Westwater Resources announces Q3 2023 business, financial update
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Westwater announces anticipated 33% increase in Phase I production at Kellyton Plant
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Construction progress of the Kellyton Graphite Processing Plant. Photo submitted
Special to the News
On Wednesday Westwater Resources, which owns Alabama Graphite Products, released its third-quarter business and financial updates, including updates relating to the Kellyton Plant and the Coosa Graphite Deposit.
During the third quarter of 2023, Westwater completed a debottlenecking study with its third-party engineering firm resulting in design changes that are expected to result in an anticipated 33% increase in coated spherical purified graphite, or CSPG, production for Phase I of the Kellyton Graphite Processing Plant.
As a result of the study, Westwater now expects to produce 10,000 MT of CSPG annually in Phase I while still remaining within its existing Phase I cost estimate of $271 million.
“Increasing expected CSPG production by 33%, while maintaining our estimated budget, is another significant step in improving the economics of the Kellyton Plant,” said Westwater President and CEO Frank Bakker. “Customer engagement and market demand for domestic CSPG remains strong, and we believe moving to 10,000 MT in response to this market demand enhances Westwater’s position as a domestic source of CSPG.”
As previously announced, Westwater has a Joint Development Agreement, or JDA, with SK On, a leading EV battery manufacturer. SK On has provided testing feedback for samples produced by Westwater under the JDA. If a supply agreement is executed between the parties, Westwater anticipates it would then supply a mass production sample to SK On as part of its formal qualification process.
Additionally, Westwater has signed general terms and conditions for a supply agreement with a North American automobile manufacturing company and is negotiating a possible off-take agreement with this company for potentially all of Westwater’s Phase I and Phase II production capacity.
Westwater continues to engage with other potential customers who have tested samples of CSPG produced by the company. Feedback from certain potential customers indicates that Westwater’s material meets their initial specifications.
Westwater is continuing to provide additional samples to these potential customers, and current counterparty interest indicates that Westwater’s Phase I and Phase II production capacity may be subject to commercial contracts in 2023 or 2024.
Construction Progress at the Kellyton Plant
During the third quarter of 2023, Westwater continued construction activities at the Kellyton Plant, including the receipt of additional long-lead equipment components, completing the construction of five of six primary plant buildings, and installation of overhead cranes ahead of equipment installation.
As of Wednesday, Westwater has constructed and is currently operating its research and development laboratory, or R&D Lab. The R&D Lab allows Westwater to continue product development and optimization under the JDA with SK On and other potential customers and to perform additional quality control tests.
It also affords greater flexibility to optimize future samples in accordance with customer specifications. Further, in August, Westwater began installing micronizers, shaping mills and steel in its shaping building.
While construction has continued during the quarter, Westwater has reduced the level of construction activities from anticipated levels, including adjusting the timing of future work, until off-take and financing agreements are secured. Reducing the level of construction activity until financing is secured is expected to impact the overall construction schedule of Phase I of the Kellyton Plant.
Westwater expects to provide an update to investors regarding the construction timeline of the Kellyton Plant when, and if, the requisite financing is secured.
Coosa Graphite Deposit Update
During the third quarter, Westwater continued its third-party consultant’s work on the preliminary economic assessment, or PEA, for the Coosa Graphite Deposit. The PEA will expand on the Technical Report Summary, or TRS, that was prepared as an initial assessment in accordance with S-K 1300 and filed with the SEC on Form 8-K on December 6, 2022.
The PEA will include an economic assessment based on the TRS and an initial mine plan. Westwater still expects to complete and disclose the results of the PEA in the fourth quarter of 2023.
Upon completion of the PEA, Westwater anticipates commencing a strategic financing review process for the Coosa Graphite Deposit. This strategic financing review process will seek to identify financial investment sources and partners for the Coosa Graphite Deposit and may include review of strategic investment partners or other strategic transactions.
Construction Financing Update
Westwater continues its efforts to secure financing to fund the balance of the estimated capital requirements for Phase I of the Kellyton Plant.
“We are still engaged with third parties interested in funding our project, and we believe that finalizing an off-take agreement for the sale of CSPG from the Kellyton Plant is critical to securing and closing a financing transaction,” said Steve Cates, Westwater’s chief financial officer and SVP – Finance.
As of September 30, Westwater had a cash balance of $11.7 million and has incurred approximately $116.7 million since beginning construction of the Kellyton Plant.
Westwater Resources Inc., an energy technology company, is focused on developing battery-grade natural graphite. The company’s primary project is the Kellyton Plant that is under construction in east-central Alabama.
In addition, the company’s Coosa Graphite Deposit is the most advanced natural flake graphite deposit in the contiguous United States and located across 41,965 acres (approximately 17,000 hectares) in Coosa County, Alabama. For more information, visit www.westwaterresources.net.