UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, ~~2019~~2020

o◻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 Registrant as Specified in Its Charter)

DELAWARE		75-2212772
(State of Incorporation)		(I.R.S. Employer Identification No.)

6950 S. Potomac Street, Suite 300, Centennial, Colorado 80112

(Address of Principal Executive Offices, Including Zip Code)

(303) 531-0516

(Registrant’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		Nasdaq Capital Market

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. Yes x⌧ No o◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x⌧ No o◻

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 filer o◻		Accelerated filer o◻

Non-accelerated filer x⌧		Smaller reporting company x⌧

		Emerging growth company o◻

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). Yes o◻ No x⌧

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		~~1,858,211~~7,564,815 as of August ~~2, 2019~~5, 2020

Table of Contents

WESTWATER RESOURCES, INC.

~~TAB~~LE 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	22

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2830

ITEM 4. CONTROLS AND PROCEDURES	2831

PART II - OTHER INFORMATION	2932

ITEM 1. LEGAL PROCEEDINGS	2932

ITEM 1A. RISK FACTORS	2932

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2932

ITEM 3. DEFAULTS UPON SENIOR SECURITIES	2932

ITEM 4. MINE SAFETY DISCLOSURES	2933

ITEM 5. OTHER INFORMATION	2933

ITEM 6. EXHIBITS	3034

SIGNATURES	3134

Table of Contents

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,
	Notes	2019			2018

									June 30,		December 31,
								Notes	2020		2019
ASSETS


Current Assets:
Cash and cash equivalents	1	$	1,156		$	1,577		1	$	2,330	$	1,870
Marketable securities	6	—			415
Assets held for sale	4,5	1,767			1,545
Prepaid and other current assets		479			643					639		491
Total Current Assets		3,402			4,180					2,969		2,361


Property, plant and equipment, at cost:
Property, plant and equipment		91,771			91,772					91,633		91,746
Less accumulated depreciation, depletion and impairment		(71,266		)	(71,219		)
Less accumulated depreciation and depletion										(71,219)		(71,409)
Net property, plant and equipment	7	20,505			20,553			6		20,414		20,337
Operating lease right-of-use assets	14	541			—			13		424		484
Restricted cash	1,6	3,768			3,732			1,5		3,807		3,797
Assets held for sale — non-current	4	—			1,493
Total Assets		$	28,216		$	29,958			$	27,614	$	26,979


LIABILITIES AND STOCKHOLDERS’ EQUITY


Current Liabilities:
Accounts payable		$	1,813		$	776			$	1,141	$	852
Accrued liabilities	5	3,230			1,688					1,308		1,770
Asset retirement obligations - current	9	881			708			8		949		894
Operating lease liability - current	14	151			—			13		154		153
Notes payable - current								15		146		—
Total Current Liabilities		6,075			3,172					3,698		3,669

Asset retirement obligations, net of current portion	9	5,145			5,495
Other long-term liabilities and deferred credits		500			500

Asset retirement obligations, net of current								8		5,322		5,406
Other long-term liabilities										500		500
Operating lease liability, net of current	14	396			—			13		280		340
Notes payable, net of current								15		185		—
Total Liabilities		12,116			9,167					9,985		9,915


Commitments and Contingencies	13							12


Stockholders’ Equity:
Common stock, 100,000,000 shares authorized, $.001 par value;
Issued shares — 1,658,371 and 1,436,555, respectively
Outstanding shares —1,658,211 and 1,436,394, respectively	10	2			1
Issued shares – 6,664,976 and 3,339,541 respectively
Outstanding shares - 6,664,815 and 3,339,380 respectively								9		7		3
Paid-in capital	10,11	314,179			313,012			9,10		326,073		319,758
Accumulated other comprehensive loss		—			(90		)
Accumulated deficit		(297,823		)	(291,874		)			(308,193)		(302,439)
Treasury stock (161 and 161 shares, respectively), at cost		(258		)	(258		)
Less: Treasury stock (161 and 161 shares, respectively), at cost										(258)		(258)
Total Stockholders’ Equity		16,100			20,791					17,629		17,064


Total Liabilities and Stockholders’ Equity		$	28,216		$	29,958			$	27,614	$	26,979

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

Table of Contents

WESTWATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(unaudited)

		For the Three Months Ended June 30,						For the Six Months Ended June 30,
	Notes	2019			2018			2019			2018


															For the Three Months Ended				For the Six Months Ended
															June 30,				June 30,
														Notes	2020		2019		2020		2019

Operating Expenses:
Mineral property expenses	8	$	(824	)	$	(969	)	$	(1,458	)	$	(1,751	)	7	$	(576)	$	(808)	$	(1,178)	$	(1,426)
Product development expenses																(175)		(16)		(301)		(32)
General and administrative expenses		(2,054		)	(2,054		)	(3,890		)	(3,859		)			(1,659)		(1,700)		(3,438)		(3,405)
Acquisition costs	3	—			422			—			(333		)
Arbitration costs																(28)		(354)		(697)		(485)
Accretion of asset retirement obligations	9	(30		)	(134		)	(156		)	(268		)	8		(32)		(30)		(138)		(156)
Depreciation and amortization		(25		)	(33		)	(48		)	(67		)			(17)		(25)		(30)		(48)
Impairment of uranium properties	7	—			(17,968		)	—			(17,968		)
Total operating expenses		(2,933		)	(20,736		)	(5,552		)	(24,246		)			(2,487)		(2,933)		(5,782)		(5,552)


Non-Operating Income/(Expenses):
Loss on sale of marketable securities	4,6	—			—			(720		)	(93		)	3,5		—		—		—		(720)
Gain on sale of fixed assets		1			8			1			8
Interest income	4	168			172			334			346			3		—		168		—		334
Other income (expense)		(11		)	99			(12)			109					20		(10)		28		(11)
Total other (expense)/income		158			279			(397		)	370

Total other income (expense)																20		158		28		(397)

Net Loss		$	(2,775	)	$	(20,457	)	$	(5,949	)	$	(23,876	)		$	(2,467)	$	(2,775)	$	(5,754)	$	(5,949)

Other Comprehensive Income (Loss)
Unrealized fair value increase (decrease) on marketable securities		$	—		$	(26	)	$	—		$	(1,056	)

Other Comprehensive Income
Transfer to realized loss upon sale of available-for-sale securities		—			—			90			93					—		—		—		90
Comprehensive Loss		$	(2,775	)	$	(20,483	)	$	(5,859	)	$	(24,839	)		$	(2,467)	$	(2,775)	$	(5,754)	$	(5,859)


BASIC AND DILUTED LOSS PER SHARE		$	(1.81	)	$	(25.63	)	$	(3.95	)	$	(35.14	)		$	(0.43)	$	(1.81)	$	(1.18)	$	(3.95)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		1,532,802			798,200			1,505,668			679,438					5,786,117		1,532,802		4,895,533		1,505,668

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

Table of Contents

WESTWATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL CASH FLOW INFORMATION

(expressed in thousands of dollars)

(unaudited)

Six Months Ended June 30,

Notes

2019

2018

Operating Activities:

Net loss

$
(5,949
)
$
(23,876
)

Reconciliation of net loss to cash used in operations:

Non-cash lease expense

7

—

Accretion of asset retirement obligations

9

156

268

Amortization of notes receivable discount

4

(299
)
(337
)
Loss on sale of marketable securities

720

93

Costs incurred for restoration and reclamation activities

9

(333
)
(355
)
Depreciation and amortization

48

67

Stock compensation expense

15

162

Common stock issued for purchase of lithium mineral interests

—

114

Common stock issued for consulting services

—

95

Other income

—

5

Impairment of uranium properties

—

17,968

Effect of changes in operating working capital items:

Decrease in prepaids and other

234

196

Increase (decrease) in payables and deferred credits

1,077

(490
)
Net Cash Used In Operating Activities

(4,324
)
(6,090
)

Cash Flows From Investing Activities:

Deposit for sale of assets

5

1,500

—

Proceeds from the sale of marketable securities, net

4

536

476

Proceeds from disposal of property, plant and equipment

—

8

Proceeds from note receivable

4

750

1,089

Note advances for Alabama Graphite corporate merger

3

—

(1,547
)
Net Cash Provided By Investing Activities

2,786

26

Cash Flows From Financing Activities:

Issuance of common stock, net

10

1,154

4,730

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

(1
)
(5
)
Net Cash Provided By Financing Activities

1,153

4,725

Net decrease in cash, cash equivalents and restricted cash

(385
)
(1,339
)
Cash, cash equivalents and restricted cash, beginning of period

5,309

7,722

Cash, Cash Equivalents and Restricted Cash, End of Period

$
4,924

$
6,383

Cash paid during the period for:

Interest

$
1

$
3

Supplemental Non-Cash Information for Investing and Financing Activities:

Securities received for payment of notes receivable - Laramide

$
750

$
750

Common stock issued for acquisition of Alabama Graphite

—

6,394

Stock options and warrants issued for acquisition of Alabama Graphite

—

89

Common stock issued for consulting services

—

95

Common stock issued for purchase of lithium mineral interests

—

114

Total Non-Cash Investing and Financing Activities for the Period

$
750

$
7,442


		For the Six Months Ended June 30,
	Notes	2020		2019
Operating Activities:
Net loss		$	(5,754)	$	(5,949)
Reconciliation of net loss to cash used in operations:
Non-cash lease expense			2		7
Accretion of asset retirement obligations	8		138		156
Costs incurred for restoration and reclamation activities	8		(167)		(333)
Amortization of note receivable discount	3		—		(299)
Depreciation and amortization			30		48
Stock compensation expense	10		28		15
Gain on disposal of fixed assets			(21)		—
Loss on sale of marketable securities	3		—		720
Effect of changes in operating working capital items:
Decrease/(Increase) in prepaids and other assets			(148)		234
(Decrease)/Increase in payables and accrued liabilities			(173)		1,077
Net Cash Used In Operating Activities			(6,065)		(4,324)

Cash Flows From Investing Activities
Proceeds from disposal of uranium assets, net	4		—		1,500
Proceeds from the sale of securities, net	3		—		536
Proceeds from note receivable	3		—		750
Capital expenditures			(87)		—
Net Cash (Used In)/Provided By Investing Activities			(87)		2,786

Cash Flows From Financing Activities:
Proceeds from note payable	15		331		—
Issuance of common stock, net	9		6,291		1,154
Payment of minimum withholding taxes on net share settlements of equity awards			—		(1)
Net Cash Provided By Financing Activities			6,622		1,153

Net increase/(decrease) in cash, cash equivalents and restricted cash			470		(385)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period			5,667		5,309
Cash, Cash Equivalents and Restricted Cash, End of Period		$	6,137	$	4,924
Cash Paid During the Period for:
Interest		$	1	$	1
Supplemental Non-Cash Information with Respect to Investing and Financing Activities:
Securities received for payment of notes receivable – Laramide			—		750
Total Non-Cash Investing and Financing Activities for the Period		$	—	$	750

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

Table of Contents

WESTWATER RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(expressed in thousands of dollars, except share amounts)

(unaudited)

Accumulated

Other

Common Stock

Paid-In

Comprehensive

Accumulated

Treasury

Six months ended June 30, 2019

Shares

Amount

Capital

Income (Loss)

Deficit

Stock

Total

Balances, January 1, 2019

1,436,555

$
1

$
313,012

$
(90
)
$
(291,874
)
$
(258
)
$
20,791

Net loss

—

—

—

—

(5,949
)
—

(5,949
)
Common stock and common stock purchase warrants issued, net of issuance costs

221,263

1

1,153

—

—

—

1,154

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

393

—

15

—

—

—

15

Minimum withholding taxes on net share settlements of equity awards

—

—

(1
)
—

(1
)
Unrealized holding loss on marketable securities

—

—

—

—

—

—

—

Transfer to realized loss upon sale of available for sale securities

—

—

—

90

—

—

90

Balances, June 30, 2019

1,658,211

$
2

$
314,179

$
0

$
(297,823
)
$
(258
)
$
16,100

Accumulated

Other

Common Stock

Paid-In

Comprehensive

Accumulated

Treasury

Three months ended June 30, 2019

Shares

Amount

Capital

Income (Loss)

Deficit

Stock

Total

Balances, March 31, 2019

1,494,153

$
1

$
313,435

$
0

$
(295,048
)
$
(258
)
$
18,130

Net loss

—

—

—

—

(2,775
)
—

(2,775
)
Common stock and common stock purchase warrants issued, net of issuance costs

164,058

1

738

—

—

—

739

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

—

—

7

—

—

—

7

Minimum withholding taxes on net share settlements of equity awards

—

—

(1
)
—

(1
)
Unrealized holding loss on marketable securities

—

—

—

—

—

—

—

Transfer to realized loss upon sale of available for sale securities

—

—

—

—

—

—

—

Balances, June 30, 2019

1,658,211

$
2

$
314,179

$
0

$
(297,823
)
$
(258
)
$
16,100


							Accumulated
						Other
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury
Six months ended June 30, 2020	Shares	Amount		Capital		Income (Loss)		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 and common stock purchase warrants 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 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 payment of taxes	—		—		28		—		—		—		28
Balances, June 30, 2020	6,664,976	$	7	$	326,073	$	-	$	(308,193)	$	(258)	$	17,629


							Accumulated
						Other
	Common Stock					Comprehensive		Accumulated
Six months ended June 30, 2019	Shares	Amount		Paid-In Capital		Income (Loss)		Deficit		Treasury Stock		Total
Balances, January 1, 2019	1,436,555	$	1	$	313,012	$	(90)	$	(291,874)	$	(258)	$	20,791
Net loss	—		—		—		—		(5,949)		—		(5,949)
Common stock issued, net of issuance costs	221,263		1		1,153		—		—		—		1,154
Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes	393		—		15		—		—		—		15
Minimum withholding taxes on net share settlements of equity awards	—		—		(1)		—		—		—		(1)
Transfer to realized loss upon sale of available for sale securities	—		—		—		90		—		—		90
Balances, June 30, 2019	1,658,211	$	2	$	314,179	$	—	$	(297,823)	$	(258)	$	16,100


Three months ended June 30, 2019
Balances, March 31, 2019	1,494,153	$	1	$	313,435	$	—	$	(295,048)	$	(258)	$	18,130
Net loss							—		(2,775)		—		(2,775)
Common stock issued, net of issuance costs	164,058		1		738		—		—		—		739
Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes	—		—		7		—		—		—		7
Minimum withholding taxes on net share settlements of equity awards	—		—		(1)		—		—		—		(1)
Balances, June 30, 2019	1,658,211	$	2	$	314,179	$	—	$	(297,823)	$	(258)	$	16,100

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

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~OF STOCKHOLDERS’ EQUITY~~

~~(expressed in thousands of dollars, except share amounts)~~(unaudited)

~~(unaudited)~~

Accumulated

Other

Common Stock

Paid-In

Comprehensive

Accumulated

Treasury

Six months ended June 30, 2018

Shares

Amount

Capital

Income (Loss)

Deficit

Stock

Total

Balances, January 1, 2018

555,806

$
—

$
297,278

$
287

$
(256,190
)
$
(258
)
$
41,117

Net loss

—

—

—

—

(23,876
)
—

(23,876
)
Common stock and common stock purchase warrants issued, net of issuance costs

387,194

1

11,422

—

—

—

11,423

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

419

—

162

—

—

—

162

Minimum withholding taxes on net share settlements of equity awards

—

—

(5
)
—

—

—

(5
)
Unrealized holding loss on marketable securities

—

—

—

(1,056
)
—

—

(1,056
)
Transfer to realized loss upon sale of available for sale securities

—

—

—

93

—

—

93

Balances, June 30, 2018

943,419

$
1

$
308,857

$
(676
)
$
(280,066
)
$
(258
)
$
27,858

Accumulated

Other

Common Stock

Paid-In

Comprehensive

Accumulated

Treasury

Three months ended June 30, 2018

Shares

Amount

Capital

Income (Loss)

Deficit

Stock

Total

Balances, March 31, 2018

576,628

$
—

$
298,010

$
(650
)
$
(259,609
)
$
(258
)
$
37,493

Net loss

—

—

—

—

(20,457
)
—

(20,457
)
Common stock and common stock purchase warrants issued, net of issuance costs

366,392

1

10,770

—

—

—

10,771

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

399

—

82

—

—

—

82

Minimum withholding taxes on net share settlements of equity awards

—

—

(5
)
—

(5
)
Unrealized holding loss on marketable securities

—

—

—

(119
)
—

—

(119
)
Transfer to realized loss upon sale of available for sale securities

—

—

—

93

—

—

93

Balances, June 30, 2018

943,419

$
1

$
308,857

$
(676
)
$
(280,066
)
$
(258
)
$
27,858

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

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for Westwater Resources, Inc. (the “Company,” “we,” “us,” “WWR” or “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 ~~2018~~2019 Annual Report on Form 10-K. 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 six months ended June 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for any other period including the full year ending December 31, ~~2019.~~2020.

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, ~~2018. Refer~~2019.

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (ASC 820): Disclosure Framework – Changes to ~~Note 14~~the Disclosure Requirements for ~~revisions made to our lease accounting policies resulting from our adoption of~~Fair Value Measurement”. This update modifies the ~~new lease accounting standard~~disclosure requirements for fair value measurements by removing, modifying or adding disclosures. The Company adopted this pronouncement effective January 1, ~~2019.~~

~~Reverse Stock Split~~

~~Immediately following the close~~2020. The adoption of ~~trading~~ASU 2018-13 has not had a material impact on ~~April 22, 2019, the Company effected a one-for-fifty reverse stock split of its common stock. With the reverse stock split, every fifty shares of~~ the Company’s issued and outstanding common stock were combined into one issued and outstanding share of common stock. The reverse stock split reduced the number of shares outstanding from approximately 74.7 million shares to approximately 1.5 million shares. The reverse stock split did not have any effect on the par value of the Company’s common stock. No fractional shares were issued as a result of the reverse stock split. Any fractional shares that would have resulted were settled in cash. All share data herein has been retroactively adjusted for the reverse stock split.consolidated financial statements.

~~Recently Adopted Accounting Pronouncements~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,~~ ~~“Leases (Topic 842),”~~ which supersedes existing guidance for lease accounting. This new standard requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The new standard requires a dual approach for lessee accounting under which a lessee accounts for leases as finance leases or operating leases with the recognition of a right-of-use asset and a corresponding lease liability. For finance leases, the lessee recognizes interest expense and amortization of the right-of-use asset, and for operating leases, the lessee recognizes straight-line lease expense. The new lease accounting standard along with the clarifying amendments subsequently issued by the FASB, collectively became effective for the Company on January 1, 2019. The Company adopted the new lease accounting standard by applying the new lease guidance at the adoption date on January 1, 2019, and as allowed under the standard, used the modified retrospective method and elected not to restate comparative periods. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. We did not elect the hindsight practical expedient to determine the lease term for existing leases. As of January 1, 2019, in connection with the adoption of the new lease accounting standard, the Company recorded a right-of-use lease asset totaling $0.4 million with a corresponding lease liability totaling $0.4 million. Refer to Note 14 for further details on our adoption of the new lease accounting standard.

Recently Issued Accounting Pronouncements

In December 2019, the 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 will be effective for interim and annual periods beginning after December 15, 2020.

In June 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 January 1, 2023.

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 2018-270, 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.

~~These updates are~~ ASU 2018-19 will be effective for ~~fiscal years~~interim and annual periods beginning after ~~December 15, 2019, and the~~January 1, 2023.

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company is currently evaluating ASU 2016-13, ~~and~~ASU 2018-19 and ASU 2019-12 for the potential impact of adopting this guidance on its financial reporting.

In August 2018, the FASB issued ASU 2018- 13, “Fair Value Measurement (ASC 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement”. This update modifies the disclosure requirements for fair value measurements by removing, modifying or adding disclosures. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. Certain disclosures in the update are applied retrospectively, while others are applied prospectively. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the consolidated balance sheet that sum to the total of the same such amounts shown in the statement of cash flows.

	As of June 30,

					As of June 30,
(thousands of dollars)	2019		2018		2020		2019
Cash and cash equivalents	$	1,156	$	2,715	$	2,330	$	1,156
Restricted cash - pledged deposits for performance bonds	3,768		3,668			3,807		3,768
Cash, cash equivalents and restricted cash shown in the statement of cash flows	$	4,924	$	6,383	$	6,137	$	4,924

Funds deposited by the Company for collateralization of performance obligations are not available for the payment of general corporate obligations and are not included in cash equivalents. Restricted cash consists of money market accounts. The bonds are collateralized performance bonds required for future restoration and reclamation obligations primarily related to the Company’s South Texas production properties.

~~Notes Receivable~~

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortized cost using the effective interest method less any provision for impairment. Management monitors these assets for credit quality and recoverability on a quarterly basis, including the value of any collateral. If the value of the collateral, less selling or recovery costs, exceeds the recorded investment in the asset, no impairment costs would be recorded.

2. LIQUIDITY AND GOING CONCERN

The interim Condensed Consolidated Financial Statements of the Company have been prepared on a “going concern” basis, which means that the continuation of the Company is presumed even though events and conditions exist that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern because it is possible that the Company will be required to adversely change its current business plan or may be unable to meet its obligations as they become due within one year after the date that these financial statements were issued.

The Company last recorded revenues from operations in 2009 and expects to continue to incur losses as a result of costs and expenses related to maintaining its properties and general and administrative expenses. Since 2009, the Company has relied on equity financings, debt financings and asset sales to fund its operations and the Company expects to rely on these forms of financing to fund its operations into the near future. The Company will also continue to identify ways to reduce its cash expenditures.

The Company’s current business plan requires working capital to fund non-discretionary expenditures for uranium reclamation activities, mineral property holding costs, ~~business~~early stage graphite battery-material product development costs and administrative costs. The Company ~~intends to pursue~~is pursuing project financing to support execution of the graphite business plan, including discretionary capital expenditures associated with ongoing graphite battery-material product development costs, construction of pilot plant facilities and construction of commercial production facilities. The Company’s current lithium business plan will be funded by working capital; however, the Company is pursuing project financing including possible joint venture partners to fund discretionary greenfield exploration activities.

At June 30, ~~2019~~2020 the Company’s cash balances were ~~$1.2~~$2.3 million and the Company had a working capital deficit balance of ~~$2.7~~$1.0 million. The Company’s cash balance at July 31, 2020 is $2.9 million. Subsequent to ~~August 7, 2019,~~July 31, 2020, the Company expects to fund operations as follows:

●

· ~~Payment due August 30, 2019 or earlier in the amount~~Table of ~~$1.25 million from sale of uranium royalty interests and the Laramide Resources Ltd. promissory note (Note 4) to Uranium Royalty Corp. (Note 5).~~Contents

WESTWATER RESOURCES, INC.

· The Stock Purchase Agreement with Lincoln Park Capital, LLC. whereby the Company may place up to $10.0 million in the aggregate of the Company’s common stock on an ongoing basis when required by the Company over a term of 24-months ending in June 2021.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

· The Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. which currently has $23.8 million remaining sales capacity, subject to the registration of shares on Form S-3. The Company is currently ineligible to register additional shares on Form S-3 pursuant to the SEC’s shelf registration rules.

· ~~Other debt and equity financings and asset sales.~~

common stock on an ongoing basis when required by the Company over a term of 24-months ending in May 2022. As of July 31, 2020, the Company has 722,279 registered shares for resale by Lincoln Park on a current Form S-1 and $9.7 million remaining sales capacity under the 2020 Purchase Agreement, subject to periodic registration of shares on Form S-1.

●

The Controlled Equity Offering Sales Agreement (the “ATM Offering Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) which currently has $19.5 million remaining sales capacity, subject to periodic registration of shares on Form S-3. The Company is currently eligible to, and intends to, register the sale of additional shares under the agreement on Form S-3 pursuant to the SEC’s shelf registration rules.

●

Other possible debt and equity financings and asset sales.

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 its needs, or on terms acceptable to the Company. Stock price volatility and uncertain economic conditions caused by the recent Covid-19 pandemic could significantly impact the Company’s ability to raise funds through equity financing. In the event that we are unable to raise sufficient additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition, long-term prospects and ability to continue as a viable business. Considering all of the factors above, the Company believes there is substantial doubt regarding its ability to continue as a going concern.

3. ~~ACQUISITIONS~~

~~Acquisition of Alabama Graphite~~

On April 23, 2018, the Company completed its acquisition of 100% of the outstanding securities of Alabama Graphite Corp. (“Alabama Graphite”) for total consideration of $8.9 million. Alabama Graphite is a Canadian entity that indirectly holds a 100% interest in the Coosa graphite project and Coosa mineral properties located in Alabama. The consideration was comprised of $2.4 million in cash used to fund Alabama Graphite’s operating activities prior to completion of the Alabama Graphite transaction and certain related transaction costs, $6.4 million in common stock of the Company and $89,000 for warrants and options in the Company. Each Alabama Graphite ordinary share was exchanged for 0.0016 common share of WWR. Each warrant and option of Alabama Graphite was also exchanged for warrants and options exercisable for common shares of WWR on the same terms and conditions as were applicable prior to the Alabama Graphite transaction, except that the exercise price was converted for the 0.0016 share exchange ratio and for the USD exchange rate on the agreement date which was $0.77809 (CAD to USD) on December 13, 2017. As a result, the Company issued 232,504 new shares, 7,280 options and 42,888 warrants. The value of the Company’s common stock issued as consideration was based upon the opening share price on April 23, 2018 of $27.50. The operating results of Alabama Graphite are included in the Consolidated Statement of Operations commencing April 23, 2018.

The Alabama Graphite loan from WWR was $1.8 million on April 23, 2018 and was incorporated into the final acquisition accounting and therefore was eliminated as of June 30, 2018. Acquisition related costs were $1.9 million as of June 30, 2018, of which, $0.6 million was capitalized as additional cash consideration at the acquisition date for certain transaction costs that were directly related to the asset acquisition.

The acquisition of Alabama Graphite was accounted for as an asset acquisition in accordance with ASC 360 as “substantially all” of the purchase consideration was concentrated in a single identifiable asset for graphite mineral interests. WWR controls the Board of Directors and senior management positions of Alabama Graphite and has overall control over the day-to-day activities of the acquired entity.

~~The following summarizes the preliminary allocation of purchase price to the fair value of assets acquired and liabilities assumed as of the acquisition date (in thousands):~~

Consideration:

Cash

$
2,397

Issuance of 232,504 common shares for replacement of Alabama Graphite shares

6,394

Issuance of 7,280 options for replacement of Alabama Graphite options

35

Issuance of 42,888 warrants for replacement of Alabama Graphite warrants

54

$
8,880

The fair value of the consideration given was allocated as follows:

Assets:

Cash and cash equivalents

$
17

Short-term receivables

113

Prepaid expenses

42

Property, plant, equipment and graphite mineral interests

8,973

Total assets

9,145

Liabilities:

Accounts payable and accrued liabilities

265

Total liabilities

265

Net assets

$
8,880

The carrying value of the current assets acquired and liabilities assumed approximated the fair value due to the short-term nature of these items. The fair value of the graphite mineral interests was estimated using a discounted cash flow approach and market comparables. Key assumptions used in the discounted cash flow analysis include discount rates, mineral resources, future timing of production, recovery rates and future capital and operating costs.

4. NOTES RECEIVABLE

Laramide Note Receivable

As part of the consideration for the sale of Hydro Resources, Inc. (HRI), in January 2017, the Company ~~currently holds~~received a promissory note ~~with a current balance~~in the amount of ~~$2.0~~$5.0 million, secured by a mortgage over the Churchrock and Crownpoint properties owned by Laramide Resources Ltd. (“Laramide”). The note ~~is in the final year of~~had a three-year term and ~~carries~~carried an initial interest rate of 5%. The Company received the first two installment payments of $1.5 million each in January 2018 and January 2019. The final principal payment of $2.0 million iswas due and payable on January 5, 2020. Interest iswas payable on a quarterly basis during the final year. Laramide ~~will have~~had the right to satisfy up to half of the ~~final~~ principal ~~payment~~payments by delivering shares of its common stock to the Company, which shares ~~will be~~were valued by reference to the volume weighted average price (“VWAP”) for Laramide’s common stock for the 20 trading days before ~~January 5, 2020.~~their respective anniversaries of the initial issuance date in January. The fair value of this note receivable was determined using the present value of the future cash receipts discounted at a market rate of 9.5%.

~~As of June~~On August 30, 2019, the Company ~~has~~sold the promissory note (Note 4). Prior to August 30, 2019, the Company had received three tranches of Laramide common shares as partial consideration for the sale, ~~of HRI,~~ which ~~has~~had resulted in the receipt of 2,218,133, 1,982,483 and 2,483,034 Laramide common shares in January 2017, January 2018 and January 2019, respectively. These share payments ~~represent~~represented the initial consideration from the January 2017 sale of HRI and two note installments in January 2018 and January 2019. The first note installment in the amount of $1.5 million in January 2018, consisted of $750,000 in cash and the issuance of 1,982,483 of Laramide’s common shares. The second note installment in the amount of $1.5 million in January 2019, consisted of $750,000 in cash and the issuance of 2,483,034 of Laramide’s common shares. Additionally, Laramide ~~has~~ made interest payments in the amount of ~~$70,764~~$96,022 in cash during the ~~six months~~year ending ~~June 30, 2019 and Laramide made an interest payment for Q2 2019 in the amount of $25,258 on July 18,~~December 31, 2019.

~~For the six months ended June 30,~~On March 25, 2019, the Company sold the third tranche of 2,483,034 Laramide common shares and 2,218,133 Laramide warrants resulting in net proceeds of $0.5 million and a net loss on sale of marketable securities of $0.7 million.

~~The following tables show the notes receivable, accrued interest and unamortized discount on the Company’s notes receivable as~~9

Table of ~~June 30, 2019 and December 31, 2018.~~

June 30, 2019

(thousands of dollars)

Note
Amount

Plus Accrued
Interest

Less
Unamortized
Note
Discount

Note Balance
per Balance
Sheet

Current Assets

Notes receivable Laramide — current

$
2,000

$
26

$
(259
)
$
1,767

Total Notes Receivable — current and non-current

$
2,000

$
26

$
(259
)
$
1,767

Contents

December 31, 2018

(thousands of dollars)

Note
Amount

Plus Accrued
Interest

Less
Unamortized
Note
Discount

Note Balance
per Balance
Sheet

Current Assets

Notes receivable Laramide — current

$
1,500

$
45

$
—

$
1,545

Non-current Assets

Notes receivable — Laramide — non-current

2,000

—

(507
)
1,493

Total Notes Receivable — current and non-current

$
3,500

$
45

$
(507
)
$
3,038

~~5. ASSETS HELD FOR SALE~~WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

4. SALE OF URANIUM ASSETS

On March 5, 2019, the Company entered into an Asset Purchase Agreement with Uranium Royalty (USA) Corp. and Uranium Royalty Corp. (together “URC”) for the sale of four of its royalty interests on future uranium production from mineral properties located in South Dakota, Wyoming and New Mexico, as well as the remaining amount of the Laramide promissory note in the amount of $2.0 million as discussed in Note 3 above, for $2.75 million, including $0.5 million paid at signing. On June 28, 2019, Westwater and URC entered into an Amendment to the ~~Agreement (collectively referred to as the “Agreement”).~~Asset Purchase Agreement. The Amendment extended the date for closing from July 31, 2019 to August 30, 2019. ~~In addition,~~ URC delivered an additional $1.0 million as deposit to the Company upon signing the ~~Amendment, increasing the total deposit to $1.5 million, which will be credited against the purchase price at the closing of the transaction.~~Amendment. The transaction ~~will close following satisfaction or waiver of the closing conditions,~~closed on August 30, 2019 at which ~~conditions include, among other things, the execution of various assignment agreements. Under the terms of the Agreement,~~time the Company ~~is set to transfer~~transferred ownership of the royalties and promissory note ~~at the closing date~~ in exchange for the final payment of $1.25 million.

The ~~Agreement contains certain termination rights and remedies~~sale of these uranium assets was accounted for ~~both URC and the Company. Subject to certain limitations, in the event that the transaction does not close by August 30, 2019, the~~as an asset disposal. The Company may terminate the Agreement and retain the $1.5 million deposit. In the event that there is a material uncured inaccuracy in any representation or warranty or a material breach of any covenant of the Company, URC has the right to terminate the Agreement and seek a return of the deposit or to seek specific performance of the Agreement. In the event that there is a material uncured inaccuracy in any representation or warranty or a material breach of any covenant of URC, the Company has the right to terminate the Agreement or to seek specific performance of the Agreement. The Agreement will terminate automatically if the closing thereunder has not occurred on or before August 30, 2019, unless otherwise agreed by the parties.

As a result of execution of the Agreement, the Laramide promissory note has been re-classified as held for sale and is recorded at its carrying value of $1.8 million in the June 30, 2019 financials since the carrying value does not exceed its fair value. The $1.5 million cash deposit received from URC could be forfeited in the event that the Agreement is terminated due to the Company’s breach of certain terms of the Agreement. Accordingly, the Company has recorded the ~~deposit as a liability~~following gain on disposal of uranium assets on its Consolidated Statements of Operations for the balance sheet and will only recognize income when all conditions of the Agreement have been met and closing is complete. The royalty interests being purchased by URC have no carrying value and accordingly, no subsequent adjustments have been made.year ended December 31, 2019:


URC Transaction
(thousands of dollars)
Total cash consideration received, net of transaction costs	$	2,470
Carrying value of promissory note		(1,741)
Carrying value of royalty interests		—
Gain on disposal of uranium assets	$	729

6.5. 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.

Table of Contents

· ~~Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that are observable at the measurement date.~~WESTWATER RESOURCES, INC.

· 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.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company believes that the fair value of its assets and liabilities approximate 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 June 30, ~~2019~~2020 and December 31, ~~2018~~2019 and indicate the fair value hierarchy.


	June 30, 2020
(thousands of dollars)	Level 1		Level 2		Level 3		Total
Non-current Assets
Restricted cash	$	3,807	$	—		—	$	3,807
Total non-current assets recorded at fair value	$	3,807	$	—	$	—	$	3,807

	June 30, 2019

									December 31, 2019
(thousands of dollars)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Non-current Assets
Restricted cash	$	3,768	$	—	—		$	3,768	$	3,797	$	—		—	$	3,797
Total non-current assets recorded at fair value	$	3,768	$	—	$	—	$	3,768	$	3,797	$	—	$	—	$	3,797

December 31, 2018

(thousands of dollars)

Level 1

Level 2

Level 3

Total

Current Assets

Short-term available-for-sale investments

$
415

$
—

$
—

$
415

Total current assets recorded at fair value

$
415

$
—

$
—

$
415

Non-current Assets

Restricted cash

$
3,732

$
—

—

$
3,732

Total non-current assets recorded at fair value

$
3,732

$
—

$
—

$
3,732

Assets that are measured on a recurring basis include the Company’s marketable securities and restricted cash.

7.6. PROPERTY, PLANT AND EQUIPMENT

	Net Book Value of Property, Plant and Equipment at June 30, 2019

													Net Book Value of Property, Plant and Equipment at June 30, 2020
(thousands of dollars)	Turkey		Texas		Alabama		New Mexico		Corporate		Total		Texas		Alabama		New Mexico		Corporate		Total
Uranium plant	$	—	$	3,142	$	—	$	—	$	—	$	3,142	$	3,112	$	—	$	—	$	—	$	3,112
Mineral rights and properties	—		—		8,972		7,806		—		16,778			—		8,972		7,806		—		16,778
Other property, plant and equipment	7		440		—		—		138		585			422		—		—		102		524
Total	$	7	$	3,582	$	8,972	$	7,806	$	138	$	20,505	$	3,534	$	8,972	$	7,806	$	102	$	20,414

	Net Book Value of Property, Plant and Equipment at December 31, 2018

													Net Book Value of Property, Plant and Equipment at December 31, 2019
(thousands of dollars)	Turkey		Texas		Alabama		New Mexico		Corporate		Total		Texas		Alabama		New Mexico		Corporate		Total
Uranium plant	$	—	$	3,256	$	—	$	—	$	—	$	3,256	$	3,112	$	—	$	—	$	—	$	3,112
Mineral rights and properties	—		—		8,973		7,806		—		16,779			—		8,972		7,806		—		16,778
Other property, plant and equipment	8		348		—		—		162		518			327		—		—		120		447
Total	$	8	$	3,604	$	8,973	$	7,806	$	162	$	20,553	$	3,439	$	8,972	$	7,806	$	120	$	20,337

~~Impairment of Temrezli and Sefaatli Projects~~

On June 20, 2018, the General Directorate of Mining Affairs, a department of the Turkish Ministry of Energy and Natural Resources, notified the Company that the mining and exploration licenses for its Temrezli and Sefaatli projects located in Turkey had been revoked and potential compensation will be proffered. While the Company is investigating the legality of this action and what remedies, including compensation, might be available to the Company, the Company has determined that it is more likely than not that the Company will be unable to explore, develop, mine or otherwise benefit from the mineral properties. Therefore, the Company has determined that all of the uranium mineral holding property assets located in Turkey were fully impaired. The Company will recognize compensation for the mining and exploration licenses when the amount of the full and fair compensation is fixed and determinable and the ability to collect is probable.

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, 2020 no events or changes in circumstance, including any affects from the COVID-19 pandemic, are believed to have impacted recoverability of the Company’s long-lived assets. Accordingly, it was determined that no interim impairment was necessary.

Table of Contents

8.WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

7. MINERAL PROPERTY EXPENDITURES

Mineral property expenditures by geographical location for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019 are as follows:


												For the Three Months Ended June 30,				For the Six Months Ended June 30,
												2020		2019		2020		2019
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
	(thousands of dollars)
Temrezli project, Turkey	$	—		$	17		$	1		$	96
Total Turkey projects	—			17			1			96

												(thousands of dollars)
Kingsville Dome project, Texas	145			172			389			423		$	179	$	145	$	444	$	389
Rosita project, Texas	100			158			217			355			122		100		213		217
Vasquez project, Texas	126			97			312			331			121		126		362		312
Other projects, Texas	(9		)	(6		)	(9		)	1			3		(8)		3		(8)
Total Texas projects	362			421			909			1,110			425		363		1,022		910


Cebolleta project, New Mexico	440			389			440			389			141		440		141		440
Juan Tafoya project, New Mexico	3			3			9			9			3		3		9		9
Total New Mexico projects	443			392			449			398			144		443		150		449


Columbus Basin project, Nevada	1			120			1			122			1		1		(1)		1
Railroad Valley project, Nevada	—			12			—			16
Total Nevada projects	1			132			1			138			1		1		(1)		1


Sal Rica project, Utah	1			(2		)	1			—			—		1		1		1
Total Utah projects	1			(2		)	1			—			—		1		1		1


Coosa project, Alabama	11			9			91			9			6		—		6		65
Bama project, Alabama	6			—			6			—
Total Alabama Projects	17			9			97			9

Total Alabama projects													6		—		6		65

Total expense for the period	$	824		$	969		$	1,458		$	1,751	$	576	$	808	$	1,178	$	1,426

9.

8. ASSET RETIREMENT OBLIGATIONS

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

	June 30,			December 31,

							June 30,		December 31,
(thousands of dollars)	2019			2018			2020		2019
Balance, beginning of period	$	6,203		$	5,731		$	6,300	$	6,203
Liabilities settled	(320		)	(521		)		(167)		(293)
Liabilities disposed	(13		)	—
Accretion expense	156			993				138		390
Balance, end of period	6,026			6,203				6,271		6,300
Less: Current portion	(881		)	(708		)		(949)		(894)
Non-current portion	$	5,145		$	5,495		$	5,322	$	5,406

The Company is currently performing plugging and surface reclamation activities at its Rosita and Vasquez projects located in Duval County, Texas. The Company’s current liability of $0.9 million consists of the estimated costs associated with current reclamation activities through ~~March 2020~~June 2021 at the Company’s Kingsville Dome, Rosita and Vasquez projects.

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~~10.~~WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

9. COMMON STOCK

~~Reverse Stock Split~~

Immediately following the close of trading on April 22, 2019, the Company effected a one-for-fifty reverse stock split of its common stock. With the reverse stock split, every fifty shares of the Company’s issued and outstanding common stock were combined into one issued and outstanding share of common stock. The reverse stock split reduced the number of shares outstanding from approximately 74.7 million shares to approximately 1.5 million shares. The reverse stock split did not have any effect on the par value of the Company’s common stock. No fractional shares were issued as a result of the reverse stock split. Any fractional shares that would have resulted were settled in cash. All share data herein has been retroactively adjusted for the reverse stock split.

Common Stock Issued, Net of Issuance Costs

~~Stock~~2020 Purchase Agreement with Lincoln Park ~~Capital Fund, LLC. (“Lincoln Park”)~~

On May 24, 2019, Westwater entered into a securities purchase agreement, as amended by Amendment No. 1 thereto dated as of May 30, 2019 (as so amended, the “Purchase Agreement”), with Lincoln Park, pursuant to which the Company agreed to issue and sell to Lincoln Park, and Lincoln Park agreed to purchase from the Company (i) 104,294 shares of the Company’s Common Stock, par value $0.001 per share (collectively, the “Common Shares”) and (ii) warrants (the “Warrants”) to initially purchase an aggregate of up to 182,515 shares of Common Stock (the “Warrant Shares”), at an exercise price of $5.062 per share, for an aggregate of $550,751. On May 30, 2019 (the “Closing Date”), the Company issued and sold the Common Shares and the Warrants to Lincoln Park and received aggregate gross proceeds before expenses of $550,751. The Warrants will become exercisable upon the six-month anniversary of the Closing Date and thereafter at any time during the five-year period following such date.

~~Purchase Agreement (“PA”) with Lincoln Park~~

~~On June 6, 2019,~~21, 2020, the Company entered into the PA2020 Purchase Agreement, as amended on May 29, 2020, with Lincoln Park to place up to ~~$10.0~~$12.0 million in the aggregate of the Company’s common stock on an ongoing basis when required by the Company over a term of 24 months. Westwater will control the timing and amount of any sales to Lincoln Park, and Lincoln Park is obligated to make purchases in accordance with the ~~PA.~~2020 Purchase Agreement. Any common stock that is sold to 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~~2020 Purchase Agreement may be terminated by Westwater at any time, in its sole discretion, without any additional cost or penalty.

The PA2020 Purchase Agreement specifically provides that the Company may not issue or sell any shares of its common stock under the PA2020 Purchase Agreement if such issuance or sale would breach any applicable rules of The Nasdaq Capital Market. In particular, Nasdaq Listing Rule 5635(d) provides that the Company may not issue or sell more than 19.99% of the shares of the Company’s common stock outstanding immediately prior to the execution of the PA2020 Purchase Agreement without shareholder approval. ~~On August 6, 2019 the Company conducted a Special Meeting of Shareholders whereby the~~The Company received such ~~approval.~~

shareholder approval to sell up to 8.0 million shares of common stock under the 2020 Purchase Agreement at its Annual Shareholders Meeting conducted on April 28, 2020.

Lincoln Park has no right to require the Company to sell any shares of common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to certain conditions. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the PA2020 Purchase Agreement if it would result in Lincoln Park beneficially owning more than 9.99% of its common stock. ~~There are no upper limits~~As an initial purchase on ~~the price per share that~~May 21, 2020, Lincoln Park ~~must pay~~bought $250,000 worth of Common Stock of the Company at a price of $1.2989 per share. The Company issued 156,250 shares of Common Stock to Lincoln Park as consideration for its commitment to purchase shares of Common Stock under the 2020 Purchase Agreement.

Also on May 21, 2020, the Company entered into a registration rights agreement with Lincoln Park pursuant to which the Company filed a registration statement on Form S-1 with the Securities and Exchange Commission, which was declared effective on June 26, 2020 relating to the resale of an initial tranche of 1,971,000 shares subject to the 2020 Purchase Agreement. As of June 30, 2020, the Company has sold 192,471 shares of common ~~stock.~~stock for gross proceeds of $250,000 under the 2020 Purchase Agreement and through July 31, 2020, the Company has sold 1.1 million shares of common stock for gross proceeds of $2.3 million.

2019 Purchase Agreement (“2019 Purchase Agreement”) with Lincoln Park

On June 6, 2019, the Company entered into the 2019 Purchase Agreement with Lincoln Park to place up to $10.0 million in the aggregate of the Company’s common stock on an ongoing basis when required by the Company over a term of 24 months. On August 6, 2019 the Company conducted a Special Meeting of Shareholders whereby the Company received such approval to sell up to 3.2 million shares of common stock under the 2019 Purchase Agreement. Following effectiveness of ~~an S-1~~a registration statement on Form S-1 relating to the resale of the shares subject to the PA2019 Purchase Agreement on June 18, 2019, the Company began selling shares of its common stock to Lincoln Park under the terms of the ~~PA.~~2019 Purchase Agreement. On September 11, 2019, October 28, 2019 and February 28, 2020 the Company filed subsequent registration statements on Form S-1, which were declared effective on September 20, 2019, November 7, 2019 and March 6, 2020, respectively, registering for resale additional shares under the 2019 Purchase Agreement. During the quarter ended June 30, ~~2019,~~2020 the Company sold ~~60,000~~623,236 shares of common stock for gross proceeds of ~~$0.3~~$593,356. The 2019

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WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Purchase Agreement was terminated in May 2020 with historical sales of 3.2 million shares of common stock for gross proceeds of $7.7 million.

~~Controlled Equity Offering Sales~~Securities Purchase Agreement with ~~Cantor Fitzgerald (“Cantor”)~~Lincoln Park

On May 24, 2019, Westwater entered into a Securities Purchase Agreement, as amended by Amendment No. 1 thereto dated as of May 30, 2019, with Lincoln Park, pursuant to which the Company agreed to issue and sell to Lincoln Park, and Lincoln Park agreed to purchase from the Company (i) 104,294 shares of the Company's common stock and (ii) warrants to initially purchase an aggregate of up to 182,515 shares of common stock, at an exercise price of $5.062 per share. On May 30, 2019, the Company issued and sold the common shares and the warrants to Lincoln Park and received aggregate gross proceeds before expenses of $550,751. The warrants became exercisable on November 30, 2019 and may be exercised at any time thereafter until November 30, 2024.

ATM Offering Agreement with Cantor

On April 14, 2017, the Company entered into the ~~at-the-market offering (the “ATM Offering”)~~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 ~~$8.0~~and $3.1 million of which shares were registered for sale under a registration statement on Form S-3, which was declared effective on ~~March 9, 2017.~~April 13, 2020. The Company pays Cantor a commission of up to 2.5% of the gross proceeds from the sale of any shares pursuant to the ATM ~~Offering.~~Offering Agreement. As of June 30, ~~2019,~~2020, the Company had sold ~~488,685~~1,959,422 shares of common stock for net proceeds of ~~$6.1~~$10.2 million under the ATM Offering Agreement, of which ~~57,205~~930,225 shares of common stock and net proceeds of ~~$0.4~~$3.0 million was sold in the ~~six~~three months ended June 30, ~~2019.~~2020. As a result, the Company ~~had~~has approximately ~~$23.8~~$19.5 million remaining available for future sales under the ATM Offering, but ~~has nil~~had no shares of common stock registered for sale under the ATM Offering Agreement as of June 30, ~~2019.~~2020.

~~Common Stock Issued~~Warrants

The following table summarizes warrants outstanding and changes for ~~Acquisition of Alabama Graphite~~the three-month periods ending June 30, 2020 and 2019:


	June 30, 2020	June 30, 2019

	Number of	Number of
	Warrants	Warrants
Warrants outstanding at beginning of period	186,182	197,621
Issued	—	—
Expired	—	—
Warrants outstanding at end of period	186,182	197,621

As discussed in Note 3 above, on April 23, 2018, the Company issued 232,504 shares of common stock in exchange for 100% of the outstanding shares of Alabama Graphite as part of the purchase consideration paid to acquire Alabama Graphite.

~~11.~~10. STOCK-BASED COMPENSATION

Stock-based compensation awards consist of stock options, restricted stock units and bonus shares issued under the Company’s equity incentive plans which include: the 2013 Omnibus Incentive Plan (the “2013 ~~Plan”~~Plan") and the Amended and Restated 2004 Directors’ Stock Option and Restricted Stock Plan (the “2004 Directors’ ~~Plan”~~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, ~~and~~ April 18, 2019 and April 28, 2020, the Company’s stockholders approved amendments to the 2013 Plan to increase the authorized number of shares of common stock available and reserved for issuance under the 2013 Plan by 20,000 shares, 66,000 and ~~66,000~~350,000 shares, respectively and in 2017 re-approve 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, ~~(“RSAs”),~~ restricted stock units (“RSUs”), unrestricted stock,

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WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards and cash bonus awards to eligible persons. The maximum number of the Company’s common stock that may be reserved for issuance under the 2013 Plan is currently ~~66,278~~416,278 shares of common stock, plus unissued shares under the prior plans. 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 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 other officers and employees of the Company as designated by the Committee and permitted by the 2013 Plan.

As of ~~April 18, 2019, 66,278~~June 30, 2020, 58,586 shares were available for future issuances under the 2013 Plan. For the six months ending June 30, ~~2019~~2020 and ~~2018,~~2019, the Company recorded stock-based compensation expense of ~~$15,424~~$27,771 and ~~$162,222,~~$15,424, respectively. Stock compensation expense is recorded in general and administrative expenses.

In addition to the plans above, upon closing of the Company’s acquisition of Anatolia Energy Limited in November 2015, the Company issued 7,495 replacement options and performance shares to the option holders and performance shareholders of Anatolia Energy Limited. The number of replacement options and performance shares was based upon the Black-Scholes value with the exercise prices of the replacement options and performance shares determined using the exchange rate of 0.0001096. The options and performance shares were issued with the same terms and conditions as were applicable prior to the acquisition of Anatolia Energy Limited. As of June 30, 2019, there were 113 replacement options outstanding and no performance shares outstanding.

In addition to the plans above, upon closing of the Company’s acquisition of Alabama Graphite in April 2018, the Company issued 50,168 replacement options and warrants to the option and warrant holders of Alabama Graphite. The number of replacement options and warrants shares was determined using the arrangement exchange rate of 0.0016. The exercise prices for the option and warrant shares were first converted for the exchange rate of 0.0016 and then converted to USD using the exchange rate on December 13, 2017 of 0.77809 (CAD to USD). The options and warrant shares were issued with the same terms and conditions as were applicable prior to the acquisition of Alabama Graphite. As of June 30, ~~2019,~~2020, there were ~~5,568~~2,840 replacement options ~~and 11,440~~outstanding but all replacement warrants ~~outstanding.~~have expired.

Stock Options

The following table summarizes stock options outstanding and changes for the ~~three-month~~six-month periods ending June 30, ~~2019~~2020 and ~~2018:~~2019:

	June 30, 2019				June 30, 2018
	Number of Stock Options		Weighted Average Exercise Price		Number of Stock Options		Weighted Average Exercise Price

									June 30, 2020			June 30, 2019
										Weighted			Weighted
									Number of	Average		Number of	Average
									Stock	Exercise		Stock	Exercise
									Options	Price		Options	Price
Stock options outstanding at beginning of period	19,170		$	79.78	5,723		$	276.50	37,786	$	37.42	19,170	$	79.78
Granted	—		—		7,280		84.00		125,804		1.59	—		—
Expired	(624	)	80.58		(680	)	466.46		(1,693)		101.64	(624)		80.58
Canceled or forfeited									—		—	—		—
Stock options outstanding at end of period	18,546		$	64.49	12,323		$	152.50	161,897	$	8.91	18,546	$	78.21
Stock options exercisable at end of period	18,546		$	64.49	12,243		$	153.00	36,093	$	34.41	18,546	$	78.21

The following table summarizes stock options outstanding and exercisable by stock option plan at June 30, ~~2019:~~2020:

	Outstanding Stock Options			Exercisable Stock Options

							Outstanding Stock Options			Exercisable Stock Options
							Number of	Weighted		Number of	Weighted
							Outstanding	Average		Stock Options	Average
Stock Option Plan	Number of Outstanding Stock Options	Weighted Average Exercise Price		Number of Exercisable Stock Options	Weighted Average Exercise Price		Stock Options	Exercise Price		Exercisable	Exercise Price
2004 Plan	96	$	1,752.25	96	$	1,752.25	92	$	1,638.00	92	$	1,638.00
2004 Directors’ Plan	3	10,380.00		3	10,380.00		3		10,380.00	3		10,380.00
2013 Plan	12,766	35.41		12,766	35.41		158,962		6.57	33,158		25.47
Replacement Stock Options-Alabama Graphite	5,568	80.96		5,568	80.96
Replacement Stock Options-Anatolia Energy	113	831.50		113	831.50
	18,546	$	64.49	18,546	$	64.49
Replacement Options-Alabama Graphite							2,840		75.94	2,840		75.94
							161,897	$	8.91	36,093	$	34.41

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WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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.

The following table summarizes RSU activity for the three-month periods ended June 30, ~~2019~~2020 and ~~2018:~~2019:

	June 30,				June 30,
	2019				2018
	Number of RSUs		Weighted- Average Grant Date Fair Value		Number of RSUs		Weighted- Average Grant Date Fair Value

									June 30,			June 30,
									2020			2019
										Weighted-			Weighted-
										Average			Average
									Number of	Grant Date		Number of	Grant Date
									RSUs	Fair Value		RSUs	Fair Value
Unvested RSUs at beginning of period	2,260		$	70.00	3,578		$	70.00	—	$	—	2,260	$	70.00
Granted	—		—		—		—		211,497		2.03	—		—
Forfeited	(565	)	70.00		(189	)	70.00		—		—	(565)		70.00
Vested	—		—		—		—		—		—	—		—
Unvested RSUs at end of period	1,695		$	70.00	3,389		$	70.00	211,497	$	2.03	1,695	$	70.00

~~12.~~

11. EARNINGS PER SHARE

Basic and diluted loss per common share have been calculated based on the weighted-average shares outstanding during the period. Additionally, potentially dilutive shares of ~~217,862~~559,576 were excluded from the calculation of earnings per share because the effect on the basic income per share would be anti-dilutive for the six months ended June 30, ~~2019.~~2020.

~~13.~~

12. COMMITMENTS AND CONTINGENCIES

The Company’s uranium recovery operations 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 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 their accrual for costs. The Company believes its operations are materially compliant with current environmental regulations.

At 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 ~~its~~our financial position, results of operations or cash flows.

~~14.~~13. LEASES

~~Lease Adoption January 1, 2019~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~“Leases (Topic 842)”~~. This new standard requires lessees to recognize leases on their balance sheets. It also requires a dual approach for lessee accounting under which a lessee accounts for leases as finance leases or operating leases with the recognition of a right-of-use asset and a corresponding lease liability. For operating leases, the lessee recognizes straight-line lease expense. The new lease accounting standard along with the clarifying amendments subsequently issued by the FASB, collectively became effective for the Company on January 1, 2019. The Company adopted the new lease accounting standard by applying the new lease guidance at the adoption date on January 1, 2019, and as allowed under the transition relief provided in ASU 2018-11, elected not to restate comparative periods. As of January 1, 2019, in connection with the adoption of the new lease accounting standard, the Company recorded a right-of-use lease asset totaling $595,870 with a corresponding lease liability totaling $599,596.

The ~~right-of-use assets represent our right to use an underlying asset for the~~Company’s lease ~~term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date~~portfolio consists of ~~the lease 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 current estimated incremental borrowing rate.~~

~~The Company has~~ operating leases for corporate offices, storage space and equipment. The leases have remaining lease terms of 1 to 53.5 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 ~~ROU~~right-of-use asset and related lease liability, but rather expensed in the period incurred.

Table of Contents

WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company is party to several leases that are for under one year in length. These include such leases as those 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 year or less are not capitalized and instead expensed on a straight-line basis over the lease term. In addition, the Company holds numerous 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 are recognized at the commencement date of the lease 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 current estimated incremental borrowing rate.

The components of lease expense ~~were~~are as follows:

June 30

(thousands of dollars)

2019

Operating lease cost

$
81

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

	Six months ended June 30, 2019

			Six months		Six months
			ended		ended
(thousands of dollars)			June 30, 2020		June 30, 2019
Cash paid for amounts included in lease liabilities:
(thousands of dollars)

Operating cash flows from operating leases	$	77	$	79	$	77


Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	541	$	424	$	541

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

June 30,

December 31,
(thousands of dollars, except lease term and discount rate)

2020

2019
Operating Leases




Operating lease right-of-use assets

$
424

$
484

Current portion of lease liabilities

$
154

$
153
Operating lease liabilities – long term portion

280

340
Total operating lease liabilities

$
434

$
493

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

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WESTWATER RESOURCES, INC.

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

June 30,
2019

Operating Leases

Operating lease right-of-use assets

$
541

Current portion of lease liabilities

$
151

Operating lease liabilities — long term portion

396

Total operating lease liabilities

$
547

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~June 30,~~
~~2019~~
~~Weighted Average Remaining Lease Term~~
~~Operating leases~~
~~4.2 Years~~
~~Discount Rate~~
~~Operating leases~~
~~9.5%~~
(unaudited)

June 30,

June 30,

2020

2019
Weighted Average Remaining Lease Term (in years)

3.2

4.2

Discount Rate

9.5
%

9.5
%

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

Lease payments by year (In thousands)

Operating
Leases

2019

$
79

2020

159

2021

161

2022

162

2023

94

Total lease payments

655

Less imputed interest

(108
)

Total

$
547


	June 30,
Lease payments by year (In thousands)	2020
2020 (remainder of year )	$	81
2021		161
2022		162
2023		92
Total lease payments		496
Less imputed interest		(62)
Total	$	434

As of June 30, ~~2019,~~2020, the ~~company~~Company has ~~$0.5~~$0.4 million in ~~ROU~~right-of-use assets and ~~$0.5~~$0.4 million in related lease liabilities ($0.2 million of which is current). The most significant operating lease is for its corporate office in Centennial, Colorado, with ~~$0.6~~$0.5 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 ~~$0.7~~$0.5 million.

~~15.~~

14. GEOGRAPHIC AND SEGMENT INFORMATION

~~The~~In addition to its corporate operations, the Company currently operates in three reportable segments, which are uranium, lithium and graphite mining activities, including exploration, standby operations and restoration and reclamation activities. As a part of these activities, the Company ~~also~~ explores, evaluates and, if warranted, ~~permits~~develops uranium, lithium and graphite properties. The Company’s long-term assets were ~~$24.4 million and $25.8~~$24.6 million as of both June 30, ~~2019~~2020 and December 31, ~~2018, respectively.~~2019. 100% of the long-term assets are located in the United States. The Company reported no revenues during the six months ended June 30, ~~2019~~2020 and June 30, ~~2018.~~

2019.

The reportable segments are those operations whose operating results are reviewed by the Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance provided those operations pass certain quantitative thresholds. Operations whose revenues, earnings or losses or assets exceed or are expected to exceed 10% of the total consolidated revenue, earnings or losses or assets are reportable segments. Information about current assets and liabilities of the segments has not been provided because the information is not used to assess performance.

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WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The table below provides a breakdown of the long-term assets by reportable segments as of June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

	June 30, 2019

											June 30, 2020
(thousands of dollars)	Corporate		Uranium		Lithium		Graphite		Total		Corporate		Uranium		Lithium		Graphite		Total


Net property, plant and equipment	$	138	$	11,395	$	—	$	8,972	$	20,505	$	102	$	11,340	$	—	$	8,972	$	20,414
Restricted cash	—		3,758		—		10		3,768			—		3,797		—		10		3,807
Notes receivable, non-current	—		—		—		—		—
Operating lease right of use assets	517		24		—		—		541			407		17		—		—		424
Total long-term assets	$	655	$	15,177	$	—	$	8,982	$	24,814	$	509	$	15,154	$	—	$	8,982	$	24,645

	December 31, 2018

											December 31, 2019
(thousands of dollars)	Corporate		Uranium		Lithium		Graphite		Total		Corporate		Uranium		Lithium		Graphite		Total


Net property, plant and equipment	$	162	$	11,418	$	—	$	8,973	$	20,553	$	114	$	11,251	$	—	$	8,972	$	20,337
Restricted cash	—		3,722		—		10		3,732			—		3,787		—		10		3,797
Notes receivable, non-current	—		1,493		—		—		1,493
Operating lease right of use assets												463		21		—		—		484
Total long-term assets	$	162	$	16,633	$	—	$	8,983	$	25,778	$	577	$	15,059	$	—	$	8,982	$	24,618

The table below provides a breakdown of the reportable segments for the three months ended June 30, ~~2019~~2020 and June 30, ~~2018.~~2019. Non-mining activities and other administrative operations are reported in the Corporate column.

	Three months Ended June 30, 2019

																Three months Ended
																June 30, 2020
(thousands of dollars)	Corporate			Uranium			Lithium			Graphite			Total			Corporate		Uranium		Lithium		Graphite		Total
Statement of Operations
Mineral property expenses	$	—		$	805		$	2		$	17		$	824		$	—	$	570	$	—	$	6	$	576
Product development expenses																	—		—		—		175		175
General and administrative expenses	1,570			433			—			58			2,061				1,094		442		—		123		1,659
Sales and marketing expenses	—			—			—			(7		)	(7		)
Arbitration expenses																	28		—		—		—		28
Accretion of asset retirement costs	—			30			—			—			30				—		32		—		—		32
Depreciation and amortization	1			24			—			—			25				12		5		—		—		17
	1,571			1,292			2			68			2,933
																	1,134		1,049		—		304		2,487
Loss from operations	(1,571		)	(1,292		)	(2		)	(68		)	(2,933		)		(1,134)		(1,049)		—		(304)		(2,487)
Other income	158			—			—			—			158
Other income/(expense)																	28		(8)		—		—		20
Loss before taxes	$	(1,413	)	$	(1,292	)	$	(2	)	$	(68	)	$	(2,775	)	$	(1,106)	$	(1,057)	$	—	$	(304)	$	(2,467)

	Three months Ended June 30, 2018

																Three months Ended
																June 30, 2019
(thousands of dollars)	Corporate			Uranium			Lithium			Graphite			Total			Corporate		Uranium		Lithium		Graphite		Total
Statement of Operations
Mineral property expenses	$	—		$	830		$	130		$	9		$	969		$	—	$	805	$	2	$	1	$	808
Product development expenses																	—		—		—		16		16
General and administrative	1,364			453			—			237			2,054				1,216		433		—		51		1,700
Acquisition related expenses	(422		)	—			—			—			(422		)
Arbitration expenses																	354		—		—		—		354
Accretion of asset retirement costs	—			134			—			—			134				—		30		—		—		30
Impairment of uranium properties	—			17,968			—			—			17,968
Depreciation and amortization	1			31			—			1			33				1		24		—		—		25
	943			19,416			130			247			20,736
Loss from operations	(943		)	(19,416		)	(130		)	(247		)	(20,736		)
Other income	172			107			—			—			279
Loss before taxes	$	(771	)	$	(19,309	)	$	(130	)	$	(247	)	$	(20,457	)
																	1,571		1,292		2		68		2,933

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WESTWATER RESOURCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Loss from operations		(1,571)		(1,292)		(2)		(68)		(2,933)
Other income		158		—		—		—		158
Loss before taxes	$	(1,413)	$	(1,292)	$	(2)	$	(68)	$	(2,775)

The table below provides a breakdown of the reportable segments for the six months ended June 30, ~~2019~~2020 and June 30, ~~2018.~~2019. Non-mining activities and other administrative operations are reported in the Corporate column.

	Six months Ended June 30, 2019

																Six months Ended
																June 30, 2020
(thousands of dollars)	Corporate			Uranium			Lithium			Graphite			Total			Corporate		Uranium		Lithium		Graphite		Total
Statement of Operations
Mineral property expenses	$	—		$	1,358		$	3		$	97		$	1,458		$	—	$	1,172	$	—	$	6	$	1,178
General and administrative expenses	2,849			825			—			205			3,879
Sales and marketing expenses	—			—			—			11			11
Product development expenses																	—		—		—		301		301
General and administrative																	2,283		868		—		287		3,438
Arbitration expenses																	697		—		—		—		697
Accretion of asset retirement costs	—			156			—			—			156				—		138		—		—		138
Depreciation and amortization	2			46			—			—			48				24		6		—		—		30
	2,851			2,385			3			313			5,552
																	3,004		2,184		—		594		5,782
Loss from operations	(2,851		)	(2,385		)	(3		)	(313		)	(5,552		)		(3,004)		(2,184)		—		(594)		(5,782)
Other (expense) income	(397		)	—			—			—			(397		)
Other income																	28		—		—		—		28
Loss before taxes	$	(3,248	)	$	(2,385	)	$	(3	)	$	(313	)	$	(5,949	)	$	(2,976)	$	(2,184)	$	—	$	(594)	$	(5,754)

Six months Ended
June 30, 2018

(thousands of dollars)

Corporate

Uranium

Lithium

Graphite

Total

Statement of Operations

Mineral property expenses

$
—

$
1,604

$
138

$
9

$
1,751

General and administrative

2,717

905

—

237

3,859

Acquisition related expenses

333

—

—

—

333

Accretion of asset retirement costs

—

268

—

—

268

Impairment of uranium properties

—

17,968

—

—

17,968

Depreciation and amortization

2

64

—

1

67

3,052

20,809

138

247

24,246

Loss from operations

(3,052
)
(20,809
)
(138
)
(247
)
(24,246
)
Other income

253

117

—

—

370

Loss before taxes

$
(2,799
)
$
(20,692
)
$
(138
)
$
(247
)
$
(23,876
)


	Six months Ended
	June 30, 2019
(thousands of dollars)	Corporate		Uranium		Lithium		Graphite		Total
Statement of Operations
Mineral property expenses	$	—	$	1,358	$	3	$	65	$	1,426
Product development expenses		—		—		—		32		32
General and administrative		2,364		825		—		216		3,405
Arbitration expenses		485		—		—		—		485
Accretion of asset retirement costs		—		156		—		—		156
Depreciation and amortization		2		46		—		—		48
		2,851		2,385		3		313		5,552
Loss from operations		(2,851)		(2,385)		(3)		(313)		(5,552)
Other (expense)		(397)		—		—		—		(397)
Loss before taxes	$	(3,248)	$	(2,385)	$	(3)	$	(313)	$	(5,949)

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15. NOTES PAYABLE

Loan under the Paycheck Protection Program (PPP)

On May 4, 2020, URI, Inc, a wholly owned subsidiary of Westwater, received loan proceeds in the amount of $0.3 million under the Paycheck Protection Program (“PPP”) in accordance with the terms of a promissory note executed in favor of Celtic Bank Corporation, a Salt Lake City based Small Business Administration (“SBA”) Preferred Lender. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for forgivable loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loan and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll costs, rent and utilities. No more than 40% of the amount forgiven can be attributable to non-payroll costs. Any unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. According to terms of the promissory note from Celtic Bank, the first payment of principal and interest is due November 30, 2020, with subsequent payments due at the end of each month through the loan maturity date of April 30, 2022.

The Company used the proceeds for funding its payroll and benefits costs for the restart of South Texas operations, purposes consistent with the PPP. The Company’s South Texas operations were shut down and employees furloughed in March 2020 due to the severe downturn in the capital markets and uncertainty about when economic conditions would return to normal. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan and is in the process of preparing the SBA’s forgiveness application, no assurance can be provided that the Company will obtain forgiveness of the loan, in whole or in part. At June 30, 2020 the loan proceeds are presented on the balance sheet as current and long-term debt based on the schedule of repayments and excluding any possible forgiveness of the loans.

The following table summarizes notes payable related to the PPP loan on the balance sheet as of June 30, 2020:


	June 30,
(thousands of dollars)	2020
Notes payable	$	331
Less: current maturities		(146)
Notes payable, net of current	$	185

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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 Westwater for the three and six months ended June 30, ~~2019~~2020 has been prepared based on information available to us as of August 7, ~~2019.~~5, 2020. 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 WWR for the period ended December 31, ~~2018~~2019 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.”

INTRODUCTION

Westwater Resources, Inc. is ana 40-year-old public company trading on the Nasdaq Capital Market under the symbol “WWR.” Originally incorporated in 1977 as Uranium Resources, Inc. to mine uranium in Texas, our company has been reborn as a diversified energy ~~minerals~~materials developer. Westwater now has a presence in uranium, lithium exploration, and ~~energy-related~~ battery-ready graphite materials ~~development company. The Company’s battery materials projects include graphite and lithium mineral properties. We established our graphite business with the~~after its acquisition of Alabama Graphite onCorp. (“Alabama Graphite”) in April ~~23, 2018 and its~~2018. In addition, Westwater recently discovered significant vanadium concentrations at the Coosa Graphite Project ~~along~~(the “Coosa Project”) in Alabama and has an exploration plan available to further investigate the size and extent of those concentrations.

Westwater holds battery-ready graphite development properties in Alabama, properties with ~~the associated Coosa Graphite Mine located across 41,900 acres in east-central Alabama. We established our~~ lithium ~~business in 2016 and currently control mineral rights encompassing approximately 36,920 acres across three prospective lithium brine basins~~ exploration potential in Nevada and ~~Utah. We have continued exploration activities as well as geological evaluation of these~~Utah, two idled uranium production properties in ~~2018 for potential development of lithium resources that may be discovered.~~

~~The Company maintains optionality on future rising~~Texas and several uranium ~~prices with significant uranium property holdings located~~properties in Texas and New Mexico. ~~In Texas, the Company has two licensed and currently idled~~Westwater ceased uranium processing facilities and approximately 11,000 acres (4,400 ha) of prospective in-situ recovery uranium projects. In New Mexico, the Company controls mineral rights encompassing approximately 188,700 acres (76,394 ha)production in 2009 due to reductions in the ~~prolific Grants Mineral Belt,~~price of uranium, although Westwater’s uranium properties and facilities in Texas can be restarted once the price of uranium recovers to acceptable levels.

RECENT DEVELOPMENTS

Graphite Business Developments

Westwater’s graphite business plan continues without pause. The Company and its consultants continue to produce results that inform pilot plant operations, which are presently scheduled for the fourth quarter of 2020. Westwater remains focused on the battery materials markets, the end markets for those products, and the role that can be played in supplying critical materials to serve them.

In June 2020, Westwater announced that independent testing of Westwater’s ULTRA-PMG™ battery graphite material has shown outstanding resistivity values as a conductive additive. This milestone achievement is a critical step in developing Westwater’s battery graphite business. PMG is one of the ~~largest concentrations of sandstone-hosted uranium deposits~~key products in the ~~world. Incorporated~~Coosa Project business plan being produced at laboratory-scale using proprietary processes that Westwater intends to utilize in ~~1977~~the pilot program later this year. Successful performance testing demonstrates that Westwater can manufacture ULTRA-PMG™ as ~~Uranium Resources, Inc., WWR also owns an extensive uranium information database~~a premium-grade, conductive enhancement material for all types of ~~historic drill hole logs, assay certificates, maps~~batteries at larger scale.

In July 2020, Westwater announced that independent performance testing of Westwater’s ULTRA-CSPG™ (Coated Spherical Purified Graphite "CSPG”) material produced in a laboratory setting shows that it performs as well or better than benchmark commercially available natural flake and ~~technical reports~~synthetic materials. ULTRA-CSPG^TM is Westwater’s anode material which is utilized in lithium ion batteries, which are used in the fast-growing electric vehicle market.

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Sales and Marketing Executive

After a comprehensive search process that yielded many highly qualified candidates, Westwater hired Jay Wago as Vice President – Sales and Marketing on July 1, 2020. Mr. Wago is a proven sales leader, whose unique skills and experience will be instrumental in leading Westwater’s sales and marketing efforts for our battery graphite materials business. The addition of Mr. Wago will help position Westwater to scale its marketing efforts to generate greater awareness of our American-made battery graphite materials to end-users throughout the ~~western United States.~~world.

Graphite, Lithium, Uranium, and ~~Uranium~~Vanadium Listed as Critical Materials

A Presidential Executive Order on a Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals was issued on December 20, 2017, which we believe will ~~accelerate~~result in important energy related mineral development in the United States. In conjunction with Professional Paper 1802, published by the US Geological Service (“USGS”), where 23 minerals are identified as critical to the Country’s security and economy, WWR believes these actions are important steps in support of domestic minerals development. One of the important steps outlined in the Executive Order required a list of critical minerals to be provided by the US Secretary of the Interior. This list was subsequently provided and included all ~~three~~ of WWR’s contemplated portfolio products consisting of graphite, lithium and uranium. The discovery of vanadium on our Alabama property adds an additional element to Westwater’s portfolio of critical elements. Graphite and lithium, in particular, are critical to the development of batteries and other energy storage systems essential to the electric vehicle, solar and wind power ~~industries.~~industries, while vanadium is a lightweight metal used in the construction industry, in high strength steel alloys, and in large grid storage batteries.

~~Section 232 Investigation~~

Creation of The US Department of Commerce initiated a Section 232 investigation in July 2018 to determine whether the present quantity of uranium ore and product imports threaten to impair US national security. This trade investigation was initiated under section 232 of the Trade Expansion Act after two US uranium producers petitioned the Department of Commerce in January 2018, seeking an order that US nuclear utilities be required to purchase 25% of their uranium from US domestic production. US uranium production has declined significantly since 1987, with domestic uranium producers experiencing a major slowdown in operations and employment.

President’s Nuclear Fuels Working Group

On 12 July 1, 2019, President Trump announced the completion of the section 232 trade investigation. President Trump decided to take no trade action, which has allayed market uncertainty about whether a quota, tariff or other trade action would be imposed under the broad power delegated to the President under section 232. Instead, President Trump ordered a review of the domestic nuclear supply chain (uranium production, conversion, enrichment and fabrication) in the context of the 2017 White House initiative to revive, revitalize and expand the nuclear energy sector.

Although President Trump did not agree that uranium imports threaten to impair the national security of the United States, he acknowledged that the United States uranium industry faces significant challenges in producing uranium domestically and that this is an issue of national security. Accordingly, to address concerns regarding the production of domestic uranium and ensure a

comprehensive review of the domestic nuclear supply chain, the President directed that a Nuclear Fuel Working Group (“NFWG”) be established. The ~~Working Group will include~~NFWG includes the Secretary of State, Secretary of Energy and Secretary of Defense, among other key ~~officials, and will develop recommendations for reviving and expanding domestic nuclear fuel production (that is,~~officials.

On April 23, 2020, the U.S. Department of Energy (“DOE”) announced the NFWG’s strategy to revive the U.S. uranium ~~conversion, enrichment and fuel fabrication). Within 90 days the Working Group must submit~~industry in a report entitled “Strategy to Restore American Nuclear Energy Leadership.” The most important recommendations in the report for the uranium mining sector are:

●

U.S. purchases of 17-19 million pounds of U3O8 for a strategic uranium reserve, beginning in 2020 from domestic producers using a competitive bidding process.

●

DOE will end the uranium bartering program and reevaluate DOE’s Excess Uranium Inventory Management Policy.

●

Streamline regulatory reform and land access for uranium extraction.

●

Support Department of Commerce efforts to extend the Russian Suspension Agreement to protect against future uranium dumping in the U.S. market.

●

Enable the Nuclear Regulatory Commission to deny imports of nuclear fuel fabricated in Russia or China for national security purposes.

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●

Fund advanced water treatment technology for uranium mining and in-situ recovery.

●

Increase efficiencies in the export processes and the adoption of 123 Agreements to open new markets for exports of U.S. civil nuclear technology, materials and fuel.

Global Pandemic and our Actions to Ensure Safety

On March 11, 2020, the World 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 throughout the world. In the U.S., many state and local governments have, based on local conditions, either recommended or mandated actions to slow the transmission of COVID-19. These measures range from limitations on crowd size, together with closures of bars and dine-in restaurants, 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 COVID-19. Uncertainty with respect to the ~~President making recommendations~~economic effects of the pandemic has introduced significant volatility in the financial markets.

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

●

First, to ensure the health and safety of employees and the communities where they work.

●

Second, to work with business partners to maintain the advanced graphite product development schedule.

●

Third, to ensure adequate financial liquidity to support key operations and business activities.

Westwater’s corporate business activities are largely unaffected at this time. Even though Westwater closed offices, remote working arrangements were instituted to ~~further enable domestic nuclear fuel production.~~ensure that employees were able to work remotely using systems that already were in place. Westwater’s continued focus on the health 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 eliminated unnecessary travel, instituted health protocols for working together, and ensured that employees are permitted to take time off due to illness or the illness of those around them without penalty. As a result, our corporate business activities will continue on as before, without interruption.

~~RECENT DEVELOPMENTS~~In South Texas, due to tumultuous capital markets and uncertain economic conditions created by the pandemic, Westwater shut down restoration and reclamation operations and furloughed employees in March 2020. Westwater complied with stay at home orders issued by county and state jurisdictions. After consultation with the Texas Commission on Environmental Quality, Westwater maintained certain critical permit compliance activities with a limited workforce. Upon receipt of the PPP loan proceeds, Westwater reinstated employees and restarted restoration and reclamation activities on May 4, 2020.

~~Equity Financings~~To the extent that the COVID-19 pandemic continues or worsens, 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 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. Also, governments may impose other laws, regulations or taxes which could adversely impact Westwater’s business, financial condition or results of operations. The potential effects of COVID-19 could also impact Westwater in a number 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.

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Payroll Protection Loan

The Paycheck Protection Program (or “PPP”) was established under the congressionally-approved Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. ~~Stock~~On May 4, 2020, URI, Inc, a wholly owned subsidiary of Westwater, received loan proceeds in the amount of $0.3 million under the Paycheck Protection Program in accordance with the terms of a promissory note executed in favor of Celtic Bank Corporation, a Salt Lake City based SBA Preferred Lender. The loan and accrued interest are forgivable after eight weeks as long as the loan proceeds are used for eligible purposes, including payroll and benefits costs, rent and utilities. Any unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months and the first payment of principal and interest due on November 30, 2020.

Between February 14, 2020 and March 16, 2020, the Company’s share price decreased 63% due to turmoil in the equity capital markets from the COVID-19 pandemic discussed above. This significantly impacted the Company’s financing facilities because registered share capacity was exhausted faster than anticipated due to the significant decrease in share price. For instance, the number of registered shares approved by shareholders available under the Company’s 2019 Purchase Agreement with Lincoln Park ~~Capital Fund, LLC. (“Lincoln Park”)~~

~~On May 24,~~ 2019 ~~Westwater entered into~~was exhausted in April 2020 with $2.3 million of remaining usable capacity lost. As a ~~securities purchase agreement, as amended by Amendment No. 1 thereto dated as~~result of the severe downturn in the capital markets and uncertainty about when economic conditions would return to normal, the Company shut down its South Texas operations and implemented other cost reduction initiatives. When the CARES Act was passed and PPP loan eligibility rules were promulgated, the Company’s interpretation of the rules were that the loan proceeds could be used for payroll and benefits of URI’s furloughed employees which would allow restart of operations in South Texas. Accordingly, the Company used the proceeds for funding its payroll and benefits costs for its South Texas operations over a 10-week period during the months of May, ~~30, 2019 (as so amended,~~June and July, purposes consistent with the ~~“Purchase Agreement”), with Lincoln Park, pursuant to which~~PPP. While the Company ~~agreed to issue and sell to Lincoln Park, and Lincoln Park agreed to purchase from~~currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan, no assurance can be provided that the Company ~~(i) 104,294 shares~~will obtain forgiveness of the Company’s Common Stock, par value $0.001 per share (collectively, the “Common Shares”) and (ii) warrants (the “Warrants”) to initially purchase an aggregate of up to 182,515 shares of Common Stock (the “Warrant Shares”), at an exercise price of $5.062 per share, for an aggregate of $550,751. On May 30, 2019 (the “Closing Date”), the Company issued and sold the Common Shares and the Warrants to Lincoln Park and received aggregate gross proceeds before expenses of $550,751. The Warrants will become exercisable upon the six-month anniversary of the Closing Date and thereafter at any time during the five-year period following such date.Loan, in whole or in part.

Equity Financings

2020 Purchase Agreement (“~~PA”~~2020 Purchase Agreement”) with Lincoln Park

Capital Fund, LLC (“Lincoln Park”)

On ~~June 6, 2019,~~May 21, 2020, the Company entered into the PA2020 Purchase Agreement, as amended on May 29, 2020, with Lincoln Park to place up to ~~$10.0~~$12.0 million in the aggregate of the Company’s common stock on an ongoing basis when required by the Company over a term of 24 months. Westwater will control the timing and amount of any sales to Lincoln Park, and Lincoln Park is obligated to make purchases in accordance with the ~~PA.~~2020 Purchase Agreement. Any common stock that is sold to 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 PA2020 Purchase Agreement may be terminated by Westwater at any time, in its sole discretion, without any additional cost or penalty.

shareholder approval to sell up to 8.0 million shares of common stock under the 2020 Purchase Agreement at its Annual Shareholders Meeting conducted on April 28, 2020.

Lincoln Park has no right to require the Company to sell any shares of common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to certain conditions. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the PA2020 Purchase Agreement if it would result in Lincoln Park beneficially owning more than 9.99% of its common stock. ~~There are no upper limits~~As an initial purchase on ~~the price per share that~~May 21, 2020, Lincoln Park ~~must pay for~~ bought $250,000 worth of Common Stock of the Company at a price of $1.2989 per share. The Company issued 156,250

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shares of ~~common stock.~~Common Stock to Lincoln Park as consideration for its commitment to purchase shares of Common Stock under the 2020 Purchase Agreement.

~~Following effectiveness of an S-1~~Also, on May 21, 2020, the Company entered into a registration rights agreement with Lincoln Park pursuant to which the Company filed a registration statement on Form S-1 with the SEC, which was declared effective on June 26, 2020 relating to the resale of ~~the~~an initial tranche of 1,971,000 shares subject to the ~~PA on~~2020 Purchase Agreement. As of June ~~18, 2019,~~30, 2020, the Company ~~began selling shares of its common stock to Lincoln Park under the terms of the PA. During the quarter ended June 30, 2019, the Company~~has sold ~~60,000~~192,471 shares of common stock for ~~net~~gross proceeds of ~~$0.3~~$250,000 under the 2020 Purchase Agreement and through July 31, 2020, the Company has sold 1.1 million shares of common stock for gross proceeds of $2.3 million.

~~Vanadium Target Identification~~

In late November 2018, Westwater announced the discovery of significant levels of vanadium concentrations at several locales within the graphitic schists at the Company’s Coosa Project. Westwater subsequently commenced the first of a four-phase exploration program designed to determine the extent, character and quality of the vanadium mineralization at Coosa. As announced by the Company on February 19, 2019, the first phase demonstrated widespread positive values for vanadium that extended beyond the graphite resource defined in the 2015 Preliminary Economic Assessment for the Coosa Project.

~~Reclamation Success in Texas~~

Westwater has completed wellfield plugging at the Vasquez Project and the Texas Commission on Environmental Quality has approved this phase of reclamation. This paves the way for bond releases in 2019, including the release of a surety bond posted by

the Company in the amount of $208,657 as announced by the Company on March 4, 2019. Reclamation of the waste disposal well and its associated pond, as well as the remainder of the surface, is scheduled for completion in early 2020.

~~At the Rosita Project, also located in Texas, the wellfield Production Areas 1 & 2 are plugged, and surface reclamation in those areas is expected to be completed in 2019.~~

~~Royalty and Promissory Note Sale~~

On March 5, 2019, Westwater entered into an agreement to sell four royalties on uranium properties located in South Dakota, Wyoming and New Mexico and a promissory note due in 2020 to Uranium Royalty Corp. for $2.75 million, including $0.5 million paid at signing. On June 28, 2019, Westwater and URC entered into an amendment to the agreement. The amendment extended the date for closing under the agreement to August 30, 2019. In addition, URC delivered an additional $1,000,000 as deposit to the Company upon signing the amendment, increasing the total deposit to $1,500,000, which will be credited against the purchase price at the closing of the transaction. The transaction will close following satisfaction or waiver of the closing conditions, which conditions include, among other things, the execution of various assignment agreements.

Turkish Government Taking of Temrezli and Sefaatli Licenses and Westwater’s Arbitration Filing and Proceedings

~~In December 2018,~~On January 27, 2020, Westwater filed a ~~Request for Arbitration~~Claimant’s Memorial (the “Memorial”) in its arbitration proceeding against the Republic of Turkey (“Turkey”). The Memorial relates to Westwater’s request for ~~its~~arbitration submitted to the International Centre for the Settlement of Investment Disputes (“ICSID”) in December 2018 as a result of Turkey’s unlawful actions against ~~the Company’s~~Westwater’s investments ~~most notably,~~at the ~~June 2018 illegal taking of its~~ Temrezli and ~~Şefaatli~~Sefaatli uranium ~~projects. These~~ projects ~~were~~ owned by Westwater’s Turkish subsidiary Adur Madencilik Limited ~~Sirketi (“Adur”).~~Sirketi.

~~Since 2007, Adur has held~~The Memorial sets forth the ~~exclusive rights~~basis for Westwater’s claims under the exploration and development of uranium at Temrezli and Şefaatli, two sites located around 200 kilometers from Ankara, which include the largest and highest-grade deposits of uranium known to be in Turkey. To date, Adur and its shareholders have invested substantially in these two projects, using their technical expertise and carrying out extensive drilling, testing and studies to move the projects towards production. Having successfully completed the exploration stage in 2013-2014, Adur was granted a number of operating licenses by the Turkish government to develop the Temrezli mine. As a direct result of Adur’s efforts, Temrezli is the most advanced uranium project in Turkey. Experts have estimated that the mine will generate revenues of up to $644 million over its life, netting Westwater an estimated future return on its investment of $267 million as described in the Prefeasibility Study completed for the Temrezli project in 2015.

For many years, Adur and Westwater worked closely with the Turkish authorities and shared their technical expertise in uranium mining. However, Turkey’s most recent actions have undermined this longstanding relationship. In particular, in June 2018, the Turkish government cancelled all of Adur’s exploration and operating licenses with retroactive effect, rendering Westwater’s investment in Adur effectively worthless. While the Turkish authorities had variously issued, renewed and overseen these licenses for more than a decade, they now assert that these were issued by mistake and that the Turkish government has a governmental monopoly over all uranium mining activities in Turkey, in violation of Westwater’s rights under Turkish and international law. Westwater has reached out on numerous occasions to the Turkish government to resolve this dispute amicably, to reinstate the licenses and to remedy its unlawful actions, but to no avail.

As a result, on December 13, 2018 Westwater filed a Request for Arbitration against the Republic of Turkey before the International Center for the Settlement of Investment Disputes (“ICSID”) pursuant to the Treatytreaty between the United States ~~of America~~ and ~~the Republic of~~ Turkey concerning the ~~Reciprocal Encouragement~~reciprocal encouragement and ~~Protection~~protection of ~~Investments. The ICSID proceeding has begun,~~investments and ~~although there are no schedules yet~~international law generally, as well as the basis for ~~any arbitration milestones,~~ the ~~Company expects a schedule to be set before the end~~jurisdiction of the ~~year.~~tribunal constituted on May 1, 2019 following ICSID’s registration of Westwater’s request for arbitration. The Memorial also establishes the reparations owed by Turkey for breach of its international obligations towards Westwater, consisting of no less than $36.5 million, plus costs and post-award interest, as compensation for Westwater’s resulting loss of its investment. Accompanying the Memorial is an expert report regarding the reparations owed to Westwater. In determining the amount of Westwater’s loss, the expert report considered (i) the projected future cash flows from the expropriated projects, discounted to present value by a risk-adjusted discount rate, (ii) valuations from transactions for similar projects, and (iii) in the case of the Sefaatli project, the amounts invested in the project.

~~Compliance with Nasdaq Minimum Bid Requirement~~

On March 11, 2020, Turkey filed a request to bifurcate the arbitration proceeding, and on March 30, 2020, Westwater filed a response in opposition to Turkey’s request for bifurcation. On April 28, 2020, the arbitral tribunal denied Turkey’s bifurcation request. On May 13, 2018, the Nasdaq Stock Market notified Westwater that the Company did not meet Nasdaq’s $1.00 per share minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2) (the “Rule”) for continued listing on the Nasdaq Capital Market, and the Company was given an initial grace period of 180 days, or until September 10, 2018, to regain compliance2020, Turkey filed with the ~~Rule. Subsequently,~~arbitral tribunal a request, which Westwater elected not to oppose, to extend the date on ~~September 12, 2018,~~which their Counter-Memorial must be filed (and to change dates for subsequent pleadings as well as document production and witness identification deadlines), which the ~~Company was provided an additional 180-day compliance period, or until March 11, 2019, to regain compliance with the Rule.~~

On March 12, 2019, the Company received a letter from the Listing Qualifications Staff of Nasdaq notifying the Company that, based upon the Company’s continuing non-compliance with the Rule, the Staff had determined that the Company’s common stock would be delisted from Nasdaq unless the Company timely requests an appeal of such determination to a Nasdaq hearings panel. The Company appealed the Staff’s determination by requesting a hearing before a Nasdaq hearings panel, which hearing was heldtribunal approved on ~~May 2, 2019. On May 8, 2019, the Company received a written confirmation from the Nasdaq Office of General Counsel that the~~

Company had regained compliance with the Rule. The May 8, 2019 letter also confirmed that the Nasdaq hearings panel affirmed continued listing of the Company’s common stock on the Nasdaq Stock Market and has closed the compliance review.

~~Reverse Stock Split~~

On April 22, 2019, following the close of trading, Westwater effected a one-for-fifty reverse split of its common shares. The consolidated common shares began trading on a split-adjusted basis on April 23, 2019. On April 18, 2019, at the Annual Meeting of Stockholders, the Company received approval for a charter amendment permitting Westwater to effect a reverse split. The primary purpose of the reverse split was to bring Westwater into compliance with the Nasdaq’s $1.00 minimum bid price requirement to maintain Westwater’s stock listing on Nasdaq.

~~The reverse split reduced the number of Westwater’s outstanding common stock from 74,707,659 shares to 1,494,153 shares of common stock. No fractional shares were issued as~~June 3, 2020. As a result of these decisions by the ~~reverse stock split. Any fractional shares that would have resulted were settled~~tribunal, Turkey must file its Counter-Memorial on or before September 14, 2020, and the hearing on the substantive issues and damages is scheduled for September 13-17, 2021. Overall, the filing on May 13, 2020 had no effect on the timing of the hearing in ~~cash. All share data herein has been retroactively adjusted for~~2021.

Additional information regarding the ~~reverse stock split.~~

ICSID arbitration proceeding is presented in Part II, Item 1 below.

RESULTS OF OPERATIONS

Summary

Our consolidated net loss for the three months ended June 30, ~~2019~~2020 was ~~$2.8~~$2.5 million, or ~~$1.79~~$0.43 per share, as compared with a consolidated net loss of ~~$20.5~~$2.8 million, or ~~$25.63~~$1.81 per share for the same period in ~~2018. For the three months ended June 30, 2018, the $17.7~~2019. The $0.3 million decrease in our consolidated net loss from the respective prior period was ~~primarily~~ the result of a decrease in mineral property expenses in the ~~June 2018 impairment charge for~~current year in an effort to conserve cash during the ~~Temrezli~~economic uncertainties arising from the COVID-19 pandemic and ~~Sefaatli uranium mineral interests.~~

a decrease in arbitration costs due to minimal scheduled proceedings during the current quarter.

Our consolidated net loss for the six months ended June 30, ~~2019~~2020 was ~~$5.9~~$5.8 million, or ~~$3.93~~$1.18 per share, as compared with a consolidated net loss of ~~$23.9~~$5.9 million, or ~~$35.14~~$3.95 per share for the same period in ~~2018. For the six months ended June 30, 2019, the $17.9~~2019. The $0.1 million decrease in our consolidated net loss from the respective prior period ~~once again~~ was ~~primarily~~partially the result of a $0.7 million loss on the ~~June 2018 impairment charge~~sale of securities comprised of Laramide shares and warrants in the first half of 2019 offset by interest income from the Laramide promissory note. No such losses or interest income was recorded for the ~~Temrezli and Sefaatli uranium mineral interests.~~same period in 2020.

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Mineral Property Expenses

The following table details our mineral property expenses for the three and six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:


	For the Three months Ended				For the Six months ended
	June 30,				June 30,
��	2020		2019		2020		2019

	(thousands of dollars)
Restoration/Recovery expenses
Kingsville Dome project	$	1	$	—	$	2	$	—
Rosita project		1		11		1		(8)
Vasquez project		5		40		5		77
Total restoration/recovery expenses		7		51		8		69

Standby care and maintenance expenses
Kingsville Dome project		162		133		334		286
Rosita project		116		84		203		201
Vasquez project		99		69		182		143
Total standby care and maintenance expenses		377		286		719		630

Exploration and evaluation costs		—		(4)		—		60

Land maintenance and holding costs		192		475		451		667

Total mineral property expenses	$	576	$	808	$	1,178	$	1,426

For the Three months Ended
June 30,

For the Six months Ended
June 30,

2019

2018

2019

2018

(thousands of dollars)

Restoration/Recovery expenses

Rosita Project

$
11

$
67

$
(7
)
$
167

Vasquez Project

40

17

77

101

Total restoration/recovery expenses

51

84

70

268

Standby care and maintenance expenses

Kingsville Dome Project

133

156

286

314

Rosita Project

84

86

201

178

Vasquez Project

69

64

142

138

Temrezli Project

—

17

—

96

Total standby care and maintenance expenses

286

323

629

726

Exploration and evaluation costs

12

11

92

21

Land maintenance and holding costs

475

551

667

736

Total mineral property expenses

$
824

$
969

$
1,458

$
1,751

For the three and six months ended June 30, ~~2019,~~2020, mineral property expenses decreased by ~~$0.1 million and $0.3~~$0.2 million from the corresponding periods during ~~2018. For both of the comparative periods, the~~2019. The decreases were primarily due to ~~a reduction in reclamation activities at~~ the ~~Vasquez and Rosita Projects due to adverse weather conditions in 2019, a reduction in operating activities at the Temrezli Project due to the revocation~~timing of the ~~mining licenses by~~annual lease rental for a uranium property in New Mexico. The full amount of lease rental is normally paid during the ~~government~~second quarter of ~~Turkey in June 2018 and by a decrease in land holding costs resulting from reduced lease rentals~~the year but for the ~~Cebolleta mineral lease~~current year the leaseholder agreed to payments in ~~New Mexico.~~seven monthly installments from May to November. At June 30, 2020 five monthly payments remained.

General and Administrative Expenses

Significant expenditures for general and administrative expenses for the three and six months ended June 30, 2020 and 2019 were:


	For the Three months ended				For the Six months ended
	June 30,				June 30,
	2020		2019		2020		2019

	(thousands of dollars)

Stock compensation expense	$	28	$	8	$	28	$	15
Salaries and payroll burden		766		725		1,533		1,410
Legal, accounting, and public company expenses		470		761		1,123		1,482
Insurance and bank fees		167		109		334		235
Consulting and professional services		74		43		104		56
Office expenses		110		58		201		162
Sales and marketing		41		(7)		99		11
Other expenses		3		3		16		34
Total	$	1,659	$	1,700	$	3,438	$	3,405

General and ~~2018 were:~~

For the Three months ended June 30,

For the Six months ended June 30,

2019

2018

2019

2018

(thousands of dollars)

Stock compensation expense

$
8

$
82

$
15

$
162

Salaries and payroll burden

725

646

1,410

1,375

Legal, accounting, public company expenses

1,115

722

1,960

1,399

Insurance and bank fees

109

136

234

277

Consulting and professional services

36

300

75

315

Office expenses

58

114

162

237

Other expenses

3

54

34

94

Total

$
2,054

$
2,054

$
3,890

$
3,859

~~For~~administrative expenses for the three and six months ended June 30, 2020 and 2019 ~~general~~remained relatively constant at $1.7 million and ~~administrative charges increased only slightly as compared~~$3.4 million respectively.

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Arbitration Costs

The majority of costs associated with the corresponding periods in 2018. For both of the comparative periods, 2019 increases in legal, accounting and public company expenses were due to financing activities, Nasdaq compliance activities, shareholder meeting costs and legal and ICSID fees related toRequest for Arbitration against the Republic of Turkey in 2020 occurred in the first quarter and slowed significantly in the second quarter resulting in a $0.3 million decrease for the three months ended June 30, 2020 compared with the same period in 2019. During the six months ended June 30, 2020, the Company incurred arbitration ~~proceeding, which were offset by decreases~~related legal and expert consulting costs of $0.7 million, a $0.2 million increase over the $0.5 million of costs incurred during the same period in ~~stock compensation expense, office expenses and consulting expenses.~~2019. The ~~higher consulting expenses in 2018 were primarily related~~increase was due to the ~~Alabama Graphite acquisition.~~significant activity in January 2020 leading up to and following the filing of the Company’s Memorial with ICSID on January 27, 2020. For further reference, see discussion in the Recent Developments section of this Part I and below at Part II, Item 1.

Other Income and Expenses

For the three months ended June 30, ~~2019,~~2020, the $0.1 million decrease in other income compared to the three months ended June 30, ~~2018~~2019 was primarily due to ~~proceeds received~~interest income from ~~sale of scrap metal~~the Laramide promissory note recorded in ~~the 2018 period, while there were no sales of scrap metal in the 2019 period.~~

2019.

For the six months ended June 30, ~~2019,~~2020, the ~~$0.8~~$0.4 million ~~decrease~~increase in other income compared to the six months ended June 30, ~~2018~~2019 was primarily due to ~~proceeds received from~~the $0.7 million loss on the sale of ~~scrap metal~~securities comprised of Laramide shares and warrants in the ~~2018~~first half of 2019 offset by interest income from the Laramide promissory note. No such losses or interest income was recorded over the same period ~~of $0.1 million, while there were no sales of scrap metal~~ in the 2019 period, plus during the 2019 period the Company sold the third tranche of 2,483,034 Laramide common shares along with 2,218,333 Laramide warrants resulting in net proceeds of $0.5 million and a net loss on sale of marketable securities of $0.7 million.

2020.

FINANCIAL POSITION

Operating Activities

Net cash used in operating activities was ~~$4.3~~$6.0 million for the six months ended June 30, ~~2019,~~2020, as compared with ~~$6.1~~$4.3 million for the same period in ~~2018.~~2019. The ~~$1.8~~$1.7 million ~~decrease~~increase in cash used was primarily due to an increase in ~~cash from working capital items, primarily an increase of $1.6 million~~prepaid assets and a decrease in accounts payable and accrued ~~liabilities.~~liabilities in 2020.

Investing Activities

Net cash ~~provided by~~used for investing activities ~~was $2.8 million~~ for the six months ended June 30, ~~2019,~~2020 was $0.1 million for the purchase of equipment, as compared with ~~$26,000~~$2.8 million of cash provided by investing activities for the six months ended June 30, ~~2018.~~2019. For the 2019 period, the Company received note payments on the Laramide note in the amount of $0.8 million in cash. Additionally, the Company received net proceeds of $0.5 million from the sale of Laramide securities and $1.5 million from URC as a deposit in accordance with the terms of the Asset Purchase Agreement signed on March 5, 2019. For the 2018 period, the Company received a note payment on the Laramide note in the amount of $1.1 million in cash. Additionally, the Company received net proceeds of $0.5 million from the sale of Laramide securities. These increases were partially offset by cash usedSee Note 4 to our unaudited Condensed Consolidated Financial Statements included herewith for ~~note advances to Alabama Graphite of $1.5 million.~~more information.

Financing Activities

Net cash provided by financing activities was ~~$1.2~~$6.6 million for the six months ended June 30, ~~2019~~2020, resulting primarily from the proceeds of sales of common stock through the Company’s ~~Cantor~~ ATM Offering ~~agreement, to~~Agreement and the Lincoln Park ~~pursuant to the Stock~~2019 Purchase Agreement and 2020 Purchase Agreement. Additionally, $0.3 million was received from the PPP loan in May 2020. Net cash provided by financing activities for the same period in 2019 was $1.1 million. The $5.5 million increase was due to better financing capacity under the Company’s financing agreements with Cantor and Lincoln Park ~~under~~in the ~~Purchase Agreement.~~

~~For the~~first six months ~~ended June 30, 2018~~of 2020 compared to the Company received net cash proceeds of $1.3 million, $2.9 million and $0.5 million from the sale of common stock sold through the Company’s Common Stock Purchase Agreement with Aspire Capital, LLC (“Aspire”), a registered direct offering to Aspire and the Cantor ATM Offering agreement, respectively.

same period in 2019.

LIQUIDITY AND CAPITAL RESOURCES

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The Company’s current business plan requires working capital to fund non-discretionary expenditures for uranium reclamation activities, mineral property holding costs, ~~business~~early stage graphite battery-material product development costs and administrative costs. The Company intends to pursue project financing to support execution of the graphite business plan, including discretionary capital expenditures associated with ongoing graphite battery-material product development costs, construction of pilot plant facilities and construction of commercial production facilities. The Company’s current lithium business plan will be funded by working capital; however, the Company is pursuing project financing including possible joint venture partners to fund discretionary greenfield exploration activities.

· Payment due August 30, 2019 or earlier in the amount of $1.25 million from sale of uranium royalty interests and the Laramide Resources Ltd. promissory note (Note 4) to Uranium Royalty Corp. (Note 5).

· The Stock Purchase Agreement with Lincoln Park Capital, LLC, whereby the Company may place up to $10.0 million in the aggregate of the Company’s common stock on an ongoing basis when required by the Company over a term of 24-months ending in June 2021.

· ~~Other debt and equity financings and asset sales.~~

●

The Purchase Agreement with Lincoln Park Capital, LLC (“Lincoln Park”) dated as of May 21, 2020 and as amended on May 29, 2020 (the “2020 Purchase Agreement”), the issuance of shares pursuant to which was approved by the Company’s shareholders at the annual shareholders meeting on April 28, 2020. Pursuant to the 2020 Purchase Agreement, the Company may place up to $12.0 million in the aggregate of the Company's common stock on an ongoing basis when required by the Company over a term of 24-months ending in May 2022. As of July 31, 2020, the Company has 722,279 registered shares for resale by Lincoln Park on a current Form S-1 and $9.7 million remaining sales capacity under the 2020 Purchase Agreement, subject to periodic registration of shares on Form S-1.

●

Other possible debt and equity financings and asset sales.

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

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drilling or production from the Company’s properties, 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 availability of capital to WWR;~~

· ~~the spot price and long-term contract price of graphite, vanadium, lithium and uranium;~~

· ~~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;~~

· ~~operating conditions at our mining projects;~~

· ~~the world-wide supply and demand of graphite, vanadium, lithium and uranium;~~

· ~~weather conditions;~~

· ~~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 result;~~

· ~~any graphite, vanadium, lithium or uranium discoveries not being in high enough concentration to make it economic to extract the metals;~~

· ~~currently pending or new litigation or arbitration; and~~

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

●

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

●

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

●

the Company’s ability to raise capital in the future;

●

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

●

risks associated with our operations and the operations of our partners, including the impact of COVID-19;

●

our expectations regarding the use of funds from the Company’s PPP Loan and the potential for loan forgiveness under the terms of the PPP Loan;

●

operating conditions at our projects;

●

the world-wide supply and demand of graphite, vanadium, lithium and uranium;

●

weather conditions;

●

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, vanadium, lithium or uranium discoveries not being in high enough concentration to make it economic to extract the metals;

●

currently pending or new litigation or arbitration;

●

our ability to continue to satisfy the listing requirements of the Nasdaq Capital Market;

●

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

as well as other factors described elsewhere in this Quarterly Report on Form 10-Q, our ~~2018~~2019 Annual Report on Form 10-K 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.

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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 June 30, ~~2019.~~2020.

Changes in Internal Controls

There were no changes in our internal control over financial reporting during the quarter ended June 30, ~~2019~~2020 that materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding reportable legal proceedings is contained in Part I, Item 3, “Legal Proceedings,” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. There have been no material changes to the legal proceedings previously disclosed in the Annual Report on Form 10-K, other than as set forth below.

~~Arbitration Against Turkey~~

On December 13, 2018, Westwater filed a Request for Arbitration against the Republic of Turkey before the International Centre for the Settlement of Investment Disputes (“ICSID”), pursuant to the Treaty between the United States of America and the Republic of Turkey concerning the Reciprocal Encouragement and Protection of Investments. The Request for Arbitration was filed as a result of the Republic of Turkey’s unlawful actions against the Company’s ~~investments at~~licenses for the Temrezli and Sefaatli uranium projects owned by Westwater’s Turkish subsidiary Adur Madencilik Limited Sirketi (“Adur”). Specifically, in June 2018, the Turkish government cancelled all of Adur’s exploration and operating licenses with retroactive effect, rendering Westwater’s investment in Adur effectively worthless. While the Turkish authorities had variously issued, renewed and overseen these licenses for more than a decade, in June 2018 they ~~now assert~~asserted that ~~these~~those licenses were issued by mistake and that the Turkish government has a governmental monopoly over all uranium mining activities in Turkey, in violation of Westwater’s rights under both Turkish and international law. Westwater ~~has~~ reached out on numerous occasions to the Turkish government to resolve this dispute amicably, to reinstate the licenses and to remedy ~~its~~Turkey’s unlawful actions, but to no avail.

As a result, on December 13, 2018, Westwater filed before ICSID its arbitration request against the Republic of Turkey. On December 21, 2018, ICSID registered Westwater’s Request for Arbitration. On May 1, 2019, the three-member ICSID ~~panel~~Panel for the arbitration was ~~established. The~~established – one of the panel members was selected by Westwater, another was selected by Turkey, and the third panel member (serving as the Chair) was selected by the two party-appointed arbitrators. On September 9, 2019, the ICSID Panel issued Procedural Order #1, which places the locale for the proceeding in Washington, DC, and sets numerous dates for both parties ~~are working~~to make various filings.

On January 27, 2020, Westwater filed its Memorial, which is a document that sets out Westwater’s case. On March 11, 2020, Turkey filed a request to bifurcate the arbitration proceeding, and on March 30, 2020, Westwater filed a response in opposition to Turkey's request for bifurcation. In Procedural Order #2 issued on April 28, 2020, the arbitral tribunal denied Turkey’s bifurcation request. On May 13, 2020, Turkey filed with the ~~panel~~arbitral tribunal a request which Westwater elected not to ~~put into place~~oppose, to extend the date on which their Counter-Memorial must be filed (and to change dates for subsequent pleadings as well as document production and witness identification deadlines), which the arbitral tribunal approved on June 3, 2020. As a ~~procedural order that will govern~~result of these decisions by the ~~process, procedure~~tribunal, Turkey must file its Counter-Memorial on or before September 14, 2020, and ~~schedule~~the hearing on the substantive issues and damages is scheduled for ~~the arbitration. It is anticipated that the procedural order will be finalized in~~ September ~~2019, and thereafter the arbitration will proceed in accordance with that order.~~13-17, 2021.

ITEM 1A. RISK FACTORS.

There 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, 2019, as updated by the risk factor set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2019~~2020, each of which ~~are~~is incorporated herein by reference.

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

None

~~None.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

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~~None~~

ITEM 6. EXHIBITS.


Exhibit Number		Description

~~3.1~~		~~Restated Certificate of Incorporation of the Company, as amended through April 22, 2019.~~

~~4.1~~		Warrant to Purchase Common Stock issued to Lincoln Park Capital Fund, LLC, dated May 30, 2019 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 31, 2019).

10.1		~~Securities~~ Purchase Agreement, dated May ~~24, 2019,~~21, 2020, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May ~~31, 2019)~~22, 2020).

10.2		~~Amendment No. 1 to Securities Purchase~~Registration Rights Agreement, dated May ~~30, 2019,~~21, 2020, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May ~~31, 2019)~~22, 2020).

10.3		~~Registration Rights~~Amendment No. 1 to Purchase Agreement, dated May ~~24, 2019, between the Company~~29, 2020, by and ~~Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 31, 2019).~~

~~10.4~~		~~Purchase Agreement, dated June 6, 2019,~~ between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June ~~11, 2019)~~1, 2020).

~~10.5~~		Registration Rights Agreement, dated June 6, 2019, between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 11, 2019).

~~10.6~~		~~Amendment No. 1 to Asset Purchase Agreement, dated June 28, 2019, among the Company, Uranium Royalty (USA) Corp., and Uranium Royalty Corp.~~

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:		XBRL Instance Document

101.SCH:		XBRL Taxonomy Extension Schema Document

101.CAL:		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF:		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB:		XBRL Taxonomy Extension Label Linkbase Document

101.PRE:		XBRL Taxonomy Extension Presentation Linkbase Document

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: August ~~7, 2019~~5, 2020	By:	/s/ Christopher M. Jones
		Christopher M. Jones
		President and Chief Executive Officer (Principal Executive Officer)

Dated: August ~~7, 2019~~5, 2020	By:	/s/ Jeffrey L. Vigil
		Jeffrey L. Vigil
		Vice President - Finance and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

3134

		Six Months Ended June 30,
	Notes	2019			2018
Operating Activities:
Net loss		$	(5,949	)	$	(23,876	)

Reconciliation of net loss to cash used in operations:
Non-cash lease expense		7			—
Accretion of asset retirement obligations	9	156			268
Amortization of notes receivable discount	4	(299		)	(337		)
Loss on sale of marketable securities		720			93
Costs incurred for restoration and reclamation activities	9	(333		)	(355		)
Depreciation and amortization		48			67
Stock compensation expense		15			162
Common stock issued for purchase of lithium mineral interests		—			114
Common stock issued for consulting services		—			95
Other income		—			5
Impairment of uranium properties		—			17,968
Effect of changes in operating working capital items:
Decrease in prepaids and other		234			196
Increase (decrease) in payables and deferred credits		1,077			(490		)
Net Cash Used In Operating Activities		(4,324		)	(6,090		)

Cash Flows From Investing Activities:
Deposit for sale of assets	5	1,500			—
Proceeds from the sale of marketable securities, net	4	536			476
Proceeds from disposal of property, plant and equipment		—			8
Proceeds from note receivable	4	750			1,089
Note advances for Alabama Graphite corporate merger	3	—			(1,547		)
Net Cash Provided By Investing Activities		2,786			26

Cash Flows From Financing Activities:
Issuance of common stock, net	10	1,154			4,730
Payment of minimum withholding taxes on net share settlements of equity awards		(1		)	(5		)
Net Cash Provided By Financing Activities		1,153			4,725

Net decrease in cash, cash equivalents and restricted cash		(385		)	(1,339		)
Cash, cash equivalents and restricted cash, beginning of period		5,309			7,722
Cash, Cash Equivalents and Restricted Cash, End of Period		$	4,924		$	6,383
Cash paid during the period for:
Interest		$	1		$	3
Supplemental Non-Cash Information for Investing and Financing Activities:
Securities received for payment of notes receivable - Laramide		$	750		$	750
Common stock issued for acquisition of Alabama Graphite		—			6,394
Stock options and warrants issued for acquisition of Alabama Graphite		—			89
Common stock issued for consulting services		—			95
Common stock issued for purchase of lithium mineral interests		—			114

Total Non-Cash Investing and Financing Activities for the Period		$	750		$	7,442

Consideration:
Cash	$	2,397
Issuance of 232,504 common shares for replacement of Alabama Graphite shares	6,394
Issuance of 7,280 options for replacement of Alabama Graphite options	35
Issuance of 42,888 warrants for replacement of Alabama Graphite warrants	54
	$	8,880

The fair value of the consideration given was allocated as follows:
Assets:
Cash and cash equivalents	$	17
Short-term receivables	113
Prepaid expenses	42
Property, plant, equipment and graphite mineral interests	8,973
Total assets	9,145
Liabilities:
Accounts payable and accrued liabilities	265
Total liabilities	265
Net assets	$	8,880

	June 30, 2019
(thousands of dollars)	Note Amount		Plus Accrued Interest		Less Unamortized Note Discount			Note Balance per Balance Sheet
Current Assets
Notes receivable Laramide — current	$	2,000	$	26	$	(259	)	$	1,767
Total Notes Receivable — current and non-current	$	2,000	$	26	$	(259	)	$	1,767

	June 30
(thousands of dollars)	2019
Operating lease cost	$	81

(thousands of dollars, except lease term and discount rate)	June 30, 2019
Operating Leases
Operating lease right-of-use assets	$	541

Current portion of lease liabilities	$		151
Operating lease liabilities — long term portion	396
Total operating lease liabilities	$	547

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		~~June 30,~~
		~~2019~~

~~Weighted Average Remaining Lease Term~~	~~Operating leases~~	~~4.2 Years~~

~~Discount Rate~~	~~Operating leases~~	~~9.5%~~

Lease payments by year (In thousands)		Operating Leases

	2019	$		79
	2020	159
	2021	161
	2022	162
	2023	94
	Total lease payments	655
	Less imputed interest	(108			)
	Total	$	547

	Six months Ended June 30, 2018
(thousands of dollars)	Corporate			Uranium			Lithium			Graphite			Total
Statement of Operations
Mineral property expenses	$	—		$	1,604		$	138		$	9		$	1,751
General and administrative	2,717			905			—			237			3,859
Acquisition related expenses	333			—			—			—			333
Accretion of asset retirement costs	—			268			—			—			268
Impairment of uranium properties	—			17,968			—			—			17,968
Depreciation and amortization	2			64			—			1			67
	3,052			20,809			138			247			24,246
Loss from operations	(3,052		)	(20,809		)	(138		)	(247		)	(24,246		)
Other income	253			117			—			—			370
Loss before taxes	$	(2,799	)	$	(20,692	)	$	(138	)	$	(247	)	$	(23,876	)

Six months

Six months

June 30,

June 30,

(thousands of dollars)

Operating lease cost