Table of Contents




UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


xFORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the quarterly period ended SeptemberJune 30, 2017


Or


2021

oOr

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the transition period from to


Commission file number 001-33404


WESTWATER RESOURCES, INC.

(Exact Name of IssuerRegistrant as Specified in Its Charter)


DELAWAREDelaware

75-2212772

(State of Incorporation)

(I.R.S. Employer Identification No.)


6950 S. Potomac Street, Suite 300, Centennial, Colorado80112

(Address of Principal Executive Offices, Including Zip Code)


                                (303) 531-0518                             (303) 531-0516

(Issuer’sRegistrant’s Telephone Number, Including Area Code)


Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.001 par value

WWR

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx Noo


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx Noo


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated fileroFiler

Accelerated fileroFiler

Non-accelerated fileroFiler

Smaller reporting companyx

(Do not check if a smaller reporting company)

Emerging growth companyo


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Nox


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Title of Each Class of Common Stock

Number of Shares Outstanding

Common Stock, $0.001 par value

27,612,624­­­­­­34,636,063 as of November 9, 2017August 11, 2021








Table of Contents

WESTWATER RESOURCES, INC.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

3

ITEM 1. FINANCIAL STATEMENTS

3

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

18

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

25

ITEM 4. CONTROLS AND PROCEDURES

25

PART II - OTHER INFORMATION

26

ITEM 1. LEGAL PROCEEDINGS

26

ITEM 1A. RISK FACTORS

26

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

26

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

26

ITEM 4. MINE SAFETY DISCLOSURES

26

ITEM 5. OTHER INFORMATION

26

ITEM 6. EXHIBITS

26

SIGNATURES

27


7

2

Table of Contents

PART I — FINANCIAL INFORMATION

3


ITEM 1. FINANCIAL STATEMENTS

3


ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

16


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

23


ITEM 4. CONTROLS AND PROCEDURES

23


PART II - OTHER INFORMATION

24


ITEM 1.  LEGAL PROCEEDINGS

24


ITEM 1A.  RISK FACTORS.

24


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

25


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

25


ITEM 4.  MINE SAFETY DISCLOSURES.

25


ITEM 5.  OTHER INFORMATION.

25


ITEM 6.  EXHIBITS.

26


SIGNATURES

27












PART I — FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

WESTWATER RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(expressed in thousands of dollars, except share amounts)

(unaudited)

    

June 30, 

    

December 31, 

2021

2020

ASSETS

 

  

 

  

Current Assets:

 

  

 

  

Cash and cash equivalents

 

$

119,138

 

$

50,315

Equity securities

 

 

2,931

 

 

1,520

Prepaid and other current assets

 

 

495

 

 

754

Total Current Assets

 

 

122,564

 

 

52,589

Property, plant and equipment, at cost:

 

 

  

 

 

  

Property, plant and equipment

 

 

9,079

 

 

9,080

Less accumulated depreciation and depletion

 

 

(96)

 

 

(95)

Net property, plant and equipment

 

 

8,983

 

 

8,985

Operating lease right-of-use assets

 

 

291

 

 

353

Restricted cash

 

 

 

 

10

Other long-term assets

 

 

100

 

 

Total Assets

 

$

131,938

 

$

61,937

 

 

  

 

 

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

  

 

 

  

Current Liabilities:

 

 

  

 

 

  

Accounts payable

 

$

2,968

 

$

1,734

Accrued liabilities

 

 

2,060

 

 

2,369

Operating lease liability - current

 

 

151

 

 

149

Total Current Liabilities

 

 

5,179

 

 

4,252

Operating lease liability, net of current

 

 

150

 

 

214

Total Liabilities

 

 

5,329

 

 

4,466

Commitments and Contingencies

 

 

  

 

 

  

Stockholders’ Equity:

 

 

  

 

 

  

Common stock, 100,000,000 shares authorized, $.001 par value;

 

 

  

 

 

  

Issued shares - 33,536,476 and 19,172,020 respectively

 

 

  

 

 

  

Outstanding shares - 33,536,315 and 19,171,859 respectively

 

 

33

 

 

19

Paid-in capital

 

 

461,717

 

 

383,723

Accumulated deficit

 

 

(334,883)

 

 

(326,013)

Less: Treasury stock (161 shares), at cost

 

 

(258)

 

 

(258)

Total Stockholders’ Equity

 

 

126,609

 

 

57,471

Total Liabilities and Stockholders’ Equity

 

$

131,938

 

$

61,937


WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(expressed in thousands of dollars, except share amounts)

(unaudited)

 

 

 

 

September 30,

 

December 31,

 

 

Notes

 

2017

 

2016

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

$

7,200

 

$

3,309 

Marketable securities

 

3

 

1,060 

 

Notes receivable – current

 

3

 

1,500 

 

Prepaid and other current assets

 

 

 

831 

 

602 

Total Current Assets

 

 

 

10,591 

 

3,911 

 

 

 

 

 

 

 

Property, plant and equipment, at cost:

 

 

 

 

 

 

Property, plant and equipment

 

 

 

112,560 

 

112,964 

Less accumulated depreciation, depletion and impairment

 

 

 

(65,677)

 

(66,048)

Net property, plant and equipment

 

5

 

46,883 

 

46,916 

 

 

 

 

 

 

 

Restricted cash

 

 

 

3,668 

 

3,964 

Notes receivable – non-current

 

3

 

2,554 

 

Long-term assets held for sale

 

 

 

 

2,123 

Total Assets

 

 

 

$

63,696 

 

$

56,914 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

 

 

$

860 

 

$

610 

Accrued liabilities

 

 

 

1,450 

 

1,981 

Convertible loan, net of discount – related party

 

7

 

 

5,431 

Current portion of asset retirement obligations

 

8

 

121 

 

121 

Total Current Liabilities

 

 

 

2,431 

 

8,143 

 

 

 

 

 

 

 

Asset retirement obligations, net of current portion

 

8

 

5,025 

 

4,668 

Other long-term liabilities and deferred credits

 

 

 

500 

 

500 

Long-term liabilities related to assets held for sale

 

 

 

 

555 

Total Liabilities

 

 

 

7,956 

 

13,866 

 

 

 

 

 

 

 

Commitments and Contingencies

 

12

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Common stock, 100,000,000 shares authorized, $.001 par value;

 

 

 

 

 

 

Issued shares – 27,484,935 and 16,675,419, respectively

 

 

 

 

 

 

Outstanding shares – 27,476,910 and 16,667,394, respectively

 

9

 

28 

 

17 

Paid-in capital

 

9,10

 

296,937 

 

280,191 

Accumulated other comprehensive income

 

 

 

(287)

 

Accumulated deficit

 

 

 

(240,680)

 

(236,902)

Treasury stock (8,025 and 8,025 shares, respectively), at cost

 

 

 

(258)

 

(258)

Total Stockholders' Equity

 

 

 

55,740 

 

43,048 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

 

 

$

63,696

 

$

56,914 

The accompanying notes are an integral part of these condensed consolidated financial statements.







WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(expressed in thousands of dollars, except share and per share amounts)

(unaudited)

 

 

 

 

For the Three Months Ended Sep 30,

 

For the Nine Months Ended Sep 30,

 

 

Notes

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

Mineral property expenses

 

6

 

$

(1,316)

 

$

(1,039)

 

$

(3,637)

 

$

(2,908)

General and administrative

 

 

 

(1,700)

 

(1,883)

 

(4,976)

 

(6,035)

Accretion of asset retirement obligations

 

8

 

(132)

 

(120)

 

(395)

 

(360)

Depreciation and amortization

 

 

 

(27)

 

(56)

 

(104)

 

(188)

Impairment of uranium properties

 

 

 

 

 

 

(534)

        Total operating expenses

 

 

 

(3,175)

 

(3,098)

 

(9,112)

 

(10,025)

 

 

 

 

 

 

 

 

 

 

 

Non-Operating Income/(Expenses):

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of convertible debt

 

 

 

 

 

(39)

 

Interest income/(expense)

 

3,7

 

186 

 

(671)

 

424 

 

(2,194)

Commitment fees

 

 

 

 

 

 

(333)

Loss on sale of marketable securities

 

 

 

 

 

 

(116)

Gain on disposal of uranium properties

 

3

 

 

 

 

4,927 

 

Other income, net

 

 

 

                    6

 

25 

 

22 

 

44 

         Total other income/(expense)

 

 

 

192 

 

(646)

 

5,334 

 

(2,599)

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

$

(2,983)

 

$

(3,744)

 

$

(3,778)

 

$

(12,624)

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

Unrealized fair value decrease on marketable securities

 

 

 

$

(126)

 

$

 

$

(287)

 

$

(49)

Transfer to realized loss upon sale of available-for-sale securities

 

 

 

 

 

 

116 

Comprehensive Loss

 

 

 

$

(3,109)

 

$

(3,744)

 

$

(4,065)

 

$

(12,557)

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS PER SHARE

 

$

(0.12)

 

$

(0.38)

 

$

(0.16)

 

$

(1.81)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

 

 

  25,037,203

 

     9,741,331

 

   23,763,842

 

    6,963,869


The accompanying notes are an integral part of these condensed consolidated financial statements.


3

Table of Contents

WESTWATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(expressed in thousands of dollars, except share and per share amounts)

(unaudited)






WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL CASH FLOW INFORMATION

(expressed in thousands of dollars)

(unaudited)

 

 

 

 

Nine Months Ended Sep 30,

 

 

Notes

 

2017

 

2016

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

Net loss

 

 

 

$

(3,778)

 

$

(12,624)

Reconciliation of net loss to cash used in operations:

 

 

 

 

 

 

Accretion of asset retirement obligations

 

8

 

395 

 

360 

Amortization of debt discount

 

 

 

30 

 

1,355 

Amortization of convertible loan establishment fee

 

 

 

 

75 

Amortization of notes receivable discount

 

 

 

(553)

 

Loss on extinguishment of convertible debt

 

7

 

39 

 

Unrealized holding loss on securities

 

 

 

 

116 

Common stock issued as payment for commitment fees

 

 

 

 

333 

Costs incurred for restoration and reclamation activities

 

8

 

(37)

 

(54)

Depreciation and amortization

 

 

 

104 

 

188 

Stock compensation expense

 

10

 

62 

 

545 

Gain on disposal of uranium properties

 

3

 

(4,927)

 

Impairment of uranium properties

 

 

 

 

534 

Amortization of non-cash investor relations fees

 

 

 

175 

 

Effect of changes in operating working capital items:

 

 

 

 

 

 

(Increase)/decrease in receivables

 

 

 

(5)

 

47 

(Increase)/decrease in prepaid and other current assets

 

 

 

 (101)

 

101 

Decrease in payables, accrued liabilities and deferred credits

 

 

 

(280)

 

(830) 

Net Cash Used In Operating Activities

 

 

 

(8,876)

 

(9,854)

 

 

 

 

 

 

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

Purchase of equipment

 

 

 

              (100)

 

                    -

Proceeds from the sale of investments

 

 

 

 

247 

Net decrease in restricted cash and short-term investments

 

 

 

23 

 

               57

Proceeds from disposal of property, plant and equipment

 

3

 

1,950 

 

Net Cash Provided By Investing Activities

 

 

 

1,873 

 

304 

 

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

Payments on borrowings

 

7

 

(5,500)

 

Issuance of common stock, net

 

9

 

16,395 

 

12,511 

Payment of minimum withholding taxes on net share settlements of equity awards  

 

 

 

(1)

 

Net Cash Provided By Financing Activities

 

 

 

10,894 

 

12,511 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

 

3,891 

 

2,961 

Cash and cash equivalents, beginning of period

 

 

 

3,309 

 

865 

Cash and Cash Equivalents, End of Period

 

 

 

$

7,200 

 

$

3,826 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

 

 

$

227 

 

$

486 

Supplemental Non-Cash Information With Respect to Investing and Financing Activities:

 

 

 

 

 

 

Common stock issued for settlement of accounts payable

 

 

 

$

300

 

$

834 

Common stock issued for payment of convertible loan interest and fees

 

 

 

$

 

$

242 

Common stock issued for payment of commitment fees

 

 

 

$

1,214

 

$

523 

The accompanying notes are an integral part of these condensed consolidated financial statements.







WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(expressed in thousands of dollars, except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Shares

 

Amount

 

Paid-In Capital

Accumulated  Other Comprehensive Loss

 

Accumulated Deficit

 

Treasury Stock

 

Total

Balances, January 1, 2017

16,667,394

 

$

17

 

$

280,191 

$

 

$

(236,902)

 

$

(258)

 

$

43,048 

Net loss

-

 

-

 

 

(3,778)

 

 

(3,778)

Common stock issued, net of issuance costs

9,776,396

 

10

 

15,172 

 

 

 

 

15,182 

Common stock issued for commitment fees

880,000

 

1

 

1,213 

 

 

 

1,214 

Common stock issued for investor relations fees

150,000

 

-

 

300 

 

 

 

300 

Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes

3,120

 

-

 

62 

 

 

 

62 

Minimum withholding taxes on net share settlements of equity awards

-

 

-

 

(1)

 

 

 

(1)

Unrealized holding loss on marketable securities

-

 

-

 

(287)

 

 

 

(287)

Balances, September 30, 2017

27,476,910

 

$

28

 

$

296,937 

$

(287)

 

$

(240,680)

 

$

(258)

 

$

55,740 

For the Three Months Ended

For the Six Months Ended

June 30, 

June 30, 

    

2021

   

2020

    

2021

   

2020

    

Operating Expenses:

 

Product development expenses

$

(2,109)

$

(175)

$

(3,932)

$

(301)

Exploration expenses

(384)

(6)

(529)

(6)

General and administrative expenses

(2,198)

(1,226)

(4,282)

(2,588)

Arbitration costs

(13)

(28)

(1,545)

(697)

Depreciation and amortization

 

(1)

(2)

(2)

(4)

Total operating expenses

(4,705)

(1,437)

(10,290)

(3,596)

Non-Operating Income/(Expenses):

 

 

  

 

 

 

  

 

 

  

Unrealized investment gain

 

 

1,218

 

 

 

1,411

 

 

Other income (expense)

7

1

9

(2)

Total other income (expense)

 

 

1,225

 

 

1

 

1,420

 

 

(2)

 

 

 

 

  

 

 

 

  

Net Loss from continuing operations

 

(3,480)

 

(1,436)

(8,870)

 

(3,598)

Net Loss from discontinued operations

 

 

(1,031)

 

(2,156)

Net Loss

 

$

(3,480)

 

$

(2,467)

$

(8,870)

 

$

(5,754)

 

 

  

 

 

  

 

  

 

 

  

BASIC AND DILUTED LOSS PER SHARE

LOSS PER SHARE FROM CONTINUING OPERATIONS

 

$

(0.11)

 

$

(0.25)

$

(0.29)

 

$

(0.74)

LOSS PER SHARE FROM DISCONTINUED OPERATIONS

$

$

(0.18)

$

$

(0.44)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

 

 

32,431,919

 

 

5,786,117

 

30,525,520

 

 

4,895,533


The accompanying notes are an integral part of these condensed consolidated financial statements.




4


Table of Contents

WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL CASH FLOW INFORMATION

(expressed in thousands of dollars)

(unaudited)

For the Six Months Ended June 30, 

    

2021

    

2020

Operating Activities:

 

  

 

  

Net loss

 

$

(8,870)

$

(5,754)

Reconciliation of net loss to cash used in operations:

 

 

  

 

Non-cash lease expense

 

 

 

2

Accretion of asset retirement obligations

 

 

 

138

Costs incurred for restoration and reclamation activities

(167)

Depreciation and amortization

 

 

2

 

30

Stock compensation expense

 

 

295

 

28

Unrealized (gain) on equity securities

(1,411)

Gain on disposal of fixed assets

(21)

Effect of changes in operating working capital items:

(Increase) in prepaids and other assets

 

 

(74)

 

(148)

(Decrease)/Increase in payables and accrued liabilities

 

 

925

 

(173)

Net Cash Used In Operating Activities

 

 

(9,133)

 

(6,065)

Cash Flows From Investing Activities

 

 

  

 

  

Proceeds from PPP loan escrow

 

 

333

 

Building deposit

(100)

Capital expenditures

 

 

 

(87)

Net Cash Provided By Investing Activities

 

 

233

 

(87)

Cash Flows From Financing Activities:

 

 

  

 

  

Proceeds from note payable

331

Issuance of common stock, net

 

 

77,863

 

6,291

Payment of minimum withholding taxes on net share settlements of equity awards

 

 

(150)

 

Net Cash Provided By Financing Activities

 

 

77,713

 

6,622

 

 

  

 

  

Net increase in cash, cash equivalents and restricted cash

 

 

68,813

 

470

Cash, Cash Equivalents and Restricted Cash, Beginning of Period

 

 

50,325

 

5,667

Cash, Cash Equivalents and Restricted Cash, End of Period

 

$

119,138

$

6,137

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents

WESTWATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(expressed in thousands of dollars, except share amounts)

(unaudited)

Common Stock

Paid-In

Accumulated

Treasury

Six months ended June 30, 2021

Shares

Amount

Capital

Deficit

Stock

Total

Balances, January 1, 2021

 

19,172,020

$

19

$

383,723

$

(326,013)

$

(258)

$

57,471

Net loss

 

 

 

(8,870)

 

 

(8,870)

Common stock issued, net of issuance costs

 

14,307,270

 

14

77,849

 

 

 

77,863

Stock compensation expense and related share issuances, net of shares withheld for payment of taxes

 

57,186

 

295

 

 

 

295

Minimum withholding taxes on net share settlements of equity awards

(150)

(150)

Balances, June 30, 2021

 

33,536,476

$

33

$

461,717

$

(334,883)

$

(258)

$

126,609

Three months ended June 30, 2021

Balances, March 31, 2021

32,336,476

$

32

$

455,854

$

(331,403)

$

(258)

$

124,225

Net loss

 

 

 

 

(3,480)

 

 

(3,480)

Common stock issued, net of issuance costs

 

1,200,000

 

1

 

5,659

 

 

 

5,660

Stock compensation expense and related share issuances, net of shares withheld for payment of taxes

 

 

 

204

 

 

 

204

Balances, June 30, 2021

 

33,536,476

$

33

$

461,717

$

(334,883)

$

(258)

$

126,609

Common Stock

Paid-In

Accumulated

Treasury

Six months ended June 30, 2020

    

Shares

    

Amount

    

 Capital

    

Deficit

    

Stock

    

Total

Balances, January 1, 2020

 

3,339,541

$

3

$

319,758

(302,439)

$

(258)

$

17,064

Net loss

 

 

 

 

(5,754)

 

 

(5,754)

Common stock issued, net of issuance costs

 

3,324,924

 

4

 

6,287

 

 

 

6,291

Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes

 

511

 

 

28

 

 

 

28

Balances, June 30, 2020

 

6,664,976

$

7

$

326,073

$

(308,193)

$

(258)

$

17,629

Three months ended June 30, 2020

Balances, March 31, 2020

 

4,762,794

$

5

$

322,227

$

(305,726)

$

(258)

$

16,248

Net loss

 

 

 

 

(2,467)

 

 

(2,467)

Common stock issued, net of issuance costs

 

1,902,182

 

2

3,818

 

 

 

3,820

Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes

 

 

 

28

 

 

 

28

Balances, June 30, 2020

 

6,664,976

$

7

$

326,073

$

(308,193)

$

(258)

$

17,629

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for Westwater Resources, Inc. (the “Company,” “we,” “us,” “WWR” or “WWR”“Westwater”), formerly known as Uranium Resources, Inc., have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements included in Westwater Resources, Inc.’s 2016 Annual Report on Form 10-K.10-K for the year ended December 31, 2020. In the opinion of management, all adjustments (which are of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and ninesix months ended SeptemberJune 30, 20172021 are not necessarily indicative of the results that may be expected for any other period including the full year ending December 31, 2017.2021.

Significant Accounting Policies

Our significant accounting policies are detailed in Note 1, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2020.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 became effective for interim and annual periods beginning after December 15, 2020. The adoption of ASU 2019-12 did not result in a material impact to our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update No. 2017-01 (ASU 2017-01), Business Combinations:  Clarifying the Definition of a Business, which clarifies the definition of a business when determining whether a company has acquired or sold a business. The ASU applies to all entities and is effective for annual periods ending after December 15, 2017, and interim periods thereafter, with early adoption permitted under certain circumstances.  The Company does not believe that the adoption of this guidance will have a material impact on our financial statements.  

In NovemberJune 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 will change how companies account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities, companies will be required to estimate lifetime expected credit losses and recognize an allowance against the related instruments. For available for sale debt securities, companies will be required to recognize an allowance for credit losses rather than reducing the carrying value of the asset. The adoption of this update, if applicable, will result in earlier recognition of losses and impairments. ASU 2016-13 will be effective for interim and annual periods beginning after December 15, 2022.

In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to ASC 326, Financial Instruments – Credit Losses.” ASU 2016-13 introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. ASU 2018-19 is the final version of Proposed Accounting Standards Update No. 2016-18, Statement2018-270, which has been deleted. Additionally, the amendments clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases. ASU 2018-19 will be effective for interim and annual periods beginning after December 15, 2022.

The Company is currently evaluating ASU 2016-13 and ASU 2018-19 for the potential impact of adopting this guidance on its financial reporting.

7

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Cash, Flows:Cash Equivalents and Restricted Cash which will require that

The following table provides a statement of cash flows explain the change during period in the totalreconciliation of cash, cash equivalents and amounts generally described as restricted cash oras reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the statement of cash flows.

As of June 30, 

(thousands of dollars)

    

2021

    

2020

Cash and cash equivalents

$

119,138

$

2,330

Restricted cash - pledged deposits for performance bonds

 

 

3,807

Cash, cash equivalents and restricted cash shown in the statement of cash flows

$

119,138

$

6,137

The Company’s restricted cash equivalents.  As a result, amounts generally describedon June 30, 2020, consisted of funds held in money market accounts and used as collateral for performance obligation bonds related to the future restoration and reclamation of the Company’s South Texas uranium properties. The performance obligation bonds were required for future restoration and reclamation obligations for the Company’s South Texas uranium properties. With the divestiture of the Company’s uranium subsidiaries, all performance obligations and related restricted cash was transferred to enCore Energy Corp. (“enCore”) as of December 31, 2020. The funds were not available for the payment of general corporate expenses and restricted cash equivalents should be included withwere excluded from cash and cash equivalents when reconcilingas of June 30, 2020.

2. LIQUIDITY

The Company last recorded revenues from operations in 2009. Since 2009, the beginning-of-periodCompany has relied on equity financings, debt financings and end-of-period total amounts shownasset sales to fund its operations. The Company expects to rely on debt and equity financing to fund its operations for the foreseeable future. The Company will also continue its cost reduction initiatives to identify ways to reduce its cash expenditures.

In 2016, the Company began to expand its business plan into acquisition and development of energy-related materials. First, in 2016 the Company obtained lithium mineral leases in Nevada and Utah as an exploration opportunity.  Then, in 2018 the Company acquired Alabama Graphite Corp. and its Coosa Graphite Project in Alabama for the purpose of developing a commercial sized graphite mineral deposit and processing the flake graphite into advanced graphite products for use in batteries. In the third quarter of 2020, the Company executed the strategic decision to focus its resources on the statement of cash flows.  The ASU applies to all entities and is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years beginning after December 15, 2019, with early adoption permitted.  As a result, upon adoption, the Company will include the restricted cash amountgraphite business in Alabama, discontinuing its investment in its beginning-of-periodlithium mineral properties and end-of-period reconciliationsselling its uranium business, located in Texas and New Mexico, to enCore. As discussed in Note 3, the sale to enCore closed on December 31, 2020, and included the elimination of cash on its statementa $9.3 million bonding liability, the elimination of cash flows.  For$5.2 million in asset retirement obligations, and the nine months ended September 30, 2017, this would have resulted in the Company including an additionalelimination of more than $4.0 million in its beginning-of-period cash balanceannual expenditures related to reclamation and an additional $3.7compliance costs. The Company received approximately $1.8 million in its end-of-period cash balance.of enCore common stock and retained royalty interests on the New Mexico uranium properties as consideration for the sale. The Company also would not have recorded a release of restricted cash of $0.3 millionretained its uranium interests in the investing section of its statement of cash flows.

2. LIQUIDITY

At September 30, 2017,Turkey, which are subject to ongoing international arbitration proceedings, in which the Company had working capitalis seeking damages.

During the first six months of $8.2 million, which along with the anticipated funding from the financing agreements described below, is expected to provide it with the necessary liquidity through September 30, 2018.  At December 31, 2016,2021, the Company hadfocused on graphite process development activities including operation of a working capital deficitpilot program for processing flake graphite into battery-grade graphite products and the initiation of $4.2a Definitive Feasibility Study (“DFS”) on the Coosa Graphite Project. The data generated and experience gained from operating the pilot program are being used to inform the DFS and will also inform the requirements and specifications for building a commercial graphite processing facility.

On June 30, 2021, the Company’s cash balance was approximately $119.1 million. The increase in working capital of $12.4 million forDuring the ninesix months ended SeptemberJune 30, 2017 was primarily due to2021, the following:

the completionCompany sold 9.3 million shares of three equity offerings in January 2017, February 2017 and September 2017common stock for net proceeds of $8.9$47.3 million $4.5 million and $2.0 million respectively, as further described in Note 9, below;  

the completion of the sale of the Company’s wholly-owned subsidiary Hydro Resources Inc. (“HRI”)pursuant to Laramide Resources Ltd. (“Laramide”) on January 5, 2017.  Upon completion, the Company received $2.2 million in cash, a $5.0 million promissory note, of which $1.5 million is due in January 2018, 2,218,333 shares of Laramide Resources Ltd.’s common stock which had a fair value of $0.5 million at September 30, 2017 and 2,218,333 common stock purchase warrants which had a fair value of $0.3 million at September 30, 2017.  Details regarding this transaction are discussed in Note 3, below; and  

the repayment of the $5.5 million outstanding balance under the RCF Loan (defined in Note 7, below.)  

Also during the nine months ending September 30, 2017, the Company entered into the following financing agreements and anticipates funding from these sources to sustain operations through 2018:




WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (unaudited)




its Controlled Equity Offering Sales Agreement


On April 14, 2017, the Company entered into a Controlled Equity OfferingSM Sales Agreement with Cantor Fitzgerald & Co. (“Cantor”) acting as sales agent, pursuant to which the Company has registered the offer and sale from time to time of shares of its common stock having an aggregate offering price of up to $30.05.0 million (the “ATM Offering”), of which approximately $28.9 million is available for future sales as of November 9, 2017.  The Company is unable to sell shares of its common stock through the Controlled Equity Offering Sales Agreement on dates that it places shares with Aspire Capital through its CSPA, as discussed below.


Common Stock Purchase Agreement


On September 25, 2017, the Company entered into a Common Stock Purchase Agreement (“CSPA”) with Aspire Capital Fund, LLC (“Aspire Capital”) to place up to $22.0 million in the aggregate of its common stock over a term of 30 months.  Upon execution of the CSPA, the Company issued 880,000 shares of common stock for net proceeds of $30.6 million pursuant to Aspire Capital as a commitment fee.  The Company cannot sell in excess of 5,033,677 shares of common stock, including the 880,000 commitment shares (“Exchange Cap”), unless (i) stockholder approval is obtained, or (ii) the average price paid for all shares issued under theDecember 2020 Purchase Agreement (including the 880,000 commitment shares) is equal to or greater than $1.38.(“PA”) (as defined below) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 7). As of November 9, 2017,June 30, 2021, the Company has dollar capacity0 shares of $20.0 million

8

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

common stock registered for sale under the ATM Offering Agreement and has 10,800,000 of common stock available for future sales limitedpursuant to the Lincoln Park December 2020 PA.

Management believes the Company’s current Exchange Cap of 2.7 million shares of common stock unless conditions (i) or (ii) above are met. See Note 9 below for further details.

cash balance is sufficient to fund its planned non-discretionary expenditures through 2022. The Company believes thatis evaluating the ATM Offeringcontinued use of the Cantor and Lincoln Park financing facilities to support construction of the CSPA, along with its existing working capital balance, will provide it with the necessary liquidity to fund operations through 2018.  The Company will also continue to explore additional opportunities to raise capital, further monetize its non-core assets and identify ways to reduce its cash expenditures.

commercial graphite processing facility. While the Company has been successful in the past in raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available to it in amounts sufficient to meet the Company’sits needs, or on terms acceptable to the Company. Stock price volatility and uncertain economic conditions caused by the COVID-19 pandemic and the recent emergence of variant strains of the virus could significantly impact the Company’s ability to raise funds through equity financing. Market conditions, including but not limited to, inflation, labor shortages and supply change disruptions could adversely impact the planned cost of the Company’s commercial graphite processing facility.  Along with evaluating the continued use of the Cantor and Lincoln Park financing facilities, the Company may consider project financing to fund the construction of the commercial graphite processing facility.   In the event that funds are not available for project financing to complete construction of the commercial graphite processing facility in 2022, the Company expects to be able to fund its non-discretionary expenditures, however, the Company may be required to materially change its planned business plans.development strategies.

3. DISPOSAL OF HYDRO RESOURCES, INC.ACQUISITIONS AND DISPOSALS

Sale of Uranium Business to enCore Energy

On January 5, 2017, LaramideDecember 31, 2020, Westwater, and its wholly owned subsidiary URI Neutron Holdings II, Inc. (“Neutron Holdings”), entered into a securities purchase agreement with enCore (the “Purchase Agreement”) to sell their subsidiaries engaged in the Companyuranium business in Texas and New Mexico (the “Uranium Subsidiaries”) to enCore. The transaction closed December 31, 2020.

At the saleclosing of the Company’s wholly-owned subsidiary HRI, which holdstransaction, enCore delivered $0.7 million in cash and issued $1.8 million worth of its common shares to Westwater, and Westwater and Neutron Holdings transferred all of the Churchrockequity interests in the Uranium Subsidiaries to enCore along with a database relating to the Grants Mineral Belt located in New Mexico. In addition, enCore delivered to Westwater a 2% net smelter return royalty (“NSR Royalty”) on production from the uranium properties held by Uranco, Inc. in New Mexico, and Crownpoint projects, pursuanta 2.5% net profits interest (“NPI”) in the profits from operations of Neutron Energy, Inc.’s Juan Tafoya and Cebolleta Projects. Pursuant to a Share Purchase Agreement (the “Laramide SPA”).  Under the terms of the Laramide SPA, executed on April 7, 2016Purchase Agreement, enCore has also agreed to replace the indemnification obligations of Westwater for certain reclamation surety bonds held in the name of URI, Inc., and amended on December 5, 2016, the Company received the following consideration:

$2.5Westwater transferred to enCore all rights to $3.8 million in cash collateral held to secure such indemnity obligations.

Also, at closing, in accordance with the terms of the Side Letter executed by the parties to the Purchase Agreement, Westwater delivered $0.3 million in cash to enCore, which $0.25 millionamount was paidto be delivered in escrow upon the request of the lender, Celtic Bank, under the loan made to URI, Inc. in May 2020 pursuant to the Small Business Administration (“SBA”) Paycheck Protection Program (the “PPP Loan”). The escrowed amount was to be released to Westwater upon, and subject to, forgiveness of the PPP Loan under the terms of the CARES Act. The PPP Loan forgiveness application was filed on October 21, 2016;

2,218,333 shares of Laramide common stockJanuary 25, 2021, and 2,218,333 Laramide common stock purchase warrants.  Each common stock purchase warrant entitles the Company to purchase one share of common stock of Laramide atWestwater received a price of CDN$0.45 for a period of 60 monthsnotification from the date of closing;  

a $5.0 million promissory note, secured by a mortgage over the projects.  The note has a three-year term and carries an initial interest rate of 5% which then increases to 10% upon Laramide’s decision regarding commercial production at the Churchrock project.  Principal payments of approximately $1.5 million are due and payableSBA on January 5 in each of 2018 and 2019, with the balance of $2.0 million due and payable on January 5, 2020.  Interest is payable on a quarterly basis, provided however that no interest will be payable until March 31, 2018.  Laramide will have the right to satisfy up to half of each of these principal payments by delivering shares of its common stock to the Company, which shares will be valued by reference to the volume weighted average price (“VWAP”) for Laramide’s common stock for the 20 trading days before the respective anniversary of January 5, on which each payment is due;

a retained 4.0% Net Smelter Return Royalty (“NSR Royalty”) on the Churchrock project, which royalty may be repurchased by Laramide by January 5, 2018 for $4.95 million; and






WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (unaudited)



an option to purchase Laramide’s La Sal project for $3.0 million and an option to purchase its La Jara Mesa project for $5.0 million, both of which expire on January 5, 2018.  Any such exercise by the Company will first result in a reduction2021 that 100% of the principal amount due underloan had been forgiven. As a result, on March 31, 2021, the promissory note with any remaining portions of the purchase priceescrowed funds were returned to be paid in cash by the Company.Westwater.

The divestiture of HRIthe uranium business was accounted for as an asset disposal and the non-cash consideration received from LaramideenCore was recorded at fair value. The fair valueIn accordance with the terms of the Purchase Agreement, non-cash consideration included the receipt of shares of LaramideenCore common stock receivedvalued in the amount of $1.8 million. The number of shares issued at closing was 2,571,598. The number of shares was determined usingby a pricing formula based on the closing sharevolume

9

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

weighted average price (“VWAP”) of enCore’s common shares for the ten trading days ending on and including December 30, 2020. The VWAP formula resulted in a price of Laramide’s stock on January 5, 2017.  The fair value$0.698 per share of theenCore common stock purchase warrants was determined using the Black-Scholes method on April 27, 2017, which was the date that Laramide’s stockholders approved the issuance of the warrants.    The fair value of the notes receivable was determined using the present value of the future cash receipts discounted at a market rate of 9.5%.  The Company did not record a separate fair value for the options as the exercise of the options would reduce the amount outstanding under the notes receivable.  Duestock.

Finally, due to the high degree of uncertainties surrounding future mine development and mineralsuranium prices, as well as limited marketability, the Company determined the fair value of the NSR Royalty and NPI to be nil.  The following fair value amounts were recorded as the purchase consideration:

(thousands of dollars)

 Fair Value

Cash, less transaction costs

$

1,950

Laramide common stock

568

Laramide common stock purchase warrants

506

Notes receivable

3,501

Total consideration received

$

6,525

The fair value of the shares of Laramide’s common stock and common stock purchase warrants received were valued using Level 1 inputs of the fair value hierarchy and the fair value of the notes receivable was valued using Level 2 inputs, as defined in Note 4 below.  NaN value.

The Company recorded the following gain on disposal of uranium properties within its Condensed Consolidated Statement of Operations:

(thousands of dollars)

Total consideration received

$

6,525 

Carrying value of Churchrock project

(2,123)

Carrying value of other plant and equipment

(31)

Accounts payable

Asset retirement obligation

105 

Royalty payable on Churchrock project

450 

Gain on disposal of HRI

$

4,927 

4. FINANCIAL INSTRUMENTS

Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair-value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that are observable at the measurement date.

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 includes unobservable inputs that reflect management’s assumptions about what factors market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including internal data.



Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that are observable at the measurement date.
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 includes unobservable inputs that reflect management’s assessment about what factors market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including internal data.

WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (unaudited)



The Company believes that the fair valuesvalue of ourits assets and liabilities approximateapproximates their reported carrying amounts. The following table presents information about assets that were recorded at fair value on a recurring and non-recurring basis as of SeptemberJune 30, 20172021, and December 31, 20162020, and indicateindicates the fair value hierarchy:hierarchy.

 

 

September 30, 2017

(thousands of dollars)

 

Level 1

Level 2

Level 3

Total

Current Assets

 

 

 

 

 

Marketable securities and short term investments

 

$

1,060

$

-

$

-

$

1,060

Total current assets recorded at fair value

 

$

1,060

$

-

$

-

$

1,060

Non-Current Assets

 

 

 

 

 

Restricted cash

 

3,668

-

-

3,668

Total non-current assets recorded at fair value

 

$

3,668

$

-

$

-

$

3,668

 

 

 

 

 

 

 

 

December 31, 2016

 

 

Level 1

Level 2

Level 3

Total

Non-Current Assets

 

 

 

 

 

Restricted cash

 

$

3,964

$

-

$

-

$

3,964

Total non-current assets recorded at fair value

 

$

3,964

$

-

$

-

$

3,964


June 30, 2021

(thousands of dollars)

    

Level 1

    

Level 2

    

Level 3

    

Total

Current Assets

 

  

 

  

 

  

 

  

Equity securities

$

2,931

$

$

$

2,931

Total current assets recorded at fair value

$

2,931

$

$

$

2,931

December 31, 2020

(thousands of dollars)

    

Level 1

    

Level 2

    

Level 3

    

Total

Current Assets

 

  

 

  

 

  

 

  

Equity securities

$

$

$

1,520

$

1,520

Total current assets recorded at fair value

$

$

$

1,520

$

1,520

Non-current Assets

 

  

 

  

 

  

 

  

Restricted cash

$

10

$

 

$

10

Total non-current assets recorded at fair value

$

10

$

$

$

10

Assets that are measured on a recurring basis include the Company’s marketable securities and restricted cash. Equity securities on the balance sheet at December 31, 2020, and June 30, 2021, consist solely of shares of common stock received as partial consideration for the sale of uranium assets to enCore (see Note 3). Further, the sale of the enCore shares was restricted and resulted in the Company applying a discount for the lack of marketability prior to May 1, 2021.   As of June 30, 2021, the restrictions on the sale of enCore stock have expired and the shares are currently available for

10

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

sale. The fair value of the securities now reflects the unadjusted market price of enCore shares as of June 30, 2021. With the lifting of restrictions and no anticipated lack of marketability, the measurement in equity securities is now considered a Level 1 input. The Company recognized a $1.4 million increase in the fair value of the equity securities in net income for the six-month period ended June 30, 2021.

5. PROPERTY, PLANT AND EQUIPMENT

 

 

Net Book Value of Property, Plant and Equipment at September 30, 2017

(thousands of dollars)

 

Turkey

 

Texas

 

New Mexico

 

Corporate

 

Total

Uranium plant

 

$

-

 

$

8,447

 

$

-

 

$

-

 

$

8,447

Mineral rights and properties

 

17,968

 

-

 

19,102

 

-

 

37,071

Other property, plant and equipment

20

 

1,132

 

-

 

214

 

1,366

     Total

 

$

17,988

 

$

9,579

 

$

19,102

 

$

214

 

$

46,883

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Book Value of Property, Plant and Equipment at December 31, 2016

(thousands of dollars)

 

Turkey

 

Texas

 

New Mexico

 

Corporate

 

Total

Uranium plant

 

$

-

 

$

8,459

 

$

-

 

$

-

 

$

8,459

Mineral rights and properties

 

17,968

 

-

 

19,102

 

-

 

37,070

Other property, plant and equipment

22

 

1,224

 

-

 

141

 

1,387

     Total

 

$

17,990

 

$

9,683

 

$

19,102

 

$

141

 

$

46,916


Net Book Value of Property, Plant and Equipment at June 30, 2021

(thousands of dollars)

    

Alabama

    

Corporate

    

Total

Mineral rights and properties

 

8,972

 

 

8,972

Other property, plant and equipment

 

 

11

 

11

Total

$

8,972

$

11

$

8,983



Net Book Value of Property, Plant and Equipment at December 31, 2020

(thousands of dollars)

    

Alabama

    

Corporate

    

Total

Mineral rights and properties

 

8,972

 

 

8,972

Other property, plant and equipment

 

 

13

 

13

Total

$

8,972

$

13

$

8,985

Impairment of Property, Plant and Equipment

The Company reviews and evaluates its long-lived assets for impairment on an annual basis or more frequently when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. For the six months ended June 30, 2021, no events or changes in circumstance are believed to have impacted recoverability of the Company’s long-lived assets. Accordingly, it was determined that 0 interim impairment was necessary.

6. DISCONTINUED OPERATIONS

In the third quarter of 2020, the Company executed the strategic decision to focus its resources on its graphite business, as further discussed above, and discontinue its investment in its lithium business. On December 31, 2020, the Company entered into a Purchase Agreement pursuant to which it agreed to sell its subsidiaries engaged in the Uranium Subsidiaries to enCore. The transaction closed on December 31, 2020. The Company’s lithium business included mineral leases and water rights in Nevada and Utah. The Company elected not to renew the annual lease rentals on the mineral properties, which also voids the water rights. 

In accordance with ASC 205-20 – “Discontinued Operations,” the enCore transaction represented a major strategic shift for Westwater and resulted in the reclassification of the Company’s uranium activities as discontinued operations and disclosure of the associated profit/loss of the Company’s uranium business as a separate line-item on the Company’s Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2021.


11

Table of Contents

WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)




6. MINERAL PROPERTY EXPENDITURES


Mineral property expenditures by geographical locationThe results of the Company’s uranium and lithium business segments included in discontinued operations for the three and ninesix months ended SeptemberJune 30, 2017 and 2016are2020, were as follows:

For the Three Months Ended

For the Six Months Ended

(thousands of dollars)

   

June 30, 2020

   

June 30, 2020

Mineral property expenses

 

$

(570)

 

$

(1,172)

General and administrative expenses

 

 

(433)

 

 

(850)

Accretion of asset retirement obligations

 

 

(32)

 

 

(138)

Depreciation and amortization

 

 

(15)

 

 

(26)

Other income (expense)

 

 

19

 

 

30

Net Loss from Discontinued Operations

 

$

(1,031)

 

$

(2,156)


 

 

For the Three Months Ended Sep 30,

 

For the Nine Months Ended Sep 30,

 

 

2017

 

2016

 

2017

 

2016

 

 

(thousands of dollars)

Temrezli project, Turkey

 

$

63

 

$

31

 

$

186

 

$

453

     Total Turkey projects

 

63

 

31

 

186

 

453

 

 

 

 

 

 

 

 

 

Kingsville Dome project, Texas

 

197

 

214

 

616

 

624

Rosita project, Texas

 

188

 

130

 

472

 

290

Vasquez project, Texas

 

117

 

105

 

399

 

365

Other projects, Texas

 

26

 

11

 

30

 

80

     Total Texas projects

 

528

 

460

 

1,517

 

1,359

 

 

 

 

 

 

 

 

 

Cebolleta project, New Mexico

 

-

 

-

 

538

 

537

Juan Tafoya project, New Mexico

 

38

 

37

 

354

 

48

Other projects, New Mexico

 

-

 

32

 

2

 

32

     Total New Mexico projects

 

38

 

69

 

894

 

617

 

 

 

 

 

 

 

 

 

Columbus Basin project, Nevada

 

481

 

113

 

667

 

113

Railroad Valley project, Nevada

 

80

 

-

 

238

 

-

Other projects, Nevada

 

8

 

14

 

11

 

14

     Total Nevada projects

 

569

 

127

 

916

 

127

 

 

 

 

 

 

 

 

 

Sal Rica project, Utah

 

118

 

352

 

124

 

352

     Total Utah projects

 

118

 

352

 

124

 

352

 

 

 

 

 

 

 

 

 

Total expense for the period

 

$

1,316

 

1,039

 

$

3,637

 

$

2,908

On June 20, 2017, the Company acquired its third lithium exploration project through the staking of 9,270 acres of federal placer mining claims within the Railroad Valley of central Nevada.  

On March 24, 2017, the Company’s wholly owned subsidiary Lithium Holdings Nevada LLC entered into an option agreement to purchase a block of unpatented placer mining claims covering an area of approximately 3,000 acres within the Columbus Salt Marsh area of Esmeralda County, Nevada.  The claims adjoin a portion of the Company’s current property holdings at its Columbus Basin project, expanding the project area within the basin to approximately 14,200 acres. The Company has the right to conduct exploration activities on the claims during the one-year option period. Under the option agreement, the Company may acquire the mineral property claims on or before March 24, 2018 in exchange for 200,000 shares of its common stock and a 1% NSR Royalty on the claims.  The Company paid $75,000 for this option, which has been included as exploration expenseOur cash flow information for the Columbus Basin project.six months ended June 30, 2020, included the following activities related to discontinued operations:

For the Six Months Ended

(thousands of dollars)

June 20, 2020

Depreciation and amortization

$

26

Capital Expenditures

(87)

Accretion of asset retirement obligations

138




WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (unaudited)




7. CONVERTIBLE LOAN

On November 13, 2013, the Company entered into a loan agreement (the “RCF Loan”) with Resource Capital Fund V L.P. (“RCF”), whereby RCF agreed, subject to the terms and conditions set forth in the RCF Loan, to provide a secured convertible loan facility of up to $15.0 million to the Company, which was subsequently amended on April 29, 2014 to reduce the amount available thereunder from $15.0 million to $8.0 million.  The Company exchanged $2.5 million in principal for shares of its common stock in December 2016 and repaid the $5.5 million outstanding balance under the RCF Loan on February 9, 2017.  No further obligations remain under the RCF Loan following the repayment. In addition, on July 31, 2017, the Company and RCF terminated the Stockholders’ Agreement dated March 1, 2012, pursuant to which RCF had certain stock participation rights and Board rights.

As a result of the repayment, the Company recorded a loss of $39,000 on the extinguishment of debt which represented the difference between the principal amount of $5.5 million and the carrying value of the RCF Loan on the date of repayment.

8. ASSET RETIREMENT OBLIGATIONS  

The following table summarizes the changes in the reserve for future restoration and reclamation costs on the balance sheet:

 

 

September 30,

 

December 31,

 

 

2017

 

2016

(thousands of dollars)

 

 

 

 

Balance, beginning  of period

 

$

4,894

 

$

4,468

Liabilities settled

 

(37)

 

(54)

Liabilities disposed

 

(106)

 

 

Accretion expense

 

395 

 

480

Balance, end of period

 

5,146

 

4,894

     Less:  Current portion

 

(121)

 

(121)

     Less:  Liabilities held for sale

 

-

 

(105)

Non-current portion

 

$

5,025

 

$

4,668

The Company is currently performing surface reclamation activities at its Rosita project located in Duval County, Texas.  The Company’s current liability of $0.1 million consists of the estimated costs associated with current surface reclamation activities through September 2018 at the Company’s Rosita project.  

9. COMMON STOCK

Common Stock Issued, Net of Issuance Costs

Confidentially Marketed Public OfferingDecember 2020 Purchase Agreement with Lincoln Park Capital Fund, LLC

On January 19, 2017,December 4, 2020, the Company completedentered into a registered public offering for net proceedsPurchase Agreement with Lincoln Park (the “December 2020 PA”) to place up to $100.0 million in the aggregate of $8.9 million.the Company's common stock on an ongoing basis when required by the Company over a term of 36 months. The Company controls the timing and amount of any sales to Lincoln Park, and Lincoln Park is obligated to make purchases in accordance with the December 2020 PA. Any common stock that is sold 1,399,140to Lincoln Park will occur at a purchase price that is based on an agreed upon fixed discount to the Company's prevailing market prices at the time of each sale and with no upper limits to the price Lincoln Park may pay to purchase common stock. The agreement may be terminated by the Company at any time, in its sole discretion, without any additional cost or penalty.

The December 2020 PA specifically provides that the Company may not issue or sell any shares of its common stock under the agreement if such issuance or sale would breach any applicable rules of the NYSE American Stock Exchange (“NYSE American”). In particular, NYSE American General Rule 713(a) provides that the Company may not issue or sell more than 19.99% of the number of shares of the Company’s common stock that were outstanding immediately prior to the execution of the December 2020 PA unless (i) shareholder approval is obtained or (ii) the average price of all applicable sales of common stock to Lincoln Park under the December 2020 PA, equals or exceeds $6.15. The Company held its 2021 Annual Shareholders Meeting on May 21, 2021 and obtained shareholder approval for the issuance of more than 19.99% of the shares of the Company’s common stock outstanding.

Lincoln Park has no right to require the Company to sell any shares of common stock at a price of $2.01 per share and 3,426,731 pre-funded warrants at a price of $2.00 per warrant.  The warrants have an exercise price of $0.01.  All of the pre-funded warrants have been exercised.

Registered Direct Offering

On February 16, 2017,to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company completed a registered direct offering for net proceedsdirects, subject to certain conditions. In all instances, the Company may not sell shares of $4.5 million with Aspire Capital whereby Aspire Capital purchased 2,100,000 sharesits common stock to Lincoln Park under the December 2020 PA if it would result in Lincoln Park beneficially owning more than 9.99% of its common stock at a priceany one point in time.

12

Table of $1.58 and 748,101 pre-funded common stock purchase warrants at a price of $1.57.  The warrants have an exercise price of $0.01 per share and a term of three years.  All of the pre-funded warrants have been exercised.Contents




WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


During the three and six months ended June 30, 2021, pursuant to the December 2020 PA with Lincoln Park, the Company sold 1.2 million and 5.0 million shares of common stock respectively, for net proceeds of $5.7 million and $30.6 million, respectively. These shares were sold pursuant to a Form S-3 registration statement filed pursuant to Rule 424(b)(3) and declared effective by the Securities and Exchange Commission on December 4, 2020.



Controlled EquityATM Offering Sales Agreement with Cantor

On April 14, 2017, the Company entered into the ATMa Controlled Equity OfferingSM Sales Agreement (the “ATM Offering Agreement”) with Cantor acting as sales agent. Under the ATM Offering Agreement, the Company may from time to time sell shares of its common stock having an aggregate offering amount up to $30.0 million in “at-the-market” offerings, which shares are registered under a registration statement on Form S-3, which was declared effective on March 9, 2017.offerings. The Company pays Cantor a commission equalof up to 2.5% of the gross proceeds from the sale of any shares pursuant to the ATM Offering.  As of November 9, 2017,Offering Agreement.

During the six months ended June 30, 2021, the Company had sold 673,8539.3 million shares of common stock for net proceeds of $1.1$47.3 million under the ATM Offering.  As a result, the Company had approximately $28.9 million remaining available for future sales under the ATM Offering.  

Common Stock Purchase Agreement with Aspire Capital


On September 25, 2017, the Company entered into the CSPA with Aspire Capital to place 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 ATM Offering Agreement with Cantor. These shares were sold pursuant to a prospectus supplement filed on December 4, 2020, pursuant to Rule 424(b)(5) as a takedown off the Company’s effective shelf registration statement which had been declared effective by the Securities and Exchange Commission 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 1,428,571December 1, 2020. The Company did 0t sell any shares of common stock for which the Company received proceeds of $2.0 million.  There were no other sales of common stock pursuant to the CSPA and asATM Offering Agreement for the three months ended June 30, 2021.  As of November 9, 2017, $20.0 millionJune 30, 2021, the Company has 0 shares of the aggregate $22.0 million remained availablecommon stock registered for future salessale under the CSPA.ATM Offering Agreement.

Common Stock Issued

Warrants

The following table summarizes warrants outstanding and changes for Investor Relations Feesthe six-month periods ending June 30, 2021, and 2020:

June 30, 2021

June 30, 2020

    

    

Number of

Number of

Warrants

Warrants

Warrants outstanding at beginning of period

 

0

 

197,622

Issued

 

0

 

0

Expired

 

0

 

(11,440)

Warrants outstanding at end of period

 

0

 

186,182

On February 28, 2017,October 6, 2020, a warrant holder of 182,515 warrants provided notice of exercise. The warrant holder elected the cashless exercise method to convert the warrants to shares of common stock. Based on the cashless exercise formula, the Company issued 150,000the warrant holder 118,799 shares with a fair market value of $0.3 million or $2.00 per share as partial consideration for investor relations services that will be provided to the Company over the ensuing 12 months.common stock.

10.

8. STOCK-BASED COMPENSATION

Stock-based compensation awards consist of stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”)bonus shares issued under the Company’s equity incentive plans which include: the 2013 Omnibus Incentive Plan (the “2013 Plan”); the 2007 Restricted Stock Plan (the “2007 Plan”); and the Amended and Restated 2004 Directors’ Stock Option and Restricted Stock Plan (the “2004 Directors’ Plan”); and the 2004 Stock Incentive Plan (the “2004 Plan”). Upon approval of the 2013 Plan by the Company’s stockholders on June 4, 2013, the Company’s authority to grant new awards under all plans other than the 2013 Plan was terminated. On July 18, 2017, April 18, 2019, April 28, 2020, and May 21, 2021, the Company’s stockholders approved an amendmentamendments to the 2013 Plan to increase the authorized number of shares of common stock available and reserved for issuance under the 2013 Plan by 1.0 million20,000 shares, 66,000, 350,000, and to re-approve1,500,000 shares, respectively, and in 2017 re-approved the material terms of the performance goals under the plan. Under the 2013 Plan, the Company may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards and cash bonus awards to eligible persons. Equity awards under the 2013 Plan are granted from time to time at the discretion of the Compensation Committee of the Board (the “Committee”), with vesting periods and other

13

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

terms as determined by the Committee with a maximum term of 10 years. The 2013 Plan is administered by the Committee, which can delegate the administration to the Board, other Committees or to such plan.  other officers and employees of the Company as designated by the Committee and permitted by the 2013 Plan.

As of November 9, 2017, the Company had 561,232June 30, 2021, 1,279,774 shares were available for future issuances under the 2013 Plan.

For the three and six months ending Septemberended June 30, 2017 and 2016,2021, the Company recorded stock-based compensation expense of $24,279$0.2 million and $75,495,$0.3 million, respectively. For the nine months ending September 30, 2017 and 2016, the Company recorded stock-basedStock compensation expense of $62,356 and $545,166, respectively.  Stock-based compensation expense has been includedis recorded in general and administrative expense.expenses.

In addition to the plans above, upon closing of the Company’s acquisition of Anatolia Energy LimitedAlabama Graphite in November 2015,April 2018, the Company issued 374,74950,168 replacement options and performance shareswarrants to the option and warrant holders and performance shareholders of Anatolia Energy Limited.Alabama Graphite. The number of replacement options and performance shareswarrants was based upondetermined using the Black-Scholes value with thearrangement exchange rate of 0.0016. The exercise prices for the option and warrant shares were first converted for the exchange rate of the replacement options0.0016 and performance shares determinedthen converted to USD using the exchange rate on December 13, 2017, of 0.00548.0.77809 (CAD to USD). The options and performancewarrant shares were issued with the same terms and conditions as were applicable prior to the acquisition of Anatolia Energy Limited.Alabama Graphite. As of SeptemberJune 30, 2017, 98,6462021, all replacement options remain outstanding.and warrants had expired.




WESTWATER RESOURCES, INC.

(formerly Uranium Resources, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (unaudited)




Stock Options

The following table summarizestables summarize stock options outstanding and changes for the nine-monthsix-month periods ending SeptemberJune 30, 20172021, and 2016:2020:

 

 

Sep 30,

 

Sep 30,

 

 

2017

 

2016

 

 

Number of Stock Options

 

Weighted Average Exercise Price

 

Number of Stock Options

 

Weighted Average Exercise Price

Stock options outstanding at beginning of period

 

110,828 

 

$

18.24

 

326,424 

 

$

24.90

Granted

 

189,164 

 

1.40

 

 

-

Expired

 

(6,001)

 

104.67

 

(215,346)

 

27.64

Stock options outstanding at end of period

 

293,991 

 

$

5.64

 

111,078 

 

$

19.60

Stock options exercisable at end of period

 

104,722 

 

$

13.26

 

110,869 

 

$

19.57

June 30, 2021

June 30, 2020

    

    

Weighted

    

    

Weighted

Number of

Average

Number of

Average

Stock

Exercise

Stock

Exercise

Options

Price

Options

Price

Stock options outstanding at beginning of period

 

185,054

$

7.99

 

37,786

$

37.42

Granted

 

94,522

 

3.91

 

125,804

 

1.59

Expired

 

(2,000)

 

73.54

 

(1,693)

 

101.64

Stock options outstanding at end of period

 

277,576

$

6.18

 

161,897

$

8.91

Stock options exercisable at end of period

 

183,054

$

7.35

 

36,093

$

34.41

The following table summarizes stock options outstanding and exercisable by stock option plan at SeptemberJune 30, 2017:2021:

 

 

Outstanding Stock Options

 

Exercisable Stock Options

Stock Option Plan

 

Number of Outstanding Stock Options

 

Weighted Average Exercise  Price

 

Number of

Exercisable

Stock Options

 

Weighted Average Exercise  Price

2004 Plan

 

4,792

 

$

35.14

 

4,792

 

$

35.14

2004 Directors’ Plan

 

973

 

317.14

 

973

 

317.14

2013 Plan

 

189,581

 

1.48

 

312

 

35.88

Replacement Stock Options

 

98,645

 

9.13

 

98,645

 

9.13

 

 

293,991

 

$

5.64

 

104,722

 

$

13.26

Outstanding Stock Options

Exercisable Stock Options

    

Number of

    

Weighted

    

Number of

    

Weighted

Outstanding

Average

Stock Options

Average

Stock Option Plan

Stock Options 

Exercise Price

Exercisable 

Exercise Price

2004 Plan

 

92

$

1,638.00

 

92

$

1,638.00

2004 Directors’ Plan

 

3

 

10,380.00

 

3

 

10,380.00

2013 Plan

 

277,481

 

5.67

 

182,959

 

6.29

 

277,576

$

6.18

 

183,054

$

7.35

Restricted Stock Units

Time-based and performance-based RSUs are valued using the closing share price of the Company’s common stock on the date of grant. The final number of shares issued under performance-based RSUs is generally based on the Company’s prior year performance as determined by the Compensation Committee of the Board of Directors at each vesting date, and the valuation of such awards assumes full satisfaction of all performance criteria.

14

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following tabletables summarizes RSU activity for the nine-monthsix-month periods ended SeptemberJune 30, 20172021, and 2016:

 

 

Sep 30,

 

Sep 30,

 

 

2017

 

2016

 

 

Number of RSUs

 

Weighted-Average Grant Date Fair Value

 

Number of RSUs

 

Weighted-Average Grant Date Fair Value

Unvested RSUs at beginning of period

 

8,649 

 

$

43.71

 

32,699 

 

$

34.25

Granted

 

304,064 

 

1.40

 

 

-

Forfeited

 

 

-

 

(3,334)

 

32.21

Vested

 

(39,340)

 

4.16

 

(7,698)

 

29.45

Unvested RSUs at end of period

 

273,373 

 

$

1.95

 

21,667 

 

$

36.27




WESTWATER RESOURCES, INC.2020:

(formerly Uranium Resources, Inc.)

June 30, 

June 30, 

2021

2020

    

    

Weighted-

    

    

Weighted-

Average

Average

Number of

Grant Date

Number of

Grant Date

RSUs

Fair Value

RSUs

Fair Value

Unvested RSUs at beginning of period

 

236,403

$

2.10

 

0

$

0

Granted

 

184,290

 

4.13

 

211,497

 

2.03

Forfeited

 

0

 

0

 

0

 

0

Vested

 

(78,801)

 

2.10

 

0

 

0

Unvested RSUs at end of period

 

341,892

$

3.08

 

211,497

$

2.03

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (unaudited)







11.9. EARNINGS PER SHARE

Basic and diluted loss per share of common stockshare have been calculated based on the weighted-average shares outstanding during the period. PotentiallyAdditionally, potentially dilutive shares of 750,698619,468 were excluded from the calculation of earnings per share because the effect on the basic income per share would be anti-dilutive for the three and ninesix months ended SeptemberJune 30, 2017.2021.

12.

10. COMMITMENTS AND CONTINGENCIES

TheFuture operations on the Company’s uranium recovery operationsproperties are subject to federal and state regulations for the protection of the environment, including water quality. Future closure and reclamation costs are provided for as each pound of uranium is produced on a unit-of-production basis. The Company reviews its uranium reclamation obligations each year and determines the appropriate unit charge. The Company also evaluates the status of current environmental laws and their potential impact on theircurrent operating costs and accrual for future costs. The Company believes its operations are materially compliant with current environmental regulations.

13. GEOGRAPHIC AND SEGMENT INFORMATIONAt any given time, the Company may enter into negotiations to settle outstanding legal proceedings and any resulting accruals will be estimated based on the relevant facts and circumstances applicable at that time. We do not expect that such settlements will, individually or in the aggregate, have a material effect on our financial position, results of operations or cash flows.

11. LEASES

The Company’s lease portfolio consists of operating leases for corporate offices, storage space and equipment. The leases have remaining lease terms of 1.3 years to 2.1 years, one of which includes an option to extend the corporate office lease for 3 years. Under our corporate office lease, we are required to reimburse the lessor each month for common use expenses such as maintenance and security services. Because these amounts are variable from year to year and not specifically set in the lease terms, they are not included in the measurement of the right-of-use asset and related lease liability, but rather expensed in the period incurred.

The Company is party to several leases that are for under one year in length. These include leases for land used in exploration and mining activities, office equipment, machinery, office space, storage and other. The Company has elected the short-term lease exemptions allowed under the new leasing standards, whereby leases with initial terms of one reportable operating segment, consistingyear or less are not capitalized and instead expensed on a straight-line basis over the lease term. In addition, the Company holds several leases related to mineral exploration and production to which it has not applied the new leasing standard. Leases to explore or use minerals and similar nonregenerative resources are specifically excluded by ASC 842-10.

The right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities were

15

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

recognized at the commencement date of the explorationlease based on the present value of lease payments over the lease term using a discount rate of 9.5%. This rate is the Company’s estimated incremental borrowing rate at the lease commencement date.

The components of lease expense are as follows:

    

For the Six Months Ended

June 30, 

(thousands of dollars)

2021

2020

Operating lease cost

$

77

$

81

Supplemental cash flow information related to the Company’s operating leases is as follows:

For the Six Months Ended

June 30, 

(thousands of dollars)

    

2021

2020

Cash paid for amounts included in lease liabilities:

 

  

  

Operating cash flows from operating leases

$

77

$

79

Right-of-use assets obtained in exchange for lease obligations:

 

  

 

  

Operating leases

$

291

$

424

Supplemental balance sheet information related to the Company’s operating leases is as follows:

    

June 30, 

December 31, 

(thousands of dollars, except lease term and discount rate)

2021

2020

Operating Leases

 

  

  

Operating lease right-of-use assets

$

291

$

353

Current portion of lease liabilities

$

151

$

149

Operating lease liabilities – long term portion

 

150

 

214

Total operating lease liabilities

$

301

$

363

Weighted-average remaining lease term and developmentdiscount rate for the Company’s operating leases are as follows:

For the Three Months Ended

June 30, 

2021

2020

Weighted Average Remaining Lease Term (in years)

    

2.0

3.2

Discount Rate

 

9.5

%

9.5

%

16

Table of lithiumContents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Maturities of lease liabilities for the Company’s operating leases are as follows:

Lease payments by year

    

June 30, 

(In thousands)

2021

2021 (remainder of year)

$

79

2022

 

158

2023

 

92

Total lease payments

 

329

Less imputed interest

 

(28)

Total

$

301

As of June 30, 2021, the Company has $0.3 million in right-of-use assets and uranium projects.  These activities are focused principally$0.3 million in related lease liabilities ($0.2 million of which is current). The most significant operating lease is for the United StatesCompany’s corporate office in Centennial, Colorado, with $0.3 million remaining in undiscounted cash payments through the end of the lease term in 2023. The total undiscounted cash payments remaining on operating leases through the end of their respective terms is $0.3 million.

12. SUBSEQUENT EVENTS

On July 23, 2021, Alabama Graphite Products, LLC (“AGP”), a wholly-owned subsidiary of Westwater, entered into a land lease with the Lake Martin Area Industrial Development Authority, providing AGP access to approximately 70 acres to construct its commercial graphite processing facility in Coosa County, Alabama.  The lease has a term of 10-years, a nominal lease payment, and transfer of title to AGP at the Republicend of Turkey.  We reported no revenuesthe lease term.  Further, the lease provides AGP the option to purchase the land for a nominal amount during the three- and nine-month periods ended September 30, 2017 and 2016.  Geographic locationterm of property, plant and equipment, including mineral rights, and mineral property expenses,the lease.  As of the lease inception, the fair value of the land, utilizing fair value methods acceptable under US GAAP, is provided in Notes 5 and 6, above.estimated at approximately $1.4 million.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of the consolidated financial results and condition of WWRWestwater for the three and ninesix months ended SeptemberJune 30, 20172021, has been prepared based on information available to us as of November 9, 2017.August 11, 2021. This discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included herewith and the audited Consolidated Financial Statements of WWRWestwater for the period ended December 31, 20162020, and the related notes thereto filed with our Annual Report on Form 10-K, which have been prepared in accordance with U.S. GAAP. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth elsewhere in this report. See “Cautionary Note Regarding Forward-Looking Statements.”

IntroductionINTRODUCTION

WWRWestwater Resources, Inc. is a 44-year-old public company trading on the NYSE American Stock Exchange (“NYSE American”) focused on battery graphite development under the symbol “WWR.” Originally incorporated in 1977 as Uranium Resources, Inc. to mine uranium in Texas, our company has pivoted to an energy metals exploration and development company. We arematerials developer. Westwater is focused on expandingbattery-grade graphite materials after its acquisition of Alabama Graphite Corp. (“Alabama Graphite”) and its Coosa Graphite Project (“Coosa Project”) in Alabama in April 2018. Westwater recently discovered vanadium concentrations at the Coosa Project and is executing an exploration plan to further investigate the size and extent of those concentrations and increase our energy metals strategy, which includes developing our lithium business while maintaining optionality onknowledge of the future rising uranium price with our significant uranium property holdings indeposit as a whole.

RECENT DEVELOPMENTS

Graphite Processing Pilot Programs

During the Republic of Turkey, Texas and New Mexico. 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.

We established our lithium business in 2016 and currently control mineral rights encompassing approximately 36,730 acres across three prospective lithium brine basins in Nevada and Utah.  We are conducting exploration and geological evaluation of these properties in 2017 and 2018 for potential development of any lithium resources that may be discovered there.

The focus of our uranium business continues to be on advancing the Temrezli in-situ recovery (“ISR”) uranium project in central Turkey when uranium prices permit economic development of this project. We control extensive exploration properties in Turkey under eight exploration and operating licenses covering approximately 39,000 acres.  In Texas, we have two licensed and currently idled uranium processing facilities and approximately 11,000 acres of prospective ISR uranium projects. In New Mexico,quarter ended June 30, 2021, the Company controls mineral rights encompassingcontinued, and is nearing completion of, its pilot program at Dorfner Anzaplan’s facilities near Amberg, Germany, as well as at facilities in Frankfurt, Germany, Chicago, Illinois and Buffalo, New York. The combined effort at these facilities produced approximately 186,000 acres13 metric tonnes of Westwater’s three battery-grade graphite products: ULTRA-PMG™, ULTRA-CSPG™ and ULTRA-DEXDG™, which were previously produced at a bench scale.

As of June 30, 2021, Westwater had produced:

10.8 metric tonnes of ULTRA-PMG™ in six sizes (6, 8, 10, 15, 30 and 44 microns): Production is now complete, and samples will be packaged and shipped to a laboratory for testing.
2.0 metric tonnes of the precursor (Spherical Purified Graphite) for ULTRA-CSPG™ in three sizes (10, 18 and 24 microns): Production of this product is now complete and has been sent to a laboratory for pitch coating to make ULTRA-CSPG™, and test its electrical performance.
0.4 metric tonnes of ULTRA-DEXDG™: Production is now complete and samples were packaged and shipped to a laboratory for testing.

Westwater undertook its pilot program operations to inform and enhance design work for its commercial production facility and to produce products for testing by potential customers. The information from those operations is being incorporated into the prolific Grants Mineral Belt, which is oneDFS.

Graphite Processing Site Selection

On June 22, 2021, AGP entered into incentive agreements with the State of Alabama and local municipalities for the largest concentrations of sandstone-hosted uranium deposits in the world.

Recent Developments

Change in Corporate Name

Effective August 21, 2017, the Company changed its name from “Uranium Resources, Inc.” to “Westwater Resources, Inc.” The name change was made pursuant to Section 242 of the Delaware General Corporation Law and did not affect the rightssiting of the Company’s security holders.proposed graphite processing plant in Coosa County, Alabama. The incentive agreements provide certain tax credits and incentives under the Alabama Jobs Act in connection with the construction of the processing facility. The estimated tax credits and incentives pursuant to the incentive agreements are estimated by

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the State of Alabama at approximately $36 million. However, our ability to realize the tax credits and incentives is dependent upon actual capital invested, creating and maintaining jobs in Alabama, and the generation of future taxable income in Alabama.

Lithium Business Expansion

On June 20, 2017,July 23, 2021, AGP entered into a land lease with the Lake Martin Area Industrial Development Authority, providing AGP rights to approximately 70 acres to construct and operate its commercial graphite processing facility in Coosa County, Alabama.  The lease has a term of 10-years, a nominal lease payment, and transfer of title to AGP at the end of the lease term.  Further, the lease provides AGP the option to purchase the land for a nominal amount during the term of the lease.  At lease inception, the Company acquiredestimated the fair value of the land to be approximately $1.4 million.

Additions to the Executive Team

After a comprehensive search process that yielded many highly qualified candidates, Westwater hired Chad M. Potter as Westwater’s Chief Operating Officer on August 2, 2021. Mr. Potter is a proven operations leader, whose unique skills and experience will be instrumental in leading Westwater and its third lithium exploration project,subsidiaries through the stakingconstruction, development, and future operation the Coosa Graphite Project. The addition of 9,270 acresMr. Potter will help position Westwater’s American-made battery graphite operations as best in class with a focus on safety, quality, integrity, and the protection of federal placer mining claims withinour environment.

In the Railroad Valleysecond quarter, after completing a comprehensive search process, Westwater hired Steven M. Cates as Westwater’s Chief Accounting Officer and Controller on May 10, 2021. Mr. Cates is a proven financial manager whose skills and experience will be instrumental in this stage of central Nevada.  The Railroad Valley project is located approximately 75 miles west of Ely, Nevada.anticipated growth and value creation at Westwater.

Columbus Basin Data Review and Exploration Drilling

Definitive Feasibility Study on the Coosa Graphite Project

On April 5, 2017,February 4, 2021, Westwater entered into a Master Services Agreement (the “Master Services Agreement”) with Samuel Engineering, Inc. (“Samuel”) for various engineering support and consulting services in connection with the CompanyCompany’s Coosa Project DFS.

Under the terms of the Master Services Agreement and as a part of the DFS, Samuel is, among other things, conducting studies that address the Coosa Project’s location, raw materials, product quality, infrastructure and other preliminary assessments, which will provide cost estimates for the Coosa Project, identifying long-lead items and providing detailed specifications for these items to be ordered, as well as preparing designs and drawings for the detailed engineering phase prior to construction.

The DFS is expected to be completed by the end of the third quarter of 2021. Westwater plans to utilize the DFS as a basis for Board approval of the project, engaging one or more engineering, procurement, construction and management (“EPCM”) companies to complete the design and start the construction of the commercial plant.  Construction is anticipated to begin around the end of 2021. Completion of construction of Phase I of the plant is planned for the end of 2022, with operations anticipated in 2023.

Vanadium Target Identification

In late November 2018, Westwater announced that its independent geophysical consultant has completed the review, integrationdiscovery of a concentration of vanadium mineralization at several locations in the graphitic schists at the Coosa Project. Westwater subsequently commenced the first of a four-phase exploration program designed to determine the extent, character and reinterpretationquality of historical geophysical survey data acquiredthe vanadium mineralization at the Coosa Project. As announced by the Company and covering its Columbus Basin lithium brineon February 19, 2019, the first phase demonstrated widespread positive values for vanadium that extended beyond the graphite deposit, as defined in the 2015 Preliminary Economic Assessment for the site.

The second phase of the vanadium exploration project began in Nevada. AmongApril 2021 and is expected to continue throughout the remainder of the year. Scope for this effort includes drilling various targets to expand the Company’s knowledge of the geology, examining the core and/or cuttings for mineral constituents, and adding to the existing geologic model. In addition, vanadium mineralization is expected to be evaluated using extractive metallurgy techniques to ascertain any economic potential.

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Graphite and Vanadium Listed as Critical Materials

On February 24, 2021, the President signed an Executive Order that seeks to provide for more resilient supply chains to revitalize and rebuild domestic manufacturing capacity and maintain America’s competitive edge in research and development. Graphite and vanadium are specifically named as critical minerals in which the U.S. is heavily dependent on China for its supply.

The President’s declaration asked the Secretary of Energy, as part of larger study involving several branches of the U.S. government, to submit a report identifying risks to the supply chain for high-capacity batteries including those that power electric vehicles. On June 8, 2021, the White House released a response to the findings of this study in support of securing an end-to-end domestic supply chain for advanced batteries, including investment in domestic production and processing of critical minerals.  Key recommendations in the June 8th release include, among other things, providing funding and financial incentives to encourage consumer adoption of electric vehicles, providing financing to support advanced batter production, and investing in the resultsdevelopment of next generation batteries. The new order, and the key recommendations in the June 8th White House release, build upon the prior Administration’s Executive Order issued on September 30, 2020, related to critical minerals, and could be important to Westwater’s plans to develop its battery graphite business in the United States.

The U.S. is 100% dependent on imports for battery-grade graphite, which is currently the primary anode material in the Lithium-Ion batteries that power smartphones, laptops, electric vehicles, and store power generated from intermittent renewable energy sources. Westwater intends to develop the Coosa Project to supply natural flake graphite for beneficiation into battery-grade graphite for all types of batteries.

Further details on the Executive Order on America’s Supply Chains can be found at https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on-americas-supply-chains/.

Further details on the June 8, 2021 White House press release can be found at https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/08/fact-sheet-biden-harris-administration-announces-supply-chain-disruptions-task-force-to-address-short-term-supply-chain-discontinuities/

Westwater will work to support the efforts by the relevant agencies in the U.S. government and will ensure that they remain aware of the work indicated that the depthimportance of the Columbus Salt Marsh basin is greater than previously anticipated and identified certain targets for lithium brine exploration.  In July 2017, the Company began a Phase-1 exploration drilling program at the Columbus Basin Project.  


On October 31, 2017, The Company announced that it has completed the Phase 1 exploration project at this project and reported the following results:


Three core holes were completed for a total of 3,870 ft. of drilling.  

o

The maximum drilled depth was 1,680 ft.

o

Fluids with high total dissolved solids (TDS) were identified in all three holes.





In-house laboratory work performed atbattery-grade graphite, its 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 Project.  As part of the Phase 2 program, Westwater has filed a Notice of Intent to drill in the Nina claim block and is evaluating the Phase 1 results and the results of drilling by Caeneus Minerals Ltd.


Sal Rica Exploration Planning


A brine sampling program at the Sal Rica Project was designed and implemented to infill previous shallow aquifer sampling completed by Mesa Exploration Corp. in 2016.  The resultant combination of the new Westwater data and the existing Mesa Exploration Corp. data now provide shallow aquifer lithium concentration data on variable 1 to 2 mile centers, depending on site accessibility, across the entirety of the 13,260 acre project area.  


In additionimportance to the recent groundwater sampling event, Westwater has also completed new geophysical interpretations ofnation’s security, and how the Sal RicaCoosa Project area.  This data is being integratedfits into a conceptual model of the exploration target,critical minerals-equation.

The COVID-19 Pandemic and will guide the ongoing planning of a drilling and hydrogeologic characterization programour Actions to further expand and define the shallow, lithium bearing, brine aquifer. So far this work has outlined a strong lithium brine anomaly that covers an area of over twenty (20) square miles, with lithium values up to 100 ppm, all at shallow depths.


Westwater has commenced the permitting process with the Bureau of Land Management (“BLM”), and the State of Utah, to field an exploration program that optimizes project access and limits environmental disturbance, minimizes cost, and maximizes overall data quality.

Option Agreement for Lithium Brine ClaimsEnsure Safety

On March 24, 2017,11, 2020, the Company’s wholly owned subsidiary Lithium Holdings Nevada LLC entered into an option agreementWorld Health Organization designated COVID-19 as a global pandemic. The pandemic spread outside of China during the first quarter of 2020 and has impacted businesses and economies throughout the world. In the U.S., many state and local governments have, based on local conditions, either recommended or mandated actions to purchase a blockslow the transmission of unpatented placer mining claims covering an areaCOVID-19. These measures range from limitations on crowd size to mandatory orders for non-essential citizens to “shelter in place” or “stay at home” until further direction. Borders between many countries have been closed to contain the spread of approximately 3,000 acres withinCOVID-19. Uncertainty with respect to the Columbus Salt Marsh area of Esmeralda County, Nevada.  The claims adjoin a portioneconomic effects of the Company’s current property holdings at its Columbus Basin Project, expandingpandemic has introduced significant volatility in the project area withinfinancial markets.

To the basinextent that the COVID 19 pandemic continues or worsens, including by reason of the emergence of variant strains of the virus, local governments or governmental agencies may impose additional restrictions. The result of COVID 19 and those restrictions could result in a number of adverse impacts to approximately 14,200 acres.Westwater’s business, including but not limited to additional disruption to the economy, additional work restrictions, and supply chains being interrupted, slowed, or rendered inoperable. As a result, it may be challenging to obtain and process raw materials to support business needs, and individuals could become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. Governments may also impose other laws, regulations or taxes which could adversely impact Westwater’s business, financial condition or results of operations. The Companypotential effects of COVID 19 could also impact Westwater in a number

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of other ways including, but not limited to, laws and regulations affecting business, the availability of future borrowings, the cost of borrowings, and potential impairment of the carrying value of long-lived tangible assets.

This pandemic, and the resultant uncertain economic conditions it has created, could adversely affect our operations, major facilities, or employees’ health. Westwater has the rightfollowing priorities while managing business activities during this period of volatility and uncertainty:

First, to ensure the health and safety of our employees and the communities where they work.
Second, to work with our business partners to maintain the advanced graphite product development schedule in a safe and measured manner.
Third, to ensure the Company has access to adequate financial liquidity to support key operations and business activities.

Westwater’s corporate business activities are largely unaffected at this time. Prior to conduct exploration activitiesMarch 1, 2021, Westwater reduced utilization of its offices and remote working arrangements were instituted to ensure that some employees were able to work remotely using systems that already were in place. On March 1, 2021, Westwater reopened its Centennial corporate facility and allowed employees to return to the office to work together with appropriate health protocols in place. Westwater’s continued focus on the claimshealth and safety of employees, the safety of operations, and the safety of the communities in which our employees live and work remains paramount. To that end, Westwater has continued to restrict unnecessary travel, and ensured that employees are permitted to take time off due to illness or the illness of those around them without penalty.

Equity Financings

Capital Raises during the one-year option period. Underthree and six months ended June 30, 2021

During the option agreement,month of June 2021, the Company may acquire the mineral property claims on or before March 24, 2018 in exchange for 200,000 shares of WWR common stock and a 1% net smelter return royalty on the claims.

Retirement of the RCF Loan

On February 9, 2017, the Company paid $5.5sold 1.2 million in cash, plus accrued and unpaid interest, to RCF to retire all of the obligations remaining under the RCF Loan, and thereafter, the loan agreement itself terminated pursuant to its terms.  In addition, on July 31, 2017, the Company and RCF terminated the Stockholders’ Agreement dated March 1, 2012, pursuant to which RCF had certain stock participation rights and Board rights.

Common Stock Purchase Agreement with Aspire Capital

On September 25, 2017, the Company entered into the CSPA with Aspire Capital to place 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, as a provision of 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 proceeds of $2.0 million.  There were no other sales of common stock pursuant to the CSPA and as of November 9, 2017, $20.0 million of the aggregate $22.0 million remained available for future sales under the CSPA.








Controlled Equity Offering Sales Agreement

On April 14, 2017, the Company entered into the ATM Offering with Cantor acting as sales agent.  Under the ATM Offering, the Company may from time to time sell shares of its common stock having an aggregate offering amount up to $30.0 million in “at-the-market” offerings, which shares are registered under a registration statement on Form S-3, which was declared effective on March 9, 2017.  The Company pays Cantor a commission equal to 2.5% of the gross proceeds from the sale of any shares pursuant to the ATM Offering.  As of November 9, 2017, the Company had sold 673,853 shares of common stock for net proceeds of $1.1$5.7 million underpursuant to the ATM Offering.  AsDecember 2020 PA entered into with Lincoln Park. These shares were sold pursuant to a result, the Company had approximately $28.9 million remaining available for future sales under the ATM Offering.  

Other Offerings

On January 19, 2017, the Company raised $8.9 million in net proceeds through the registered sale of approximately 1.4 million shares of common stock and pre-funded warrantsprospectus supplement filed on December 4, 2020, pursuant to purchase approximately 3.4 million shares of common stock at $0.01 per share. Also, on February 16, 2017, the Company raised approximately $4.5 million in additional net proceeds through the registered sale of 2.1 million shares of common stock and pre-funded warrants to purchase approximately 0.7 million shares of common stock at $0.01 per share. All of the pre-funded warrants were subsequently exercised.

Closing of Sale of HRI

On January 5, 2017, the Company completed the sale of its wholly owned subsidiary HRI, which heldRule 424(b)(5) as a takedown off the Company’s Crownpointshelf registration statement which had been declared effective by the Securities and Churchrock properties, to Laramide for $2.5 million in cash, common stock and warrants from Laramide valued at $0.5 million, and a three-year installment promissory note in the amount of $5.0 million. The Company also retained a 4% NSR RoyaltyExchange Commission on the Churchrock project, which Laramide may purchase for $4.95 million duringDecember 1, 2020.

During the first year following the closingsix months of the transaction. In addition,2021, the Company has an optionreceived net proceeds of $77.9 million from its equity facilities, resulting in a cash balance of approximately $119 million at June 30, 2021. The significant treasury balance has mitigated the Company’s capital risk through 2021 and 2022 as the Company’s budgeted pilot program for processing battery-grade graphite, the DFS and the remaining budgeted product development costs are now fully funded, and the Company will be able to purchase Laramide’s La Sal project for $3.0 millionmake substantial initial investment in the commercial graphite processing facility in Coosa County, Alabama in the latter half of 2021.

Transfer of Common Stock Listing to the NYSE American Stock Exchange

On March 8, 2021, Westwater Resources, Inc., acting pursuant to authorization from its Board of Directors, determined to voluntarily withdraw the listing of the Company's common stock, par value $0.001 per share, from The Nasdaq Capital Market (“Nasdaq”) and an optiontransfer the listing to purchase Laramide’s La Jara Mesa project in Cibola County, New Mexico for $5.0 million, boththe NYSE American. The Company informed Nasdaq on March 8, 2021, of which options expire in January 2018.its intent to transfer the listing of its common stock to the NYSE American. The Company’s listing and trading of its common stock on Nasdaq ended at market close on March 18, 2021, and trading began on the NYSE American on March 19, 2021. The Company’s common stock continues to trade under the ticker symbol “WWR” on the NYSE American.

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RESULTS OF OPERATIONS

Results of Operations

Summary

Our consolidated net loss for the three months ended SeptemberJune 30, 20172021, was $3.0$3.5 million, or $0.12$0.11 per share, as compared with $3.7a consolidated net loss of $2.5 million, or $0.38$0.43 per share for the same period in 2016.  For the three months ended September 30, 2017, the decrease2020. The $1.0 million increase in our consolidated net loss of $0.7 million from the respective prior period in 2020 was mostlydue to an increase in product development, exploration, and general and administrative costs; offset partially by the resultelimination of a decrease in interest expense of $0.7 million.costs from discontinued operations, and an unrealized gain related to the enCore common stock.

OurFor the six months ended June 30, 2021, our consolidated net loss for the nine months ended September 30, 2017 was $3.8$8.9 million, or $0.16$0.29 per share, as compared with $12.6a consolidated net loss of $5.8 million, or $1.81$1.18 per share for the same period in 2016.  For the nine months ended September 30, 2017, the decrease2020. The $ 3.1 million increase in our consolidated net loss of $8.8 million from the respective prior period in 2020 was 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 general administrative expenses of $1.1 million, a decrease in commitment fees of $0.3 million and a decrease of $0.1 millionprimarily due to a loss on the sale of marketable securities in 2016.   Offsetting these amounts was an increase in mineral propertyproduct development, arbitration, general and administrative, and exploration expenses; offset partially by the elimination of costs from discontinued operations, and an unrealized gain related to the enCore common stock.

Product development expenses of

For the three and six month period ended June 30, 2021, $2.1 million and $3.9 million was spent on product development, respectively. Of that, approximately $0.7 million.

Mineral Property Expenses

The following table detailsmillion and $1.9 million was related to our mineral property expensesgraphite processing pilot program for the three and ninesix months ended SeptemberJune 30, 2017 and 2016:


 

For the Three Months Ended

Sep 30,

 

For the Nine Months Ended

Sep 30,

 

2017

 

2016

 

2017

 

2016

 

(thousands of dollars)

Restoration/Recovery expenses

 

 

 

 

 

 

 

     Rosita Project

$            71

 

$           18

 

$

160

 

$

6

          Total restoration/recovery expenses

 71

 

18

 

160

 

6

 

 

 

 

 

 

 

 

Standby care and maintenance expenses

 

 

 

 

 

 

 

     Kingsville Dome Project

153

 

166

 

477

 

467 








     Rosita Project

74

 

73

 

258

 

233 

     Vasquez Project

117

 

105

 

308

 

275 

     Temrezli Project

41

 

31

 

164

 

453 

          Total standby care and maintenance expenses

385

 

375

 

1,207

 

1,428 

 

 

 

 

 

 

 

 

Exploration and evaluation costs

423

 

86

 

609

 

92 

 

 

 

 

 

 

 

 

Land maintenance and holding costs

437

 

560

 

1,661

 

1,382 

 

 

 

 

 

 

 

 

Total mineral property expenses

$

1,316

 

$

1,039

 

$

3,637

 

$

2,908 

For2021, respectively.  The remaining product development costs for both the three and ninesix month periods related to product testing, other lab work, shipping, required travel, and other auxiliary costs associated with the Coosa Project.

Arbitration Costs

During the first two quarters of 2021, Westwater incurred arbitration related legal and expert consulting costs of $1.5 million. This represents an increase of 114% or $0.8 million in costs associated with the Request for Arbitration against the Republic of Turkey compared to the six months ended SeptemberJune 30, 2017, mineral property expenses increased by $0.3 million2020. For further reference, see discussion above in the Recent Developments section of this Part I, Item 2 and $0.7 million, respectively, from the corresponding periods during 2016.  For the three month period, exploration costs increased by $0.3 million, which was partially offset by a decrease in land and maintenance costs of $0.1 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.Part II, Item 1 below.

General and Administrative Expenses

Significant expenditures for general and administrative expenses for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 were:

For the Three months ended

For the Six months ended

 

June 30, 

 

June 30, 

 

    

2021

    

2020

    

2021

    

2020

    

 

(thousands of dollars)

Stock compensation expense

$

204

$

28

$

295

$

28

Salaries and payroll burden

 

593

 

766

 

1,259

 

1,533

Legal, accounting, public company expenses

 

786

 

470

 

1,536

 

1,123

Insurance and bank fees

 

142

 

167

 

323

 

333

Consulting and professional services

 

181

 

74

 

385

 

104

Office expenses

 

114

 

110

 

207

 

201

Sales and marketing

 

158

 

41

 

237

 

99

Other expenses

 

20

 

3

 

40

 

17

Total general and administrative expenses

$

2,198

$

1,659

$

4,282

$

3,438

(Less) General and administrative expenses from discontinued operations

(433)

(850)

General and administrative expenses from continuing operations

$

2,198

$

1,226

$

4,282

$

2,588

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For the Three Months Ended Sep 30,

 

For the Nine Months Ended Sep 30,

 

 

2017

 

2016

 

2017

 

2016

 

 

(thousands of dollars)

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

$

24

 

$

75

 

$

62

 

$

545

Salaries and payroll burden

 

614

 

846

 

1,796

 

2,144

Legal, accounting, public company expenses

718

 

648

 

2,251

 

2,266

Insurance and bank fees

 

149

 

127

 

370

 

405

Consulting and professional services

 

21

 

28

 

44

 

190

Office expenses

 

148

 

126

 

364

 

392

Other expenses

 

26

 

33

 

89

 

93

Total

 

$

1,700

 

$

1,883

 

$

4,976

 

$

6,035

ForGeneral and administrative expenses for the three monthsand six month periods ended SeptemberJune 30, 2017, general2021, increased by $0.5 million and administrative charges decreased by $0.2$0.8 million as compared withfrom their respective periods in 2020, due primarily to higher costs related to the corresponding period in 2016.  This decrease was primarily due to decreases in salaries expense and stock compensation expense of $0.3 million, which was partially offset byannual shareholder meeting, an increase in legal, accounting and public company expenses of $0.1 million.

For the nine months ended September 30, 2017, general and administrative charges decreased by $1.1 million as compared with the corresponding period in 2016.  This decrease was primarily due to decreases in stock compensation expensein 2021, and salarieshigher costs related to the Company’s sales and payroll burden of $0.8 million and consulting and professional services of $0.1 million.

Other Income and Expenses

Loss on Sale of Marketable Securities

On February 22, 2016, we received proceeds of $0.2 million frommarketing efforts.  These increases were offset partially by lower personnel costs due to the sale of our 76,455 shares of Energy Fuels Inc. common stock that we received as partial consideration for the sale of our Roca Honda assets during 2015.  We recorded a loss of $0.1 million as the difference between the fair value on the date we received the shares of $0.3 million and the proceeds received of $0.2 million.    

Gain on Disposal of Uranium Properties

On January 5, 2017, we completed the sale of our wholly-owned subsidiary HRI, which holds the Churchrock and Crownpoint projects, to Laramide pursuant to the Laramide SPA.  Under the terms of the Laramide SPA, executed on April 7, 2016 and amended onuranium business at December 5, 2016, we received the following consideration:

$2.5 million in cash, of which $0.25 million was paid on October 21, 2016;





2,218,333 shares of Laramide common stock and 2,218,333 Laramide common stock purchase warrants.  Each common stock purchase warrant entitles the Company to purchase one share of common stock of Laramide at a price of CDN$0.45 for a period of 60 months from the date of closing;

a $5.0 million promissory note, secured by a mortgage over the projects.  The note has a three-year term and carries an initial interest rate of 5% which then increases to 10% upon Laramide’s decision regarding commercial production at the Churchrock project.  Principal payments of $1.5 million are due and payable on January 5 in each of 2018 and 2019, with the balance of $2.0 million due and payable on January 5,31, 2020.  Interest is payable on a quarterly basis, provided however that no interest will be payable until March 31, 2018.  Laramide will have the right to satisfy up to half of each of these payments by delivering shares of its common stock to the Company, which shares will be valued by reference to the VWAP for Laramide’s common stock for the 20 trading days before the respective anniversary of January 5, on which each payment is due;

a retained 4.0% NSR Royalty on the Churchrock project, which royalty may be repurchased by Laramide by January 5, 2018 for $4.95 million; and


an option to purchase Laramide’s La Sal project for $3.0 million and an option to purchase its La Jara Mesa project for $5.0 million, both of which expire on January 5, 2018.  Any such exercise by the Company will first result in a reduction of the principal amount due under the promissory note with any remaining portions of the purchase to be paid in cash by the Company.

The divestiture of HRI was accounted for as an asset disposal and the non-cash consideration received from Laramide was recorded at fair value.  The fair value of the shares of Laramide common stock received was determined using the closing share price of Laramide’s stock on January 5, 2017.  The fair value of the common stock purchase warrants was determined using the Black-Scholes method on April 27, 2017, which was the date that Laramide’s stockholders approved the issuance of the warrants.  The fair value of the notes receivable was determined using the present value of the future cash receipts discounted at a market rate of 9.5%.  We did not record a separate fair value for the options as the exercise of the options would reduce the amount outstanding under the notes receivable.  Due to the high degree of uncertainties surrounding future mine development and minerals prices, as well as limited marketability, the Company determined the fair value of the NSR Royalty to be nil.   We recorded the following gain on disposal of uranium properties within our Condensed Consolidated Statement of Operations:

(thousands of dollars)

Total consideration received

$

6,525 

Carrying value of Churchrock project

(2,123)

Carrying value of other plant and equipment

(31)

Accounts payable

Asset retirement obligation

105 

Royalty payable on Churchrock project

450 

Gain on disposal of HRI

$

4,927 


Loss on Extinguishment of Convertible Debt

On February 9, 2017, we repaid $5.5 million outstanding under the RCF Loan.  Upon repayment, we recognized a loss of $39,000, which represented the difference between the $5.5 million principal amount and the carrying value of the RCF Loan on the date of repayment.  

Interest Income/(Expense)

Interest income of $0.2 million for the three months ended September 30, 2017 consisted of accrued interest receivable of $0.1 million on the Laramide Notes and amortization of $0.1 million on the discount on the Laramide Notes.

Interest income of $0.4 million for the nine months ended September 30, 2017 consisted of accrued interest receivable of $0.2 million on the Laramide Notes and amortization of $0.4 million on the discount on the Laramide Notes.  These amounts were partially offset by interest expense of $0.2 million associated with the RCF Loan prior to repayment.  

Interest expense of $0.7 million for the three months ended September 30, 2016 consisted of interest of $0.2 million payable to RCF, and amortization of the debt discount of $0.5 million.





Interest expense of $2.2 million for the nine months ended September 30, 2016 consisted of interest of $0.7 million payable to RCF, amortization of the debt discount of $1.4 million and amortization of the establishment fee of $0.1 million.

Commitment Fees

Commitment fees expense of $0.3 million for the nine-months ended September 30, 2016 was the result of the issuance of 75,000 shares of our common stock to Aspire Capital on February 4, 2016 as consideration for Aspire Capital entering into an option agreement with us.  The shares had a fair value of $4.44 per share.

Financial Position

FINANCIAL POSITION

Operating Activities

Net cash used in operating activities was $8.9$9.1 million for the ninesix months ended SeptemberJune 30, 2017,2021, as compared with $9.8$6.1 million for the same period in 2016.2020. The decrease of $0.9$3.0 million increase in cash used is mostlyin operating activities was primarily due to a decreaseincreased graphite product development, exploration, general and administrative and arbitration costs 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.2021 compared to 2020.

Investing Activities

Net cash provided by investing activities was $1.9$0.2 million for the ninesix months ended SeptemberJune 30, 2017,2021, as compared with $0.3to net cash used of $0.1 million in investing activities for the same period in 2016.  For2020. The change was a result of the 2017 period, we received $2.0receipt of $0.3 million netheld in escrow for the balance of expenses, fromthe outstanding Paycheck Protection Program loan and accrued interest at December 31, 2020, when the loan was transferred to enCore with the sale of our wholly-owned subsidiary, HRIuranium subsidiaries (see Note 3). The loan was officially forgiven in full by the Small Business Administration on March 31, 2021, and the entire balance of the escrow fund was transferred to Laramide which closed on January 5, 2017. For the 2016 period, we received $0.2 million from the sale of short-term investments.Company’s operating account.

Financing Activities

Net cash provided by financing activities was $10.9$77.7 million for the ninesix months ended SeptemberJune 30, 2017.  For the nine months ended September 30, 2017, net cash proceeds of $15.4 million were received upon equity financings completed in January, February and September 2017, respectively.  Additionally, $1.0 million was received from the sale2021, due to sales of common stock sold through the Company’s ATM Offering.  This increase was offset byOffering Agreement with Cantor and the repayment of $5.5 million outstanding under the RCF Loan.

Company’s December 2020 PA with Lincoln Park. Net cash provided by financing activities was $12.5 million for the ninesame period in 2020 was $6.6 million. The $71.1 million increase was due to greater shelf registration capacity with which to offer registered shares under the Company’s financing agreement with Cantor and increased sales activity under the Company’s financing agreements with Lincoln Park during the first six months of 2021 compared to the same period in 2020.

LIQUIDITY AND CAPITAL RESOURCES

The Company last recorded revenues from operations in 2009. Since 2009, the Company has relied on equity financings, debt financings and asset sales to fund its operations. The Company expects to rely on debt and equity financing to fund its operations for the foreseeable future. The Company will also continue its cost reduction initiatives to identify ways to reduce its cash expenditures.

In 2016, the Company began to expand its business plan into acquisition and development of energy-related materials. First, in 2016 the Company obtained lithium mineral leases in Nevada and Utah as an exploration opportunity.  Then, in 2018 the Company acquired Alabama Graphite Corp. and its Coosa Graphite Project in Alabama for the purpose of developing a commercial sized graphite mineral deposit and processing the flake graphite into advanced graphite products for use in batteries. In the third quarter of 2020, the Company executed the strategic decision to focus its resources on the graphite business in Alabama, discontinuing its investment in its lithium mineral properties and selling its uranium business, located in Texas and New Mexico, to enCore. As discussed in Note 3, the sale to enCore closed on December 31, 2020, and included the elimination of a $9.3 million bonding liability, the elimination of $5.2 million in asset retirement obligations, and the elimination of more than $4.0 million in annual expenditures related to reclamation and compliance costs. The Company received approximately $1.8 million of enCore common stock and retained royalty interests on the New Mexico uranium properties as consideration for the sale. The Company retained its uranium interests in Turkey, which are subject to ongoing international arbitration proceedings, in which the Company is seeking damages.

During the first six months of 2021, the Company focused on graphite process development activities including operation of a pilot program for processing flake graphite into battery-grade graphite products and the initiation of a

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Definitive Feasibility Study (“DFS”) on the Coosa Graphite Project. The data generated and experience gained from operating the pilot program are being used to inform the DFS and will also inform the requirements and specifications for building a commercial graphite processing facility.

On June 30, 2021, the Company’s cash balance was approximately $119 million. During the six months ended SeptemberJune 30, 2016.  For2021, the nine months ended September 30, 2016, net cash proceeds of $0.8Company sold 9.3 million and $1.2 million were received upon equity financings completed on February 4, 2016 and April 4, 2016, respectively. $4.7 million in net proceeds were received from the saleshares of common stock to Aspire Capital under the terms of the 2016 Common Stock Purchase Agreement and $5.8 million in net proceeds were received from the sale of common stock sold through the Company’s prior ATM program with BTIG.

Liquidity and Capital Resources

At September 30, 2017, the Company had working capital of $8.2 million, which along with the anticipated funding from the financing agreements described below is expected to provide it with the necessary liquidity through September 30, 2018.  At December 31, 2016, the Company had a working capital deficit of $4.2 million.  The increase in working capital of $12.4 million for the nine months ended September 30, 2017 was primarily due to the following:

the completion of three equity offerings in January 2017, February 2017 and September 2017 for net proceeds of $8.9$47.3 million $4.5 million and $2.0 million respectively, as further described under “Recent Developments”;  

the completion of the sale of the Company’s wholly-owned subsidiary HRIpursuant to Laramide on January 5, 2017.  Upon completion, the Company received $2.2 million in cash, a $5.0 million promissory note, of which $1.5 million is due in January 2018, 2,218,333 shares of Laramide’s common stock which had a fair value of $0.5 million at September 30, 2017 and 2,218,333 common stock purchase warrants which had a fair value of $0.3 million at September 30, 2017.  Details regarding this transaction are discussed in Note 3 to the accompanying condensed consolidated financial statements; and  

the repayment of the $5.5 million outstanding balance under the RCF Loan (defined in Note 7 to the accompanying condensed consolidated financial statements.)  

Also during the nine months ending September 30, 2017, the Company entered into the following financing agreements and anticipates funding from these sources to sustain operations through 2018:







its Controlled Equity OfferingSM Sales Agreement


On April 14, 2017, the Company entered into the ATM Offering with Cantor acting as sales agent, pursuant to which the Company has registered the offer and sale from time to time of shares of its common stock having an aggregate offering price of up to $30.05.0 million of which approximately $28.9 million is available for future sales as of November 9, 2017.  The Company is unable to sell shares of its common stock through the ATM Offering on dates that it places shares with Aspire Capital through its CSPA, as discussed below.


Common Stock Purchase Agreement


On September 25, 2017, the Company entered into a CSPA with Aspire Capital to place up to $22.0 million in the aggregate of its common stock over a term of 30 months.  Upon execution of the CSPA, the Company issued 880,000 shares of common stock for net proceeds of $30.6 million pursuant to Aspire Capital as a commitment fee.  Thethe December 2020 PA with Lincoln Park (see Note 7). As of June 30, 2021, the Company cannot sell in excess of 5,033,677has no shares of common stock the Exchange Cap, including the 880,000 commitment shares, unless (i) stockholder approval is obtained, or (ii) the average price paidregistered for all shares issuedsale under the CSPA (including the 880,000 commitment shares) is equal to or greater than $1.38.  As of November 9, 2017, the CompanyATM Offering Agreement and has dollar capacity of $20.0 million10,800,000 of common stock available for future sales limitedpursuant to the Lincoln Park December 2020 PA.

Management believes the Company’s current Exchange Cap of 2.7 million shares of common stock unless conditions (i) or (ii) above are met. See Note 9cash balance is sufficient to the accompanying condensed consolidated financial statements for further details.

fund its planned non-discretionary expenditures through 2022. The Company believes thatis evaluating the ATM Offeringcontinued use of the Cantor and Lincoln Park financing facilities to support construction of the CSPA, along with its existing working capital balance, will provide it with the necessary liquidity to fund operations through 2018.  The Company will also continue to explore additional opportunities to raise capital, further monetize its non-core assets and identify ways to reduce its cash expenditures.

commercial graphite processing facility. While the Company has been successful in the past in raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available to it in amounts sufficient to meet the Company’sits needs, or on terms acceptable to the Company. Stock price volatility and uncertain economic conditions caused by the COVID-19 pandemic, including the recent emergence of variant strains of the virus, could significantly impact the Company’s ability to raise funds through equity financing. Market conditions, including but not limited to, inflation and supply change disruptions could adversely impact the planned cost of the Company’s commercial graphite processing facility.  Along with evaluating the continued use of the Cantor and Lincoln Park financing facilities, the Company may consider project financing to fund the construction of the commercial graphite processing facility.  The alternative sources of project financing could include, but are not limited to, convertible debt or pursuing a partnership or joint venture.

In the event that funds are not available for project financing to complete construction of the commercial graphite processing facility in 2022, the Company expects to be able to fund its non-discretionary expenditures, however, the Company may be required to materially change its planned business plans.development strategies.

Off- Balance Sheet Arrangements

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

With the exception of historical matters, the matters discussed in this report are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding the adequacy of funding, liquidity, the timing or occurrence of any future drilling or production from the Company’s properties, the timing or establishment of lithium resources, the ability of the Company to acquire additional properties or partner with other companies, the construction of pilot plant facilities and construction of commercial production facilities, the realization of expected benefits from recent business combinations and the Company’s anticipated cash burn rate and capital requirements. Words such as “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project” and variations of these words, comparable words and similar expressions generally indicate forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, among others:

the spot price and long-term contract price of graphite (both flake graphite feedstock and purified graphite products) and vanadium, and the world-wide supply and demand of graphite and vanadium;
government regulation of the mining and processing industries in the United States;

24

the availabilityTable of capital to WWR;Contents

the spot price and long-term contract price of uranium and lithium;

risks associated with our foreign operations;

the ability of WWR to enter into and successfully close acquisitions, dispositions or other material transactions;

government regulation of the mining industry and the nuclear power industry in the United States and the Republic of Turkey;

operating conditions at our mining projects;

the world-wide supply and demand of uranium and lithium;

weather conditions;




risks associated with our operations and the operations of our partners, including the impact of COVID-19 and supply chain disruptions;
operating conditions at our mining and processing facilities in the United States;
unanticipated geological, processing, regulatory and legal or other problems we may encounter;
the results of our exploration activities, and the possibility that future exploration results may be materially less promising than initial exploration results;
any graphite or vanadium discoveries not being in high enough concentration to make it economic to extract the metals;
our ability to finance growth plans;
currently pending or new litigation or arbitration; and
our ability to maintain and timely receive mining and other permits from regulatory agencies.


unanticipated geological, processing, regulatory and legal or other problems we may encounter;

currently pending or new litigation; and

our ability to maintain and timely receive mining and other permits from regulatory agencies.

as well asIn addition, other factors are described elsewhere in this Quarterly Report on Form 10-Q, our 2016 Annual Report on Form 10-K for the year ended December 31, 2020, and the other reports we file with the SEC. Most of these factors are beyond our ability to predict or control. Future events and actual results could differ materially from those set forth herein, contemplated by or underlying the forward-looking statements. Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements made herein, except as required by law.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide this information in our Quarterly Reports.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings with the Securities and Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management has recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply judgment in evaluating the Company’s controls and procedures.

During the fiscal period covered by this report, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 2017.2021.

Changes in Internal Controls

During the three months ended September 30, 2017,There were no changes have been made in our internal control over financial reporting during the six months ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.



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Table of Contents


PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

Information regarding reportableDuring the three months ended June 30, 2021, there were no material developments in the legal proceedings is containeddisclosed in Part I, Item 3., “Legal Proceedings,” in our Annualthe Company’s Quarterly Report on Form 10-K10-Q for the year ended December 31, 2016.  The following disclosure updates the legal proceeding set forth under the headings “Dispute Over Kleberg Settlement Agreement” and “TCEQ Adjudicatory Proceeding for the Kingsville Facility” in the 2016 Form 10-K to reflect developments during the ninethree months ended September 30, 2017 and should be read together with the corresponding disclosure in the 2016 Form 10-K.March 31, 2021.

Dispute Over Kleberg Settlement Agreement

Following the submittal of all the briefs by both parties, on June 23, 2017, the Texas Supreme Court granted the Petition for Review.  On October 12, 2017 the Texas Supreme Court held an oral argument.  The Company has no indication as to when or how the Texas Supreme Court will rule on the matter.

TCEQ Adjudicatory Proceeding for the Kingsville Facility

On April 12, 2017, the TCEQ held a hearing and granted the request of URI, Inc., a wholly-owned subsidiary of the Company, to withdraw the permit application without prejudice, and ordered URI, Inc. to pay Kleberg County $15,716 and to pay another named individual $967.  URI, Inc. has made those payments and the matter is fully resolved.

ITEM 1A. RISK FACTORS.

Other than as set forth below, thereThere have been no material changes from those risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016.2020.

Our foreign operations subject us to a number of significant regulatory, legal and political risks that may have a material adverse impact on our prospects, projects, financial condition and results of operations.

Our acquisition of Anatolia Energy significantly increased the importance of foreign operations to our future prospects and growth, and our foreign operations expose us to a number of risks. These risks include such things as:

enforcement of unfamiliar or uncertain foreign real estate, mineral tenure, contract, water use, mine safety and environmental laws and policies;

challenges to mining, processing and related permits and licenses, or to applications for permits and licenses, by or on behalf of regulatory authorities, indigenous populations, non-governmental organizations or other third parties;

war, crime, terrorism, sabotage, civil unrest and uncertain political and economic environments;

deterioration in relations between the United States and the foreign jurisdictions in which we operate;

renegotiation, nullification or forced modification of existing contracts, licenses, permits, approvals, concessions or the like;

corruption;

challenges in overseeing employees and contractors, including the risk that our employees and independent contractors may engage in unauthorized or illegal activity;

exchange and currency controls and fluctuations;

limitations on foreign exchange and repatriation of earnings;

restrictions on mineral production and price controls;

seizure of mineral production and expropriation or nationalization of property;





changes in legislation, including changes related to taxation, new or increased mining royalty interests, import and export regulations, foreign ownership, foreign trade and foreign investment;

high rates of inflation; and

labor practices and disputes.

For example, during October 2017, the United States and the Republic of Turkey each suspended all non-immigrant visa services for travel between the two countries following the arrest of U.S. consular staff in Turkey. The uncertainty surrounding the political and economic relationship between the United States and Turkey and the suspension of non-immigrant visas between the two countries could adversely affect our ability to operate in Turkey.

In addition, we face the numerous risks as a new acquirer that our expectations may not be realized and that we may encounter unexpected problems. We continue to review Anatolia Energy’s operations in Turkey, including compliance with local laws and applicable permitting requirements. In the event we determine material noncompliance, we could face fines or restrictions on our ability to develop our projects in Turkey, which could have a material adverse effect on our prospects, projects, financial condition and results of operations.

Further, regulatory, permitting and business arrangements in foreign jurisdictions are subject to extensive laws and regulations intended to prevent improper payments, fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of business arrangements that are commonplace in such foreign jurisdictions, and violations of such laws and regulations could result in regulatory sanctions and serious harm to our reputation. We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSPROCEEDS.

None.None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.






ITEM 6. EXHIBITS.

Exhibit Index


Exhibit


Number

Description

3.1

Restated Certificate of Incorporation of Westwater Resources, Inc., as amended through August 21, 2017.

3.2

Amended and Restated Bylaws of Westwater Resources, Inc., effective August 21, 2017.

4.1

Registration Rights Agreement dated September 25, 2017 between Westwater Resources, Inc. and Aspire Capital Fund, LLC (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 27, 2017.

10.1

Common Stock Purchase Agreement dated September 25, 2017 between Westwater Resources, Inc. and Aspire Capital Fund, LLC2013 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.1Appendix B to the Company’s Current ReportDefinitive Proxy Statement on Form 8-KSchedule 14A filed on September 27, 2017.March 26, 2021).

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS:

Inline XBRL Instance Document

101.SCH:

Inline XBRL Taxonomy Extension Schema Document

101.CAL:

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF:

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB:

Inline XBRL Taxonomy Extension Label Linkbase Document

26

Table of Contents

101.PRE:

XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE:

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)








SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


WESTWATER RESOURCES, INC.

Dated: November 9, 2017August 11, 2021

By:

/s/ Christopher M. Jones

Christopher M. Jones

President and Chief Executive Officer


(Principal Executive Officer)

Dated: November 9, 2017August 11, 2021

By:

/s/ Jeffrey L. Vigil

Jeffrey L. Vigil

Vice President - Finance and Chief Financial Officer


(Principal Financial Officer and Principal Accounting Officer)




27