Q2 2026 Westwater Resources Inc Earnings Call
Speaker #1: 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.
Speaker #1: 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.
Speaker #2: Thank you, Operator, and good morning, everyone. Thank you for joining us today for Westwater Resources' second quarter 2026 business update. Our Form 10-Q was filed earlier this week, and is available in the Investor section of our website, at westwaterresources.com.
Speaker #2: Joining me today on the call are Terence Cryan, our Executive Chairman, and Frank Bakker, our President and Chief Executive Officer. Both will be available to answer questions following our prepared remarks.
Speaker #2: 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 Kellington graphite plant, and the Koosa graphite deposit, financing activities, permitting timelines, and customer qualification efforts.
Speaker #2: These statements are subject to risk 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.
Speaker #2: With that, I'll turn the call over to our Executive Chairman, Terence Cryan.
Speaker #3: Thanks, Steve. And good morning, everyone. This week marked a major step forward for Westwater for Kellington, and for the build-out of American-made battery-grade natural graphite.
Speaker #3: On Monday, we announced that XM approved a $25 million loan to support continued development of our Kellington graphite plant in Alabama. XM's $25 million approval is more than a financing milestone; it's a clear recognition of the strategic importance of Kellington and the role of domestic graphite production can play in strengthening the U.S.
Speaker #3: critical mineral supply chain. For years, the United States has relied heavily on foreign sources of graphite and battery-grade graphite materials. Kellington is being developed to help change that by advancing domestic processing capacity for graphite, a U.S.
Speaker #3: 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.
Speaker #3: supply chains. An importantly, the loan approval moves us one step closer to commercial production from Kellington, which could commence as soon as next year.
Speaker #3: The loan was approved under XM's Make More in America initiative, which supports domestic manufacturing projects tied to critical U.S. supply chains. And Kellington fits the bill.
Speaker #3: For Westwater, this approval provides non-dilutive capital to advance Kellington. 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.
Speaker #3: 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.
Speaker #3: Our Kellington graphite plant is an advanced physical asset with significant capital already deployed. Since inception, the company has invested approximately $130 million in Phase 1.
Speaker #3: We have buildings in place, equipment on site, and on order, and operating qualification line and R&D lab, and a team advancing the technical and operational capabilities needed to support commercial production.
Speaker #3: We believe that progress gives Westwater a 3 to 5-year first-mover advantage, versus our competitors. In an industry where projects can take years to advance, the work already completed at Kellington gives us a head start as the U.S.
Speaker #3: works to build domestic battery-grade graphite production capacity. The Kellington plant is designed to produce coated spherical purified graphite, or CSPG, a battery-grade natural graphite material used primarily in lithium-ion batteries.
Speaker #3: Phase 1 is designed to produce approximately 12,500 metric tons per year, of CSPG. That is why XM's approval is so important. It supports the next stage of work at Kellington and recognizes the strategic value of building this type of processing capacity here in the U.S.
Speaker #3: It also reflects the amount of work our team has already done to move Kellington forward. From engineering and equipment procurement to customer qualification and operational readiness.
Speaker #1: The curation plant is designed to produce coated spherical purified graphite, or CSPG, a battery-grade natural graphite material used primarily in lithium-ion batteries. Phase 1 is designed to produce approximately 12,500 metric tons per year of CSPG. That is why Exim's approval is so important.
Speaker #3: 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 Kellington Phase 1 and beyond.
Speaker #1: 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.
Speaker #3: Our financing objective is clear: secure the capital needed for Kellington on the best terms available, and begin producing American-made battery-grade natural graphite here in the United States.
Speaker #1: It also reflects the amount of work our team has already done to move Kellington forward. From engineering and equipment procurement to customer qualification and operational readiness.
Speaker #3: 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 Kellington and CUSA permitting and continue to advance our business.
Speaker #1: At the same time, the Exim 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 Kellington Phase 1 and beyond.
Speaker #3: With that, I'll turn the call over to Frank, to provide an operational update.
Speaker #2: Thank you, Terence. And good morning, everyone. As Terence mentioned, Kellington 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 Kellington at a measured pace.
Speaker #1: Our financing objective is clear: secure the capital needed for Kellington on the best terms available, and begin producing American-made battery-grade natural graphite here in the United States.
Speaker #1: We have been disciplined, focused, and persistent in our approach, and the Exim approval reflects that strategy. As we move forward, we will continue customer qualification activities at Kellington and CUSA permitting, and continue to advance our business.
Speaker #2: We oversaw detailed engineering and manufacturing progress related to long lead equipment ordered last year, and we are continuing to support its progress and delivery.
Speaker #2: We also continue to operate our qualification line and R&D lab at Kellington. 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.
Speaker #1: With that, I'll turn the call over to Frank to provide an operational update.
Speaker #2: Thank you, Terence. And good morning, everyone. As Terence mentioned, Kellington 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 Kellington at a measured pace.
Speaker #2: Today, the qualification line has enabled Westwater to produce samples in excess of 1 metric ton of CSPG for use in pre-production evaluation and testing.
Speaker #2: We oversaw detailed engineering and manufacturing progress related to long-lead equipment ordered last year, and we are continuing to support its progress and delivery.
Speaker #2: The CSPG produced on the qualification line is representative of material we expect to produce in the future commercial setting. And we expect the line to support additional bulk sample production for customer qualification activities.
Speaker #2: We also continue to operate our qualification line and R&D lab at Kellington. 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.
Speaker #2: 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.
Speaker #2: 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.
Speaker #2: 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.
Speaker #2: The CSPG produced on the qualification line is representative of the material we expect to produce in the future commercial setting, and we expect the line to support additional bulk sample production for customer qualification activities.
Speaker #2: 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.
Speaker #2: This is not something we view as theoretical. It is part of the product development and qualification work taking place at Kellington today. As the market evolves, we are ensuring Westwater is positioned to respond to customer needs across battery applications.
Speaker #2: 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.
Speaker #2: 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.
Speaker #2: 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.
Speaker #2: This is not something we view as theoretical. It is part of the product development and qualification work taking place at Kellington today. As the market evolves, we are ensuring Westwater is positioned to respond to customer needs across battery applications.
Speaker #2: Turning to CUSA. We advanced permitting and technical work during the first half of the year. CUSA is intended to serve as a long-term domestic source of natural graphite flake concentrate for the Kellington graphite plant.
Speaker #2: 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.
Speaker #2: During the first half of 2026, we completed environmental, cultural, hydrologic, and geochemical studies supporting federal and state permitting efforts. These activities included wetland, and stream delineations, jurisdictional determination activities, cultural resource surveys, habitat assessments, and others across the project area.
Speaker #2: 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.
Speaker #2: On June 15, 2026, we submitted our Section 404 permit application to the U.S. Army Corps of Engineers. And on June 26, 2026, the Corps issued the project's public notice.
Speaker #2: Turning to CUSA, we advanced permitting and technical work during the first half of the year. CUSA is intended to serve as a long-term domestic source of natural graphite flake concentrate for the Kellington Graphite Plant.
Speaker #2: Formally beginning the public review process. CUSA also received covered project designation under the FAST 41 Federal Permitting Program. FAST 41 is intended to improve the timeliness, predictability, and transparency of the federal permitting process to publicly available permitting schedules and formal coordination mechanism.
Speaker #2: During the first half of 2026, we completed environmental, cultural, hydrologic, and geochemical studies supporting federal and state permitting efforts. These activities included wetland and stream delineations, jurisdictional determination activities, cultural resource surveys, habitat assessments, and others across the project area.
Speaker #2: The current estimated completion date for environmental review and permitting as reflected on the FAST 41 dashboard is June 2027. That timing matters, because CUSA is intended to support Kellington over the long term as a domestic source of natural graphite feedstock, as we work to bring Kellington closer to production we are also advancing the resource that can support a more fully integrated U.S.
Speaker #2: On June 15, 2026, we submitted our Section 404 permit application to the U.S. Army Corps of Engineers. And on June 26, 2026, the Corps issued the project's public notice.
Speaker #2: Formally beginning the public review process. CUSA also received covered project designation under the FAST-41 federal permitting program. FAST-41 is intended to improve the timeliness, predictability, and transparency of the federal permitting process through publicly available permitting schedules and a formal coordination mechanism.
Speaker #2: graphite supply chain over time. So, operationally, our priorities remain clear. Continue advancing Kellington, support customer qualification, progress CUSA through permitting, and position Westwater to produce battery-grade natural graphite in the United States.
Speaker #2: The current estimated completion date for environmental review and permitting as reflected on the FAST 41 dashboard is June 2027. That timing matters because CUSA is intended to support Kellington over the long term as a domestic source of natural graphite feedstock as we work to bring Kellington closer to production we are also advancing the resource that can support a more fully integrated U.S.
Speaker #2: With that, I will turn the call over to Steve, for a financial update.
Speaker #1: 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, Westwater reported a consolidated net loss of $4.3 million or $0.03 per share.
Speaker #1: 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.
Speaker #2: Graphite supply chain over time. So, operationally, our priorities remain clear: continue advancing Kellington, support customer qualification, progress Coosa through permitting, and position Westwater to produce battery-grade natural graphite in the United States.
Speaker #1: 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.
Speaker #2: With that, I will turn the call over to Steve for a financial update.
Speaker #3: 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, Westwater reported a consolidated net loss of $4.3 million, or $0.03 per share.
Speaker #1: Partially offset by additional interest income. Product development expenses increased during the first half of the year as we continue to equipment maintenance and enhancements on the qualification line, used raw material inventory and sample production, and continued developing active anode materials.
Speaker #3: 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.
Speaker #1: 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.
Speaker #1: 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 Kellington at a measured pace, while seeking financing to fund the remaining construction of Phase 1.
Speaker #3: The increase in net loss was primarily due to costs associated with progressing permitting for the Coosa graphite deposit, higher stock-based compensation expense, and greater product development costs.
Speaker #3: 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.
Speaker #1: As of June 30, 2026, the company had incurred approximately $130 million of costs associated with Phase 1 of Kellington. We continue to expect Phase 1 development capital of $245 million.
Speaker #3: 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.
Speaker #1: Of which $115 million has not yet been incurred. That amount includes approximately $15 million in contingency. We have, in our currently pursuing potential government funding opportunities, with the support of our advisors, across multiple funding pathways.
Speaker #1: 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.
Speaker #3: 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 Kellington at a measured pace while seeking financing to fund the remaining construction of phase one.
Speaker #1: 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 toward securing non-dilutive capital to support continued development at Kellington.
Speaker #3: As of June 30, 2026, the company had incurred approximately $130 million in costs associated with phase one of Kellington. We continue to expect phase one development capital of $245 million.
Speaker #3: Of this, $115 million has not yet been incurred. That amount includes approximately $15 million in contingency. We are currently pursuing potential government funding opportunities, with the support of our advisors, across multiple funding pathways.
Speaker #1: 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.
Speaker #1: 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.
Speaker #3: Including engagements in D.C., 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.
Speaker #1: 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.
Speaker #3: 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 Kellington.
Speaker #1: Remain prepared. Maintain flexibility. And advance Kellington towards commercial production as we secure additional capital. With that, I'll turn the call back to Terry for closing remarks.
Speaker #3: 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 Kellington 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.
Speaker #3: 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.
Speaker #3: 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.
Speaker #3: 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.
Speaker #3: At Westwater, our vision is clear. To be America's source, for battery-grade graphite, XM's approval moves us one step closer to that objective. It supports our broader financing strategy, strengthens our ability to advance Kellington, and reinforces our first-mover advantage in the development of a U.S.-based battery-grade natural graphite production.
Speaker #3: Remain prepared, maintain flexibility, and advance Kellington towards commercial production as we secure additional capital. With that, I'll turn the call back to Terry for closing remarks.
Speaker #1: 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 Kellington and to put it right in the middle of the fairway in terms of what this administration is seeking to do regarding domestic production of critical minerals.
Speaker #3: We've been working to position the company with flexibility, and discipline, and that means pursuing non-dilutive and lower-cost capital wherever available. It means advancing Kellington at a measured pace as we continue to successfully secure low-cost financing.
Speaker #1: At Westwater, our vision is clear: to be America's source for battery-grade graphite. XM's approval moves us one step closer to that objective. It supports our broader financing strategy, strengthens our ability to advance Kellington, and reinforces our first-mover advantage in the development of a U.S.-based battery-grade natural graphite production.
Speaker #3: 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.
Speaker #3: The need to secure domestic supply chains and the importance of battery-grade graphite is clear. And as Kellington is the most advanced graphite processing plant in North America, it is well positioned to help address that need.
Speaker #1: We've been working to position the company with flexibility and discipline. That means pursuing non-dilutive and lower-cost capital wherever available. It also means advancing Kellington at a measured pace as we continue to successfully secure low-cost financing.
Speaker #3: 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.
Speaker #1: 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.
Speaker #3: Operator, we can now open the line for questions.
Speaker #1: The need to secure domestic supply chains and the importance of battery-grade graphite is clear. And as Kellington is the most advanced graphite processing plant in North America, it is well-positioned to help address that need.
Speaker #4: We will now begin the 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.
Speaker #4: 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.
Speaker #1: 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.
Speaker #4: Please stand by while we compile the Q&A roster. Your first question, comes from the line of Heiko Ihle, with HC Wainwright. Your line is open.
Speaker #4: Please go ahead.
Speaker #5: Hey, good morning. Steve Terence and team. Thanks for taking my questions. It's hard to argue that we need Kellington to ensure domestic supply. But I assume your vendors presumably know that too.
Speaker #1: Operator, we can now open the line for questions.
Speaker #2: 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.
Speaker #5: With costs at Kellington, can you name which, if anything, still give you a bit of a headache related to pricing, maybe?
Speaker #2: 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.
Speaker #6: Sorry. Yeah, thank you, Heiko. So on the for the construction cost, we have sufficient contingency in our 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, we still have a 15% percentage there.
Speaker #2: 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 Ehle with HC Wainwright.
Speaker #2: Your line is open. Please go ahead.
Speaker #4: Hey, good morning, Steve, Terence, and team. Thanks for taking my questions. It's hard to argue that we need Kellington to ensure domestic supply, but I assume your vendors presumably know that too.
Speaker #6: 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.
Speaker #4: With costs at Kellington, can you name which, if anything, still gives you a bit of a headache related to pricing, maybe?
Speaker #5: Okay. So there is nothing really that we're 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?
Speaker #5: Sorry. Yeah, thank you, Heiko. So on the for the construction cost, we have sufficient contingency in our 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, we still have a 15% percentage there.
Speaker #5: What major ones?
Speaker #6: 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.
Speaker #6: 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 forecast at completion that we can complete it within the $245 million.
Speaker #5: 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.
Speaker #4: Okay. So, there is nothing really where the pricing hasn't been set, or what you're saying is the contingency should cover all of that.
Speaker #5: 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?
Speaker #4: Because if it's the former, I guess the question is: what components are they? What major ones?
Speaker #5: 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.
Speaker #5: And maybe I assume that's probably asking for a lot. A bit of a timeline, even.
Speaker #6: Hi, Heiko. Thanks. 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 give a roadmap to others that are seeking funding in the critical mineral space.
Speaker #5: So, there's no more risk over there, of course. So, I'm comfortable with the contingency and the escalation that we still have in our focus at completion, that we can complete it within the $245 million.
Speaker #6: 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.
Speaker #4: 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 or what entities you're approaching?
Speaker #6: 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 US government in each one has a different protocol and pace at which they work.
Speaker #4: And maybe I assume that's probably asking for a lot. A bit of a timeline, even?
Speaker #6: But you can rest assured this management team is not going to not going to be the long pole in the tent. I mean, we move very, very quickly.
Speaker #5: Hi, Heiko. Thanks. 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 give a roadmap to others that are seeking funding in the critical mineral space.
Speaker #6: And we'll move as quickly as these agencies can move.
Speaker #5: Very good. Perfect. I'll get back into you. Thank you, guys.
Speaker #5: 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.
Speaker #4: Your next question comes from the line of Tate Sullivan, with Maxim Group. Your line is open. Please go ahead.
Speaker #7: Great. Thank you. And great to see the news from Maxim on Friday on the loan. And you very clear in the release. But I mean, all the 25 million of funding is to Kellington.
Speaker #5: 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 US government and each one has a different protocol and pace at which they work.
Speaker #7: Can you use any of that to for CUSA?
Speaker #6: The use of proceeds are for phase one of Kellington. And so the 25 million is earmarked to advance phase one.
Speaker #5: 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.
Speaker #7: Okay. And then, I mean, it's just it will be great to see how quickly you can actually get those XM that XM funding in hand.
Speaker #5: And we'll move as quickly as these agencies can move.
Speaker #7: 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 XM to confirm, please?
Speaker #4: Very good. Perfect. I'll get back to you. Thank you, guys.
Speaker #2: Your next question comes from the line of Tate Sullivan with Maxim Group. Your line is open. Please go ahead.
Speaker #6: We've received the formal approval of the loan. And to go through that was a extensive diligence process as far as looking at the project, environmental reviews, and things like that.
Speaker #3: Great, thank you, and great to see the news for Maxim on Friday on the loan. You were very clear in the release, but I mean, all the $25 million of funding is to Kellington?
Speaker #3: Can you use any of that for CUSA?
Speaker #6: So yes, what remains is the documentation, as well as the customary kind of closing conditions we need to execute that loan.
Speaker #5: The use of proceeds are for phase one of Kellington, and so the $25 million is earmarked to advance phase one.
Speaker #7: Is it reasonable or are you willing to put timing that you get all the proceeds of the loan the full extension before the end of the year, or I mean, are you reasonably confident much earlier?
Speaker #3: Okay. And then, I mean, it will be great to see how quickly you can actually get that XM funding in hand.
Speaker #6: I think similar to what I had mentioned to Heiko, we're going to move as fast as XM can move as far as getting the documentation signed, as well as accessing those loan proceeds.
Speaker #3: 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 XM, to confirm, please?
Speaker #6: The way I would think about the loan proceeds is it's similar to a construction loan and construction draws. As you move forward, versus necessarily a one-time loan, usually you submit four draws to be able to draw down and purchase additional equipment or additional construction spend.
Speaker #5: We've received the formal approval of the loan, and to go through that was an extensive diligence process as far as looking at the project, environmental reviews, and things like that.
Speaker #5: So yes, what remains is the documentation, as well as the customary kind of closing conditions we need to execute that loan.
Speaker #6: So it might come in a little bit over time. But the goal right now is to get the documentation finalized and get the loan closed.
Speaker #3: Is it reasonable, or are you willing to put time in, that you get all the proceeds of the loan—the full extension—before the end of the year?
Speaker #7: 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 are you in a position to give any comments on recent graphite flake prices, please?
Speaker #3: I mean, are you reasonably confident much earlier?
Speaker #5: I think, similar to what I had mentioned to Heiko, we're going to move as fast as XM can move as far as getting the documentation signed, as well as accessing those loan proceeds.
Speaker #6: 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.
Speaker #5: The way I would think about the loan proceeds is, it's similar to a construction loan and construction draws. As you move forward, versus necessarily a one-time loan, usually you submit four draws to be able to draw down and purchase additional equipment or additional construction spend.
Speaker #6: 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 5, 6 hundred dollars a ton range.
Speaker #5: So, it might come in a little bit over time, but the goal right now is to get the documentation finalized and get the loan closed.
Speaker #6: 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 we're CUSA, when it comes online, we like to be mining that in a much higher price environment before curve for flake graphite, as well as anode material, is still rising.
Speaker #3: 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. Can you, or are you in a position to give any comments on recent graphite flake prices, please?
Speaker #6: The estimates that are out there. And so from a Westwater perspective, it would be much more beneficial to be mining that graphite out of CUSA at a higher price environment than what we see today.
Speaker #5: 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.
Speaker #7: Yeah. It would the government side on the FTC initiative or anything of that sort. But then on CUSA's as well, with the EIA permitting process, you mentioned by June 2027.
Speaker #5: 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 $500 to $600 a ton range.
Speaker #7: Is there any site work you can do while that is ongoing, or do you plan to dedicate more resources to CUSA in that review timeline, please?
Speaker #5: For the type of flake that we are purchasing, we've seen them maintain a relatively low level right now, which is one of the reasons we're—CUSA, when it comes online, we like to be mining that in a much higher price environment before the curve for flake graphite as well as anode material.
Speaker #6: Yeah. 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.
Speaker #5: It's 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 of Coosa at a higher price environment than what we see today.
Speaker #6: 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.
Speaker #3: Yeah, it would be great to get 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.
Speaker #7: Okay. Well, thank you very much for having the update call. And great to see the news from Friday. Thank you.
Speaker #3: Is there any site work you can do while that is ongoing, or do you plan to dedicate more resources to CUSA in that review timeline, please?
Speaker #6: Thank you.
Speaker #4: Your next question comes from the line of Pat McCann, with Dee Borrell Capital. Your line is open. Please go ahead.
Speaker #5: Yeah, we have already done 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.
Speaker #5: Hey, good morning, guys. Thanks for taking my questions. I guess my first question has to do with your discussions with the federal agencies. With you mentioned that the recent the XM loan is going to be for Kellington.
Speaker #5: So, looking at the overall timeline, with the permit being issued in June 2027, we're looking at CUSA being operational at the end of 2028 or early 2029 at this moment.
Speaker #5: So I'm wondering as you have these discussions with other federal agencies, if Kellington is kind of the leading factor in those discussions based on processing being the bottleneck in the supply chain?
Speaker #3: Okay. Well, thank you very much for having the update call, and great to see the news from Friday. Thank you.
Speaker #5: Thank you.
Speaker #5: Would you expect any near-term future funding commitments to similarly be earmarks for Kellington first and foremost? And how does the CUSA asset also help to play into these discussions?
Speaker #2: Your next question comes from the line of Pat McCann with Dee Borrell Capital. Your line is open. Please go ahead.
Speaker #4: Hey, good morning, guys. Thanks for taking my questions. I guess my first question has to do with your discussions with the federal agencies. You mentioned that the recent Ex-Im loan is going to be for Kellington.
Speaker #6: 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.
Speaker #4: So, I'm wondering, as you have these discussions with other federal agencies, if Kellington is kind of the leading factor in those discussions, based on processing being the bottleneck in the supply chain?
Speaker #6: And while the XM loan is dedicated towards progressing Kellington, I certainly wouldn't rule out that other initiatives that we have ongoing could provide funding for CUSA.
Speaker #4: Would you expect any near-term future funding commitments to similarly be earmarked for Kellington first and foremost? And how does the CUSA asset also help to plan for these discussions?
Speaker #6: This is a very supportive environment we have for mining, probably the best environment we've had in decades in the US. And again, the vertically integrated nature with us being able to provide our own feedstock for our processing plant.
Speaker #5: Thanks for your question, Pat. I think when we look at the various initiatives we currently have ongoing with the federal government, the fact that we have a vertically integrated strategy is really appealing to the government.
Speaker #6: It's really attractive to the government. It's attractive to customers as well. So we're going to be confidential about the exact status of our discussions with those agencies until we have something definitive to say.
Speaker #5: And while the XM loan is dedicated towards progressing Kellington, I certainly wouldn't rule out that other initiatives that we have ongoing could provide funding for CUSA.
Speaker #6: But I'm looking forward to having that conversation.
Speaker #5: Great. And I was also wondering if how you expect the recent federal validation to help with the customer pipeline? I guess during that process of being approved for the XM 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?
Speaker #5: This is a very supportive environment we have for mining—probably the best environment we've had in decades in the US. And again, the vertically integrated nature, with us being able to provide our own feedstock for our processing plant.
Speaker #5: It's really attractive to the government. It's attractive to customers as well. So we're going to be confidential about the exact status of our discussions with those agencies until we have something definitive to say.
Speaker #5: I guess 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, how does that help with your customer pipeline build?
Speaker #5: But I'm looking forward to having that conversation.
Speaker #4: Great. And then I was also wondering how you expect the recent federal validation to help with the customer pipeline? I guess during that process of being approved for the XM 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?
Speaker #6: Right. So I think really from the beginning, we took a somewhat different approach than others when it came to producing customer samples. I mean, going back four years ago, right out of the gate, we were running samples in five-ton batches.
Speaker #6: 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.
Speaker #4: I guess, how much does that help validate the process you have 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, you know what you're doing—how does that help with your customer pipeline build?
Speaker #6: Customers really liked that approach. And I think it had a real bearing on the fact that we were able to put off-take agreements in place with SKON and with Stellantis.
Speaker #6: Now, those contracts are currently in process of being renegotiated. Our relationships with those customers remain strong. As with 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.
Speaker #5: Right. So I think really from the beginning, we took a somewhat different approach than others when it came to producing customer samples. I mean, going back four years ago, right out of the gate, we were running samples in five-ton batches.
Speaker #5: 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.
Speaker #6: And customers understand that. So I feel very confident that as we move Kellington forward towards completion and commissioning, we'll be sold out.
Speaker #5: Customers really liked that approach, and I think it had a real bearing on the fact that we were able to put off-take agreements in place with SK On and with Stellantis.
Speaker #5: Excellent. That's all for me. I'll hop back in the queue. Congrats again on the announcement.
Speaker #5: Now, those contracts are currently in the process of being renegotiated. Our relationships with those customers remain strong, as with a number of other customers. The fact remains that if you want anode material produced here in the United States in 2027, 2028, or 2029, Westwater is really the only source that you have.
Speaker #4: There are no further questions at this time. So Pat, if you would like to ask a few more questions, please go ahead.
Speaker #5: 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.
Speaker #5: And customers understand that. So, I feel very confident that as we move Kellington forward towards completion and commissioning, we'll be sold out.
Speaker #5: I know that it's nothing final yet. But in broad strokes, is there any more you could say about what we should expect from that?
Speaker #6: Yeah. Thanks, Pat. This is Steve. You're right. I mean, until we have the definitive document signed and executed, I'm not going to give much details then.
Speaker #4: Excellent. That's all for me. I'll hop back in the queue. Congrats again on the announcement.
Speaker #6: 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.
Speaker #2: There are no further questions at this time. So, Pat, if you would like to ask a few more questions, please go ahead.
Speaker #6: Obviously, you know the quantum that has been disclosed. From a cost of capital perspective, what we saw on the private market, the private debt markets, is double-digit mid-teens type of cost of capital.
Speaker #4: 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?
Speaker #6: 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.
Speaker #4: I know that it's nothing final yet, but in broad strokes, is there any more you could say about what we should expect from that?
Speaker #6: So it's a 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.
Speaker #5: Yeah, thanks, Pat. This is Steve. You're right. I mean, until we have the definitive document signed and executed, I'm not going to give much detail then.
Speaker #5: Excellent. And if I could just squeeze in one more, and this will be it for me. I was wondering if in terms of meeting the current target of getting to production during 2027, what do you think would be the point in 2026 where you need to have the full phase one funding in place?
Speaker #5: But obviously, when that gets signed and executed, those details will come out publicly. But I think, in broad strokes, what you could see is multi-year.
Speaker #5: Obviously, you know the quantum that has been disclosed. From a cost of capital perspective, what we saw on the private debt markets is double-digit, mid-teens type of cost of capital.
Speaker #5: I mean, should we just think about it in terms of add 12 to 14 months or 10 to 12 months to the point at which you get full funding for phase one or when you would start production?
Speaker #5: 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.
Speaker #5: How should we think about that timeline? And how soon you need to have everything in place in order to in order to begin production during 2027?
Speaker #5: 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.
Speaker #6: Right. Thanks, Pat. Yeah. I think what we're still seeing with some of the timelines and us being able to put on some 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.
Speaker #4: Excellent. And if I could just squeeze in one more—and this will be it for me—I was wondering, in terms of meeting the current target of getting to production during 2027, what do you think would be the point in 2026 where you need to have the full Phase One funding in place?
Speaker #6: Once funding is complete, I think what the XM loan does it allows us to continue to advance Kellington and hold that 12-month timeline. So right now, as we advance and raise additional capital, we're going to continue to progress Kellington with the goal of getting that done.
Speaker #4: I mean, should we just think about it in terms of adding 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?
Speaker #6: And completed in 2027 and be able to have commercial production. So I don't think there's a second yeah, I don't think there's a set timeline because as we had secure additional capital, we're able to take steps forward and try to maintain that timeline.
Speaker #4: How should we think about that timeline? And how soon do you need to have everything in place in order to begin production during 2027?
Speaker #5: Right. Thanks, Pat. Yeah. I think what we're still seeing with some of the timelines and us being able to put on some 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.
Speaker #5: Perfect. Makes sense. Thanks so much, thanks so much. And again, congrats on the inclusion and the big announcement.
Speaker #6: Thank you.
Speaker #4: There are no further questions at this time. I will now turn the call back to Terence for any closing remarks.
Speaker #5: Once funding is complete, I think what the XM loan does is it allows us to continue to advance Kellington and hold that 12-month timeline. So as we advance and raise additional capital, we're going to continue to progress Kellington with the goal of getting that done.
Speaker #1: 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.
Speaker #1: Good day.
Speaker #5: And completed in 2027 and be able to have commercial production. So I don't think there's a set—yeah, 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.
Speaker #4: Perfect, makes sense. Thanks so much, and again, congrats on the inclusion and the big announcement.
Speaker #5: Thank you.
Speaker #2: There are no further questions at this time. I will now turn the call back to Terence for any closing remarks.
Speaker #1: Thanks, everyone, for joining us today. We're happy to have an opportunity to keep you updated on our progress, and we look forward to speaking with you soon on further developments.
Speaker #1: Good day.
