We face a variety of risks related to our planned battery-graphite manufacturing business.
The construction and operation of the Kellyton Graphite Plant is subject to delays, cost overruns, and may not produce expected benefits.
The Company is not producing any products at a commercial scale at this time. As a result, we do not currently have a reliable source of operating cash. If we cannot successfully transition to commercial scale production of graphite and vanadium, partner with another company that has cash resources, find other means of generating and/or access additional sources of private or public capital, we may not be able to remain in business.
Volatility in graphite and vanadium prices may result in the Company not receiving an adequate return on invested capital.
Our operations are subject to environmental risks.
Competition from better-capitalized companies affects prices and our ability to acquire both properties and personnel.
Because we have limited capital, inherent manufacturing and mining risks pose a significant threat to us compared with our larger competitors.
Risks Related to Exploration and Mining Activities
Our Coosa property is in the exploration stage. There is no assurance that we can establish the existence of any Mineral Reserve on the property in commercially exploitable quantities. Until we can do so, we cannot earn any revenue from the property, and if we do not do so, and are unable to enter into a joint venture or sell the property, we will lose all of the funds that we expend on exploration. If we do not discover any Mineral Reserves in a commercially exploitable quantity, our business could be adversely impacted.
Exploration and development of graphite and vanadium properties are risky and subject to great uncertainties.
The extent of the Company’s vanadium mineral reserves at the Coosa Graphite Deposit is unknown and may not be in sufficient quantities to make its extraction and processing economically feasible.
The Company does not have and may not be able to obtain surface or access rights to all or a portion of the Coosa Graphite Deposit.
Because mineral exploration and development activities are inherently risky, we may be exposed to environmental liabilities and other dangers. If we are unable to maintain adequate insurance, or liabilities exceed the limits of our insurance policies, we may be unable to continue operations.
Title to the Coosa Graphite Deposit may be subject to defects in title or other claims, which could affect our property rights and claims.
Our stock price has been and may continue to be volatile and may fluctuate significantly, which may adversely impact investor confidence and results and increase the likelihood of securities class action litigation.
The Company has no history of paying dividends on its common stock, and we do not anticipate paying dividends in the foreseeable future.
Terms of subsequent financings may adversely impact holders of our securities.
Our net loss for the three months ended September 30, 2024, was $3.1 million, or $0.05 per share, as compared with a net loss of $3.5 million, or $0.07 per share for the same period in 2023. The $0.4 million decrease in our net loss was primarily due to lower costs related to product development and exploration; partially offset by a loss on the sale of raw material inventory and less interest income.
Our net loss for the nine months ended September 30, 2024, was $9.8 million, or $0.17 per share, as compared with a net loss of $9.5 million or $0.19 per share for the same period in 2023. The $0.3 million increase in our net loss was primarily due to a loss on the sale of raw material inventory and less interest income; partially offset by a decrease in product development and exploration expenses.
Product development expenses for the three and nine months ended September 30, 2024, were $0.3 million and $0.9 million, respectively, a decrease of $0.7 million and $1.8 million compared to the same periods in 2023, respectively. Product development expenses for the three and nine months ended September 30, 2024 and 2023, related primarily to sample production of battery-grade natural graphite products for evaluation by potential customers. Since the third quarter of 2023, the Company has utilized its in-house R&D Lab for sample processing, resulting in lower costs for each batch of samples produced.
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