The company may offer and sell shares of common stock with an aggregate offering price of up to $7.0 million under the ATM Offering Agreement as of June 30, 2024[97] - The company received $1.0 million from sales of raw material graphite concentrate and $0.5 million from capital cost recoupment after June 30, 2024, maintaining a cash balance of $3.2 million as of August 12, 2024[95] - The company is considering alternative financing options, including project debt, convertible debt, or partnerships, to fund the Kellyton Graphite Plant construction[96] - The company faces risks related to securing additional funding, which could impact the construction timeline and operations of the Kellyton Graphite Plant[92] Mineral Rights and Regulatory Environment - The Company holds mineral rights across 41,965 acres of the Alabama graphite belt through its subsidiary, Alabama Graphite[73] - Westwater believes the Inflation Reduction Act's domestic content requirements could provide indirect future benefits to the Company[77] Share Issuance and Capital - The Company sold 1.8 million shares of common stock for net proceeds of $0.8 million during the six months ended June 30, 2024[83]

Core Viewpoint - Westwater Resources Inc has secured a significant sales agreement with Fiat Chrysler, part of the Stellantis group, which is crucial for the company's efforts to obtain debt financing and expand its market presence [1][2]. Group 1: Sales Agreement Details - The Baltic sales agreement with Fiat Chrysler is a major contract that will help Westwater Resources in securing debt financing [2]. - The company will supply natural graphite anode material from its Carrollton graphite plant, achieving 100% production capacity for Phase One, extending the contract through to 2031 [3]. Group 2: Market Position and Financing - The graphite market has been historically dominated by China, and establishing production capabilities in North America is essential for lenders [4]. - Having 100% committed volumes under the contract provides a significant advantage for underwriting projects compared to uncommitted capacity [4][5]. Group 3: Future Plans and Construction - The contract with Fiat Chrysler is set to commence in 2026, and the company plans to select a lender and proceed with due diligence for financing [6][7]. - Once financing is secured, the company will rapidly continue construction to meet the forecasted volumes outlined in the contract [7][10]. Group 4: Strategic Focus - The current focus is on customer engagement and securing additional supply agreements for Phase Two of the Kellyton project, while prioritizing the completion of Phase One [10].

Summary of Westwater Resources Inc. Business Update Conference Call Company Overview - **Company**: Westwater Resources Inc. (NYSE: WWR) - **Industry**: Graphite and battery materials, specifically focused on anode materials for electric vehicles Key Points Industry and Market Developments - Westwater has signed a second multi-year offtake agreement with Fiat Chrysler Automobiles (FCA), part of Stellantis Group, for the sale of Coated Spherical Purified Graphite (CSPG) produced at the Kellyton Graphite Plant [4][5] - The agreement ensures that 100% of planned phase one production is contracted through 2031, with phase two volumes also beginning to be contracted [5][6] Financial and Operational Highlights - The FCA agreement includes indexation for flake and CSPG pricing, providing downside protection against fluctuating graphite prices, which is attractive to lenders [6][7] - The planned production capacity for phase one is 12,500 metric tons per annum, with production expected to commence in 2026 [13][15] - The company is in discussions with multiple lenders for debt financing to complete phase one construction, with secured offtake agreements being critical for these discussions [8] Strategic Partnerships - The partnership with Stellantis is significant as it marks the first offtake agreement for natural graphite anode material executed by a 100% U.S.-based company with a tier 1 automotive manufacturer [9] - The agreements with Stellantis and SK ON are expected to enhance Westwater's ability to service debt financing and achieve profitability once the plant is operational [18] Government Relations and Funding - Westwater has maintained dialogue with various U.S. government entities, including the Department of Energy, regarding potential funding opportunities, although specific applications or negotiations were not disclosed [21] Stock Market and Compliance - Westwater is listed on the New York Stock Exchange American and has no plans for a reverse stock split, emphasizing compliance with listing regulations [23][25] - The company has not received any notices of compliance or non-compliance from the NYSE [25] Future Outlook - A feasibility study for phase two is underway, with updates expected in the August call [16] - The company is optimistic about achieving profitability with the current contracts in place and is focused on creating value for shareholders [18][23] Additional Important Information - The call included a question-and-answer session where analysts inquired about production timelines, economic updates, and stock price concerns, indicating active investor interest and scrutiny [10][20][24]