Westwater Resources, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Westwater Resources, Inc. First Quarter 2023 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'll be an opportunity to ask questions. To join the question queue, you may press star then 1 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 Frank Bakker, President and CEO. Please go ahead.

Thank you, Mother Reza, and thanks to those attending our first quarter 2023 business update and results call. With me today is Terence Kryan, our Executive Chairman of the Board, and Steve Gates, our Chief Financial Officer. During this presentation, the forward-looking statements we make are based on management's judgment, including, but not limited to, future graphite demand and price forecasts, scheduling cost projections, and economic expectations related to the Calentum Graphite Plant, the Guza graphite deposit, and capital raising activities, including the estimated timing of those activities. These and other similar statements are subject to certain risks, and uncertainties of which a description can be found on slide two within this presentation and in our 10-K for 2022 and our other SEC filings. Please read our cautionary statement and realize that actual results may differ materially from what is discussed today. Slide three. We remain focused on becoming the first U.S.-based vertically integrated anode graphite supplier. Also, we continue to believe that the location of our Calentan plant in East Central Alabama places our operations in the heart of the growing US EV battery market. When completed, the Calentan graphite processing plant will provide anode material necessary to support the energy transition. Recently, the EPA announced new emission targets, which is expected to increase critical material demand for electric vehicles by 78% over the next nine years, according to the benchmark mineral intelligence. As we have mentioned previously, graphite is considered a critical mineral by the US government. And when produced in the US, it helps battery and EV manufacturers meet the domestic content requirements contained in the Inflation Reduction Act. The IRA has been an important catalyst to our engagement with potential customers because of this domestic content requirement. Slide 4. Last week we announced a joint development agreement with SK Yon, which was the follow on announcement we referred to during our 2020 year end update call. SK Yon is a Tier 1 global battery manufacturer that currently operates two EV battery plants in Georgia and is building three additional EV battery plants in the US. under its Blue Oval joint venture with Ford. Additionally, Esquion has announced plans to build a $5 billion EV battery manufacturing facility in Georgia with Hyundai. We are extremely excited to work with a significant Tier 1 battery manufacturer like Esquion. Under the JDA, we will work with Esquion, and work has already begun to ensure that the CSBG produced at our Kellington plant will be used as a high performance anode material for their batteries. Subject to those efforts and terms and conditions yet to be negotiated in a future agreement, the JDA allows for the sale of potentially all anode material from our Calentan plant for those batteries. Interest from potential customers remains strong and samples continue to be requested and produced and not only for those customers for which we have an LOI or JDA in place, but other interested battery manufacturers as well. Turning to slide five for a construction update. We've been under construction for phase one of our Calentum plant for over a year. And since the beginning of construction, we have had zero recordable safety incidents by our contractors and Westwater teammates. This is a significant accomplishment. Safety is and will continue to be our number one core value. as well as the protection of the environment where we live and operate. As of the date of this call, we've completed the construction of five primary processing buildings, and those buildings are ready for equipment installation. Longleat equipment continues to arrive at site. To date, we've begun receiving equipment related to our patent pending purification process, the shaping and milling process, and expect to receive additional equipment in the coming months. Subject to receipt of additional equipment and closing on additional financing, we plan to begin installation of equipment later this year and are still targeting to have phase one of the Calentan plant ready to produce at the optimized annual run rate of 7,500 metric ton of CSBG per year in the second half of 2024. Slide 6. Our site at Caledon has significant expansion potential. The approximately 70 acres allows for a Phase 2 expansion on the current footprint. The estimated capital cost for Phase 2 at the pre-feasibility level is $465 million, subject to a definitive feasibility study, which we intend to begin in the second half of 2023. The Phase 2 expansion is expected to produce 40,500 metric tons per year of CHPG. Currently, there are approximately 15 battery manufacturing plants, either under construction or planned to be built in the United States. All these battery plants want graphite that meets the domestic content requirements of the IRA. And Westwater plans to be a significant part of the graphite supply solution for these plants. Turning to slide 7. We also hold mineral rights to approximately 42,000 acres across the Alabama graphite belt. Once in operations, the Calenton Graphite Processing Plant and the GUSA deposit represents the first fully vertically integrated domestic battery grade graphite company in the US. We believe this will provide significant competitive advantages, giving the domestic content requirements in the IRA previously mentioned. In April 2022, we completed our exploration drilling program and completed our geological model and published a technical report in the fourth quarter, which identified about 3.8 million shore tons of graphite, enough to supply the estimated feedstock requirements for a skeleton graphite processing plant for over 35 years. It's worth noting that the technical report was completed based on drilling approximately 10% of the approximate 42,000 acres to which we hold mineral rights. I am extremely proud of the Westwater's team, our contractors, the dedication and hard work of all involved to make Westwater resources successful. Now I would like to turn it over to our Chief Financial Officer, Mr. Steve Gates.

Thank you, Frank, and good morning, everyone. Slide eight. Westwater finished the quarter with a cash balance of approximately $40 million and no debt. We are progressing through the process required to be in a position to close a private debt transaction for $150 million and plan to update investors upon executing a definitive transaction. Turning to the financial summary on slide 9. Detailed discussion of these items is included in our recently filed Form 10-Q, as well as our first quarter press release. Net cash used in all operating activities for the first quarter increased by approximately $260,000, primarily due to the purchase of feedstock inventory. This increase was partially offset by higher interest income earned of approximately $600,000 and a decrease in prepaids and other assets during the quarter. Cash used in investing activities for the first quarter totaled approximately $34 million and was related to the ongoing construction of phase one of the Kellyton plant. approximately 21 million of the current quarter cash spend related to Q4 construction activity that was included in our working capital liabilities as of December 31, 2022. Since beginning construction, cash expenditures related to Phase 1 construction totaled approximately 90 million, and we estimate approximately 180 million of Phase 1 cash spend remaining. As of March 31, 2023, Our current liabilities include approximately 13 million of phase one construction related liabilities. Product development costs for the first quarter increased by approximately 260,000 compared to Q1 of last year. The increase relates to additional sample production for customers during the first quarter. We expect to continue to incur product development costs related to customer sample production during the remainder of 2023 As we work to put additional LOIs and customer contracts in place, we believe continuing to work through the qualification process with customers is important to maintain early market mover advantages and reaching our goal of having phase one volumes under contract prior to the Kellyton plant commencing operations. Lastly, net loss for the first quarter was approximately 2.4 million, or five cents per share, compared to a net loss of $2.8 million or $0.08 per share in Q1 of 2022. The $400,000 reduction in net loss was due primarily to higher interest income earned on our cash balances and lower exploration costs, as well as lower arbitration costs related to the arbitration against the Republic of Turkey. These reductions to net loss during the quarter were partially offset by higher G&A expenses primarily related to our executive management change announced in January of 2023 and the higher product development costs previously discussed. With that, I'll turn the call back to you, operator, for questions.