Westwater Resources(WWR) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Westwater finished Q3 2022 with a cash balance of $100 million and no debt, allowing continued advancement of the graphite business [17] - Net loss for Q3 2022 was $3.5 million or $0.07 per share, compared to a net loss of $4.6 million or $0.13 per share for Q3 2021, reflecting a $1.1 million reduction due to lower product development costs [18] Business Line Data and Key Metrics Changes - The company is constructing Phase I of the Kellyton graphite processing plant with a projected total cost of $202 million, having incurred over $50 million to date [4][17] - Product development costs decreased by $1.6 million during Q3 2022 compared to the same quarter in 2021, primarily due to the absence of costs related to the arbitration against Turkey [18] Market Data and Key Metrics Changes - Industry experts predict significant growth in battery markets and graphite demand, with automakers planning to increase spending on electric vehicles to $1.2 trillion by 2030 [5] - Graphite is designated as a critical mineral by the US Government, with the Inflation Reduction Act providing a 10% refundable tax credit on the cost to produce battery minerals [12] Company Strategy and Development Direction - Westwater's strategy involves developing the graphite processing plant first to lower capital costs and achieve revenue sooner, while securing non-Chinese sources of natural graphite [9] - The company aims to take advantage of the growing market for batteries and electric vehicles, with a focus on domestic production to meet increasing demand [11] Management's Comments on Operating Environment and Future Outlook - Management believes that supply shortage projections for graphite will hold firm, supported by strong fundamentals in the battery materials market [7] - The company is encouraged by positive customer feedback on battery products and intensified interest in US-produced battery minerals due to the IRA [21] Other Important Information - The company has had no recordable safety incidents during the construction of the Kellyton graphite project, emphasizing safety as a core value [13] - The resource model and technical report for the Coosa graphite deposit are nearing completion, with an update expected by the end of the year [15] Q&A Session Summary Question: Concerns about possible oversupply for processed graphite due to Syrah's facility in Louisiana - Management believes that the expected market demand for anode materials will result in a significant shortage, despite the presence of other producers [24] Question: Consideration of other critical metals besides graphite - Currently, the focus remains solely on developing the Kellyton graphite processing plant [25] Question: Sourcing material for the plant before the Coosa deposit is ready - The company has a third-party non-Chinese source of natural flake graphite concentrate under contract [26] Question: Timeline for customer evaluations of products - The evaluation process is iterative and varies by customer, making it difficult to predict definitive timelines for announcements [30] Question: Update on the arbitration process with Turkey - A final decision from the International Court of Arbitration is still pending, with no definitive updates available [32] Question: Estimated costs to complete the plant and additional capital needs - The estimated budget for Phase I is $202 million, with over $50 million incurred to date, and the company is working to secure the remaining financing [35] Question: Discussion on financing preferences between equity and loans - The company is open to all potential sources of financing, considering the current strong balance sheet [41] Question: Pace of capital expenditures and construction progress - Capital spending will fluctuate based on construction progress, with expectations for increased activity in the coming quarters [42][44] Question: Concerns about supply chain and weather impacts on the timetable - Current delivery schedules for long lead items are on track, and the company is monitoring potential impacts [58]