Earnings Call Transcript - WWR Q1 2026

Operator, Operator

Hello, everyone. Thank you for joining us, and welcome to Westwater Resources Q1 2026 Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Steven Cates, CFO. Steven, please go ahead.

Steven Cates, CFO

Thank you, operator, and good morning, everyone. Thank you for joining us today for Westwater Resources' first quarter 2026 business update. Our Form 10-Q was filed and issued yesterday after market close and is available in the Investors section of our website at westwaterresources.com. Joining me on the call today are Terence James Cryan, 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 regarding future events and expectations, including projected demand for graphite products, expected timelines and costs related to the Kellyton graphite plant and Coosa 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 included in our press release for additional detail. With that, I will turn the call over to our Executive Chairman, Terence James Cryan.

Terence James Cryan, Executive Chairman

Thank you, Steven, and good morning, everyone. Over the past several months, the battery materials industry has continued to evolve rapidly. Customers across the supply chain are adjusting procurement strategies and development timelines in response to shifting policies, tariffs, evolving end-market demand, and broader geopolitical uncertainty. At the same time, the strategic importance of establishing a domestic supply chain for critical minerals like graphite has only become clearer. Today, the United States remains almost entirely dependent on foreign sources of natural graphite, principally from China, despite graphite being essential to lithium-ion batteries, battery energy storage systems, and increasingly, defense and advanced industrial applications such as small modular nuclear reactors. Against this backdrop, Westwater continues to advance a vertically integrated mine-to-market graphite platform in Alabama designed to deliver secure domestic battery-grade graphite in the United States. Our strategy connects two complementary assets. The first is the Coosa Graphite Deposit, the largest and most advanced natural flake graphite deposit in the contiguous United States. The second is the Kellyton graphite plant where graphite concentrate will be processed into CSPG, the active anode material used in lithium-ion batteries. Importantly, we continue to believe Westwater has a multi-year first-mover advantage as the most advanced American developer of battery-grade natural graphite in the United States. During the quarter, we advanced permitting efforts at Coosa, including receiving FAST-41 designation during the quarter, continued advancing construction and operational readiness at Kellyton, and progressed customer qualification activities through our operational qualification line. FAST-41 is an important milestone for the project because it improves coordination and visibility across federal permitting activities. We view this as another step in accelerating progress and de-risking the long-term development pathway for Coosa. While market conditions remain dynamic, our focus continues to be on execution and advancing our two core projects, and we are doing just that. Steven will talk further about our active engagement on capital formation including our engagement with various government agencies on funding. With that, I will turn the call over to Frank for an operational update.

Frank Bakker, President & CEO

Thanks, Terence, and good morning, everyone. I will begin with an update on the Kellyton graphite plant which remains central to our mine-to-market strategy. During the first quarter, we continued construction and operational readiness activities at the site while also advancing customer qualification efforts. The qualification line was operational during the quarter and produced aggregate CSPG sample volumes exceeding one metric ton for customer evaluation and testing. This capability remains an important differentiator for Westwater and positions us ahead of many North American peers who remain several years away from providing qualification-scale material. We also continued operating our R&D laboratory to support product optimization, customer qualification activities, and internal quality-control processes. At quarter end, approximately $29.6 million had been invested into Kellyton since inception of the project. Importantly, we continue to maintain our Phase 1 capital estimate at approximately $245 million, including $19 million of untouched contingency. Assuming financing is secured, we continue to expect initial production within approximately 12 months. We continue to engage with prospective customers across the battery, automotive, industrial, and defense sectors. During the quarter, SK On notified us of its decision to terminate the product procurement agreement originally executed in 2024. While market conditions remain dynamic, we believe this reflects the evolving environment customers are navigating across the broader battery supply chain. Both SK On as well as their new JV with Hyundai want to put new agreements in place with Westwater, as well as others. Importantly, our commercial strategy remains unchanged. We continue to provide product samples to prospective customers as part of ongoing qualification processes and we continue to receive inbound interest from companies evaluating domestic sources of battery-grade graphite amid evolving trade policy, tariff considerations, and supply chain security concerns. Turning to Coosa, we continued advancing permitting and development activities during the quarter. Most notably, Coosa received designation under the FAST-41 federal permitting program during the quarter. This designation supports improved coordination and transparency across federal agencies as permitting activities continue to advance. During the second quarter, we anticipate a permitting timeline will be established and agreed to by the participating federal agencies. In addition, we continue geotechnical analysis, hydrology monitoring, environmental studies, and preparation activities associated with the Section 404 permit application and Alabama air permitting. We expect the permitting process to take approximately 12 to 24 months, after which we would look toward a decision on constructing mine development. Overall, we continue to make meaningful progress across our vertically integrated graphite platform and believe Westwater remains well positioned given the evolving domestic battery materials landscape. Steven, over to you.

Steven Cates, CFO

Thanks, Frank. At the end of the first quarter, the company had approximately $41.5 million of cash on hand. During the quarter, we raised approximately $1.2 million from the ATM, which has approximately $71 million available under the facility. We also have approximately $26 million of undrawn committed capital on our ELOC facility. We remain confident in our ability to secure the remaining financing needed to complete Phase 1 of Kellyton and move toward initial production. As we continue to advance the project and operate our qualification line, we are focused on securing the right capital solution while preserving long-term shareholder value. We are prioritizing non-dilutive and lower-cost sources of capital, including potential government funding programs. To support these efforts, we have engaged a tier-one group of advisers and are actively evaluating the most efficient funding pathways available to us. We and our advisers are spending quality time in D.C., and we are pursuing multiple funding opportunities across various federal agencies. These activities have included in-person meetings, submitting certain proposals and/or applications, and establishing data rooms for diligence. While we cannot comment on specific opportunities or provide an estimate as to the ultimate outcome of these efforts, we and our advisors continue to believe we are in the middle of the domestic critical minerals fairway that has been a strategic focus of this administration. We are also maintaining flexibility to evaluate other funding alternatives and project-level financing structures, including equipment-based financing and other structured solutions. Our existing equity financing tools provide additional flexibility, and we will remain disciplined and thoughtful in how we utilize them. As we work to secure the remaining financing, we will continue managing liquidity carefully and aligning construction activity with available capital. For the quarter, the company reported a net loss of approximately $4.7 million, or $0.04 per share, compared to approximately $2.7 million, or $0.40 per share, during the same period last year. The increase in net loss was primarily related to increased permitting activities at Coosa, increased product development costs at Kellyton, and higher stock-based compensation expense. Overall, we believe our current liquidity position, disciplined capital management approach, and ongoing financing efforts in D.C. and beyond provide a solid foundation as we continue advancing our mine-to-market strategy.

Frank Bakker, President & CEO

To close, our priorities remain clear. We are advancing a vertically integrated mine-to-market graphite platform designed to support a growing need for domestic battery materials in the United States. During the quarter, we continued progress in construction and qualification activities at Kellyton, advanced permitting efforts at Coosa, and strengthened our position as one of the most advanced domestic developers in the U.S. The broader market environment continues to evolve, but we believe the long-term need for secure domestic sources of battery-grade graphite is becoming increasingly important. We are focused on execution, disciplined capital allocation, and advancing our projects toward production. We appreciate your continued interest and support. Operator, we would now be happy to take questions.

Operator, Operator

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 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 Ihle with H.C. Wainwright. Heiko, your line is open. Please go ahead.

Heiko Ihle, Analyst

Hi there. Thank you so much for taking my questions. You are obviously quite a bit closer to the pulse than I am, so maybe if you could provide callers a little bit of additional context in addition to what you already brought up in your prepared remarks: what you are seeing with prospective graphite customers and government agencies, the sizing they are seeking, avoidance of geopolitical risk factors, and other items that may not be as obvious from your release or presentation — things we could elaborate on to clients as well?

Steven Cates, CFO

Hi, Heiko. Thanks for the question and for joining. What we are seeing in the broader market when it comes to graphite is that while there has been some near-term uncertainty related to on-again, off-again tariffs and certain trade policies, the long-term story really has not changed. Analysts like Benchmark and others continue to forecast that demand for North American graphite will significantly outweigh forecast supply. One of the drivers is demand from AI data centers and battery energy storage systems, in addition to industrial applications such as nuclear and other traditional markets like EVs, all of which are still forecasted to grow globally. From a Westwater perspective, as we speak to government agencies and potential customers, our key message is timing and scale: if someone is looking for anode material in 2027, 2028, or 2029, Westwater is currently the only viable domestic source with the timing and scale to deliver. Many competitors are at lab scale or at the conceptual stage — PowerPoint level — whereas we have buildings built and a qualification line running in one-ton batches. We are in a significant advantage from a timing perspective and we have capacity to sell. That positioning is intriguing to many potential customers and potential funders.

Heiko Ihle, Analyst

Fair enough. And then just for our modeling needs, can you give a bit of color on the capital spend at site on a quarterly basis for the remainder of 2026? And maybe, if I gave you a blank check today, how much would you like to spend?

Steven Cates, CFO

Thanks. We are not prepared to provide detailed quarter-by-quarter capital spend guidance at this time. To reiterate, our Phase 1 capital estimate remains approximately $245 million, which includes about $19 million of untouched contingency. We have invested roughly $130 million into the project to date. We have approximately $41.5 million of cash on the balance sheet and additional financing capacity under our ATM and ELOC facilities as previously stated. If we secure the remaining financing, our expectation is that we are about 12 months from commercial production. From a capital spend perspective going forward, you can expect a measured approach. We announced in the fourth quarter that we placed some long-lead equipment orders; you will see those expenditures come through over the next few quarters, but they are not significant relative to the total project. We intend to move at the speed of cash and be disciplined with our spending.

Heiko Ihle, Analyst

I will follow up with one more. Companies like Caterpillar have very long lead times for capital goods. What are you seeing in regards to waiting periods now versus, say, six, nine, or 12 months ago?

Frank Bakker, President & CEO

Hi, Heiko. What we see is that the manufacturing lead time for the equipment we need is about three to four months. Then you need to include shipping, so in about six months we can have the remaining equipment on site.

Heiko Ihle, Analyst

Perfect. I will get back in queue. Thank you very much.

Operator, Operator

Thank you. Your next question comes from the line of Matthew Sotelo with Maxim Group. Matthew, your line is open. Please go ahead.

Matthew Sotelo, Analyst

Hey, Terence, Frank, and Steven. This is Matt on for Tate. Thank you for taking my question. I was wondering if you can give us some more detail on the customer qualification pipeline. Specifically, how far along your most advanced customer process is, and where the others stand relative to that?

Frank Bakker, President & CEO

We are working with multiple customers at various stages. We send one-kilogram samples, 10-kilogram samples, and larger-scale samples to customers. We have received positive feedback, and some customers are quite far along in their processes. I think the last step for qualification will be when we have our production plan finished and can provide a mass-production sample to the customer for final qualification. Overall, the feedback has been positive.

Matthew Sotelo, Analyst

And as a follow-up, in terms of the step-up process at Kellyton, given production begins on time and there are offtake agreements in place potentially, how long does it take to get near capacity?

Frank Bakker, President & CEO

We anticipate that once financing is in place, we will need another 12 months to start initial production. All the buildings are finished, which helps the construction timeline and reduces weather risk. We can conduct construction in parallel across different buildings, and we have already installed part of the equipment. We designed the plant with storage silos between different process units so we can commission and start up one unit while still constructing another, enabling a phased approach to construction, commissioning, and start-up. Additionally, our qualification line has similar equipment and we are running it with the team on site, which should reduce the risk of commissioning or start-up issues.

Matthew Sotelo, Analyst

That is great. Super helpful. Thank you for taking my questions.

Operator, Operator

There are no further questions at this time. We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.