Westwater Resources, Inc. (WWR) Earnings Call Transcript
November 12, 2026
Earnings Call Speaker Segments
Hello, everyone. Thank you for joining us, and welcome to Westwater Resources, Inc. Third Quarter 2026 Results and Business Update Conference Call. [Operator Instructions] I'll now hand the conference over to Steve Cates, Chief Financial Officer. Steve, go ahead.
Thank you, operator, and good morning, everyone. Thank you for joining us for the Westwater Resources Third Quarter 2026 Business Update. Before beginning, as yesterday was Veterans Day, we want to express our thanks and gratitude for all the service men and women and their families who have served and sacrificed for this country. Our Form 10-Q was filed earlier this week and is available in the Investors section of our website at westwaterresources.com. Joining me on today's call are Terence Cryan, our Executive Chairman; and Frank Bakker, our President and Chief Executive Officer. I'll provide a financial update later in the call. Today's discussion includes forward-looking statements regarding future events and expectations, including expected time lines and costs related to the Kellyton Graphite Plant and Coosa Graphite Mine, financing activities, permitting time lines and customer qualification efforts. These statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations. Please refer to our SEC filings and the cautionary language in our press release for additional information. With that, I'll turn the call over to our Executive Chairman, Terence Cryan.
Thank you, Steve, and good morning, everyone. This quarter, we advanced the 2 projects at the center of Westwater's strategy, Kellyton, our Alabama-based graphite processing plant and Coosa, the graphite mine that will provide a long-term domestic source of feedstock for Kellyton located about 30 miles apart. These projects are designed to work together as the foundation of our vertically integrated U.S. mine-to-market platform. At Kellyton, progress is happening both in and around the plant. During the quarter, we placed orders for additional long-lead equipment. Our R&D lab and qualification line are already producing and testing CSPG and providing high-quality samples that are meeting the exacting specifications of leading battery cell producers. The qualification line has produced more than one metric ton samples of CSPG and is providing valuable training for our operations teams, while we advance the equipment, product and operational capabilities needed to move Phase 1 towards full commercial production. XM's approval of a $25 million direct loan for Kellyton in August was more than a financing milestone. It is a clear recognition of Kellyton's strategic importance in the role domestic graphite production can play in strengthening U.S. critical mineral supply chains. For years, the United States has relied heavily on foreign sources of graphite and battery-grade materials. Kellyton is being built to change that. Phase 1 at Kellyton, is already an advanced physical asset, approximately $136 million has been invested to date. All of the major buildings are in place. Our R&D lab and qualification line are operating and the majority of equipment is on site and on order. The approved EXIM loan is designed to provide nondilutive capital for the next stages of work, including equipment installation, commissioning and operational readiness. This approval moves Kellyton closer to completing construction and commissioning which could begin as soon as next year. On the commercial side, we signed a letter of intent with a leading international customer during the quarter and are in active offtake discussions with multiple Tier 1 customers. Based on our prior success in achieving offtake contracts and the current level of commercial interaction, we remain confident that we will be fully sold out for Kellyton Phase 1 capacity prior to commissioning. The Coosa Graphite line is the other essential part of our vision to build a mine to market platform. We have made significant progress year-to-date on Coosa permitting and are excited about the opportunity to continue to move Coosa along per the FAS 41 permitting dashboard, which currently projects Coosa to be fully permitted in June 2027. Frank will walk us through the federal and state permitting progress and the mine planning work now underway. Together, the work at Kellyton and Coosa is driving towards one clear vision, a vertically integrated, American natural graphite company, supplying battery grade and material to the domestic market, potentially within the next year. This positions the company with a 3- to 5-year first-mover advantage over other North American competitors. Frank, I'll now turn it over to you to share the progress at both projects and where we go from here.
Thank you, Terence, and good morning, everyone. I will begin with Kellyton. During the third quarter, we continued advancing Phase 1 through equipment procurement and preparation of future commercial operations. We placed orders for additional long-lead equipment and shipments are arriving in November and December of this year. We also continued operating the R&D lab and a qualification line. The line will give customers representative material to evaluate while supporting product development, quality testing, and training for our operations team. We are advancing the equipment product and operating capabilities needed to move Phase 1 toward production. These efforts build on the engineering, equipment procurement and facility work already completed at Kellyton. As of September 30, approximately $136 million has been incurred for Phase 1. We continue to estimate total Phase 1 capital costs of approximately $245 million, including approximately $15 million for contingency and potential cost escalation. Construction continues as we work to complete Phase 1. EXIM's approval of the $25 million direct loan in August was an important step in that effort. With buildings in place, equipment on site and on order and the R&D lab and qualification line operating, we are advancing the work needed to support commercial production. Turning to the Coosa Graphite Mine. We are working to bring a domestic graphite resource to life as the future feedstock source for Kellyton. Our team is pushing the project forward on 2 fronts: permitting and mine planning. On the federal permitting side and dangerous Species Act consultation is complete, ahead of the first 41 timetable. The public comment period for a clean water Act Section 404 permit has concluded. And the U.S. Army Corps of Engineers is reviewing comments as the application moves through its next phase. Cultural resource field work is complete across the proposed project footprint, including additional acreage for a planned tailings disposal area, wetland deletion and stream assessment field work and reporting are also complete. At the state level, A&M is continuing its technical review of our NPDS permit application, including site-specific affluent limits, our water quality certification application associated with the Section 404 permit has been accepted and is advancing through state review. While this permitting work continues we have also begun preliminary mine planning and are processing studies, including an evaluation of the potential value of vanadium mineralization, which is present and this could enhance the already attractive Coosa mine economics. And notably, after quarter end, Dr. N. Duncan joined Westwater as General Manager of the Coosa Graphite Mine. Their experience in engineering, operations and project execution will help lead the next stage of Coosa's development. The FAST-41 dashboard currently targets completion of our environmental review and permitting in June 2027. Each step move Coosa closer to development and to its intended role as a domestic source of natural graphite feedstock for Kellyton, the upstream link in our U.S. mine-to-market platform, developing that resource alongside Kellyton's processing capacity is central to building a more secure domestic graphite supply chain. Our focus is to keep advancing Kellyton toward production while moving Coosa through permitting and mine planning. With that, I will turn the call over to Steve for a review of our financial results and liquidity. Steve?
Thank you, Frank, and good morning, everyone. I'll provide a brief overview of our third quarter results, liquidity position and financing strategy. For the third quarter of 2026, Westwater reported a consolidated net loss from operations of $4.4 million or $0.03 per share. compared with the consolidated net loss from operations of $9.8 million or $0.12 per share for the same period in 2025. For the first 9 months of 2026, Westwater reported consolidated net loss from operations of approximately $13.4 million or $0.11 per share compared with $16.4 million or $0.21 per share for the same period last year. The biggest reason for the quarter-over-quarter improvement was that we retired the convertible notes during the quarter. That was partially offset by higher cost to advance Coosa permitting and higher consulting and outside services costs primarily related to the evaluation of government funding opportunities. For the 9-month period, lower convertible note related losses and higher interest income were partially offset by increased Coosa permitting, stock-based compensation, consulting and outside services and product development costs. The convertible notes were originally issued with an aggregate principal amount of $10 million. In July, we redeemed the remaining outstanding balance for approximately $2.4 million in cash, and there are currently no convertible notes or debt outstanding. From a liquidity perspective, Westwater had approximately $29.2 million in cash as of September 30, 2026. With the remaining phase work ahead, financing continues to be a priority. Following the end of the quarter, we replaced our prior equity line of credit or ELOC, which expired in November with a new ELOC. The new agreement provides us with $50 million of committed capital backed by Lincoln Park, subject to the terms of the agreement. Importantly, this does not mean we've raised $50 million or that we are committed to issue $50 million of equity. We control weather and when to access the facility. As we have in the past, we intend to be prudent in evaluating the use of the new ELOC and our ATM facility. The ELOC provides a source of financial flexibility and committed capital as we evaluate the right sources of capital for Kellyton. In addition, having that committed capital helps us derisk our broader financing strategy as we continue to pursue other financing alternatives for Kellyton, including potential nondilutive sources of capital. We continue to pursue and evaluate government financing opportunities. With our Tier 1 financial and legal advisers, we are working across several potential pathways, including agency engagement, proposals and applications and due diligence processes. Regarding the EXIM loan, we are working on finalizing the loan documents and anticipate closing in the near future. We believe it's not a matter of if but when we get the remaining financing in place for Phase 1 and the associated cost of capital. Our focus remains on securing nondilutive lower cost of capital were available, while keeping a range of financing options open to support the completion of Phase 1 at Kellyton. Now I'll turn the call back to Terence for closing remarks.
Thank you, Steve. Westwater is working to build an integrated U.S. graphite platform linking the Coosa Graphite line with the Kellyton processing plant. The Coosa Graphite line is poised to be the first permitted producing natural graphite mine in the United States. While Kellyton is designed to process Coosa graphite into battery grade and material. In the third quarter, we continued advancing that vision. At Kellyton, we placed orders for additional equipment, continued operating the R&D lab and qualification line and received EXIM's approval for a $25 million direct loan. At Coosa, we advanced permitting, completed endangered species act consultation ahead of schedule and began preliminary mine planning and ore processing studies. The progress at these projects is connected. We are moving Kellyton forward towards production while advancing the resource that can support its feedstock needs over time. That is the foundation of our mine-to-market strategy and our goal of becoming America's source for battery-grade graphite. We appreciate the support of our shareholders, employees, partners and the communities where we operate. Thank you for joining us today. Operator, we can now open the line for questions.
[Operator Instructions] Your first question comes from Tate Sullivan with Maxim Group.
Thank you for the updates on Kellyton and Coosa with Kellyton with, I think, about $109 million of remaining spend based on the budget, what will dictate the pace of that spending? Do you have other schedules for equipment forward purchases of equipment such as you had in 3Q? Can you describe that a potential pacing, please?
Tate, this is Steve. Thanks for the question. Regarding the pacing, a lot of it is going to be dependent upon obviously securing additional funding beyond the EXIM $25 million loan. As far as the near-term kind of pacing and what we've seen, we do have the equipment that we noted in our call that's on order and on the water. There will be some follow-up, obviously, payments as that is received this site and we started some installation. So I think in the near term, it's a little bit more clear that you would expect over the next quarter or 2, a very similar consistent pace of spend as you saw in Q3.
Okay. And you gave good details on the EXIM, the $25 million with, I think, the timing you said shortly. Would that be in tranches? Or would you draw all the $25 million upon approval? How might that timing work?
Well, just a point of clarification. The loan has been approved. We're just working through the documentation now and some of the finer points of that. It is more akin to a construction loan where you tend to draw it down over time. I foresee there could be a larger chunk maybe at the beginning or early on and then it comes out over time. But essentially, as we continue to advance the project, those funds will be available to draw.
Okay. And then on Coosa development steps, you talked about the permitting and you had the notable hire the end of the 3Q to move the plant forward? And then the last technical report on Coosa, I think, was from 2023, is updating that report or issuing other feasibility studies part of the development for '27?
Tate, this is Frank. So at this moment, the permitting is ongoing. All the studies have been done for the permitting. Permit will be issued as scheduled in June that's forecasted. And the other study that we're doing is the oral processing study and then we'll also do a feasibility study on the mine development next.
Next year, you said is that what you mentioned it?
Yes. Next year, we're going to do the feasibility certainly on the mine development.
Okay. Great. And Terence, you had good comments on the development, too. I mean is Alabama generally supportive of the mining industry going forward? Or how is your feeling from your conversations.
Appreciate the question. Alabama is a great place to do business. And we have enjoyed really strong support from the governor's office from our congressional delegation in Washington and from local politicians in the local community. We recently have checked in with really all of those groups. We do so on a regular basis and keep them updated. I think one of the benefits that we're going to drive going forward is we're now a very well-known entity in the community. Our team lives and works here. And we've, I think, really established ourselves as a good neighbor, a good partner. And I think that's really going to pay benefits for us as we move through permitting at Coosa. The fact that the Coosa mine is only 30 miles from the processing plant is really a remarkable advantage and really quite rare in the mining industry on a global basis. So couldn't be more happy to be in the great state of Alabama.
Your next question comes from Pat McCann with D. Boral Capital.
I was wondering if you could talk a little bit more about the offtake agreements or the LOI that you mentioned. I know you mentioned that you expect to have the entire Phase 1 capacity accounted for by the time you reach commissioning. Nonetheless, I was just curious with this most recent LOI, kind of what level of commitment it is? And then if you could talk about kind of maybe what -- where you are in that process of filling up that capacity of accounting for all the capacity that you're expecting to have available once Phase 1 is commissioned.
Sure. This is Terence. Thanks for the question. We've enjoyed considerable success over the past years in putting binding offtake agreements in place. The industry dynamics have definitely changed over time. But what hasn't changed is our ability to produce high-quality samples that meet the exacting specifications of customers. What's interesting about our industry is the anode material that's consumed by leading cell manufacturers, each of them have their own qualification requirements. And so when we produce samples, we're producing bespoke samples to meet the requirements of, say, an LG or an SK. And what we've seen recently is we've been producing really high-quality samples that are meeting all of their specifications. And we've also introduced a new anode material that is a low swelling anode material that's particularly targeted at the battery energy storage market. We see that as a very rapidly growing market. And we think that this new material that we have been testing and getting really good feedback on gives us a strong entree into that market. So the way to get to offtake agreements is to prove your chops in terms of what you can do in producing quality material. That's where I think our team has really done great work. And so given our track record of getting binding offtake agreements when frankly, others in North America have not been able to I feel very confident about our ability to put new offtake in place. And one of the things that is part of that is making sure that the terms of those offtake agreements really are to our benefit and maximize value for our shareholders. So part of that is making sure that we get the right pricing and having a longer-term view about how this industry is going to develop and where pricing may move. So I will tell you, we're playing a pretty interesting game of poker with a bunch of potential customers. And we believe because we're the first mover in this industry and we're kind of the go-to source if you want domestic anode material in '27, '28, '29. You really need to be calling Westwater. We want to make sure we're getting full value for that. So we feel confident in our ability to put bonding off taking place. just want to make sure we get full value. So I hope that's good color and helpful.
And just as a follow-up and then I will be done was just you did mention the low slowing Anno material -- and it kind of brought up a question for me of how you see the various industries, the drivers of your demand, how are those developing as we move along? Are you -- could you say anything about battery energy storage systems versus electric vehicles? What any changes, any developments in where you think the near-term demand is going to be strongest for your for offtake agreements, I guess?
So I would say, looking at the EV market, that's the market where we have been providing samples to customers for going on 4 years now. And where we have long-established relationships that have historically led us to offtake agreements. So that's where, I think, in an industry where qualification time lines can be quite lengthy, even when you're hitting your marks, we have the longest track record and the strongest relationships. But the battery energy storage market is an important potential market for us. As you think about battery energy storage, supporting data centers, supporting chip production, supporting other types of generation capacity and really helping shore up the grid and provide the additional electronics needed. That's a market that we think is very interesting. Historically, that market was very cost competitive. And as we think about developing here in the U.S. We think that the greater energy density that's provided by natural graphite anode has a role to play in battery energy storage. And so we identifying that potential market opportunity really focused on developing a low swelling product to meet it. Now we're going to have to go through additional testing across a broad range of sell customers who are now increasingly pivoting towards the battery energy storage market. And that's what you would expect us to do. But I'm really encouraged by initial feedback and test results in that area.
Your next question comes from the line of Heiko Ihle with H.C. Wainwright.
Just trying to get a bit of a better sense of cash flow outlined by quarter. You guys have invested $136 million into Kellyton as of quarter end. Could you give us maybe a rough estimate of some of the higher capital items that would still need to be paid for mainly what they are and when you expect to pay those respective bills?
Yes. Well, like I said earlier in the call, in the near term, I'd say over the fourth quarter, we expect a similar run rate in Q3 as we bring some of these long lead items in. As far as the $109 million to go, I think it's important to remember that there's nearly $15 million of contingency in that, which makes up about contingency so remaining, and we do have the majority of equipment on site or on the water being shipped right now. So the remaining piece of essentially absent contingency the $95 million or so. You're going to have about 1/3 of it to be some additional equipment, but then you're going to also have your installation, your commissioning and your start-up. And so there's going to be a couple -- some wonder lead items that we want to put on order, but we just have a big chunk of that in July. But a lot of that is some of the ancillary equipment and piping and things that go around that.
Perfect. And I know you also mentioned this earlier in the call, but just as it relates to the $25 million EXIM loan, you mentioned that documentation is going on right now. When do you think those funds would actually show up in your accounts?
Yes. I think it's going to happen over time. I think there could be a heat that is drawn down concurrent with closing or potentially later as we spend additional money, there's different types of requirements. When you get into the Make More America program. spend that qualifies the timing of that spend and when you can potentially go back and recapture spend you've already had in order to bill to draw down. But normally, they'd like you to do is draw down as you're spending forward and advancing the project, just some of the requirements for review and approval in the submission package that you do, similar to kind of a construction draw you would see in more of the private market where you put a draw package together, get the funds, spend the funds. So I think it's going to come out over time.
There are no more questions at this time unless we have a follow-up question. We have reached the end of the Q&A session. I'll turn the call back to Terence for closing remarks.
We're now about 2 weeks away from Thanksgiving, which has always been my favorite holiday. So I'd just like to take an opportunity to thank our shareholders, our employees, our partners, the communities where we operate. And all of you who took time today to join us. So happy Thanksgiving. Thanks.
This concludes today's call. Thank you for attending. You may now disconnect.
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