Westwater Resources(US:WWR)2023-03-07 18:48Financial Data and Key Metrics Changes - Westwater Resources finished 2022 with a cash balance of $75.2 million and no debt, allowing continued advancement of its graphite business [17] - Net loss for 2022 was $11.1 million, or $0.25 per share, compared to a net loss of $16.1 million, or $0.49 per share in 2021, reflecting a $5 million reduction due to lower product development and arbitration costs [23][21] - Cash used in operating activities decreased to approximately $13.2 million in 2022 from $16.9 million in 2021, primarily due to reduced product development expenses [20] Business Line Data and Key Metrics Changes - The optimization study for the Kellyton graphite processing plant is expected to double throughput capacity in Phase I to approximately 16,000 metric tons per annum, increasing estimated CSPG production to 7,500 metric tons per year [10] - The estimated pre-tax NPV increased over three times to $417 million, with cumulative pre-tax cash flow rising to $1.9 billion and estimated pre-tax IRR increasing to 24.7% [11] - Phase II production is planned to increase to approximately 40,500 metric tons per year, with a pre-tax NPV of $2.2 billion and cumulative pre-tax cash flow of $10.3 billion [13] Market Data and Key Metrics Changes - The company holds mineral rights to approximately 42,000 acres across the Alabama Graphite Belt, positioning it as the first fully vertically integrated domestic battery-grade graphite company in the US [9] - The demand for CSPG material in the domestic market has increased, prompting the optimization of the plant [25] Company Strategy and Development Direction - The company aims to complete the optimization of Phase I by the second half of 2024, with initial production expected in the first half of 2024 [12] - A new agreement with an electric vehicle battery producer is anticipated to allow for the sale of potentially all anode material from the Kellyton plant [8] - The company is targeting completion of the Coosa deposit by the end of 2028, with ongoing efforts to secure permits and financing [17][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future, highlighting significant progress in increasing production capacity and executing a term sheet for Phase I capital requirements [57] - The company is optimistic about the strong interest from potential customers and the anticipated joint announcement with a battery manufacturer [8][37] Other Important Information - Cash expenditures for Phase I construction totaled approximately $55 million, with an estimated $216 million remaining to complete the project [19] - The company reported zero recordable safety incidents during the construction of the Kellyton graphite project [14] Q&A Session Summary Question: What triggered the optimization study for the plant? - The optimization was driven by increased demand for CSPG material in the US and an improvement in IRR from 15% to close to 25% [25][26] Question: What is the means of the optimization? - The optimization involves rerouting process flows and adding additional equipment while reusing existing equipment [27] Question: What are the sources of the cost increase? - The cost increase is primarily due to the optimization project, with some contribution from delays and cost overruns [28][30] Question: Is the project still on its original schedule? - The project remains on schedule, with commissioning expected to start at the end of this year [31] Question: What is the planned product mix under the optimization plan? - The focus will be on CSPG production due to its higher margin, although purified fines can also be produced depending on economics [32] Question: Is the new development agreement with a previously discussed entity? - Details will be provided in a joint announcement later this month, including the name of the partner [34] Question: Can Phase II production be increased if needed? - Yes, the current footprint allows for increased capacity in Phase II if demand remains strong [42]