Westwater Resources, Inc. (WWR) Q2 2026 Earnings Call Transcript

Hello, everyone. Thank you for joining us, and welcome to Westwater Resources, Inc., second quarter, 2026. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Steve Cates, Chief Financial Officer. Steve, please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining us today for Westwater Resources' second quarter 2026 business update. Our Form 10Q was filed earlier this week and is available in the Investor section of our website at westwaterresources.com. Joining me today on the call are Terrence Krein, our Executive Chairman, and Frank Bakker, our President and Chief Executive Officer. Both will be available to answer questions following our prepared remarks as a reminder today's discussion will include forward-looking statements including but not limited to future events and expectations including projected demand for graphite products expected timelines and costs related to the kellyton graphite plant and the cousa graphite deposit financing activities permitting timelines and customer qualification efforts these statements are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations. Please refer to our SEC filings and the cautionary language, including in our press releases, for additional detail. With that, I'll turn the call over to our Executive Chairman, Terrence Cryan.

Thanks, Steve, and good morning, everyone. This week marked a major step forward for Westwater, for Kellyton, and for the build-out of American-made battery-grade natural graphite. On Monday, we announced that Ex-Im approved a $25 million loan to support continued development of our Kellyton graphite plant in Alabama. Ex-Im's $25 million approval is more than a financing milestone. It's a clear recognition of the strategic importance of Kellyton and the role domestic graphite production can play in strengthening the U.S. critical mineral supply chain. For years, the United States has relied heavily on foreign sources of graphite and battery grade graphite materials. Kellyton is being developed to help change that by advancing domestic processing capacity for graphite, a U.S. critical mineral essential to lithium ion batteries, energy storage and advanced manufacturing. We are now one step closer to something the country urgently needs. American-made, battery-grade natural graphite produced here in the United States for U.S. supply chains. And importantly, the loan approval moves us one step closer to commercial production from Kellyton, which could commence as soon as next year. The loan was approved under Ex-Im's Make More in America initiative, which supports domestic manufacturing projects tied to critical U.S. supply chains, and Kellyton fits the bill. For Westwater, this approval provides non-dilutive capital to advance Kellyton, from construction and equipment installation to commissioning and operational readiness. As we shared in our first quarter call, we and our advisors have been actively engaged in D.C. in the pursuit of sourcing non-dilutive, lower-cost sources of capital. The XM approval we received this week is a direct reflection of that ongoing effort. Our Kellyton Graphite plant is an advanced physical asset with significant capital already deployed. Since inception, the company has invested approximately $130 million in Phase 1. We have buildings in place, equipment on site and on order, an operating qualification line, an R&D lab, and a team advancing the technical and operational capabilities needed to support commercial production. We believe that progress gives Westwater a three to five year first mover advantage versus our competitors. In an industry where projects can take years to advance, the work already completed at Kellyton gives us a head start as the U.S. works to build domestic battery grade graphite production capacity. The Kelleyton plant is designed to produce coated spherical purified graphite, or CSPG, a battery-grade natural graphite material used primarily in lithium-ion batteries. Phase I is designed to produce approximately 12,500 metric tons per year of CSPG. That is why EXIM's approval is so important. It supports the next stage of work at Kellyton and recognizes the strategic value of building this type of processing capacity here in the U.S. It also reflects the amount of work our team has already done to move Kellyton forward, from engineering and equipment procurement to customer qualification and operational readiness. At the same time, the XM approval is one step in a broader financing strategy. We are also continuing to pursue additional government funding sources and other financing alternatives to support the completion of Kellyton Phase I and beyond. Our financing objective is clear. Secure the capital needed for Kellyton on the best terms available and begin producing American-made battery-grade natural graphite here in the United States. We have been disciplined, focused, and persistent in our approach, and the XM approval reflects that strategy. As we move forward, we will continue customer qualification activities at Kellyton and CUSA permitting and continue to advance our business. With that, I'll turn the call over to Frank to provide an operational update.

Thank you, Terence, and good morning, everyone. As Terence mentioned, Callington remains central to Westwater's strategy to build U.S.-based production of battery-grade graphite. During the second quarter and first half of 2026, we continued to advance Callington at a measured pace. We oversaw detailed engineering and manufacturing progress related to long-lead equipment order last year, and we are continuing to support its progress and delivery. We also continue to operate our qualification line and R&D lab at Callington. These capabilities are important because they allow us to continue product development, produce material for customer evaluation, support in-house quality control testing, and train our team on the processes and equipment for future commercial operations. Today, the qualification line has enabled Westwater to produce samples in excess of one metric ton of CSPG for use in pre-production evaluation and testing. The CSPG produced on the qualification line is representative of material we expect to produce in a future commercial setting, and we expect the line to support additional bulk sample production for customer qualification activities. Our R&D work also remains an important part of our customer engagement strategy. One area of focus is the battery energy storage market. We recognize that certain battery chemistries used in energy storage applications, including LFP, have historically relied heavily on synthetic graphite because of performance characteristics such as lower swelling. That said, natural graphite has certain advantages, including higher energy density. Our R&D team is focused on developing a natural graphite-based anode material, including work aimed at developing lower swelling material that could potentially address opportunities in the energy storage market over time. This is not something we view as theoretical. It is part of the product development and qualification work taking place at Callington today. As the market evolves, we are ensuring Westwater is positioned to respond to customer needs across battery applications. During the first half of 2026, Westwater provided product samples for evaluation and qualification to prospective customers in the electric vehicle and battery energy storage systems. Many of these prospective customers include large global lithium-ion battery manufacturers and original equipment manufacturers. We continue to explore additional offtake opportunities with prospective customers, and we will continue providing product samples to support their evaluation and qualification processes. Turning to CUSA, we advanced permitting and technical work during the first half of the CUSA is intended to serve as a long-term domestic source of natural graphite flake concentrate for the gelatin graphite plant. During the first half of 2026, we completed environmental, cultural, hydrologic and geochemical studies supporting federal and state permitting efforts. These activities included wetlands and stream delegations, jurisdictional determination activities, cultural resource surveys, habitat assessments, and others across the project area. On June 15, 2026, we submitted our Section 404 permit application to the US Army Corps of Engineers, and on June 26, 2026, the Corps issued the project public notice, formally beginning the public review process. CUSA also received covered project designation under the FAST41 Federal Permitting Program. FAST41 is intended to improve the timeliness, predictability and transparency of the federal permitting process through publicly available permitting schedules and formal coordination mechanism. The current estimated completion date for an environmental review and permitting as reflected on the FAS41 dashboard is June 2027. That timing matters because CUSA is intended to support Callington over the long term as a domestic source of natural graphite feedstock. As we work to bring Callington closer to production, we are also advancing the resource that can support a more fully integrated U.S. graphite supply chain over time. So, operationally, our priorities remain clear. Continue advancing Calenton, support customer qualification, progress CUSA through permitting, and position Westwater to produce battery-grade natural graphite in the United States. With that, I will turn the call over to Steve for a financial update.

Thank you, Frank, and good morning, everyone. I'll provide a brief overview of our second quarter results, liquidity position, and financing strategy. For the second quarter of 2026, WestWad reported a consolidated net loss of $4.3 million, or $0.03 per share, compared with a consolidated net loss of $3.9 million, or $0.05 per share, for the same period in 2025. For the first six months of 2026, consolidated net loss was $9 million or $0.07 per share compared with $6.5 million or $0.09 per share for the same period in 2025. The increase in net loss was primarily due to costs associated with progressing permitting for the CUSA graphite deposit, higher stock-based compensation expense, and greater product development costs, partially offset by additional interest income. Product development expenses increased during the first half of the year as we continued equipment maintenance and enhancements on the qualification line, used raw material inventory and sample production, and continued developing active anode materials. Exploration expenses increased as we advanced permitting related to the CUSA graphite deposit. General and administrative expenses increased primarily due to higher stock-based compensation, increased third-party services related to the evaluation of government funding opportunities, and other service fees. From a liquidity perspective, Westwater had approximately $38.2 million in cash as of June 30, 2026. During the first half of 2026, we continued to progress construction activities at Kellyton at a measured pace while seeking financing to fund the remaining construction of Phase 1. As of June 30, 2026, the company had incurred approximately $130 million of costs associated with Phase 1 of We continue to expect Phase 1 development capital of $245 million, of which $115 million has not yet been incurred. That amount includes approximately $15 million in contingency. We have and are currently pursuing potential government funding opportunities with the support of our advisors across multiple funding pathways, including engagements in DC, proposal and application submissions, and diligence processes. As Terry discussed, XM's approval of a $25 million direct loan is an important step in our financing strategy, and we will continue working with our advisors to pursue additional government funding opportunities. The XM approval represents real progress in that strategy. While the loan remains subject to definitive documentation and customary closing conditions, it is an important step towards securing non-dilutive capital to support continued development at Kellyton. and I'd like to pause on that point for a moment. There's a saying I heard when I first joined Westwater, luck may come to visit, but hard work and preparation makes it stay. That idea captures how we have approached this process. We have worked hard to position Westwater to pursue multiple funding pathways while maintaining flexibility and discipline. We are focused on non-dilutive and lower cost capital where available. We are making decisions with long-term shareholder value in mind the xm approval reflects that approach it is not the end of the process our focus is clear remain prepared maintain flexibility and advance kellyton towards commercial production as we secure additional capital with that i'll turn the call back to terry for closing remarks thank you steve westwater is on the right path xm's approval is an important milestone and the announcement by the president last Friday of our loan approval is a clear validation of the work our team has done to advance Kellyton and to put it right in

the middle of the fairway in terms of what this administration is seeking to do in terms of domestic production of critical minerals. At Westwater, our vision is clear to be America's source for battery-grade graphite. EXIM's approval moves us one step closer to that objective. It supports our broader financing strategy, strengthens our ability to advance Kellyton, and reinforces our first-mover advantage in the development of a U.S.-based battery-grade natural graphite production. We've been working to position the company with flexibility and discipline. That means pursuing non-dilutive and lower-cost capital wherever available. It means advancing Kellyton at a measured pace as we continue to successfully secure low-cost financing. It means continuing customer qualification work. It means supporting CUSA through permitting, and it means staying focused on the long-term opportunity in front of us. The need to secure domestic supply chains and the importance of battery-grade graphite is clear, and as Kellyton is the most advanced graphite processing plant in North America, it is well-positioned to help address that need. We appreciate the continued support of our shareholders, employees, partners, and the communities where we operate. Thank you again for joining us today. We look forward to keeping you updated as we continue advancing America's source for battery-grade graphite. Operator, we can now open the line for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Heiko Ile with H.C. Wainwright. Your line is open. Please go ahead.

Hey, good morning, Steve Terence and team. Thanks for taking my questions. It's hard to argue that we need Kellerton to ensure domestic supply, but I assume your vendors presumably know that too.

With costs of Kellerton, can you name which if anything still give you a bit of a headache related to pricing maybe sorry yeah thank you heiko so on the for the construction cost uh we have sufficient contingency in our uh forecast at completion of the project so if you look at the amounts of money to be capital to be committed and if you take the contingency plus escalation that we have have. We still have a 15% percentage there. So I think we're looking pretty good on the forecast at completion for our project to complete it within the amount of 245 million total. Okay.

So there is nothing really that the word of pricing hasn't been set, or what you're saying is the contingency should cover all of that.

Because if it's the former, I guess the question is what components are they what major ones well it's a mix of items so for certain items we have fixed pricing for some items we use unit rates to get to the estimated forecast at completion some items are already on order and purchased and actually delivered so there's no more risk over there of course so i'm comfortable with the contingency that we and the escalation that we still have in our focus at completion that we can complete within the 245 million dollars. Okay, fair enough.

And then another thing, I think twice or maybe even three times on this call, you mentioned additional government funding sources. Can you give a bit more color on what departments, what entities you're approaching? And maybe, I assume that's probably asking for a lot, a bit of a timeline even?

Hi, Heiko. Thanks. You know, I don't want to get into the specific programs, mainly because a lot of them are kind of competitive, right? And so we want to reserve that and not maybe get a roadmap to others that are seeking funding in the critical mineral space. But what I will say is that during the year and since we've engaged with our advisors, We've had about four initiatives going. XM was just one of those initiatives. The other three are still going and at various stages. Like I said at the Q1 call, I can't make comment on the ultimate outcome of those or the timeline because we are dealing with the U.S. government and each one has a different protocol and pace at which they work. But you can rest assured this management team is not going to be the long pole in the tent. I mean, we move very, very quickly, and we'll move as quickly as these agencies can move. Very good.

Perfect. I'll get back to you. Thank you, guys.

Your next question comes from the line of Tate Sullivan with Maxim Group. Your line is open. Please go ahead.

Great. Thank you, and great to see the news from Maxim on Friday on the loan. And you're very clear in the release, but I mean, all the $25 million of funding is to Kellington. Can you use any of that for CUSA?

The use of proceeds are for Phase I of Kellington. And so the $25 million is earmarked to advance Phase I. Okay.

And then, I mean, it's just, it will be great to see how quickly you can actually get those Exum, that EXIM funding in hand, you're clear in the earlier comments. I mean, it's loan documentation and customary closing conditions, but diligence, their diligence process is complete at EXIM, to confirm, please.

We've received the formal approval of the loan, and to go through that was a, you know, extensive diligence process as far as looking at the project, environmental reviews and things like that so yes what remains is the documentation as well as the customary kind of closing conditions we need to execute that loan is it is it reasonable or are you willing to put time and now you get all the proceeds of the loan the full full extension before the end of the year i mean are you reasonably confident much earlier um i think um similar to what i i mentioned to to heiko we're going to move as fast as xm can move as far as getting the documentation um signed as well as accessing those loan proceeds um the way i would think about the loan proceeds is it's similar to a construction loan and construction draws um as you move forward versus uh necessarily a one-time loan usually you you submit four um draws to be able to draw down and purchase additional equipment or additional construction spend. So it might come in a little bit over time, but the goal right now is to get the documentation finalized and get the long clothed.

Okay, thank you. And given you're already producing or have been for many years CSPG samples to customers, you're a graphite flake purchaser, or can you or can you or you in a position to give any comments on recent graphite flake prices, please?

Yeah, I think what we're seeing in the market from a graphite flake perspective is we're still seeing them at what we would view as pretty much historic lows. There is still ample supply. And so we've been seeing prices somewhere in the, depending upon where it's coming from and shipping kind of five, $600 a ton range for the type of flake that we are purchasing. So we've seen them maintain a relatively low level right now, which is one of the reasons where, you know, KUSA when it comes online, we'd like to be mining that in a much higher price environment. The forward curve for flake graphite as well as anode material is still rising, the estimates that are out there. And so from a Westwater perspective, it would be much more beneficial to be mining that graphite out at KUSA at a higher price environment than what we see today.

Yeah, it would be great to get more more news from the government side on the FTC initiative or anything of that sort but then on CUSA as well with the EIA permitting process you mentioned by June 2027 is there any site work you can do while that is ongoing or do you plan to dedicate more more resources to CUSA in that review timeline please yeah what we have done already quite a lot of drilling to determine our resource at CUSA, so we really need to wait for our NPDES permit to be issued to advance construction over there.

So looking at the overall timeline with the permit being issued on June 2027, we're looking at CUSA being operational at the end of 2028 early 2029 at this moment okay um well thank you very much for having the update call and i'm great to see the news from friday thank you thank you your next question comes from the line of pat mccann with d borrow capital your line is open please go ahead hey good morning guys uh thanks for uh taking my questions i i guess my first question has to do with uh with your discussions

with the federal agencies. You mentioned that the EXIM loan is going to be for Kelly 10. So I'm wondering, as you have these discussions with other federal agencies, if Kelly 10 is kind of the leading factor in those discussions based on processing being the bottleneck in the supply chain, would you expect any near-term future funding commitments to similarly be earmarks for Kelleyton, first and foremost? And how does the CUSA asset also help to play into these discussions?

Thanks for your question, Pat. I think when we look at the various initiatives we have currently ongoing with the federal government, the fact that we have a vertically integrated strategy is really appealing to the government. And while the Ex-Im loan is dedicated towards progressing Kellyton, I certainly wouldn't rule out that other initiatives that we have ongoing could provide funding for CUSA. You know, this is a very supportive environment we have for mining, probably the best environment we've had in decades in the U.S. And again, the vertically integrated nature with us being able to provide our own feedstock for a processing plant, it's really attractive to the government. It's attractive to customers as well. So, you know, we're going to be confidential about the exact status of our discussions with those agencies until we have something definitive to say. But I'm looking forward to having that conversation.

Great. And I was also wondering if, you know, how you expect the recent federal validation to help with the customer pipeline. I guess during that process of being approved for the EXIM loan, how much verification work would you have to go through to validate your process and the success that you're having with the customer qualification lines? I guess, you know, how much does that help validate the process you have, I guess, for customers, in addition to the fact that, of course, you're important from a strategic perspective, but in terms of the success of your qualification line and kind of a proof point that, I guess, that you know what you're doing, you know, how does that help with your customer pipeline build?

Right. So I think really from the beginning, you know, we took a somewhat different approach than others when it came to producing customer samples. I mean, going back, you know, four years ago, right out of the gate, we were running samples in five ton batches. You know, we were not attempting to do this at a very small lab scale. And the reason we wanted to do that and produce samples on commercial scale equipment is because we wanted to take the scale up risk off the table. Customers really liked that approach. And I think it had a real bearing on the fact that we were able to put off-ticket agreements in place with SKON and with Stellantis. Now, those contracts, you know, are currently in process of being, you know, renegotiated. Our relationships with those customers remain strong, as with, you know, a bunch of other customers. The fact remains that if you want anode material produced here in the United States in 27, 2028, or 2029, Westwater is really the only source that you have, and customers understand that. So I feel very confident that as we move Kellyton forward towards completion and commissioning, we'll be sold out.

Excellent. That's all for me. I'll hop back in the queue. Congrats again on the announcement.

There are no further questions at this time. So, Pat, if you would like to ask a few more questions, please go ahead.

Well, I guess I'll throw another one in there. I was wondering if you could give any type of expectations or ideas around maybe what we might expect for the terms of the loan. I know that It's nothing's final yet, but in broad strokes, is there any more you could say about what we should expect from that?

Yeah, thanks, Pat. This is Steve. You're right. I mean, until we have the definitive document signed and executed, you know, I'm not going to give much details then. But obviously, when that gets signed and executed, those details will come out publicly. But I think broad strokes, what you could see is multi-year. obviously you know the quantum that has been disclosed from a cost of capital perspective you know what we saw in the private market the private debt markets is double digit mid-teens type of cost of capital this is well below that and much much more attractive i think it's easy to expect and estimate that we're talking about single digit type of cost of capital so it's very attractive but that's about as far as i'm willing to go at this time but more to come when we get the documentation completed excellent if i could just squeeze in one more and this will be it for me i i would i was wondering if uh in terms of meeting the the current uh target of of getting

to production during 2027 uh what do you think would be the point in 2026 where you need to have the full phase one funding in place i mean should we just think about it in terms of uh add 12 to 14 months or 10 to 12 months to the point at which you get full funding for phase one for when you would start production? How should we think about that timeline and how soon you need to have everything in place in order to begin production during 2027?

Right. Yeah, I think what we're still seeing with some of the timelines and, you know, us being able to put in some orders at the end of last year for some additional long-lead equipment items that we need. That was critical for us to maintain that 12-month timeline once funding is complete. I think what the XM loan does, it allows us to continue to advance Kellyton and hold that 12-month timeline. So right now, as we advance and raise additional capital, we're going to continue to progress Kellyton with the goal of getting that done and complete it in 2027 and be able to have commercial production. So I don't think there's a set timeline, because as we secure additional capital, we're able to take steps forward and try to maintain that timeline.

Perfect. Makes sense. Thanks so much. Thanks so much. And again, congrats on the inclusion and the big announcement. Thank you.

There are no further questions at this time. I will now turn the call back to Terrence for any closing remarks.

Thanks, everyone, for joining us today. We're happy to have an opportunity to keep you updated on our progress. We look forward to speaking with you soon on further progress. Good day.

This concludes today's call. Thank you for attending. You may now disconnect.