Formerly Uranium Resources, Inc.

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Westwater Resources Reports 3rd Quarter 2017 Results

Nov 13, 2017
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CENTENNIAL, Colo., November 13, 2017Westwater Resources, Inc. (Nasdaq: WWR) (the “Company”), an energy metals exploration and development company, announced today its results for the third quarter of fiscal year 2017, and also discussed its business outlook and its energy metals business development for the remainder of 2017 and calendar year 2018.

Christopher M. Jones, President and Chief Executive Officer, said, “Continued work to strengthen our financing capacity and lithium projects portfolio, a clay deposit discovery, reclamation success in Texas and a strong working capital position combine to give us a robust platform for growth well into 2018.  Also, Cameco’s surprise announcement suspending production at two operations on November 8, effectively removing over 8% of the world’s production of uranium, has resulted in an immediate 10% increase in the price of uranium.  This is good for the uranium industry.”

Highlights for 3Q-2017 and to Date

  • The Company changed its name from Uranium Resources to Westwater Resources on August 21.
  • We completed our Phase 1 exploration drilling and acquired water rights at the Columbus Basin lithium brine project in Nevada.
  • We announced positive lithium results at the Sal Rica Project in Utah.
  • We announced the discovery of a new calcium montmorillonite clay deposit at our Tulu Tepe property in Turkey.
  • We entered into a common stock purchase agreement (“CSPA”) with Aspire Capital Fund, LLC (“Aspire Capital”) to sell up to $22.0 million in the aggregate of the Company’s common stock on an ongoing basis over a term of 30 months.  The Company will control the timing and amount of sales to Aspire Capital, and at a price based on market prices at that time.
  • Pursuant to the CSPA, on September 27, 2017, Aspire Capital made an initial purchase of 1,428,571 shares of common stock for which the Company received net proceeds of $2.0 million.
  • The Company terminated its listing on the Australian Stock Exchange (“ASX”) as part of our continuing cost reduction process.
  • Cash and working capital balances at September 30, 2017 were $7.2 million and $8.2 million, respectively.

    Financial Overview

  • Net cash used in operations.  Net cash used in operating activities was $8.9 million for the nine months ended September 30, 2017, as compared with $9.8 million for the same period in 2016.  The decrease of $0.9 million in cash used is mostly due to a decrease in interest expense of $0.3 million, an increase in interest income of $0.4 million and an aggregated decrease in operating expenses of $0.3 million.
  • Operating expenses.For the three and nine months ended September 30, 2017, mineral property expenses increased by $0.3 million and $0.7 million, respectively, from the corresponding periods during 2016.  For the three-month period, exploration costs increased by $0.3 million.  For the nine-month period, exploration costs increased by $0.5 million, Rosita restoration costs increased by $0.2 million and land and maintenance costs increased by $0.3 million, and Temrezli standby costs decreased by $0.3 million.  For the three months ended September 30, 2017, general and administrative charges decreased by $0.2 million primarily due to decreases in salaries expense and stock compensation expense, which were partially offset by an increase in legal, accounting and public company expenses.  For the nine-month period, general and administrative charges decreased by $1.1 million primarily due to decreases in stock compensation expense, salaries, consulting and professional services.
  • Net loss.  Consolidated net loss for the three months ended September 30, 2017, was $3.0 million, or $0.12 per share, as compared with $3.7 million, or $0.38 per share for the same period in 2016.  For the three-month period, the decrease of $0.7 million from the prior period was mostly the result of a decrease in interest expense of $0.7 million.  For the nine months, the loss was $3.8 million, or $0.16 per share, as compared with $12.6 million, or $1.81 per share for the same period in 2016.  The decrease of $8.8 million from the prior period was mostly the result of a gain on the disposal of our Churchrock and Crownpoint projects of $4.9 million, a decrease in interest expense of $2.2 million, a decrease in the impairment of uranium properties of $0.5 million, a decrease in general administrative expenses of $1.1 million, a decrease in commitment fees of $0.3 million and a decrease of $0.1 million due to a loss on the sale of marketable securities in 2016.   Offsetting these amounts was an increase in mineral property expenses of $0.7 million.
  • Cash and working capital. Continued working capital improvements resulted in an improved cash balance of $7.2 million at September 30, 2017 and working capital of $8.2 million compared to a working capital deficit of $4.3 million at December 31, 2016.  The increase in working capital of $12.5 million during the nine months was primarily due to the completion of two equity offerings in the first quarter of 2017, net proceeds of $2.0 million from common shares sold to Aspire Capital in the third quarter of 2017 and the completion of the sale of our Churchrock and Crownpoint projects to Laramide in January 2017. The cash balance as of October 31, 2017 was $6.1 million.
  • Shares outstanding.  Total shares outstanding as of November 9, 2017 were 27,612,624.
Table 1: Financial Summary (unaudited)

($ and Shares in 000's, Except Per Share)

9-Mo 2017

3Q 2017

2Q 2017

1Q 2017

9-Mo 2016

3Q 2016

2Q 2016

1Q 2016

9-Mo Variance

3-Mo Variance

Net Cash Used in Operations


$(8,876)

 

$(2,542)

 

$(3,047)

 

$(3,287)

 

$(9,854)

 

$(4,614)

 

$(3,035)

 

$(2,205)

 

-10%

 

-45%

Mineral Property Expenses

 

$(3,637)

 

$(1,316)

 

$(1,552)

 

$(769)

 

$(2,908)

 

$(1,039)

 

$(1,138)

 

$(731)

 

25%

 

27%

General and Administrative, including Non-Cash Stock Comp

 

$(4,976)

 

$(1,700)

 

$(1,608)

 

$(1,668)

 

$(6,035)

 

$(1,883)

 

$(2,007)

 

$(2,145)

 

-18%

 

-10%

 

Net Income/(Loss)



$(3,778)

 

$(2,983)

 

$(2,639)

 

$1,844

 

$(12,624)

 

$(3,744)

 

$(4,607)

 

$(4,273)

 

-70%

 

-20%

Net Income/(Loss) Per Share

 

$(0.16)

 

$(0.12)

 

$(0.11)

 

$0.09

 

$(1.81)

 

$(0.38)

 

$(0.75)

 

$(0.86)

 

-91%

 

-68%

Weighted Avg. Shares Outstanding


23,764

25,037

24,615

21,602

6,964

9,741

6,152

4,968

241%

157%


Business Update

Lithium Business 

Over the past year, WWR has expanded its energy metals business by leveraging its existing business operations and technical capabilities.  Those efforts have resulted in the acquisition of three lithium brine exploration projects -- Columbus Basin, Sal Rica, and now Railroad Valley -- totaling over 36,730 acres of mineral claims and representing one of the largest lithium brine exploration holdings in North America.

WWR will integrate its newest property, known as the Railroad Valley Project, into the Company’s ongoing lithium exploration activities in Nevada and Utah.  Studies underway for the project include additional surface sediment sampling, and acquisition of relevant geophysical data generated from both historical and current oil exploration within the basin for reinterpretation.  Further exploration work will be dependent on results from these studies.

Water rights are critical to the production of brines, and water law in the dry southwest United States is robust.   In order to secure WWR’s ability to produce any brines found on its Columbus Basin Project, the Company has successfully acquired all of the remaining water rights in this basin.  Applications for water rights are in queue for the Sal Rica and Railroad Valley projects to secure WWR’s production capacity in those basins should economic quantities of brines be discovered there.

On July 31, 2017, the Company announced the commencement of exploration drilling at the Columbus Basin lithium brine project.  On October 31, 2017, the Company announced that Phase 1 drilling was complete with the following results:

  • Three core holes were completed at the 14,200-acre Columbus Basin Project for a total of 3,870 ft. of drilling.  The maximum drilled depth was 1,680 ft. and fluids with high total dissolved solids (TDS) were identified in all three holes.
  • In-house laboratory work performed at our Kingsville, Texas facility returned lithium concentrations of up to 43 parts per million (ppm) and boron concentrations of up to 173 ppm. 
  • Planning is underway for a Phase 2 exploration program at the Columbus Basin Project. Westwater also notes that brines have been discovered near our claims by Caeneus Minerals Ltd. (“Caeneus”) with reported concentrations of up to 95.9 ppm lithium and 1,100 ppm boron at depths of 260-340 feet. As a result of our results and those reported by Caeneus, Westwater has filed a Notice of Intent to drill with the Bureau of Land Management (BLM) on the nearby Nina Claim Block of our Columbus Basin Project.  Westwater will drill this block as part of the Phase 2 exploration program.

The Company is in the process of applying for an exploration permit on its Sal Rica Project.  Earlier sample results indicate widespread lithium values.  The intent of the new program at Sal Rica will be to further define the extent and quality of lithium in brines, and is scheduled for early 2018, depending upon the timing of receipt of permits to drill there.

Uranium Business

Continuing reclamation work at our Texas properties has resulted in the approval by the Texas Commission on Environmental Quality (“TCEQ”) on July 28, 2017 of bond reduction in the amount of $318,000 at the Rosita project. In addition, subsequent to the end of the quarter on November 6, the TCEQ advised Westwater that groundwater restoration at the Vasquez Project was deemed complete.  This now paves the way for final plugging and reclamation of the site. These important milestones for the Company demonstrate our continuing commitment to the communities where we work, and is a testament to the hard and high-quality work by our team in Texas.

Further to the successful environmental work, the Company secured the following:

  • A $200,000 bond release for relinquishment of the Cebolleta/Juan Tafoya Project exploration license after certification by the State of New Mexico that no disturbance had occurred; and
  • A $50,000 bond release for the successful reclamation of a circa 1980’s uranium pilot plant after certification by the State of Wyoming.

Clay Business

Westwater announced the discovery of over 400,000 tons of high quality calcium montmorillonite clay at its Tulu Tepe site in Turkey.   This clay is currently being tested for suitability in industrial and consumer applications.  Testing is expected to be completed in the fourth quarter of 2017, whereupon markets for the clay can be evaluated and targeted.

Corporate Business

On September 25, 2017, the Company entered into the CSPA with Aspire Capital to sell up to $22.0 million in the aggregate of the Company’s common stock on an ongoing basis when required by the Company over a term of 30 months.  The Company will control the timing and amount of sales to Aspire Capital, and at a price based on market prices at that time.  As consideration for Aspire Capital entering into the purchase agreement, the Company issued 880,000 shares of its common stock to Aspire Capital.  The shares of common stock subject to the CSPA were registered pursuant to the Company’s effective shelf registration statement on Form S-3.

On September 27, 2017, pursuant to the CSPA and after satisfaction of certain commencement conditions, Aspire Capital made an initial purchase of 1,428,571 shares of common stock for which the Company received net proceeds of $2.0 million.  There were no other sales of common stock pursuant to the CSPA and as of November 10, 2017, $20.0 million of the aggregate $22.0 million remained available for future sales under the CSPA.

On October 20, 2017 the Company terminated its listing on the Australian Stock Exchange (“ASX”).  Trading volumes had significantly diminished since the original listing in November 2015, as the majority of ASX shareholders had transferred their shares to the Nasdaq stock exchange and capital raising efforts in Australia had been unsuccessful.  Shareholders on the ASX were given the option of transferring their ownership interest to NASDAQ.  The Company will save costs of approximately $50,000 annually as a result of the delisting.

Outlook 2017 and 2018

The Company’s current cash, plus funding available under the Cantor ATM Sales Agreement and the Aspire Capital CSPA, is expected to fund critical operations through year-end 2017 and into the third quarter of 2018.  As an exploration and development company with no current production, the Company expects to obtain additional capital market financing, including the possible further sale of non-core assets, to fund its lithium exploration program and to operate the Company through 2018. The Company’s goals for the remainder of 2017 and 2018 are as follows:

  • Lithium: Continue to develop and implement exploration plans for the Company’s lithium assets in Nevada and Utah.
  • Uranium:  Maintain our low-cost uranium portfolio and continue reclamation work in Texas.
  • Ongoing Cost Rationalization Efforts: Continue to reduce operating and general and administrative expenditures.
  • M&A Efforts Continue.  Maintain an opportunistic posture in mergers and acquisitions by focusing on low-cost, high value development opportunities in the resource sector.

About Westwater Resources

WWR (formerly Uranium Resources, Inc.) is focused on developing energy-related metals.  The Company has developed a dominant land position in three prospective lithium brine basins in Nevada and Utah in preparation for exploration and potential development of any lithium resources that may be discovered there.  In addition, WWR remains focused on advancing the Temrezli in-situ recovery (ISR) uranium project in Central Turkey when uranium prices permit economic development of this project. WWR controls extensive exploration properties in Turkey under eight exploration and operating licenses covering approximately 39,000 acres (over 16,000 ha) with numerous exploration targets, including the potential satellite Sefaatli Project, which is 30 miles (48 km) southwest of the Temrezli Project. In Texas, the Company has two licensed and currently idled uranium processing facilities and approximately 11,000 acres (4,400 ha) of prospective ISR uranium projects. In New Mexico, the Company controls mineral rights encompassing approximately 186,000 acres (75,300 ha) in the prolific Grants Mineral Belt, which is one of the largest concentrations of sandstone-hosted uranium deposits in the world. Incorporated in 1977, WWR also owns an extensive information database of historic drill hole logs, assay certificates, maps and technical reports for uranium properties located in the Western United States.

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,” “intent,” “projects,” “anticipates,” “believes,” “should,” “could,” “will,” and other similar words. All statements addressing events or developments that the Company 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, including future exploration costs and results, intent and timing of new and existing programs and testing, expected savings from delisting from the ASX 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) estimated or expected net cash used in operations, mineral property expenses, general and administrative expenses, net loss, and cash and working capital positions for the twelve months ended December 31, 2017, (b) the Company’s ability to raise additional capital in the future; (c) spot price and long-term contract price of uranium, lithium and calcium montmorillonite clay; (d) risks associated with the Company’s foreign operations, (e) operating conditions at the Company’s projects; (f) government and tribal regulation of the uranium industry, the lithium industry, and the power industry; (g) world-wide uranium and lithium 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, including in Texas, New Mexico, Utah, Nevada and Turkey; (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, (l) the ability of the Company to negotiate an extension on the Cebolleta lease and (m) 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.

Westwater Resources Contact:
Christopher M. Jones, President and CEO                      Jeff Vigil, VP Finance and CFO
303.531.0480                                                                    303.531.0481

Email: Info@WestwaterResources.net

Website: www.WestwaterResources.net