Westwater Resources(WWR) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net loss of approximately $3.6 million or $0.07 per share for Q2 2023, compared to a net loss of $3.2 million or $0.07 per share in Q2 2022, indicating an increase in net loss primarily due to higher product development costs [34] - Cash expenditures related to Phase I construction totaled approximately $107 million, with an estimated $164 million remaining to complete the project [29] - Cash used in operating activities increased by approximately $3 million in the first half of 2023 compared to the same period in 2022, mainly due to higher product development costs and general administrative expenses [31] Business Line Data and Key Metrics Changes - The Kellyton Plant is expected to produce an optimized annual run rate of 7,500 metric tons of Coated Spherical Purified Graphite (CSPG) by the end of 2024 [23] - The company has sent 36 product samples to potential customers from May through July, receiving strong interest and positive feedback [21] Market Data and Key Metrics Changes - Global demand for lithium-ion batteries is projected to grow at a compounded annual rate in the double digits through 2035, which will drive increased demand for CSPG [7] - Demand for CSPG in North America is expected to reach approximately 200,000 tonnes per year by 2030 and over 400,000 tonnes by 2035 [8] Company Strategy and Development Direction - The company aims to become the first vertically integrated natural graphite anode supplier in the U.S., focusing on the domestic energy transition [5] - The company has secured feedstock from Syrah Resources, a non-Chinese source, and plans to perform 100% of the conversion process domestically, ensuring compliance with the Inflation Reduction Act [12] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of securing an offtake agreement as a critical milestone for finalizing debt transactions [39] - The company is optimistic about the future, citing strong customer feedback on CSPG samples and ongoing negotiations for offtake agreements [52] Other Important Information - The company holds mineral rights to approximately 42,000 acres across the Alabama graphite belt, which provides significant competitive advantages [25] - A preliminary economic assessment for the Coosa deposit is expected to be completed by the end of the calendar year [27] Q&A Session Summary Question: Can you explain the mass sample provided to SK On? - The company confirmed that the sample meets specifications and is targeting to produce a mass production sample by the end of the year [36] Question: Is the finalization of a supply agreement anticipated this year? - The company anticipates finalizing the supply agreement this year, currently in the final stages of negotiation [37] Question: Will the PEA on the Coosa deposit include an economic analysis? - Yes, the PEA will include an economic analysis and cash flow estimates based on a preliminary mine design [38] Question: How confident is the company about completing financing after securing a sales agreement? - The company views securing a sales agreement as a critical milestone for closing financing, with multiple lenders interested in the project [39] Question: Are there special funding groups for green energy loans? - Yes, lenders are interested in the energy transition and battery materials, with some having specific funds for these projects [41] Question: Will Phase II production be necessary to meet demand from other manufacturers? - Yes, the company is engaging with other potential customers and plans to use Phase II production to meet additional demand [45] Question: Has the company considered asset-level financing? - The company has explored various financing avenues, finding that current lenders offer more attractive terms than asset-level financing options [50]