Westwater Resources Reports 2018 Results & Energy Minerals Business Update
February 19, 2019
Expands Energy Materials Assets with Significant Vanadium Discovery
at Coosa
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/graphite?src=hash” target=”_blank”gt;#graphitelt;/agt;–Westwater Resources, Inc. (“Westwater,” or the “Company”) (Nasdaq:
WWR), an energy materials development company, announced its results
for fiscal year 2018, and provided an outlook on its energy minerals
business development for 2019.
Christopher M. Jones, President and Chief Executive Officer, said, “We
are pleased with our accomplishments in 2018, including our acquisition
and integration of Alabama Graphite Corp., which gives us an advantage
in a key component of electrical storage devices. We ended 2018 with the
discovery of substantial vanadium mineralization on our existing mineral
leases in Alabama. We are making progress on all fronts; many facets of
Westwater’s business are developing simultaneously. Collectively, I
believe these factors will continue to benefit our business and further
advance Westwater all while maximizing shareholder value.”
Highlights for 2018 and to Date
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RECENT VANADIUM DISCOVERY:
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On November 29, 2018, Westwater announced the discovery of
significant levels of vanadium concentrations at several locales
within the graphitic schists at the Company’s Coosa Graphite
Project (“Coosa Project”). -
On February 19, 2019, concurrent with the issuance of this press
release the Company also announced that it has 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. The wide-spread distribution of highly anomalous
vanadium mineralization, commonly in association with strong
graphite mineralization, points to the need for comprehensive
follow-up drilling and trenching to more fully define the ultimate
distribution and intensity (grade) of the graphite and vanadium
resources of the Coosa Project. Planning is underway for
additional core drilling and surface trenching of individual
target areas and extensions of known mineralized zones.
Additionally, Westwater will initiate a program to evaluate and
assess various processing options to economically recover vanadium
as a byproduct to graphite.
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On November 29, 2018, Westwater announced the discovery of
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GRAPHITE BUSINESS DEVELOPMENT:
- Pilot plant planning for operations remains on-track for 2019.
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Plant start up and initial operations will utilize purchased
graphite feedstock, bringing forward revenues and cash flow in
time. - First revenues are expected in 2021.
- Positive cash flow for the graphite business is expected in 2022.
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The mine is planned for construction in 2025, with planned
production in 2026 – funded from operating cash flow rather than
external financing. -
Net present values are estimated to be $400 – $500 million,
depending on contingency. -
Capital expenditures, now including pilot plant studies and final
plant design, are estimated at $42.0 million. -
We have over two-dozen Non-Disclosure Agreements in place for
discussions with potential customers. -
On September 6, 2018, Westwater announced the successful
production of over 4 kilograms of Purified Micronized Graphite
(“PMG”). PMG is used as a conductivity enhancement material for a
variety of battery applications. Electrical performance testing by
an independent lab confirmed that the PMG performs as well as
expected. Samples of PMG are being tested by two potential
customers. -
Work continues with business, state and local officials in Alabama
to site, permit and explore business incentives. -
The Company gave a well-received presentation at Benchmark Mineral
Intelligence’s ‘Graphite + Anodes 2018’ Conference, on October
23rd in Newport Beach, California. The presentation included a
Company overview and an update on Westwater’s graphite business
plan for potential customers.
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LITHIUM EXPLORATION PROJECTS:
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On March 24, 2018, the Company exercised an option to purchase a
block of unpatented placer mining claims covering an area of
approximately 3,000 acres within the Columbus Salt Marsh area of
Esmeralda County, Nevada. The claims adjoin a portion of the
Company’s other property holdings at its Columbus Basin Project,
expanding the project area within the basin to approximately
14,200 acres. -
The Company continues to develop its water rights positions and
geological knowledge on its three highly prospective
lithium-enriched brine properties in Nevada and Utah.
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On March 24, 2018, the Company exercised an option to purchase a
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URANIUM PROJECTS: Activities included:
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On September 21st, 2018 the Company made public an analysis of the
current uranium market that backs up the Company’s belief that a
continued rise in uranium prices is likely. This makes it clear
there is strong interest in securing uranium supplies at lower
prices as a hedge. Uranium spot prices hit $29.15 per pound on
November 19, 2018 its highest level since March 2016. Five-year
futures have also risen to over $35/lb. since August. -
Westwater has completed wellfield plugging at the Vasquez Project
in Texas and has received certification by the Texas Commission on
Environmental Quality (TCEQ). This paves the way for surface
reclamation completion and bond release applications in 2019.
Reclamation of the waste disposal well and its associated pond, as
well as the remainder of the surface is scheduled for completion
in 2019. -
At the Rosita Project in Texas, the wellfield Production Areas 1 &
2 are plugged, and surface reclamation in those areas is also
expected to be completed in 2019. -
The Company published a new technical report outlining resources
on its property holdings at Ambrosia Lake in New Mexico.
-
On September 21st, 2018 the Company made public an analysis of the
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CORPORATE ACTIVITIES:
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ARBITRATION CASE REGISTERED: On
December 21, 2018, the International Centre for Settlement of
Investment Disputes (ICSID) registered Westwater’s Request for
Arbitration. The registration is the next step in the process
whereby Westwater will recover compensation from the Republic of
Turkey for its takings of the Temrezli and Sefaatli uranium
properties. On June 20, 2018, the Turkish government notified the
Company that the mining and exploration licenses for its Temrezli
and Sefaatli projects located in Turkey had been revoked and
proffered as-yet undefined compensation. -
KARLI ANDERSON JOINS BOARD: Karli
Anderson joined Westwater’s Board of Directors on September 18,
2018. Ms. Anderson, 45, most recently served as Vice President
Investor Relations for Royal Gold, Inc. (NASDAQ: RGLD), a precious
metals stream and royalty company with over 190 properties across
six continents. Previously, Ms. Anderson was a Senior Director of
Investor Relations for Newmont Mining Corporation (NYSE: NEM), one
of the world’s largest gold mining companies. Ms. Anderson also
serves on the Board of Directors of the Women’s Mining Coalition. -
PROPOSED EPA RULE CHANGE WITHDRAWN:
The US Environmental Protection Agency (EPA) recently withdrew a
rule change proposed in 2017 for groundwater restoration that
would have raised costs for the uranium industry with almost no
benefit to the environment if enacted. Westwater is currently
involved in two uranium reclamation projects, and this EPA
decision is an important sign that future reclamation operations
will not be impacted by poorly conceived rules. Westwater is
committed to the safety of the environment and the public, and
fully supports compliance with sensible and effective regulations. -
TEXAS SUPREME COURT SUCCESS: On March
23, 2018, after a nine-year legal dispute with Kleberg County,
Texas, involving the Company’s Kingsville Dome site, Westwater
prevailed at the Texas Supreme Court, enabling future reclamation
of some of our wellfields at Kingsville. -
COST RATIONALIZATION EFFORTS: The
Company continues to seek to reduce operating and general and
administrative expenditures. -
EQUITY CAPITAL RAISES: In 2018, the
Company raised net proceeds of $8.7 million, comprised of $1.3
million from sales of stock pursuant to the Company’s Stock
Purchase Agreements with Aspire Capital (now canceled), $4.5
million from sales of stock from the Company’s ATM facility with
Cantor Fitzgerald and a registered direct offering of $2.9 million
from the sale of common stock and pre-funded warrants to Aspire
Capital which closed on June 14, 2018. All pre-funded warrants
were exercised in August 2018. -
CASH AND WORKING CAPITAL: Cash and
working capital balances at December 31, 2018 were $1.6 million
and $1.0 million, respectively.
-
ARBITRATION CASE REGISTERED: On
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Key Financial Highlights |
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($ and Shares in 000, Except Per Share) |
2018 |
2017 |
Variance |
||||||||
| Net Cash Used in Operations | $ | (11,648 | ) |
($ |
11,603 |
) | 1 | % | |||
| Mineral Property Expenses | $ | (3,538 | ) | $ | (4,584 | ) | -23 | % | |||
| General and Administrative, including Non-cash Stock Compensation | $ | (7,357 | ) | $ | (6,614 | ) | 11 | % | |||
| Net Loss | $ | (35,684 | ) | $ | (19,288 | ) | 85 | % | |||
| Net Loss Per Share | $ | (0.77 | ) | $ | (0.78 | ) | 1 | % | |||
| Weighted Avg. Shares Outstanding | 46,384 | 24,737 | 88 | % | |||||||
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Net cash used in operations. Net cash
used in operating activities was $11.7 million in 2018, compared to
$11.6 million in 2017. The increase of $0.1 million reflected an
increase in cash used for prepaids and accounts payable of $1.1
million, which was mostly offset by a decrease in operating expenses
of $1.0 million.
-
Operating expenses. Mineral property
expenses for the year ended December 31, 2018 were $3.5 million, as
compared with $4.6 million for the year ended December 31, 2017. The
decrease was primarily due to a reduction in exploration activities in
our lithium projects in Utah and Nevada, and a reduction in land
holding costs for the Cebolleta and Juan Tafoya uranium properties of
$0.4 million. However, general and administrative expense increased by
$0.7 million for fiscal year 2018, compared with fiscal year 2017. The
increase of $0.7 million in 2018 was due to increases in salaries and
payroll burden of $0.3 million, largely due to a higher head count and
consulting and professional expenses of $0.4 million, primarily
related to post-acquisition Alabama Graphite operations. -
Net loss. Our consolidated net loss for
the year ended December 31, 2018 was $35.7 million or $0.77 per share,
as compared to a loss of $19.3 million or $0.78 per share for the same
period in 2017. The increase in our consolidated net loss from the
year prior was primarily the result of the larger 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, an increase in general and administrative expenses
of $0.7 million, and the gain recorded in 2017 of $4.9 million from
the sale of our Churchrock and Crownpoint uranium properties to
Laramide Resources. These increases were mostly offset by a decrease
in mineral property expenses of $1.0 million. -
Cash and working capital. The Company’s
cash balances were $1.6 million and the Company had a working capital
balance of $1.0 million as of December 31, 2018, compared to working
capital of $3.9 million at December 31, 2017. The $2.9 million
decrease in working capital was due to $1.5 million in loan advances
and acquisition costs for the acquisition of Alabama Graphite, a $0.4
million reduction in accounts payable and continued funding of
operating losses from the sale proceeds of available-for-sale
marketable securities of $0.8 million. -
As of December 31, 2018, the Company’s cash position, working capital,
along with the anticipated funding from the Company’s financing
agreements and the Laramide promissory note, is expected to provide
the necessary liquidity through January 31, 2020, assuming the Company
is successful in maintaining the listing of its common stock on Nasdaq
and remains eligible to sell shares through its ATM program. -
Shares outstanding. Total shares
outstanding as of February 15, 2019 was 74,399,332 shares.
Conference Call & Webcast
The Company will hold a conference call to discuss its full year 2018
financial results and recent developments later today, Tuesday, February
19, 2019 at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time).
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Dial-in Numbers: |
+1 (800) 319-4610 (U.S. and Canada) |
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+1 (604) 638-5340 (International) |
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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. 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.
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.
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Replay Numbers: |
+1 (855) 669-9658 (U.S. and Canada) |
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+1 (412) 317-0088 (International) |
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Replay Access Code: |
2957 |
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 approximately
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 Company’s growth, developments at the
Company’s projects, the future production of graphite, including on a
pilot scale, future sales of graphite, including as a first mover for
key components of electrical storage devices, the continued listing of
the Company’s common stock on Nasdaq, and the Company’s liquidity and
cash demands, including future capital markets financing and disposition
activities, 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 availability of capital to the Company
and the Company’s ability to continue as a going concern; (b) the
availability of the Company to continue to satisfy the listing
requirements of the Nasdaq Capital Market; (c) the spot price and
long-term contract price of graphite, vanadium, lithium and uranium; (d)
the ability of the Company to enter into and successfully close
acquisitions, dispositions or other material transactions; (e)
government regulation of the mining industry and the nuclear power
industry in the United States; (f) operating conditions at our mining
projects; (g) the world-wide supply and demand of graphite, vanadium,
lithium and uranium; (h) weather conditions; (i) unanticipated
geological, processing, regulatory and legal or other problems the
Company may encounter; (j) the results of the Company’s exploration
activities, and the possibility that future exploration results may be
materially less promising than initial exploration result; (k) any
graphite, vanadium, lithium or uranium discoveries not being in high
enough concentration to make it economic to extract the metals; (l)
currently pending or new litigation or arbitration; (m) the Company’s
ability to maintain and timely receive mining and other permits from
regulatory agencies; 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 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
or
Investor
Relations Contact:
Michael Porter
Porter, LeVay and Rose
Phone:
212.564.4700
Email: Westwater@plrinvest.com