Westwater Resources, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Westwater Resources Incorporated third quarter 2022 results and business update conference call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Chad Potter, President and CEO. Please go ahead, sir.

Thank you, moderator, and thank you for all attending our third quarter 2022 results call. With me today is Terrence Kryan, our Executive Chairman of the Board, and Steve Cates, our Chief Financial Officer. Slide two. During this presentation, the forward-looking statements we will be making are based upon management's judgment, including but not limited to future graphite demand and price forecasts, cost and schedule projections related to the Kellington Graphite Plant and the Coosa Graphite Deposit, and capital raising activities. These and other similar statements are subject to certain risks and uncertainties, which a description can be found on slide two within this presentation. and in our 10-K for 2021 and other SEC filings. Please read our cautionary statement and realize that actual results may differ materially from what may be discussed with you today. On to slide three. Westwater is an energy technology company focused on producing advanced natural graphite materials in the United States using our proprietary technology, including our patent-pending purification process. We are currently constructing phase one of our skeleton graphite processing plant, which has a projected total cost of $202 million. Samples continue to be produced and have been sent to 27 potential customers for evaluation. We have executed four LOIs to date, and we are actively working to put more LOIs in place before operations begin. We also hold mineral rights to approximately 42,000 acres across the Alabama Graphite Belt, which we call our acoustic graphite deposit. Slide four. Today, we are reaffirming our value proposition as a domestic source of battery grade natural graphite materials. In addition, we continue our ESG focus, including environmental stewardship and our business plan that includes the potential for future expansion of our graphite business. On to slide five. Industry experts believe that the battery markets and the demand for graphite will experience significant growth for their foreseeable future. We believe that the advanced graphite materials produced at the Kellington Graphite Plant will support the energy transition to electric vehicles, and there are a number of other tailwinds present in the graphite market. As many industry experts have pointed out, graphite is the number one material by weight in lithium-ion battery, and the U.S. is currently dependent on foreign imports of this critical mineral. The Global Battery and Energy Storage Business News Channel recently reported that automakers plan to increase spending on electric vehicles to $1.2 trillion by 2030, including for batteries and related raw materials. In August, the U.S. government passed the Inflation Reduction Act, or IRA. This is an important piece of legislation for the battery materials industry in the US because it includes a domestic content threshold. Related to battery materials for EV batteries, that must be met for buyers of electric vehicles to take advantage of the Clean Vehicle Tax Credit. Governments around the world have passed legislation regulating the transition from the internal combustion engine to electric vehicles, which should result in an even further increase in demand. Therefore, we believe the supply shortage projections for graphite that have already been identified by many third-party resources, such as benchmark minerals, hold firm. Given these tailwinds, we remain firm in our belief in the fundamentals that underlie our business plan. Slide 6 depicts the importance of graphite in the lithium-ion battery as it accounts for approximately 50% of the critical minerals by weight. A typical electric vehicle has around 175 to 210 pounds of anoid graphite. It's worth noting that lithium makes up less than 10% of a lithium ion battery. Perhaps it would be better to refer to the lithium ion battery as a graphite nickel battery. Moving to slide seven, we took a different approach than other companies with mineral deposits by developing our graphite processing plant first and planning our KUSA deposit second. And we believe there are a number of strategic advantages to this approach. First, it lowers the capital cost and gets us to revenue and positive cash flow sooner. Second, this approach, along with securing our supply of natural graphite flake from a non-Chinese source, will allow us to take near-term advantage of the growing market for batteries and electric vehicles. Lastly, the approach de-risks the permitting process in preparation of the KUSA deposit being brought online in 2028. On to slide eight. Here we see the value created in processing natural graphite concentrate into an active anode material for batteries, or CSPG. The conversion of graphite slate concentrate into CSPG results in a value multiplier of approximately nine times. This is an additional reason we chose to put the processing plant ahead of the deposit. Namely, we're able to source graphite concentrate feedstock from a non-Chinese source until KUSA deposit is developed, and we can take advantage quicker of the value created in this producing CSBG at the Kellington graphite plant. Turning to slide nine. Given the tailwinds already mentioned and the strong fundamentals in the battery materials market, Demand for the natural battery grade graphite is projected to increase significantly, resulting in supply shortage for the foreseeable future. We believe putting the Kellyton graphite plant first allows us to develop relationships with potential customers, take near term advantage of value created when producing CSPG from the Kellyton plant, and process or flake graphite from the KUSA deposit in a higher price environment due to the forecasted supply shortage. Slide 10. As mentioned, graphite has been designated a critical mineral by the U.S. government. Along with the domestic requirement already mentioned, the Inflation Reduction Act passed in the third quarter provided a 10% refundable tax credit on the cost to produce battery minerals, and the IRA removed the limit of electric vehicles that an auto manufacturer can sell before the clean vehicle credit is phased out or eliminated. Based on our discussions, our potential customers are aware of this legislation. As a result, the interest of our potential customers remains strong and has intensified since the passing of this legislation. We believe the domestic requirement, including the significant piece of legislation, will provide a future competitive advantage to Westwater and a domestic producer of CSPG. On to slide 11. Since the beginning of the construction of our Kelton Graphite project in late 2021, we've had no recordable safety incidents by our contractors or Westwater teammates. This is a significant accomplishment, and I would like to thank all of our teammates and contractors that continue keeping safety their number one priority. There's nothing more important than the core value of safety, safety of our teammates, the contractors that work on site with us, and the protection of the environment where we live and operate. Furthering our commitment to safety, in October, we hosted a tour of our Kellington graphite site for over 100 first responders and local officials. We look forward to continuing to engage with our local community. During the quarter, we completed earthwork and site grading for 132,000 cubic yards of soil moved. We began pouring foundation, and as of today, we are substantially complete with three out of five building foundations. which will total over 86,000 square feet when completed. We are also nearing completion of our underground utilities. Pre-fabrication of our buildings progressed during the quarter, and in October, we began erecting one of our primary buildings. Additionally, our technical teammates visited multiple vendors in Europe that are manufacturing our long lead time equipment prior to shipments, and we began receiving some of those equipment. We continue to make strong construction progress amidst supply chain challenges and expect to begin testing and commissioning mid-year of 2023 and expect commissioning into the second half of 2023. We will look to provide a more definitive update related to the testing, commission, and operational startup of the Kellington Graphite Plant as we work through the construction next year. Regarding our Coosa Graphite deposit on slide 12, In April 2022, we completed our exploration drilling program and therefore began preparing a resource model and technical report, which is nearing completion. We expect to provide an update on the resource at the KUSA deposit by the end of the year once the resource model and technical report is finalized. I'm extremely proud of the Westwater team and their hard work and the significant progress we've made. We look forward to future contributions to advance our graphite business. Now I'd like to turn it over to our Chief Financial Officer, Mr. Steve Cates. Thank you, Chad.

And good morning, everyone. Slide 13. Westwater finished the third quarter with a cash balance of $100 million and no debt. Our strong financial position has allowed us to continue to advance our graphite business, including the construction of Phase 1 of the Kelleyton Graphite Processing Plant. Since beginning construction of Phase 1, we have incurred over $50 million of the estimated cost of $202 million. Management continues to aggressively seek out additional sources of capital funding. As stated previously, we have not and are not currently limiting the form or source of potential funding for Phase 1. We continue to focus on executing our business plan, and management is currently having discussions with a number of third parties under NDAs related to financing. While the equity and debt markets continue to experience volatility in an environment marked by rising interest rates and high inflation, we continue to diligently work to close the funding gap for the construction of phase one of the Kellyton plan. Market uncertainty and tightening in the capital markets has impacted our target of raising additional capital by year end. However, we are still working towards securing that funding within the next few months. Westwater's cash position and no debt provides us the flexibility to diligently evaluate potential funding opportunities, focusing on securing the lowest cost of capital. Turning to the financial summary on slide 14. Detailed discussion of these items is included in our Form 10-Q filed yesterday, as well as our third quarter press release. However, I want to point out a couple of items on this slide. net cash used in all operating activities was approximately $8.6 million for the first nine months of 2022, as compared with $13 million for the same period in 2021. The approximate $4.5 million decrease in cash used for operations was primarily due to reduced product development expenses and the absence of any costs related to our arbitration against the Republic of Turkey. Second, The cash used in investing activities for the first nine months of 2022, totaling $32 million, was related to the ongoing construction of phase one of the Kelleyton graphite processing plant. Third, product development costs decreased $1.6 million during the third quarter compared to the same quarter in 2021. Last year, we had incurred costs to complete our definitive feasibility study for phase one and our pilot program. As mentioned earlier on the call, We continue to provide samples of our battery-grade products for shipment to and evaluation by potential customers. Fourth, net loss for the third quarter of 2022 was 3.5 million, or 7 cents per share, compared to a net loss of 4.6 million, or 13 cents per share, for the third quarter of 2021. The 1.1 million reduction in net loss was due primarily to lower product development costs and lower arbitration costs. These decreases were partially offset by higher G&A expenses as we continue to build out our team and the absence of the unrealized gain recorded in the third quarter of 2021 related to equity securities held by Westwater that we received in 2020 with the final sale of our former uranium business. We subsequently sold those securities for cash proceeds in the fourth quarter of 2021. With that, I'll turn it back to you, Chad.