Westwater Resources, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Westwater is a pre-revenue battery-graphite developer focused on its Coosa Graphite Project in Alabama; it reports no operating revenue since 2009.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | None | None |
| Net loss | $5.390 million | $3.287 million |
| Loss per share | $0.19 | $0.82 |
| Cash used in operations | $4.850 million | $3.455 million |
| Cash from financing | $72.053 million | $2.471 million |
| Cash and cash equivalents, March 31 | $117.861 million | $50.315 million at December 31, 2020 |
| Total assets | $129.629 million | $61.937 million at December 31, 2020 |
| Total liabilities | $5.404 million | $4.466 million at December 31, 2020 |
Revenue-based margins are not meaningful because the company had no revenue. The filing reports no material borrowing debt; liabilities principally include accounts payable, accruals, and operating leases. Lease liabilities totaled $0.332 million. Current assets were $120.324 million against current liabilities of $5.222 million.
Material changes versus the prior comparable period
- Net loss increased $2.103 million, primarily due to higher graphite product-development spending, arbitration costs, and general and administrative expenses; the prior-year period included a $1.125 million loss from discontinued operations.
- Product-development expense rose to $1.823 million from $0.126 million. Arbitration costs rose to $1.532 million from $0.669 million. Continuing-operation general and administrative expense was $2.084 million versus $1.362 million.
- Operating cash use increased $1.395 million. Financing proceeds rose substantially, mainly from equity sales.
- During Q1, Westwater issued 9.3 million shares through its Cantor at-the-market facility for net proceeds of $47.3 million and 3.8 million shares to Lincoln Park for $24.9 million. Shares outstanding increased from 19.2 million at year-end to 32.3 million at March 31.
Outlook, management commentary, and risks
- Management said cash on hand was sufficient for planned non-discretionary expenditures through 2022. It expected to pursue project financing and possibly further use equity facilities to help fund construction; additional financing is not assured.
- The Coosa definitive feasibility study began in Q1 and was expected to be completed by the end of Q2 2021. Construction was anticipated to start around year-end 2021, Phase I completion was planned for year-end 2022, and production was anticipated in 2023. These are forward-looking targets, not guarantees.
- Pilot programs had produced more than 11 metric tonnes of battery-grade graphite products or precursor material for testing and to inform facility design and the feasibility study.
- Westwater’s ICSID arbitration against Turkey concerns the taking of its Turkish uranium project licenses. The company’s memorial sought at least $36.5 million plus costs and interest; a hearing was scheduled for September 13–17, 2021. Recovery and timing are uncertain, and no value was assigned to retained uranium royalties in New Mexico.
- Key risks include graphite and vanadium prices and market demand, project economics and permitting, access to capital, exploration results, litigation/arbitration, and COVID-19-related disruption. Management reported disclosure controls were effective and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether feasibility-study results, product testing, customer qualification, project costs, and construction funding support the stated Coosa schedule.
- Cash burn, available financing capacity, and potential further dilution; the Cantor facility had no shares registered for sale at March 31, and Lincoln Park sales were near the agreement’s 19.99% threshold absent shareholder approval or the specified average-price condition.
- Progress and outcome of the Turkey arbitration, including the scheduled hearing and the uncertain amount and collectability of any award.
- Whether planned graphite production becomes commercially viable; the filing reports no operating revenue and no established commercial production.