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 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.

Current wording

The following management’s discussion and analysis of the consolidated financial results and financial condition of Westwater for the three and nine months ended September 30, 2024, has been prepared based on information available to us as of November 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. 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.

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 Kellyton 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

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.

Current wording

During the first three quarters of 2024, construction activities consisted of receipt of additional long-lead equipment components and installing equipment and structural steel. As of the end of the third quarter of 2024, micronization (sizing) and spheroidization (shaping) mills were placed in the SPG building and the structural steel work is near completion. Installation of peripheral support equipment surrounding the micronization and spheroidization mills in the SPG building began during the third quarter of 2024. Westwater has constructed and continues to operate 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 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.

Current wording

Since inception of the project, and inclusive of liabilities as of September 30, 2024, the Company has incurred costs of approximately $121.5 million, net of $1.5 million recoupment of capital costs, related to construction activities for Phase I of the Kellyton Graphite Plant (Refer toNote 5 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 now estimates that approximately $124 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

During the quarter ended June 30, 2024, Westwater began installing its qualification line at the Kellyton Graphite Plant. The qualification line will be utilized to prepare larger bulk samples of CSPG for customer qualification. The qualification line is expected to produce CSPG in 5 to 10 mt (or larger) batches. To speed the qualification process, Westwater has taken a dual approach to qualification of the CSPG. During Westwater’s pilot program, smaller sample sizes were prepared utilizing the Company’s equipment suppliers, which suppliers utilized the same technology and scale equipment as Westwater had purchased for use in the Kellyton Graphite Plant. Westwater is now installing such equipment at the Kellyton Graphite Plant. The qualification line is expected to be operational in the fourth quarter of 2024 and is expected to produce approximately 1 mt per day of CSPG. Westwater anticipates utilizing the qualification line to supply future bulk samples, which samples will be representative of mass production materials because the equipment and underlying technologies used to produce the samples are representative of full-scale production processes.

Current wording

During the quarter ended September 30, 2024, Westwater continued to receive and install equipment for its qualification line at the Kellyton Graphite Plant. The qualification line is expected to be operational in the fourth quarter of 2024 and will be utilized to prepare larger bulk samples of CSPG for customer qualification. The qualification line is expected to produce approximately 1 mt per day of CSPG and the samples produced on it will be representative of CSPG mass production. The Company expects that the operation of the qualification line will allow Westwater to supply its customers bulk samples of CSPG in 1 to 10 mt batches for cell qualification activities while the Company completes the construction of Phase I of the Kellyton Graphite Plant. The line will also be used to train Westwater’s operations team which the Company expects will expedite the commissioning and startup of the Kellyton Graphite Plant.

Previous wording

Through its wholly owned subsidiary, Alabama Graphite, Westwater holds mineral rights across 41,965 acres of the Alabama graphite belt in Coosa County, Alabama. During the fourth quarter of 2023, Westwater completed an IA, with an economic analysis for the Coosa Graphite Deposit. The IA was completed as a Technical Report Summary (“TRS”) disclosing Mineral Resources, including an economic analysis, for the Coosa Graphite Deposit, in accordance with S-K 1300. The TRS was completed on behalf of Westwater by SLR International Corporation (“SLR”) with an effective date of December 11, 2023, and filed with the SEC on Form 8-K on December 13, 2023. For further information regarding the IA and the Coosa Graphite Deposit, refer to Item 2, Properties, in the Annual Report.

Current wording

Through its wholly owned subsidiary, Alabama Graphite, Westwater holds mineral rights across 41,965 acres of the Alabama graphite belt in Coosa County, Alabama. During the fourth quarter of 2023, Westwater completed an IA, with an economic analysis for the Coosa Graphite Deposit. The IA was completed as a Technical Report Summary (“TRS”) disclosing Mineral Resources, including an economic analysis, for the Coosa Graphite Deposit, in accordance with S-K 1300. The TRS was completed on behalf of Westwater by SLR International Corporation (“SLR”) with an effective date of December 11, 2023, and filed with the SEC on Form 8-K/A on October 9, 2024. For further information regarding the IA and the Coosa Graphite Deposit, refer to Item 2, Properties, in the Annual Report and the aforementioned Form 8-K/A.

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 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

Current wording

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 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. In November 2024, President Trump was re-elected as President; it is not yet known how a change in Presidential administration may affect the domestic production of critical materials, and related tariff and tax incentive policies,

Previous wording

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

Current wording

Capital Raises during the three and nine months ended September 30, 2024

Previous 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.

Current wording

During the three and nine months ended September 30, 2024, the Company sold 0.5 million and 2.3 million shares of common stock for net proceeds of $0.3 million and $1.1 million, respectively, pursuant to the ATM Offering Agreement with Cantor. During the three and nine months ended September 30, 2024, the Company sold 0.4 million shares of common stock for net proceeds of $0.1 million, pursuant to the ATM Sales Agreement with H.C. Wainwright.

Previous 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.

Current wording

Our net loss for the three months ended September 30, 2024, was $3.1 million, or $0.05 per share, as compared with a net loss of $3.5 million, or $0.07 per share for the same period in 2023. The $0.4 million decrease in our net loss was primarily due to lower costs related to product development and exploration; partially offset by a loss on the sale of raw material inventory and less interest income.

Previous wording

Our net loss for the six months ended June 30, 2024, was $6.7 million, or $0.12 per share, as compared with a net loss of $6.0 million or $0.12 per share for the same period in 2023. The $0.7 million increase in our net loss from the prior year period 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 a decrease in product development and exploration expenses.

Current wording

Our net loss for the nine months ended September 30, 2024, was $9.8 million, or $0.17 per share, as compared with a net loss of $9.5 million or $0.19 per share for the same period in 2023. The $0.3 million increase in our net loss was primarily due to a loss on the sale of raw material inventory and less interest income; partially offset by a decrease in product development and exploration expenses.

Previous 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.

Current wording

Product development expenses for the three and nine months ended September 30, 2024, were $0.3 million and $0.9 million, respectively, a decrease of $0.7 million and $1.8 million compared to the same periods in 2023, respectively. Product development expenses for the three and nine months ended September 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 and six months ended June 30, 2024, decreased slightly compared to the same periods in 2023, due to lower personnel costs.

Current wording

Exploration expenses for the three and nine months ended September 30, 2024 decreased by $0.1 million and $0.2 million, respectively, compared to the same periods in 2023, due to lower personnel costs.

Previous wording

Other expense, net for the three and six months ended June 30, 2024, was $1.0 million and $0.9 million, respectively, an increase of $1.4 million and $1.9 million, respectively, compared to the same periods in 2023. The increase in other expense, net for both periods is due to lower average cash balance resulting in less interest income earned and an increase in other expenses related to sales and write-down of raw material inventory.

Current wording

Other expense, net for the three and nine months ended September 30, 2024, was $0.4 million and $1.2 million, respectively, an increase of $0.5 million and $2.4 million, respectively, compared to the same periods in 2023. The increase in other expense, net for both periods is due to lower average cash balance resulting in less interest income earned and a loss on the sale of raw material inventory in the current periods.

Previous 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.

Current wording

Net cash used in operating activities of $3.8 million for the nine months ended September 30, 2024, represents a decrease of $8.4 million compared to the same period in 2023. The decrease in cash used in operating activities was primarily due to $3.4 million of cash collected on sales of raw material inventory in 2024, a decrease in purchases of raw material inventory of $2.2 million, a decrease in third-party services related to product development of $1.0 million, and $0.7 million less legal and consulting expense in 2024 compared to 2023. These changes to operating cash flow were partially offset by a reduction of interest income of $1.0 million. The remaining change in operating cash flow was primarily due toother non-capital related liabilities of $2.1 million.

Previous 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.

Current wording

Net cash used in investing activities decreased by $51.8 million for the nine months ended September 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 seeking debt financing to fund the remaining construction of Phase I of the Kellyton Graphite Plant. This decrease was slightly offset by $1.5 million of cash received from the sale of an asset during 2024. Refer toNote 5 for further details.

Previous 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.

Current wording

Net cash provided by financing activities decreased by $3.0 million for the nine months ended September 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 Sales Agreement and ATM Offering Agreement, lower trading volumes, and lower average stock prices during the nine months ended September 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 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

Current wording

The Company has relied on equity and debt financings and asset sales to fund its operations. During the nine months ended September 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 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.

Previous wording

The Company expects to continue to incur losses as a result of costs and expenses related to construction activity and ongoing general and administrative expenses until operations commence at the Kellyton Graphite Plant. The Company has historically relied and expects to continue to rely, on debt and equity financing to fund its operations and business plan. Along with evaluating the continued use of the ATM Offering Agreement, the Company is considering other forms of project financing to fund the construction of the Kellyton Graphite Plant, including both Phase I and Phase II. The alternative sources of project financing could include, but are not limited to, project debt, convertible debt, or pursuing a partnership or joint venture. If funds are not available to fund the construction of Phase I of the Kellyton Graphite Plant through the equity markets or alternative financing sources, the Company may be required to reduce or severely curtail operations, change its planned business development strategies related to the Coosa Graphite Deposit and Phase I of the Kellyton Graphite Plant, alter the construction and commissioning timeline of Phase I of the Kellyton Graphite Plant, or put the construction of Phase I on hold until additional funding is obtained. If the Company is required to abandon construction and development or alter its intended long-term plans related the Kellyton Graphite Plant, the Company could be required to evaluate the recoverability of its long-lived assets.

Current wording

The Company expects to continue to incur losses as a result of costs and expenses related to construction activity and ongoing general and administrative expenses until operations commence at the Kellyton Graphite Plant. The Company has historically relied and expects to continue to rely, on debt and equity financing to fund its operations and business plan. Along with evaluating the use of the ATM Sales Agreement and 2024 Lincoln Park PA, the Company is considering other forms of project financing to fund the construction of the Kellyton Graphite Plant. The alternative sources of project financing could include, but are not limited to, project debt, convertible debt, or pursuing a partnership or joint venture. If funds are not available to fund the construction of Phase I of the Kellyton Graphite Plant through the equity markets or alternative financing sources, the Company may be required to reduce or severely curtail operations, change its planned business development strategies related to the Coosa Graphite Deposit and Phase I of the Kellyton Graphite Plant, alter the construction and commissioning timeline of Phase I of the Kellyton Graphite Plant, or put the construction of Phase I on hold until additional funding is obtained. If the Company is required to abandon construction and development or alter its intended long-term plans related the Kellyton Graphite Plant, the Company could be required to evaluate the recoverability of its long-lived assets.

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 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.

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 July 3, 2024, the Company filed a new Registration Statement on Form S-3 (the “Registration Statement”), which was declared effective by the SEC on August 29, 2024. The Company issubject to General Instruction I.B.6 of Form S-3, which