WESTWATER RESOURCES INC

Previous wording

The following management’s discussion and analysis of the consolidated financial results and financial condition of Westwater for the three months ended March 31, 2024 has been prepared based on information available to us as of May 14, 2024. This discussion should be read in conjunction with the unaudited Interim Financial Statements and Notes thereto included herewith and the audited Consolidated Financial Statements of Westwater for the period ended December 31, 2023 and the related notes thereto included in our Annual Report, which were prepared in accordance with U.S. GAAP. This management’s discussion and analysis contains forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth elsewhere in this report. See “Cautionary Note Regarding Forward-Looking Statements” herein.

Current wording

The following management’s discussion and analysis of the consolidated financial results and financial condition of Westwater for the three and six months ended June 30, 2024, has been prepared based on information available to us as of August 14, 2024. This discussion should be read in conjunction with the unaudited Interim Financial Statements and Notes thereto included herewith and the audited Consolidated Financial Statements of Westwater for the period ended December 31, 2023, and the related notes thereto included in our Annual Report, which were prepared in accordance with U.S. GAAP. This management’s discussion and analysis contains forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth elsewhere in this report. See “Cautionary Note Regarding Forward-Looking Statements” herein.

Previous wording

Westwater Resources, Inc., originally incorporated in 1977, is an energy technology company focused on developing battery-grade natural graphite materials through its two primary projects, the Kellyton Graphite Plant and the Coosa Graphite Deposit, both located in Coosa County, Alabama. Westwater expects the Kellyon Graphite Plant to process natural flake graphite and, based on current studies and estimates, produce 12,500 metric tons (“mt”) per year of CSPG in Phase I of the Kellyton Graphite Plant, primarily for use in lithium-ion batteries. Westwater also holds mineral rights to explore and potentially mine the Coosa Graphite Deposit, which Westwater anticipates will eventually provide natural graphite flake concentrate to the Kellyton Graphite Plant.

Current wording

Westwater Resources, Inc., originally incorporated in 1977, is an energy technology company focused on developing battery-grade natural graphite materials through its two primary projects, the Kellyton Graphite Plant and the Coosa Graphite Deposit, both located in Coosa County, Alabama. Once operational, Westwater expects the Kellyon Graphite Plant to process natural flake graphite and, based on current studies and estimates, produce 12,500 metric tons (“mt”) per year of CSPG in Phase I of the Kellyton Graphite Plant, primarily for use in lithium-ion batteries. Westwater also holds mineral rights to explore and potentially mine the Coosa Graphite Deposit, which Westwater anticipates will eventually provide natural graphite flake concentrate to the Kellyton Graphite Plant.

Previous wording

As previously announced, during the first quarter of 2024, the Company entered into the Procurement Agreement with SK On. Pursuant to the terms of the Procurement Agreement, Westwater will supply CSPG natural graphite anode products from its Kellyton Graphite Plant to SK On battery plants located within the U.S. Under the terms of the Procurement Agreement, SK On will be obligated to purchase, on an annual basis, a quantity of Product equal to a percentage of the forecasted volume required by SK On (the “Minimum Purchase Amount”), provided that the Minimum Purchase Amount may be increased from time to time by the mutual agreement of the parties. The forecasted volume required by SK On in the final year of the Procurement Agreement is 10,000 mt of CSPG. The Procurement Agreement is the result of Westwater and SK On’s collaboration pursuant to the JDA that was executed in the first quarter of 2023.

Current wording

As previously announced, during the first quarter of 2024, the Company entered into the Procurement Agreement with SK On. Pursuant to the terms of the Procurement Agreement, Westwater will supply CSPG natural graphite anode products from its Kellyton Graphite Plant to SK On battery plants located within the U.S. Under the terms of the Procurement Agreement, SK On will be obligated to purchase, on an annual basis, a quantity of CSPG equal to a percentage of the forecasted volume required by SK On (the “Minimum Purchase Amount”), provided that the Minimum Purchase Amount may be increased from time to time by the mutual agreement of the parties, upon Westwater providing CSPG in accordance with the terms of the contract. The forecasted volume required by SK On in the final year of the Procurement Agreement is 10,000 mt of CSPG.

Previous wording

During the first quarter of 2024, construction activities consisted of receipt of additional long-lead equipment components and installing equipment and structural steel. Westwater has constructed and is currently operating its R&D Lab. The R&D Lab allows Westwater to continue product development and optimization with potential customers, and to perform additional quality control tests. It also affords greater flexibility to optimize future samples in accordance with customer specifications.

Current wording

During the first two quarters of 2024, construction activities consisted of receipt of additional long-lead equipment components and installing equipment and structural steel. Westwater has constructed and is currently operating its R&D Lab. The R&D Lab allows Westwater to continue product development and optimization with potential customers, and to perform additional quality control tests. It also affords greater flexibility to optimize future samples in accordance with customer specifications.

Previous wording

Since inception of the project, and inclusive of liabilities as of March 31, 2024, the Company has incurred costs of approximately $120.6 million related to construction activities for Phase I of the Kellyton Graphite Plant. While the Company has continued construction activities related to Phase I of the Kellyton Graphite Plant during the first quarter of 2024, Westwater has reduced the level of construction activity from anticipated levels, including adjusting the timing of future work, until receipt of the additional funding needed to complete construction of Phase I of the Kellyton Graphite Plant, which is estimated at approximately $150 million. Reducing the level of construction activity until financing is secured is expected to impact the overall schedule to complete Phase I of the Kellyton Graphite Plant. The Company expects to provide an update on construction timing once, and if, the additional funding is secured.

Current wording

Since inception of the project, and inclusive of liabilities as of June 30, 2024, the Company has incurred costs of approximately $120.4 million, net of $1.5 million recoupment of capital costs, related to construction activities for Phase I of the Kellyton Graphite Plant (Refer toNote 4 for further details). While the Company has continued construction activities related to Phase I of the Kellyton Graphite Plant during the first half of 2024, Westwater has reduced the level of construction activity from anticipated levels, including adjusting the timing of future work, until receipt of the additional funding needed to complete construction of Phase I of the Kellyton Graphite Plant. The Company estimates that approximately $150 million will be required to complete construction of Phase I of the Kellyton Graphite Plant. Reducing the level of construction activity until financing is secured is expected to impact the overall schedule to complete Phase I of the Kellyton Graphite Plant. As a result of entry into the Offtake Agreement and Procurement Agreement, we expect to begin production in 2026, subject to securing financing to complete construction of Phase I of the Kellyton Graphite Plant.

Previous wording

Westwater is currently engaged in discussions with several entities related to financing of the Kellyton Graphite Plant. Issues in the market regarding the availability of critical minerals for battery products and the need for domestically sourced critical minerals, particularly in light of current geopolitical conditions, have helped create increased interest in the Kellyton Graphite Plant by potential financing sources. Management believes that the execution of one or more commercial agreements to sell some portion of its anticipated CSPG production, including the Procurement Agreement with SK On, will be a condition precedent to securing the financing needed to complete construction of the Phase I of the Kellyton Graphite Plant. Even with the execution of commercial agreements to sell some portion of the Company’s anticipated CSPG production, no assurance can be given that additional financing will be available, or in amounts sufficient to meet its needs, or on terms acceptable to the Company.

Current wording

Westwater is currently engaged in discussions with several entities related to financing of the Kellyton Graphite Plant. Issues in the market regarding the availability of critical minerals for battery products and the need for domestically sourced critical minerals, particularly in light of current geopolitical conditions, have helped create increased interest in the Kellyton Graphite Plant by potential financing sources. Management believes that the execution of its two commercial offtake agreements, the Procurement Agreement with SK On and Offtake Agreement with FCA, to sell its anticipated CSPG production from Phase I, is a step towards securing the financing needed to complete construction of Phase I of the Kellyton Graphite Plant. Even with the execution of the commercial offtake agreements, no assurance can be given that additional financing will be available, or in amounts sufficient to meet its needs, or on terms acceptable to the Company.

Previous wording

During the first quarter of 2024, Westwater completed a debottlenecking study with its third-party engineering firm resulting in a 67% year-over-year increase in anticipated CSPG production for Phase I of the Kellyton Graphite Plant. As a result of this study, Westwater now expects CSPG production of 12,500 mt per year for Phase I of the Kellyton Graphite Plant. Total estimated construction costs related to Phase I of the Kellyton Graphite Plant remain at approximately $271 million.

Current wording

As previously announced, during the first quarter of 2024, Westwater completed a debottlenecking study with its third-party engineering firm resulting in a 67% year-over-year increase in anticipated CSPG production for Phase I of the Kellyton Graphite Plant. As a result of this study, Westwater now expects CSPG production of 12,500 mt per year for Phase I of the Kellyton Graphite Plant. Total estimated construction costs related to Phase I of the Kellyton Graphite Plant remain at approximately $271 million.

Previous wording

Approximately 78% of natural graphite anode global supply comes from China (Benchmark, 2023). In addition, China is one of the largest global importers of natural graphite flake, relying on less expensive African sources. Both of these factors cause China to pose a geopolitical risk, particularly to the EU and U.S. China and the U.S. have imposed tariffs and export controls on critical minerals, including graphite, indicating the potential for further trade barriers between China and the United States. Effective December 1, 2023, China began requiring government approval for exports of two

Current wording

Approximately 78% of natural graphite anode global supply comes from China (Benchmark, 2023). In addition, China is one of the largest global importers of natural graphite flake, relying on less expensive African sources. Both of these factors cause China to pose a geopolitical risk, particularly to the U.S. and EU. China and the U.S. have imposed tariffs and export controls on critical minerals, including graphite, indicating the potential for further trade barriers between China and the United States. Effective December 1, 2023, China began requiring government approval for exports of two types of graphite products, including high-purity, high-hardness and high-intensity synthetic graphite material and natural flake graphite and its products. Westwater believes these export restrictions continue to highlight the supply-chain risk for the U.S. and other countries related to natural graphite products and could provide an opportunity for Westwater.

Previous wording

On May 3, 2024, the U.S. Department of the Treasury (the “Treasury Department”) adopted final regulations related to the Clean Vehicle Tax credit of $7,500 under section 30D of the Internal Revenue Code (the “federal electric vehicle tax credit”). The final rules effectuate the guidance previously provided in December 2023 by the Treasury Department related to the key requirements for federal clean vehicle tax credit. The final rules include a process – called the traced qualifying value test – for automakers to trace the battery supply chain to qualify for the federal electric vehicle tax credit's domestic content requirements, which critical minerals rule takes effect in 2025. The final rules also prohibit battery parts and critical minerals from “excluded entities” – defined as foreign entities of concern, or FEOCs – from qualifying for the federal electric vehicle tax credit. Under relevant Treasury Department and U.S. Department of Energy interpretive regulations regarding the scope and application of FEOC-related restrictions, the People’s Republic of China is identified as an FEOC. The final FEOC battery component rules are important to Westwater because beginning in 2027, any vehicle whose batteries contain graphite that was extracted or processed in any way, and to any degree, by an FEOC – including China – will be ruled ineligible for the federal electric vehicle tax credit. As a result, an FEOC must be excluded from a vehicle battery’s supply chain in order for the vehicle to be eligible for the federal electric vehicle tax credit. Because Westwater is not an FEOC and intends to produce battery grade graphite for lithium-ion batteries to be used in electric vehicles in the United States, management believes its future production of battery-graphite products will meet the domestic content requirements of the IRA, which we anticipate will provide indirect future benefit to the Company.

Current wording

On May 3, 2024, the U.S. Department of the Treasury (the “Treasury Department”) adopted final regulations related to the Clean Vehicle Tax credit of $7,500 under section 30D of the Internal Revenue Code (the “federal electric vehicle tax credit”). The final rules effectuate the guidance previously provided in December 2023 by the Treasury Department related to the key requirements for the federal electric vehicle tax credit. The final rules include a process – called the traced qualifying value test – for automakers to trace the battery supply chain to qualify for the federal electric vehicle tax credit’s domestic content requirements, which takes effect in 2025. The final rules also prohibit battery parts and critical minerals from “excluded entities” – defined as foreign entities of concern, or FEOCs – from qualifying for the federal electric vehicle tax credit. Under relevant Treasury Department and U.S. Department of Energy interpretive regulations regarding the scope and application of FEOC-related restrictions, the People’s Republic of China is identified as an FEOC. The final FEOC battery component rules are important to Westwater because, beginning in 2027, any electric vehicle whose batteries contain graphite that was extracted or processed in any way, and to any degree, by an FEOC – including China – will be ruled ineligible for the federal electric vehicle tax credit. As a result, an FEOC must be excluded from an electric vehicle battery’s supply chain in order for the electric vehicle to be eligible for the federal electric vehicle

Previous wording

Capital Raises during the three months ended March 31, 2024

Current wording

Capital Raises during the three and six months ended June 30, 2024

Previous wording

During the three months ended March 31, 2024, the Company sold 1.2 million shares of common stock for net proceeds of $0.6 million pursuant to the ATM Offering Agreement.

Current wording

During the three and six months ended June 30, 2024, the Company sold 0.5 million and 1.8 million shares of common stock for net proceeds of $0.2 million and $0.8 million pursuant to the ATM Offering Agreement.

Previous wording

SeeNote 4to the Interim Financial Statements for additional information.

Current wording

SeeNote 6to the Interim Financial Statements for additional information.

Previous wording

Our net loss for the three months ended March 31, 2024, was $2.9 million, or $0.05 per share, as compared with a net loss of $2.4 million, or $0.05 per share for the same period in 2023. The $0.5 million increase in our net loss was due primarily to higher costs related to general and administrative expenses and less interest income; partially offset by less product development expense.

Current wording

Our net loss for the three months ended June 30, 2024, was $3.8 million, or $0.07 per share, as compared with a net loss of $3.6 million, or $0.07 per share for the same period in 2023. The $0.2 million increase in our net loss was due primarily to an increase in other expenses related to sales of raw material inventory, a write-down of raw material inventory, and less interest income; partially offset by lower costs related to product development and general and administrative expenses.

Previous wording

Product development expenses for the three months ended March 31, 2024, were $0.3 million, a decrease of $0.2 million compared to the same period in 2023. Product development expenses for the three months ended March 31, 2024 and 2023, related primarily to sample production of battery-grade natural graphite products for evaluation by potential customers. Since the third quarter of 2023, the Company has utilized its in-house R&D Lab for sample processing, resulting in lower costs for each batch of samples produced.

Current wording

Product development expenses for the three and six months ended June 30, 2024, were $0.3 million and $0.6 million, respectively, a decrease of $0.9 million and $1.1 million compared to the same periods in 2023, respectively. Product development expenses for the three and six months ended June 30, 2024 and 2023, related primarily to sample production of battery-grade natural graphite products for evaluation by potential customers. Since the third quarter of 2023, the Company has utilized its in-house R&D Lab for sample processing, resulting in lower costs for each batch of samples produced.

Previous wording

Exploration expenses for the three months ended March 31, 2024, decreased slightly compared to the same quarter in 2023, due to lower personnel costs.

Current wording

Exploration expenses for the three and six months ended June 30, 2024, decreased slightly compared to the same periods in 2023, due to lower personnel costs.

Previous wording

Net cash used in operating activities of $2.8 million for the three months ended March 31, 2024, represents a decrease of $0.2 million compared to the same period in 2023. The decrease in cash used in operating activities was primarily due to $0.9 million less purchases of raw material inventory, partially offset by $0.5 million less interest income during the first quarter of 2024 compared to the same period of 2023. The remaining offset was due to other changes in working capital.

Current wording

Net cash used in operating activities of $5.2 million for the six months ended June 30, 2024, represents a decrease of $3.7 million compared to the same period in 2023. The decrease in cash used in operating activities was primarily due to decreases in purchases of raw material inventory of $1.9 million, third-party services related to product development of $1.0 million, and $0.2 million of cash collected on sales of raw material inventory. These changes to operating cash flow were partially offset by a reduction of interest income of $0.8 million. The remaining change in operating cash flow was primarily due to other non-capital related liabilities of $1.3 million.

Previous wording

Net cash used in investing activities decreased by $31.5 million for the three months ended March 31, 2024, as compared to the same period in 2023. The decrease was a result of lower capital expenditures as the Company reduces construction activity while working to put additional financing in place to fund the construction of Phase I of the Kellyton Graphite Plant.

Current wording

Net cash used in investing activities decreased by $48.6 million for the six months ended June 30, 2024, as compared to the same period in 2023. The decrease was a result of lower capital expenditures as the Company reduces construction activity while working to put additional financing in place to fund the construction of Phase I of the Kellyton Graphite Plant. This decrease was slightly offset by $0.8 million of cash received from the sale of an asset during the second quarter of 2024. SeeNote 4 for further details.

Previous wording

Net cash provided by financing activities decreased by $0.9 million for the three months ended March 31, 2024, as compared to the same period in 2023. The decrease was primarily due to fewer shares of common stock sold under the

Current wording

Net cash provided by financing activities decreased by $2.2 million for the six months ended June 30, 2024, as compared to the same period in 2023. The decrease was primarily due to fewer shares of common stock sold under the ATM Offering Agreement, lower trading volumes, and lower average stock prices during the six months ended June 30, 2024, compared to the same period in 2023.

Previous wording

The Company has relied on equity and debt financings and asset sales to fund its operations. During the three months ended March 31, 2024, and through the date that the Interim Financial Statement were issued, the Company continued construction activities related to the Kellyton Graphite Plant. However, while the Company has continued certain construction activities related to Phase I of the Kellyton Graphite Plant, those activities have been significantly reduced from anticipated levels until the additional funding needed to complete Phase I of the Kellyton Graphite Plant is in place. The Company’s construction related contracts include termination provisions at the Company’s election that do not obligate the Company to make payments beyond what is incurred by the third-party service provider through the date of such termination. In its going concern analysis, the Company considered construction activity and related costs through the date that the Interim Financial Statements were issued. Based on this analysis and excluding potential external funding opportunities and the Company’s current equity facility, the Company’s planned non-discretionary expenditures for one year past the issue date of these Interim Financial Statements, exceed the cash on hand as of the date of these Interim Financial Statements.

Current wording

The Company has relied on equity and debt financings and asset sales to fund its operations. During the six months ended June 30, 2024, and through the date that the Interim Financial Statement were issued, the Company continued construction activities related to the Kellyton Graphite Plant. However, while the Company has continued certain construction activities related to Phase I of the Kellyton Graphite Plant, those activities have been significantly reduced from anticipated levels until the additional funding needed to complete Phase I of the Kellyton Graphite Plant is in place. The Company’s construction related contracts include termination provisions at the Company’s election that do

Previous wording

On March 31, 2024, the Company’s cash balance was approximately $6.1 million. During the three months ended March 31, 2024, the Company sold 1.2 million shares of common stock for net proceeds of $0.6 million pursuant to the ATM Offering Agreement. As of March 31, 2024, the Company may offer and sell shares of its common stock having an aggregate offering price of up to approximately $6.5 million under the ATM Offering Agreement.

Current wording

On June 30, 2024, the Company’s cash balance was approximately $3.2 million. During the six months ended June 30, 2024, the Company sold 1.8 million shares of common stock for net proceeds of $0.8 million pursuant to the ATM Offering Agreement. As of June 30, 2024, the Company may offer and sell shares of its common stock having an aggregate offering price of up to approximately $7.0 million under the ATM Offering Agreement.

Previous wording

While the Company has advanced its business plan and has been successful in the past raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available in amounts sufficient to meet its needs, or on terms acceptable to the Company. Recent volatility in the equity and debt capital markets, rising interest rates, inflation, electric vehicle production and adoption rates, generally uncertain economic conditions and regulatory policy/enforcement, and unstable geopolitical conditions could significantly impact the Company’s ability to access the necessary funding to advance its business plan. Further, on March 13, 2023, the Company filed a prospectus supplement to the Registration Statement and as a result, the Company’s access to the available capacity under the Registration Statement is subject to General Instructions I.B.6 of Form S-3, which limits the amounts that the Company may sell under the Registration Statement. As of March 31, 2024, after giving effect to these limitations and the public float of our common stock as of the date of the Annual Report, and after giving effect to the terms of the ATM Offering Agreement, we currently may offer and sell shares of our common stock having an

Current wording

While the Company has advanced its business plan and has been successful in the past raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available in amounts sufficient to meet its needs, or on terms acceptable to the Company. Recent volatility in the equity and debt capital markets, rising interest rates, inflation, electric vehicle production and adoption rates, generally uncertain economic conditions and regulatory policy and enforcement, and unstable geopolitical conditions could significantly impact the Company’s ability to access the necessary funding to advance its business plan. On March 13, 2023, the Company filed a prospectus supplement to the Existing Registration Statement and as a result, the Company’s access to the available capacity under the Existing Registration Statement is subject to General Instructions I.B.6 of Form S-3, which limits the amounts that the Company may sell under the Registration Statement. As of June 30, 2024, after giving effect to these limitations and the public float of our common stock as of the date of the Annual Report, and after giving effect to the terms of the ATM Offering Agreement, we currently may offer and sell shares of our common stock having an aggregate offering price of up to approximately $7.0 million under the ATM Offering Agreement, which amount is in addition to the shares of common stock that we have sold to date in accordance with the ATM Offering Agreement under the Existing Registration Statement and prospectus supplements thereto. On July 3, 2024, the Company filed the Registration Statement, which has not yet been declared effective by the SEC. The Existing Registration Statement expired on July 8, 2024, however, pursuant to Rule 415 of the Securities Act, the Company is permitted to continue making offers and sales of securities covered by the Existing Registration Statement and prospectus supplements thereto until the earlier of the effective date of the Registration Statement or 180 days after July 8, 2024.