Westwater Resources, Inc. (Nasdaq: WWR), an energy
materials development company, announced its results for fiscal
year 2019, and provided an outlook on its battery graphite business
development for 2020.
Christopher M. Jones, President and Chief Executive Officer,
said, “We believe that 2019 was a great year for Westwater, as we
continued to make real progress in our advanced graphite battery
products business. Back in June of 2018, we published our Optimized
Business Plan for the Coosa Graphite Project and since then we have
made several important improvements to bring forward cash flow to
2022. In 2019, we put into place a long-term purchase agreement to
procure high-purity, natural flake graphite concentrate that allows
battery graphite production far earlier than originally
contemplated. Also in 2019, we partnered with Dorfner Anzaplan for
the design of our Pilot Plant, which will enable us to put larger
samples of battery graphite into the hands of various large-scale
battery manufacturers. And in 2019 we received a request for a one
metric tonne sample from a major, well-known battery manufacturer.
We believe that these activities with other parties in the advanced
graphite market illustrates the value of our Coosa business plan
and they advance real and positive changes to the business plan in
terms of time and cost.
“We are certainly not satisfied with our share price today. I
continue to believe that our best remedy is the execution of our
Coosa business plan and in doing so to become a leading, American
source of high-quality graphite battery materials. We have
assembled a highly experienced team of tenured leaders in energy
minerals development. We continue to manage our cash position
prudently, monetizing non-core assets and securing financing
sources with terms to keep our cost of capital low. We thank our
shareholders for approving those financing terms last summer.
“Also, an important recent development in the US uranium
industry has provided a real-time opportunity for Westwater. The
President’s budget, announced February 10, 2020, provides for a
mechanism to build a strategic stockpile of uranium to secure our
nation’s defensive needs. $150 million dollars has been requested
for FY 2021 to create a uranium reserve for use in the event of a
market disruption in the United States. The government’s plan
includes the possibility for additional expenditures (each subject
to Congressional approval) over the next nine years for a total of
$1.5 billion. This near-term budget request and long-term plan
increases the value of Westwater’s two fully licensed production
facilities in Texas and uranium properties in Texas and New Mexico.
We stand ready to participate in the creation of the government’s
new uranium reserve.
“With our business opportunistically positioned to take
advantage of the low carbon future in both power generation and
energy storage, we see great years ahead. I wish to thank our
shareholders for their continued support,” concluded Mr. Jones.
Highlights for Fiscal Year 2019 and Year to Date
- GRAPHITE BUSINESS DEVELOPMENT:
- On November 21, 2019, Westwater announced it has engaged the
internationally recognized and highly regarded specialist in
high-purity industrial and strategic metals businesses, Dorfner
Anzaplan, to accelerate product development and design for our
Graphite Pilot Program. Under the agreement, Dorfner will assist
Westwater in defining (1) the method, equipment and operating
parameters and requirements for graphite purification; (2) the
operating parameters and equipment for processes required to
manufacture Westwater’s battery graphite products; and (3) the
design of Westwater’s pilot program.
- On September 19, 2019, the Company announced a long-term
agreement to purchase high-purity, natural flake graphite for Coosa
Project allowing the previously planned startup of the Coosa
Graphite Processing Facility earlier than possible with internally
mined graphite.
- The purchase agreement with an internationally known company
provides Westwater with a reliable and long-term source of
high-quality natural flake graphite concentrate.
- On October 15, 2019, Westwater announced that it had received
its first shipment of graphite concentrate, 20 metric tonnes of
material, to be fully utilized in development of planned pilot
scale processes and to produce several metric tonnes of battery
ready advanced graphite products. Once processed, various sizes of
each of the Company’s three planned products will be distributed to
potential clients to advance the pre-qualification process.
- On August 6, 2019, Westwater announced that testing of its
ULTRA-PMGTM (purified micronized graphite) product at a major
battery manufacturer has resulted in a request for a bulk sample of
one metric tonne for further testing.
- ULTRA-PMGTM is a conductivity enhancer to primary lithium,
alkaline and lead-acid batteries, and is designed to improve the
performance of these types of batteries, providing manufacturers a
competitive advantage.
- On April 19, 2019, the Company announced the long-term cycling
data obtained by independent tests conducted on coated spherical
purified natural crystalline graphite (ULTRA-CSPGTM) from the
Company’s Coosa Graphite Deposit.
- This testing was the first ever long-term cycling data on US
sourced CSPG, which demonstrates superior performance compared to
the leading CSPG originated from China.
- On April 11, 2019, Westwater announced independent test results
from long-term cycling data conducted on uncoated, spherical
purified graphite (SPG) from the Company’s Coosa Graphite Deposit.
Purification, micronization, spheronization and sizing was
performed on the natural flake graphite from our Coosa Graphite
Deposit utilizing the Company’s proprietary process. The purity
level achieved was 99.95 wt%.
- URANIUM PROGRESS: On March 7,
2019, Westwater announced that Uranium Royalty Corp. (URC) and its
US subsidiary had together agreed to purchase, for $2.75 million,
four royalties owned by Westwater on future uranium production from
mineral properties in South Dakota, Wyoming and New Mexico, as well
as a promissory note and the related mortgage that the Company
holds on the Church Rock and Crownpoint properties in New Mexico
owned by Laramide Resources Ltd. On September 3, 2019, Westwater
announced the completion of the sale with URC.
- RECLAMATION SUCCESS: On March 4,
2019, the Texas Commission on Environmental Quality (TCEQ)
certified the third phase of site reclamation at the Vasquez
Project in Duval County, Texas as complete and released a surety
bond posted by the Company in excess of $208,000. This milestone
involved the complete reclamation and plugging of 844 production
wells formerly used for production and water quality monitoring.
This success follows a similar reclamation milestone achievement at
our Rosita property, also in Texas. Final reclamation efforts,
including surface work and the reclamation of a waste disposal well
at Vasquez are expected to be complete later in FY2020. Once that
work is certified as complete by the TCEQ, Westwater will follow up
with a request for surety bond release on that phase.
- VANADIUM DISCOVERY: On
February 19, 2019, Westwater announced that it had received
independent lab results that demonstrated a wide-spread
distribution of vanadium mineralization throughout the central
portion of the Company’s mineral holdings within the Coosa Project
in Alabama. On April 9, 2019, the Company announced a new drilling
and sampling exploration plan to explore for and define vanadium
resources, and to further quantify the graphite deposit, on five
target areas at its Coosa Project in Alabama. Execution of this
exploration plan is subject to funding in 2020. The Company
believes that this exploration plan could advance and enhance the
evaluation of its existing graphite resource, including the
possibility for an extension of that mineralization.
- LITHIUM PROGRESS: On April 12,
2019, Westwater announced that its application for the use of 1500
acre-feet of groundwater per year had been approved by the
Department of Natural Resources of the State of Utah. This water is
intended for the development of lithium mining operations at the
Company’s Sal Rica Project. The right to use water is very
important in the arid American West, and this right is essential to
the development of lithium brine resources at the Sal Rica Project.
This is a major milestone for the Company, as water is perhaps the
most crucial element used in the mining of lithium.
- PURCHASE AGREEMENT WITH LINCOLN PARK
CAPITAL: On August 6, 2019, our shareholders approved the
sale of additional shares under the $10 million Purchase Agreement
between Westwater Resources and Lincoln Park Capital. This
financing source uses low price discounts and provides
opportunistic timing options that can take advantage of market
events that cannot be anticipated. Westwater believes this
financing source will lower cost of capital for the Company verses
conventional instruments used in the past.
Key Financial Highlights
Table 1: Financial Summary
($ in 000's, Except Per
Share)
FY
2019
FY
2018
Variance
Net Cash Used in Operations
$(10,049)
$(11,649)
-13.7%
Mineral Property Expenses
$(2,852)
$(3,538)
-19.4%
General and Administrative, including
Non-cash Stock Comp
$(6,086)
$(7,009)
-13.2%
Net Loss
$(10,565)
$(35,684)
-70.4%
Net Loss Per Share
$(5.39)
$(38.47)
-86%
Avg. Weighted Shares Outstanding
1,961,086
927,687
111.4%
- Net cash used in operations. Net
cash used in operating activities was $10.0 million in fiscal year
2019, compared to $11.6 million in fiscal year 2018. The $1.6
million decrease in cash used was due to a decrease of $0.7 million
of mineral property expenses and a decrease of $0.9 million in
general and administrative expenses during 2019 compared with
2018.
- Operating expenses. Mineral
property expenses decreased by approximately $0.7 million as
compared to the corresponding period in 2018. The decrease was
primarily due to a reduction in reclamation activities at the
Vasquez and Rosita Projects due to adverse weather conditions in
the first half of 2019 and a reduction in operating activities at
the Temrezli Project due to the revocation of the mining licenses
by the government of Turkey in June 2018. General and
administrative expenses decreased by $0.9 million in 2019 due to
reductions in stock compensation expense, payroll, and sales and
marketing costs during the year.
- Net loss. Our consolidated net
loss for the years ended December 31, 2019 and 2018 was $10.6
million and $35.7 million or $5.39 and $38.47 per share,
respectively. The decrease in consolidated net loss was primarily
due to the $23.7 million impairment charge on our uranium
properties in 2018, mostly consisting of a $18.0 million impairment
charge relating to the Temrezli and Sefaatli Projects located in
Turkey. Additionally, $0.3 million was spent in 2018 related to the
acquisition of Alabama Graphite. No acquisition-related costs
occurred during 2019.
- Cash and working capital. As of
December 31, 2019, the Company’s cash balances were $1.9 million
and a working capital deficit balance of $1.3 million, compared
with a cash balance of $1.6 million and a working capital balance
of $1.0 million as of December 31, 2018. The $2.3 million decrease
in working capital year-over-year was due to a $1.8 million
decrease in current assets as a result of sale of the Laramide
promissory note and a $0.5 million increase in current liabilities
due mostly to an increase in the current portion of operating lease
liabilities and the asset retirement obligation.
- The Company intends to pursue project financing to support
execution of the graphite business plan, including discretionary
capital expenditures associated with graphite battery-material
product development, construction of pilot plant facilities and
construction of commercial production facilities. Additionally, the
Company is pursuing project financing in the way of possible joint
venture partners to fund discretionary greenfield exploration
activities for its lithium business.
- Shares outstanding. Total shares
outstanding are 4,160,723 as of February 14, 2020.
Conference Call & Webcast
The Company will hold a conference call to discuss its fiscal
year 2019 results on Tuesday, February 18, 2020 at 11:00 a.m.
Eastern Time (9:00 a.m. Mountain Time).
Dial-in Numbers:
+1 (800) 319-4610 (U.S. and Canada)
+1 (604) 638-5340 (International)
Conference ID:
Westwater Resources Conference Call
Hosting the call will be Christopher M. Jones, President and
Chief Executive Officer of Westwater Resources, who will be joined
by Jeffrey L. Vigil, Vice President-Finance and Chief Financial
Officer and Mr. Dain McCoig, Vice President of Operations. Mr.
Jones will present an overview of the Company’s business position
and provide updates on its graphite, lithium and uranium
businesses. Mr. Vigil will review the financial results. Mr. McCoig
will be available for questions as part of the call.
The conference call and presentation will also be available via
a live webcast through the Company’s website,
www.WestwaterResources.net. A replay of the call will be available
on the Company’s website for a limited time and also by phone using
the details below.
Replay Numbers:
+1 (855) 669-9658 (U.S. and
Canada)
+1 (412) 317-0088
(International)
Replay Access Code:
4162
About Westwater Resources
WWR is focused on developing energy-related materials. The
Company’s battery-materials projects include the Coosa Graphite
Project — the most advanced natural flake graphite project in the
contiguous United States — and the associated Coosa Graphite Mine
located across 41,900 acres (~17,000 hectares) in east-central
Alabama. In addition, the Company maintains lithium mineral
properties in prospective lithium brine basins in Nevada and Utah.
Westwater’s uranium projects are located in Texas and New Mexico.
In Texas, the Company has two licensed and currently idled uranium
processing facilities and approximately 11,000 acres (~4,400
hectares) of prospective in-situ recovery uranium projects. In New
Mexico, the Company controls mineral rights encompassing
approximately 188,700 acres (~76,000 hectares) in the prolific
Grants Mineral Belt, which is one of the largest concentrations of
sandstone-hosted uranium deposits in the world. Incorporated in
1977 as Uranium Resources, Inc., Westwater also owns an extensive
uranium information database of historic drill hole logs, assay
certificates, maps and technical reports for the western United
States. For more information, visit www.westwaterresources.net.
Cautionary Statement
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 “expects,”
“estimates,” “projects,” “anticipates,” “believes,” “could,” and
other similar words. All statements addressing events or
developments that WWR expects or anticipates will occur in the
future, including but not limited to statements relating to
developments and future production from the Coosa Project, the
performance of and market for the Company’s graphite products,
potential funding for a uranium reserve in the United States, and
the potential for partnering opportunities or project finance for
the Company’s projects, are forward-looking statements. Because
they are forward-looking, they should be evaluated in light of
important risk factors and uncertainties. These risk factors and
uncertainties include, but are not limited to, (a) the Company’s
ability to successfully integrate Alabama Graphite Corporation’s
business into its own, and the risk that additional analysis of the
Coosa Graphite Project may result in revisions to the findings of
WWR’s initial optimization study; (b) the Company’s ability to
raise additional capital in the future; (c) spot price and
long-term contract price of graphite, lithium, vanadium and
uranium; (d) risks associated with our domestic operations; (e)
operating conditions at the Company’s projects; (f) government and
tribal regulation of the graphite industry, the lithium industry,
the vanadium industry, the uranium industry, and the power
industry; (g) world-wide graphite, lithium, vanadium and uranium
supply and demand, including the supply and demand for
lithium-based batteries; (h) maintaining sufficient financial
assurance in the form of sufficiently collateralized surety
instruments; (i) unanticipated geological, processing, regulatory
and legal or other problems the Company may encounter in the
jurisdictions where the Company operates or intends to operate,
including in Alabama, Texas, New Mexico, Utah, and Nevada; (j) the
ability of the Company to enter into and successfully close
acquisitions or other material transactions; (k) the results of the
Company’s lithium brine exploration activities at the Columbus
Basin and Sal Rica projects, and the possibility that future
exploration results may be materially less promising than initial
exploration result; (I) any graphite, lithium, vanadium or uranium
discoveries not being in high-enough concentration to make it
economic to extract the metals; (m) currently pending or new
litigation or arbitration; and (n) other factors which are more
fully described in the Company’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and other filings with the
Securities and Exchange Commission. Should one or more of these
risks or uncertainties materialize or should any of the Company’s
underlying assumptions prove incorrect, actual results may vary
materially from those currently anticipated. In addition, undue
reliance should not be placed on the Company’s forward-looking
statements. Except as required by law, the Company disclaims any
obligation to update or publicly announce any revisions to any of
the forward-looking statements contained in this news release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200218005292/en/
Westwater Resources Contact: Christopher M. Jones,
President & CEO Phone: 303.531.0480 Jeff Vigil, VP Finance
& CFO Phone: 303.531.0481 Email:
Info@WestwaterResources.net
Investor Relations Contact: Michael Porter Porter, LeVay
and Rose Phone: 212.564.4700 Email: Westwater@plrinvest.com
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