Westwater Files International Arbitration Request Against Republic of Turkey
Seeks full compensation for illegal taking of the Temrezli and
Şefaatli uranium projects – an investment that would have returned $267
million
CENTENNIAL, Colo.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24WWR&src=ctag” target=”_blank”gt;$WWRlt;/agt; lt;a href=”https://twitter.com/hashtag/uranium?src=hash” target=”_blank”gt;#uraniumlt;/agt;–Westwater Resources, Inc. (“Westwater,” or the “Company”) (Nasdaq:
WWR), an energy materials development company, today
announced the filing of a Request for Arbitration against the Republic
of Turkey for its unlawful actions against the Company’s investments,
most notably, the illegal taking of its Temrezli and Şefaatli uranium
projects in June 2018. These projects were owned by Westwater’s Turkish
subsidiary Adur Madencilik Limited Sirketi (“Adur”).
Christopher M. Jones, President and CEO of Westwater Resources, stated:
“Over the course of this year, we have attempted to open a dialogue with
the Republic of Turkey without substantive result. Our good faith
efforts have not been reciprocated by the Turkish government. The time
for utilizing the provisions of the US-Turkey bilateral investment
treaty and to seek recovery of the Company’s investment in the Temrezli
and Şefaatli projects has come.”
Since 2007, Adur has held the exclusive rights for the exploration and
development of uranium at Temrezli and Şefaatli. To date, Adur and its
shareholders have invested substantially in these two projects, using
their technical expertise and carrying out extensive drilling, testing
and studies to move the projects towards production. Having successfully
completed the exploration stage, in 2013-2014, Adur was granted a number
of operating licenses by the Turkish government to develop the Temrezli
mine. As a direct result of Adur’s efforts, Temrezli is the most
advanced uranium project in Turkey. Experts have estimated that the mine
will generate revenues of up to USD 644 million over its life, netting
Westwater a return on its investment of USD 267 million as described in
the Prefeasibility Study completed for the Temrezli project in 2015.
For many years, Adur and Westwater worked closely with the Turkish
authorities and shared their technical expertise in uranium mining.
However, Turkey’s most recent actions have undermined this longstanding
relationship. In particular, in June 2018, the Turkish government
cancelled all of Adur’s exploration and operating licenses with
retroactive effect, rendering Westwater’s investment in Adur effectively
worthless. While the Turkish authorities had variously issued, renewed
and overseen these licenses for more than a decade, they now assert that
the licenses were issued by mistake and that the Turkish government has
a governmental monopoly over all uranium mining activities in Turkey, in
violation of Westwater’s rights under Turkish and international law.
Westwater has reached out on numerous occasions to the Turkish
government to resolve this dispute amicably, to reinstate the licenses,
and to remedy the unlawful actions, but to no avail.
Westwater will continue to seek meaningful engagement from the Turkish
authorities to resolve this dispute. However, Westwater is also fully
committed to the protection of its rights. In the absence of any
willingness of the Turkish authorities to engage in a such a dialogue at
this time, Westwater has been left with no choice but to file a Request
for Arbitration against the Republic of Turkey before the International
Centre for the Settlement of Investment Disputes (“ICSID”), pursuant to
the Treaty between the United States of America and the Republic of
Turkey concerning the Reciprocal Encouragement and Protection of
Investments.
History of the Projects
Since 2007, Adur has held the exclusive rights for the exploration and
development of uranium at Temrezli and Şefaatli, two sites located
around 200km from Ankara, which include the largest and highest-grade
deposits of uranium in Turkey. These rights were granted by licenses
issued by the Turkish mining agency, MIGEM, in accordance with the
relevant legislation, and for many years Adur has worked closely with
the Turkish authorities, even sharing know-how on uranium mining.
In November 2015, Westwater acquired Anatolia Energy and thus became the
ultimate owner of Adur and its interest in the Temrezli and Şefaatli
projects. The acquisition allowed Westwater to bring to the table its
technical knowledge, funding and access to the US market. In particular,
Westwater has decades of experience in uranium mining and processing,
operating several facilities in Texas and New Mexico. Since the 1980s,
it has brought to market over 8 million pounds of uranium concentrate (U3O8,
known as “yellowcake”). Westwater has particular expertise in the in-situ
recovery (“ISR”) of uranium. This technique – in which uranium is
extracted in solution through wells drilled on the property – bears
significant environmental and cost advantages over other methods, such
as open pit mining, including by reducing water consumption and waste.
Since the feasibility of the projects had been modelled on the basis of
ISR, Westwater’s knowledge of this technology was welcomed by MIGEM.
With the support of its shareholders, by 2018 Adur had carried out
extensive work on the projects, including the drilling of 123 holes at
Temrezli and 164 holes at Şefaatli, with a total depth of almost 40km.
Investment was also undertaken in new infrastructure and outreach
programs to the local community. At the same time, Westwater and its
predecessors in interest had engaged consultants to undertake various
studies, hydrogeological and metallurgical test programs, and
environmental impact assessments in order to plan for the sustainable
development of the projects.
All these efforts have been with the active encouragement of, and in
concert with, the Turkish authorities. For many years, Adur and its
shareholders enjoyed a close working relationship with MIGEM and the
Ministry of Energy – for example, regularly meeting, reporting on
progress at the sites, organizing workshops to share Westwater’s
know-how, and even arranging for a delegation from the Turkish
government to visit uranium mining facilities in the USA. Throughout
this time, the Turkish government not only supported Adur’s activities
on the ground, but also drew on Westwater’s technical expertise in
uranium mining to help train its personnel.
Turkey’s Cancellation of Adur’s Licenses in June 2018
On 20 June 2018, the Turkish government informed Adur that it was
cancelling all Adur’s licenses with retroactive effect, making it
impossible for Adur to continue exploring and developing the two
projects. Immediately prior to their cancellation, Adur had held seven
licenses – four operating licenses, one pending operating license and
two exploration licenses – granting it exclusive rights over an area of
more than 10,000 hectares (24,700 acres). The justification given in the
letters was that MIGEM had apparently issued the licenses in error.
Turkey’s Failure to Negotiate and to Pay Compensation
Westwater attempted to engage with the Turkish authorities on numerous
occasions and wrote letters to Turkish governmental officials on 28 June
2018, 7 September 2018, 11 October 2018, and again on 25 November 2018.
In each letter, Westwater expressed its concern with the illegal taking
of the Adur licenses and requested that Turkey negotiate, in good faith,
as to the compensation that Westwater is entitled to under international
law. The Turkish government has, however, persistently failed to make
any offer of compensation despite committing to do so. As a result,
Westwater has now filed its request for arbitration before ICSID.
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 three 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 the Request for Arbitration and timing and
outcome thereof, 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,
Railroad Valley, 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. The results
of the initial optimization study are preliminary in nature and subject
to revision following WWR’s further analysis of the Coosa Graphite
Project.
Contacts
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
