WESTWATER RESOURCES, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS WESTWATER RESOURCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (expressed in thousands of dollars, except share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2021 ​ 2020 ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ Current Assets: ​ ​ Cash and cash equivalents $ 118,969 $ 50,315 Equity securities 3,438 1,520 Prepaid and other current assets 366 754 Total Current Assets 122,773 52,589 ​ ​ ​ ​ ​ ​ ​ Property, plant and equipment, at cost: Property, plant and equipment 10,577 9,080 Less accumulated depreciation and depletion ( 97 ) ( 95 ) Net property, plant and equipment 10,480 8,985 Operating lease right-of-use assets 258 353 Restricted cash — 10 Other long-term assets 245 — Total Assets $ 133,756 $ 61,937 ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current Liabilities: Accounts payable $ 3,002 $ 1,734 Accrued liabilities 2,792 2,369 Operating lease liability - current 151 149 Total Current Liabilities 5,945 4,252 ​ ​ ​ ​ ​ ​ ​ Operating lease liability, net of current 117 214 Other long-term liabilities 1,352 — Total Liabilities 7,414 4,466 ​ ​ ​ ​ ​ ​ ​ Commitments and Contingencies (see note 10) ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity: Common stock, 100,000,000 shares authorized, $ .001 par value; Issued shares - 34,636,224 and 19,172,020 respectively Outstanding shares - 34,636,063 and 19,171,859 respectively 34 19 Paid-in capital 466,017 383,723 Accumulated deficit ( 339,451 ) ( 326,013 ) Less: Treasury stock ( 161 shares), at cost ( 258 ) ( 258 ) Total Stockholders’ Equity 126,342 57,471 ​ ​ ​ ​ ​ ​ ​ Total Liabilities and Stockholders’ Equity $ 133,756 $ 61,937 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ ​ 3 Table of Contents WESTWATER RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (expressed in thousands of dollars, except share and per share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ 2021 2020 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product development expenses ​ $ ( 1,834 ) ​ $ ( 1,641 ) ​ $ ( 5,766 ) ​ $ ( 1,942 ) ​ Exploration expenses ​ ​ ( 348 ) ​ ​ — ​ ​ ( 877 ) ​ ​ — ​ General and administrative expenses ​ ​ ( 2,189 ) ​ ​ ( 1,536 ) ​ ​ ( 6,470 ) ​ ​ ( 4,106 ) ​ Arbitration costs ​ ​ ( 644 ) ​ ​ ( 171 ) ​ ​ ( 2,190 ) ​ ​ ( 868 ) ​ Mineral property expenses ​ ​ ( 94 ) ​ ​ ( 12 ) ​ ​ ( 94 ) ​ ​ ( 18 ) ​ Depreciation and amortization ​ ( 1 ) ​ ​ 19 ​ ​ ( 3 ) ​ ​ ( 5 ) ​ Total operating expenses ​ ​ ( 5,110 ) ​ ​ ( 3,341 ) ​ ​ ( 15,400 ) ​ ​ ( 6,939 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Operating Income/(Expenses): ​ ​ ​ Unrealized investment gain 507 — ​ 1,918 — ​ Other income (expense) ​ ​ 35 ​ ​ ( 21 ) ​ ​ 44 ​ ​ 7 ​ Total other income (expense) 542 ( 21 ) ​ 1,962 7 ​ ​ ​ ​ ​ ​ Net Loss from continuing operations ​ ( 4,568 ) ​ ( 3,362 ) ​ ​ ( 13,438 ) ​ ( 6,932 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Loss from discontinued operations ​ — ​ ( 6,389 ) ​ ​ — ​ ( 8,573 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Loss $ ( 4,568 ) $ ( 9,751 ) ​ $ ( 13,438 ) $ ( 15,505 ) ​ ​ ​ ​ BASIC AND DILUTED LOSS PER SHARE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LOSS PER SHARE FROM CONTINUING OPERATIONS $ ( 0.13 ) $ ( 0.42 ) ​ $ ( 0.42 ) $ ( 1.18 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LOSS PER SHARE FROM DISCONTINUED OPERATIONS ​ $ — ​ $ ( 0.81 ) ​ $ — ​ $ ( 1.45 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 34,331,778 7,904,522 ​ 31,808,215 5,905,850 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 4 Table of Contents WESTWATER RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (expressed in thousands of dollars) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Nine Months Ended September 30, ​ 2021 2020 Operating Activities: ​ ​ Net loss $ ( 13,438 ) ​ $ ( 15,505 ) Reconciliation of net loss to cash used in operations: ​ ​ Non-cash lease expense ( 1 ) ​ 2 Accretion of asset retirement obligations — ​ 170 Costs incurred for restoration and reclamation activities ​ ​ — ​ ​ ( 501 ) Depreciation and amortization 3 ​ 41 Stock compensation expense 594 ​ 170 Unrealized (gain) on equity securities ​ ​ ( 1,918 ) ​ ​ — Impairment of uranium properties ​ ​ — ​ ​ 5,200 Effect of changes in operating working capital items: ​ ​ ​ ​ ​ ​ Decrease/(Increase) in prepaids and other assets 55 ​ ( 29 ) Increase/(Decrease) in payables and accrued liabilities 1,665 ​ 318 Net Cash Used In Operating Activities ( 13,040 ) ​ ( 10,134 ) ​ ​ ​ ​ ​ ​ ​ Cash Flows From Investing Activities: ​ Proceeds from PPP loan escrow 333 ​ — Building deposit ​ ​ ( 245 ) ​ ​ — Capital expenditures ( 119 ) ​ ( 107 ) Net Cash Used In Investing Activities ( 31 ) ​ ( 107 ) ​ ​ ​ ​ ​ ​ ​ Cash Flows From Financing Activities: ​ Proceeds from note payable ​ ​ — ​ ​ 331 Issuance of common stock, net 81,865 ​ 13,530 Payment of minimum withholding taxes on net share settlements of equity awards ( 150 ) ​ — Net Cash Provided By Financing Activities 81,715 ​ 13,861 ​ ​ Net increase in Cash, Cash Equivalents and Restricted Cash 68,644 ​ 3,620 Cash, Cash Equivalents and Restricted Cash, Beginning of Period 50,325 ​ 5,667 Cash, Cash Equivalents and Restricted Cash, End of Period $ 118,969 ​ $ 9,287 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents WESTWATER RESOURCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ (expressed in thousands of dollars, except share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Treasury ​ ​ ​ Nine months ended September 30, 2021 ​ Shares ​ Amount ​ Capital ​ Deficit ​ Stock ​ Total Balances, January 1, 2021 19,172,020 ​ $ 19 ​ $ 383,723 ​ $ ( 326,013 ) ​ $ ( 258 ) ​ $ 57,471 Net loss — ​ — ​ ​ — ​ ( 13,438 ) ​ — ​ ( 13,438 ) Common stock issued, net of issuance costs 15,407,018 ​ 15 ​ ​ 81,850 ​ — ​ — ​ 81,865 Stock compensation expense and related share issuances, net of shares withheld for payment of taxes 57,186 ​ — ​ ​ 594 ​ — ​ — ​ 594 Minimum withholding taxes on net share settlements of equity awards ​ — ​ ​ — ​ ​ ( 150 ) ​ ​ — ​ ​ — ​ ​ ( 150 ) Balances, September 30, 2021 34,636,224 ​ $ 34 ​ $ 466,017 ​ $ ( 339,451 ) ​ $ ( 258 ) ​ $ 126,342 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances, June 30, 2021 ​ 33,536,476 ​ $ 33 ​ $ 461,717 ​ $ ( 334,883 ) ​ $ ( 258 ) ​ $ 126,609 Net loss — ​ — ​ — ​ ( 4,568 ) ​ — ​ ( 4,568 ) Common stock issued, net of issuance costs 1,099,748 ​ 1 ​ 4,001 ​ — ​ — ​ 4,002 Stock compensation expense and related share issuances, net of shares withheld for payment of taxes — ​ — ​ 299 ​ — ​ — ​ 299 Balances, September 30, 2021 34,636,224 ​ $ 34 ​ $ 466,017 ​ $ ( 339,451 ) ​ $ ( 258 ) ​ $ 126,342 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Treasury ​ ​ ​ Nine months ended September 30, 2020 Shares Amount Capital Deficit Stock Total Balances, January 1, 2020 3,339,541 ​ $ 3 ​ $ 319,758 ​ ​ ( 302,439 ) ​ $ ( 258 ) ​ $ 17,064 Net loss — ​ — ​ — ​ ( 15,505 ) ​ — ​ ( 15,505 ) Common stock issued, net of issuance costs 7,093,960 ​ 7 ​ 13,523 ​ — ​ — ​ 13,530 Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes 511 ​ — ​ 170 ​ — ​ — ​ 170 Balances, September 30, 2020 10,434,012 ​ $ 10 ​ $ 333,451 ​ $ ( 317,944 ) ​ $ ( 258 ) ​ $ 15,259 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances, June 30, 2020 6,664,976 ​ $ 7 ​ $ 326,073 ​ $ ( 308,193 ) ​ $ ( 258 ) ​ $ 17,629 Net loss ​ ​ ​ ​ ​ ​ ( 9,751 ) ​ — ​ ( 9,751 ) Common stock issued, net of issuance costs 3,769,036 ​ 3 ​ ​ 7,236 ​ — ​ — ​ 7,239 Stock compensation expense and related share issuances, net of shares withheld for the payment of taxes — ​ — ​ 142 ​ — ​ — ​ 142 Balances, September 30, 2020 10,434,012 ​ $ 10 ​ $ 333,451 ​ $ ( 317,944 ) ​ $ ( 258 ) ​ $ 15,259 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 6 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ ​ 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements for Westwater Resources, Inc. (the “Company,” “we,” “us,” “WWR” or “Westwater”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements included in Westwater Resources, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020 (“Annual Report”). In the opinion of management, all adjustments (which are of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for any other period including the full year ending December 31, 2021. Significant Accounting Policies Our significant accounting policies are detailed in Note 1, Summary of Significant Accounting Policies , in the Notes to Consolidated Financial Statements within our Annual Report. Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740)” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 became effective for interim and annual periods beginning after December 15, 2020. The adoption of ASU 2019-12 did not result in a material impact to our condensed consolidated financial statements. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 will change how companies account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities, companies will be required to estimate lifetime expected credit losses and recognize an allowance against the related instruments. For available for sale debt securities, companies will be required to recognize an allowance for credit losses rather than reducing the carrying value of the asset. The adoption of this update, if applicable, will result in earlier recognition of losses and impairments. ASU 2016-13 will be effective for interim and annual periods beginning after December 15, 2022. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to ASC 326, Financial Instruments – Credit Losses.” ASU 2016-13 introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. That methodology replaces the probable, incurred loss model for those assets. ASU 2018-19 is the final version of Proposed Accounting Standards Update 2018-270, which has been deleted. Additionally, the amendments clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases. ASU 2018-19 will be effective for interim and annual periods beginning after December 15, 2022. The Company is currently evaluating ASU 2016-13 and ASU 2018-19 for the potential impact of adopting this guidance on its financial reporting. 7 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the statement of cash flows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of September 30, (thousands of dollars) 2021 2020 Cash and cash equivalents ​ $ 118,969 ​ $ 5,480 Restricted cash - pledged deposits for performance bonds ​ — ​ 3,807 Cash, cash equivalents and restricted cash shown in the statement of cash flows ​ $ 118,969 ​ $ 9,287 ​ The Company’s restricted cash on September 30, 2020, consisted of funds held in money market accounts and used as collateral for performance obligation bonds related to the restoration and reclamation of the Company’s South Texas uranium properties. With the divestiture of the Company’s uranium subsidiaries, all performance obligations and related restricted cash was transferred to enCore Energy Corp. (“enCore”) as of December 31, 2020. The funds were not available for the payment of general corporate expenses and were excluded from cash and cash equivalents as of September 30, 2020. ​ 2. LIQUIDITY The Company last recorded revenues from operations in 2009. Since 2009, the Company has relied on equity financings, debt financings and asset sales to fund its operations. The Company expects to rely on debt and equity financings to fund its operations for the foreseeable future. In 2016, the Company began to expand its business plan into acquisition and development of energy-related materials. First, in 2016 the Company obtained lithium mineral leases in Nevada and Utah as an exploration opportunity. Then, in 2018 the Company acquired Alabama Graphite Corp. and its Coosa Graphite Project in Alabama for the purpose of developing a commercial sized graphite mineral deposit and processing the flake graphite into advanced graphite products for use in batteries. In the third quarter of 2020, the Company executed the strategic decision to focus its resources on the graphite business in Alabama, discontinuing its investment in its lithium mineral properties and selling its uranium business, located in Texas and New Mexico, to enCore. As discussed in Note 3, the sale to enCore closed on December 31, 2020, and included the elimination of a $ 9.3 million bonding liability, the elimination of $ 5.2 million in asset retirement obligations, and the elimination of more than $ 4.0 million in annual expenditures related to reclamation and compliance costs. The Company received approximately $ 1.8 million of enCore common stock and retained royalty interests on the New Mexico uranium properties as consideration for the sale. The Company also retained its uranium interests in Turkey, which are subject to ongoing international arbitration proceedings, in which the Company is seeking damages. During the first nine months of 2021, the Company focused on graphite process development activities including the operation of a pilot program for processing flake graphite into battery-grade graphite products and a Definitive Feasibility Study (“DFS”) on Phase I of the Coosa Graphite Project. The data generated and experience gained from the pilot program was used to inform the Phase I DFS that was completed in October 2021 and will also inform the requirements and specifications for building a commercial graphite processing facility. On September 30, 2021, the Company’s cash balance was approximately $ 119.0 million. During the nine months ended September 30, 2021, the Company sold 9.3 million shares of common stock for net proceeds of $ 47.3 million pursuant to its Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co. (“Cantor”) and 6.1 million shares of common stock for net proceeds of $ 34.6 million pursuant to the December 2020 Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) (see Note 7). As of September 30, 2021, the Company has $ 50.0 million available for future sales under the ATM Offering and has 9,700,252 of common stock available for future sales pursuant to the Lincoln Park December 2020 PA (as defined in Note 7). 8 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ Subsequent to September 30, 2021, and through the date of this release, the Company has sold 637,200 common shares for net proceeds of $ 2.3 million pursuant to its financing facility with Cantor Fitzgerald & Co., and liquidated its holdings of enCore common stock for net cash proceeds of $ 3.6 million. Management believes the Company’s current cash balance is sufficient to fund its planned non-discretionary expenditures through 2022. The Company anticipates the continued use of the Cantor and Lincoln Park financing facilities to support construction of the commercial graphite processing facility. While the Company has been successful in the past in 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. Stock price volatility and uncertain economic conditions caused by the COVID-19 pandemic and the recent emergence of variant strains of the virus could significantly impact the Company’s ability to raise funds through equity financing. Market conditions, including but not limited to, inflation, labor shortages and supply chain disruptions could adversely impact the planned cost of the Company’s commercial graphite processing facility. Along with evaluating the continued use of the Cantor and Lincoln Park financing facilities, the Company may consider project financing to fund the construction of the commercial graphite processing facility. In the event funds are not available for project financing to complete construction of the commercial graphite processing facility in 2023, the Company expects to be able to fund its non-discretionary expenditures, however, the Company may be required to change its planned business development strategies. ​ ​ 3. ACQUISITIONS AND DISPOSALS Sale of Uranium Business to enCore Energy On December 31, 2020, Westwater, and its wholly owned subsidiary URI Neutron Holdings II, Inc. (“Neutron Holdings”), entered into a securities purchase agreement with enCore (the “Purchase Agreement”) to sell their subsidiaries engaged in the uranium business in Texas and New Mexico (the “Uranium Subsidiaries”) to enCore. The transaction closed on December 31, 2020. At the closing of the transaction, enCore delivered $ 0.7 million in cash and issued $ 1.8 million worth of its common shares to Westwater, and Westwater and Neutron Holdings transferred all of the equity interests in the Uranium Subsidiaries to enCore along with a database relating to the Grants Mineral Belt located in New Mexico. In addition, enCore delivered to Westwater a 2 % net smelter return royalty (“NSR Royalty”) on production from the uranium properties held by Uranco, Inc. in New Mexico, and a 2.5 % net profits interest (“NPI”) in the profits from operations of Neutron Energy, Inc.’s Juan Tafoya and Cebolleta Projects. Pursuant to the terms of the Purchase Agreement, enCore has also agreed to replace the indemnification obligations of Westwater for certain reclamation surety bonds held in the name of URI, Inc., and Westwater transferred to enCore all rights to $ 3.8 million in cash collateral held to secure such indemnity obligations. Also, at closing, in accordance with the terms of the Side Letter executed by the parties to the Purchase Agreement, Westwater delivered $ 0.3 million in cash to enCore, which amount was delivered in escrow upon the request of the lender, Celtic Bank, under the loan made to URI, Inc. in May 2020 pursuant to the Small Business Administration (“SBA”) Paycheck Protection Program (the “PPP Loan”). The escrowed amount was to be released to Westwater upon, and subject to, forgiveness of the PPP Loan under the terms of the CARES Act. The PPP Loan forgiveness application was filed on January 25, 2021, and Westwater received a notification from the SBA on March 31, 2021 that 100 % of the loan had been forgiven. As a result, on March 31, 2021, the escrowed funds were returned to Westwater. ​ The divestiture of the uranium business was accounted for as an asset disposal and the non-cash consideration received from enCore was recorded at fair value. In accordance with the terms of the Purchase Agreement, non-cash consideration included the receipt of shares of enCore common stock valued in the amount of $ 1.8 million. The number of shares issued at closing was 2,571,598 . The number of shares was determined by a pricing formula based on the volume 9 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ weighted average price (“VWAP”) of enCore’s common shares for the ten trading days ending on and including December 30, 2020. The VWAP formula resulted in a price of $ 0.698 per share of enCore common stock. ​ Finally, due to the high degree of uncertainties surrounding future mine development and uranium prices, as well as limited marketability, the Company determined the fair value of the NSR Royalty and NPI to be of nil value. ​ 4. FAIR VALUE MEASUREMENTS Applicable accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair-value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority): ● Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that are observable at the measurement date. ● Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). ● Level 3 includes unobservable inputs that reflect management’s assessment about what factors market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including internal data. The Company believes that the fair value of its assets and liabilities approximates their reported carrying amounts. The following table presents information about assets that were recorded at fair value on a recurring and non-recurring basis as of September 30, 2021 and December 31, 2020 and indicates the fair value hierarchy. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 (thousands of dollars) Level 1 Level 2 Level 3 Total Current Assets ​ ​ ​ ​ Equity securities ​ $ 3,438 ​ $ — ​ $ — ​ $ 3,438 Land grant ​ ​ — ​ ​ — ​ ​ 1,378 ​ ​ 1,378 Total current assets recorded at fair value ​ $ 3,438 ​ $ — ​ $ 1,378 ​ $ 4,816 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 (thousands of dollars) Level 1 Level 2 Level 3 Total Current Assets ​ ​ ​ ​ Equity securities ​ $ — ​ $ — ​ $ 1,520 ​ $ 1,520 Total current assets recorded at fair value ​ $ — ​ $ — ​ $ 1,520 ​ $ 1,520 Non-current Assets ​ ​ ​ ​ Restricted cash ​ $ 10 ​ $ — ​ — ​ $ 10 Total non-current assets recorded at fair value ​ $ 10 ​ $ — ​ $ — ​ $ 10 ​ Recurring Fair Value Measurements ​ Assets that are measured on a recurring basis include the Company’s marketable securities and restricted cash. Equity securities on the balance sheet at December 31, 2020 and September 30, 2021 consist solely of shares of common 10 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ stock received as partial consideration for the sale of uranium assets to enCore (see Note 3). Further, the sale of the enCore shares was restricted and resulted in the Company applying a discount for the lack of marketability prior to May 1, 2021. As the restrictions on the sale of enCore stock have expired and the shares are currently available for sale, the fair value of the securities now reflects the unadjusted market price of enCore shares as of September 30, 2021. With the lifting of restrictions and no anticipated lack of marketability, the measurement in equity securities is now considered Level 1 in the fair-value hierarchy. For the three and nine months ended September 30, 2021, the Company recognized unrealized gains of $ 0.5 million and $ 1.9 million, respectively, related to the increased fair value of the enCore shares. ​ Non-recurring Fair Value Measurements ​ As discussed in Note 5, on July 23, 2021, the Company received a land grant from local municipalities related to its planned graphite processing plant in Coosa County, Alabama. At inception, the Company estimated the fair value of the land to be approximately $ 1.4 million. The fair value was determined using Level 3 inputs using the market approach, by considering comparable sales in the area, adjusted for property specific items; such as lot size, location and access to major highways and distribution channels. The Company began amortization of the obligation over the 10-year lease term. ​ 5. PROPERTY, PLANT AND EQUIPMENT ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Book Value of Property Plant and Equipment at September 30, 2021 (thousands of dollars) Alabama Corporate Total Mineral rights and properties ​ $ 8,972 ​ $ — ​ $ 8,972 Other property, plant and equipment ​ 1,378 ​ 30 ​ 1,408 Construction in progress ​ ​ 100 ​ ​ — ​ ​ 100 Total ​ $ 10,450 ​ $ 30 ​ $ 10,480 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Book Value of Property Plant and Equipment at December 31, 2020 (thousands of dollars) Alabama Corporate Total Mineral rights and properties ​ $ 8,972 ​ $ — ​ $ 8,972 Other property, plant and equipment ​ — ​ 13 ​ 13 Total ​ $ 8,972 ​ $ 13 ​ $ 8,985 ​ Impairment of Property, Plant and Equipment ​ The Company reviews and evaluates its long-lived assets for impairment on an annual basis or more frequently when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. For the nine months ended September 30, 2021 no events or changes in circumstance are believed to have impacted recoverability of the Company’s long-lived assets. Accordingly, it was determined that no interim impairment was necessary. ​ Land Addition ​ On June 22, 2021, Alabama Graphite Products, LLC (“AGP”), a wholly-owned subsidiary of Westwater entered into incentive agreements with the State of Alabama and local municipalities for the siting of the Company’s planned graphite processing plant in Coosa County, Alabama. The incentive agreements provide certain tax credits and incentives under the Alabama Jobs Act in connection with the construction of the processing facility. Additionally, in connection to, and in contemplation of the incentive agreements, on July 23, 2021, AGP entered into a land lease with the Lake Martin Area Industrial Development Authority. The lease provides AGP rights to approximately 70 acres to construct and operate its commercial graphite processing facility in Coosa County, Alabama. The lease has a term of 11 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ 10-years , a nominal lease payment, and transfer of title to AGP at the end of the lease term. Further, the lease provides AGP the option to purchase the land for a nominal amount during the term of the lease. ​ The incentive agreements and the lease are accounted for by the company as a government grant; whereby the Company realized the fair value of the land, subject to the lease, at inception with a corresponding obligation on the consolidated balance sheet. The land is included in property, plant, and equipment, and represents a non-depreciable asset on the Company’s consolidated balance sheet. The corresponding obligation is recorded in other long-term liabilities on the consolidated balance sheet. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6. DISCONTINUED OPERATIONS In the third quarter of 2020, the Company executed the strategic decision to focus its resources on its graphite business, and discontinued its investment in its lithium and uranium businesses. The Company’s lithium business included mineral leases and water rights in Nevada and Utah. The Company elected not to renew the annual lease rentals on the mineral properties, which also voids the water rights. On December 31, 2020, the Company sold its subsidiaries engaged in its uranium business to enCore (see Note 3). ​ In accordance with ASC 205-20 – “Discontinued Operations,” the enCore transaction represented a major strategic shift for Westwater and resulted in the reclassification of the Company’s uranium activities as discontinued operations and disclosure of the associated profit/loss of the Company’s uranium business as a separate line-item on the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020. ​ The results of the Company’s uranium and lithium business segments included in discontinued operations for the three and nine months ended September 30, 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Nine Months Ended (thousands of dollars) September 30, 2020 September 30, 2020 Mineral property expenses $ ( 752 ) $ ( 1,924 ) General and administrative expenses ( 405 ) ( 1,273 ) Accretion of asset retirement obligations ( 32 ) ( 170 ) Depreciation and amortization ( 30 ) ( 36 ) Impairment of uranium properties ​ ​ ( 5,200 ) ​ ​ ( 5,200 ) Other income (expense) 30 30 Net Loss from Discontinued Operations $ ( 6,389 ) $ ( 8,573 ) ​ Our cash flow information for the nine months ended September 30, 2020 included the following activities related to discontinued operations: ​ ​ ​ ​ For the Nine Months Ended (thousands of dollars) ​ September 30, 2020 Depreciation and amortization $ 36 Capital Expenditures ​ ( 101 ) Accretion of asset retirement obligations ​ 170 Impairment of uranium properties ​ 5,200 ​ ​ ​ 12 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ 7. COMMON STOCK Common Stock Issued, Net of Issuance Costs December 2020 Purchase Agreement with Lincoln Park Capital Fund, LLC On December 4, 2020, the Company entered into a Purchase Agreement with Lincoln Park (the “December 2020 PA”) to place up to $ 100.0 million in the aggregate of the Company's common stock on an ongoing basis over a term of 36 months . The Company controls the timing and amount of any sales to Lincoln Park, and Lincoln Park is obligated to make purchases in accordance with the December 2020 PA. Any common stock that is sold to Lincoln Park will occur at a purchase price that is based on an agreed upon fixed discount to the Company's prevailing market prices at the time of each sale and with no upper limits to the price Lincoln Park may pay to purchase common stock. The agreement may be terminated by the Company at any time, in its sole discretion, without any additional cost or penalty. The December 2020 PA specifically provides that the Company may not issue or sell any shares of its common stock under the agreement if such issuance or sale would breach any applicable rules of the NYSE American Stock Exchange (“NYSE American”). In particular, NYSE American General Rule 713(a) provides that the Company may not issue or sell more than 19.99 % of the number of shares of the Company’s common stock that were outstanding immediately prior to the execution of the December 2020 PA unless (i) shareholder approval is obtained or (ii) the average price of all applicable sales of common stock to Lincoln Park under the December 2020 PA, equals or exceeds $ 6.15 . The Company held its 2021 Annual Shareholders Meeting on May 21, 2021 and obtained shareholder approval for the issuance of more than 19.99 % of the shares of the Company’s common stock outstanding. Lincoln Park has no right to require the Company to sell any shares of common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to certain conditions. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the December 2020 PA if it would result in Lincoln Park beneficially owning more than 9.99 % of its common stock at any one point in time. During the three and nine months ended September 30, 2021, pursuant to the December 2020 PA with Lincoln Park, the Company sold 1.1 million and 6.1 million shares of common stock for net proceeds of $ 4.0 million and $ 34.6 million, respectively. These shares were sold pursuant to a prospectus supplement filed on December 4, 2020, and in accordance with Rule 424(b)(5) as a takedown off the Company’s shelf registration statement, which had been declared effective by the Securities and Exchange Commission (the “Commission”) on December 1, 2020. ​ ATM Offering Agreement with Cantor On April 14, 2017, the Company entered into a Controlled Equity Offering SM Sales Agreement (the “ATM Offering Agreement”) with Cantor acting as sales agent. Under the ATM Offering Agreement, the Company may from time to time sell shares of its common stock in “at-the-market” offerings. The Company pays Cantor a commission of up to 2.5 % of the gross proceeds from the sale of any shares pursuant to the ATM Offering Agreement. ​ During the nine months ended September 30, 2021, the Company sold 9.3 million shares of common stock for net proceeds of $ 47.3 million pursuant to the ATM Offering Agreement with Cantor. These shares were sold pursuant to a prospectus supplement filed on December 4, 2020, and in accordance with Rule 424(b)(5) as a takedown off the Company’s shelf registration statement, which had been declared effective by the Commission on December 1, 2020. The Company did no t sell any shares of common stock pursuant to the ATM Offering Agreement for the three months ended September 30, 2021. ​ As of September 30, 2021, the Company has $ 50 million available for sale under the ATM Offering Agreement, pursuant to a prospectus supplement filed on August 20, 2021, and in accordance with Rule 424(b)(5) as a takedown off the Company’s shelf registration statement on Form S-3, which was declared effective by the Commission on July 8, 2021. 13 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ ​ Warrants The following table summarizes warrants outstanding and changes for the nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ September 30, 2020 ​ ​ ​ ​ ​ Number of ​ Number of ​ ​ Warrants ​ Warrants Warrants outstanding at beginning of period — 186,182 Issued — — Expired — — Warrants outstanding at end of period — 186,182 ​ ​ ​ ​ ​ On October 6, 2020, a warrant holder of 182,515 warrants provided notice of exercise. The warrant holder elected the cashless exercise method to convert the warrants to shares of common stock. Based on the cashless exercise formula, the Company issued the warrant holder 118,799 shares of common stock. 8. STOCK-BASED COMPENSATION Stock-based compensation awards consist of stock options, restricted stock units and bonus shares issued under the Company’s equity incentive plans which include the 2013 Omnibus Incentive Plan (the “2013 Plan”) and the Amended and Restated 2004 Directors’ Stock Option and Restricted Stock Plan (the “2004 Directors’ Plan”). Upon approval of the 2013 Plan by the Company’s stockholders on June 4, 2013, the Company’s authority to grant new awards under all plans other than the 2013 Plan was terminated. On July 18, 2017, April 18, 2019, April 28, 2020, and May 21, 2021, the Company’s stockholders approved amendments to the 2013 Plan to increase the authorized number of shares of common stock available and reserved for issuance under the 2013 Plan by 20,000 , 66,000 , 350,000 , and 1,500,000 shares, respectively, and in 2017 re-approved the material terms of the performance goals under the plan. Under the 2013 Plan, the Company may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards and cash bonus awards to eligible persons. Equity awards under the 2013 Plan are granted from time to time at the discretion of the Compensation Committee of the Board (the “Committee”), with vesting periods and other terms as determined by the Committee with a maximum term of 10 years . The 2013 Plan is administered by the Committee, which can delegate the administration to the Board, other Committees or to such other officers and employees of the Company as designated by the Committee and permitted by the 2013 Plan. As of September 30, 2021, 1,223,939 shares were available for future issuances under the 2013 Plan. For the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense of $ 0.3 million and $ 0.6 million, respectively. Stock compensation expense is recorded in general and administrative expenses. 14 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ Stock Options The following tables summarize stock options outstanding and changes for the nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 ​ September 30, 2020 ​ ​ Weighted ​ Weighted ​ ​ Number of ​ Average ​ Number of ​ Average ​ ​ Stock ​ Exercise ​ Stock ​ Exercise ​ ​ Options ​ Price ​ Options ​ Price Stock options outstanding at beginning of period 185,054 ​ $ 7.99 37,786 ​ $ 37.42 Granted 94,522 ​ 3.91 125,804 ​ 1.59 Expired ( 2,000 ) ​ 73.54 ( 1,693 ) ​ 101.64 Stock options outstanding at end of period 277,576 ​ ​ 6.18 161,897 ​ ​ 9.25 Stock options exercisable at end of period 183,054 ​ $ 7.35 36,093 ​ $ 34.41 ​ ​ The following table summarizes stock options outstanding and exercisable by stock option plan at September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding Stock Options ​ Exercisable Stock Options ​ Number of Weighted Number of Weighted ​ ​ Outstanding ​ Average ​ Stock Options ​ Average Stock Option Plan ​ Stock Options ​ Exercise Price ​ Exercisable ​ Exercise Price 2004 Plan 92 ​ $ 1,638.00 92 ​ $ 1,638.00 2004 Directors’ Plan 3 ​ 10,380.00 3 ​ 10,380.00 2013 Plan 277,481 ​ 5.53 182,959 ​ 6.36 ​ 277,576 ​ $ 6.18 183,054 ​ $ 7.35 ​ Restricted Stock Units Time-based and performance-based RSUs are valued using the closing share price of the Company’s common stock on the date of grant. The final number of shares issued under performance-based RSUs is generally based on the Company’s prior year performance as determined by the Committee at each vesting date, and the valuation of such awards assumes full satisfaction of all performance criteria. The following table summarizes RSU activity for the nine months ended September 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ ​ 2021 ​ 2020 ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ Average ​ ​ ​ Average ​ ​ Number of ​ Grant Date ​ Number of ​ Grant Date ​ ​ RSUs ​ Fair Value ​ RSUs ​ Fair Value Unvested RSUs at beginning of period 236,403 ​ $ 2.10 — ​ $ — Granted 240,125 ​ 3.93 211,497 ​ 2.03 Forfeited — ​ — — ​ — Vested ( 78,801 ) ​ 2.10 — ​ — Unvested RSUs at end of period 397,727 ​ $ 3.20 211,497 ​ $ 2.03 ​ ​ 9. EARNINGS PER SHARE Basic and diluted loss per common share have been calculated based on the weighted-average shares outstanding during the period. Additionally, potentially dilutive shares of 675,303 were excluded from the calculation of earnings per 15 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ share because the effect on the basic income per share would be anti-dilutive, as the Company had a net loss for the three and nine months ended September 30, 2021. ​ 10. COMMITMENTS AND CONTINGENCIES Future operations on the Company’s properties are subject to federal and state regulations for the protection of the environment, including air and water quality. The Company evaluates the status of current environmental laws and their potential impact on current operating costs and accrual for future costs. The Company believes its operations are materially compliant with current environmental regulations. At any given time, the Company may enter into negotiations to settle outstanding legal proceedings and any resulting accruals will be estimated based on the relevant facts and circumstances applicable at that time. We do not expect that such settlements will, individually or in the aggregate, have a material effect on our financial position, results of operations or cash flows. ​ 11. LEASES The Company’s lease portfolio consists of operating leases for corporate offices, storage space and equipment. The leases have remaining lease terms of 1.1 years to 1.8 years, one of which includes an option to extend the corporate office lease for 3 years . Under our corporate office lease, we are required to reimburse the lessor each month for common use expenses such as maintenance and security services. Because these amounts are variable from year to year and not specifically set in the lease terms, they are not included in the measurement of the right-of-use asset and related lease liability, but rather expensed in the period incurred. The Company is party to several leases that have terms that are less than a year in length. These include leases for land used in exploration and mining activities, office equipment, machinery, office space, storage and other. The Company has elected the short-term lease exemption allowed under the new leasing standards, whereby leases with initial terms of one year or less are not capitalized and instead expensed on a straight-line basis over the lease term. In addition, the Company holds several leases related to mineral exploration and production to which it has not applied the new leasing standard. Leases to explore or use minerals and similar nonregenerative resources are specifically excluded by ASC 842, “Leases.” The right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities were recognized at the commencement date of the lease based on the present value of lease payments over the lease term using a discount rate of 9.5 %. This rate is the Company’s estimated incremental borrowing rate at the lease commencement date. The components of lease expense are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Nine Months Ended ​ ​ September 30, (thousands of dollars) ​ 2021 ​ 2020 Operating lease cost ​ $ 115 ​ $ 112 ​ 16 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ Supplemental cash flow information related to the Company’s operating leases is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Nine Months Ended ​ ​ September 30, (thousands of dollars) 2021 ​ 2020 Cash paid for amounts included in lease liabilities: ​ ​ ​ Operating cash flows from operating leases ​ $ 115 ​ $ 115 ​ ​ ​ ​ ​ ​ ​ Right-of-use assets obtained in exchange for lease obligations: ​ ​ Operating leases ​ $ 258 ​ $ 383 ​ Supplemental balance sheet information related to the Company’s operating leases is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, (thousands of dollars, except lease term and discount rate) ​ 2021 ​ 2020 Operating Leases ​ ​ ​ Operating lease right-of-use assets ​ $ 258 ​ $ 353 ​ ​ ​ ​ ​ ​ ​ Current portion of lease liabilities ​ ​ 151 ​ ​ 149 Operating lease liabilities – long term portion ​ 117 ​ 214 Total operating lease liabilities ​ $ 268 ​ $ 363 ​ ​ Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ September 30, ​ ​ ​ 2021 ​ 2020 Weighted Average Remaining Lease Term (in years) ​ 1.8 ​ ​ 3.0 ​ ​ ​ ​ ​ ​ ​ ​ ​ Discount Rate ​ 9.5 % ​ 9.5 % ​ Maturities of lease liabilities for the Company’s operating leases are as follows: ​ ​ ​ ​ ​ Lease payments by year September 30, (in thousands) ​ 2021 2021 (remainder of year) ​ $ 39 2022 ​ 158 2023 ​ 92 Total lease payments ​ 289 Less imputed interest ​ ( 21 ) Total ​ $ 268 ​ As of September 30, 2021, the Company has $ 0.3 million in right-of-use assets and $ 0.3 million in related lease liabilities ($ 0.2 million of which is current). The most significant operating lease is for the Company’s corporate office in Centennial, Colorado, with $ 0.3 million remaining in undiscounted cash payments through the end of the lease term in 2023. The total undiscounted cash payments remaining on operating leases through the end of their respective terms is $ 0.3 million. 17 Table of Contents WESTWATER RESOURCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ 12. SUBSEQUENT EVENTS On October 13, 2021, Alabama Graphite Products, LLC (“AGP”), a wholly-owned subsidiary of Westwater, completed the purchase of two buildings that total 90,000 sq. ft. for approximately $ 3.1 million. The purchase of the two buildings supports the development of AGP’s Coosa Graphite Project, as both buildings are adjacent to the future site of the planned processing plant, and will be used for administrative offices, laboratory, and warehousing space. ​ ​ ​ 18 Table of Contents