# Westwater Resources, Inc.: Form 10-Q for the period ended Sep 30, 2023 - Company: [Westwater Resources, Inc.](/companies/wwr.md) (CIK 839470) - Form: 10-Q - Filed: 2023-11-14 - Accepted by EDGAR: Nov 14, 2023, 16:30 ET - Period: 2023-09-30 - Accession: 0001558370-23-019042 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/839470/000155837023019042/wwr-20230930x10q.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/839470/000155837023019042/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2023-09-30. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Net income | 3 months, 2023-07-01 to 2023-09-30 | −$3.5m | us-gaap:ProfitLoss | | Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.07 | us-gaap:EarningsPerShareDiluted | | Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.19 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.07 | us-gaap:EarningsPerShareBasic | | Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.19 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 52,989,857 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 51,197,516 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$12.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $55.3m | us-gaap:PaymentsToAcquireProductiveAssets | | Cash and equivalents | at 2023-09-30 | $11.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2023-09-30 | $12.2m | us-gaap:AssetsCurrent | | Total assets | at 2023-09-30 | $147.5m | us-gaap:Assets | | Current liabilities | at 2023-09-30 | $8.9m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2023-09-30 | $10.6m | us-gaap:Liabilities | | Shareholders' equity | at 2023-09-30 | $136.9m | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 30,130 characters. 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, 2023 has been prepared based on information available to us as of November 14, 2023. 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, 2022 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. ### INTRODUCTION Westwater Resources, Inc., originally incorporated in 1977, is an energy technology company focused on developing battery-grade natural graphite materials since its acquisition of Alabama Graphite in April 2018. Alabama Graphite holds mineral rights to explore and potentially mine the Coosa Graphite Deposit. During the first three quarters of 2023, AGP continued construction activities related to Phase I of the Kellyton Graphite Plant. The Coosa Graphite Deposit is located near Rockford, Alabama. ### RECENT DEVELOPMENTS ### 33% Increase in Phase I Planned Production During the third quarter of 2023, Westwater completed a debottlenecking study with its third-party engineering firm resulting in a 33% increase in anticipated coated spherical purified graphite (“CSPG”) production for Phase I of the Kellyton Graphite Plant. As a result of this study, Westwater now expects CSPG production of 10,000 mt per year for Phase I of the Kellyton Graphite Plant. The Company is reiterating its prior estimate of total costs of Phase I construction to be approximately $271 million. ### Customer Engagement Update As previously announced, Westwater has a JDA with SK On, a leading electric vehicle battery manufacturer. SK On has provided testing feedback to the Company regarding samples produced by Westwater under the JDA. If a supply agreement is executed between the parties, the Company anticipates it would then supply a mass production sample to SK On as part of its formal qualification process. Additionally, Westwater has signed general terms and conditions for a supply agreement with a North American automobile manufacturing company and is negotiating a possible offtake agreement with this company for potentially up to all of Westwater’s Phase I and Phase II production capacity. Westwater continues to engage with other potential customers who have tested samples of CSPG produced by the Company. Feedback from certain potential customers indicates that Westwater’s material meets their initial specifications. Westwater is continuing to provide additional samples to these potential customers and current counterparty interest indicates that Westwater's Phase I and Phase II production capacity may be subject to commercial contracts in 2023 or 2024. ### Kellyton Graphite Plant – Construction Update During the third quarter of 2023, the Company continued construction activities related to Phase I of its Kellyton Graphite Plant, including the receipt of additional long-lead equipment components, completing the construction of five of six primary plant buildings, and installation of overhead cranes ahead of equipment installation. Westwater has constructed and is currently operating its research and development laboratory (“R&D Lab”). The R&D Lab allows Westwater to continue product development and optimization under the JDA with SK On and other potential customers, and to perform additional quality control tests. It also affords greater flexibility to optimize future samples in accordance with customer specifications. Further, in August, Westwater began installing micronizers, shaping mills, and steel in its shaping building. Since inception of the project, and inclusive of liabilities as of September 30, 2023, the Company has incurred cost of approximately $116.7 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 third quarter, Westwater has reduced the level of construction activity from anticipated levels, including adjusting the timing of future work, until receipt of the requisite additional funding needed 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. The Company expects to provide an update on construction timing once, and if, the requisite funding is secured. ### Construction Financing Update Westwater continues its efforts to partake in a financing transaction to fund the balance of the estimated capital requirements for construction of Phase I of the Kellyton Graphite Plant. Westwater is currently engaged in discussions with entities related to the financing of the Kellyton Graphite Plant. Concerns 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, has led to interest in the Kellyton Graphite Plant by these potential financing sources. Management believes that the execution of a commercial agreement to sell some portion of its anticipated CSPG production may be a condition precedent to securing the requisite financing needed to complete construction of Phase I of the Kellyton Graphite Plant. Even with the execution of a commercial agreement 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. ### Coosa Graphite Deposit 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 third quarter, Westwater continued preparing the preliminary economic assessment (“PEA”) for the Coosa Graphite Deposit. The PEA will expand on the Technical Report Summary (“TRS”) that was prepared as an initial assessment in accordance with S-K 1300 and filed with the SEC on Form 8-K on December 6, 2022. The PEA will include an economic assessment based on the TRS and an initial mine plan. Westwater expects to complete and disclose the results of the PEA in the fourth quarter of 2023. Upon completion of the PEA, Westwater anticipates commencing a strategic financing review process for the Coosa Deposit. This strategic financing review process will seek to identify financial investment sources and partners for the Coosa Deposit, and may include review of strategic investment partners or other strategic transactions. ### Graphite and Vanadium as Critical Materials Presently, the United States is almost 100% dependent on imports for battery-grade graphite, which is currently the primary anode material in the lithium-ion batteries that power electric vehicles, smartphones, and laptops, and store power generated from intermittent renewable energy sources. Westwater intends to process natural flake graphite into battery-grade graphite for all types of batteries including lithium-ion batteries. On March 31, 2022, President Biden invoked the Defense Production Act to encourage the domestic production of critical materials, including graphite, for advanced batteries for electric vehicles and clean energy storage. On August 16, 2022, President Biden signed into law the Inflation Reduction Act (“IRA”). This legislation includes an investment of $369 billion in climate programs. The IRA provides a 10% tax credit for the costs of producing certain critical minerals, including graphite and vanadium. This credit is eligible for direct pay and is also transferable to unrelated taxpayers. In addition, a key provision of the IRA that could indirectly benefit the Company is the Clean Vehicle credit. The IRA eliminates the previous limitation on the number of electric vehicles a manufacturer can sell before the Clean Vehicle credit is phased out or eliminated. Further, the IRA sets a minimum domestic content threshold for the percentage of the value of applicable critical minerals contained in the battery of the electric vehicles. Because Westwater intends to produce battery grade graphite for lithium-ion batteries to be used in electric vehicles in the United States, management believes the domestic content requirement could provide indirect future benefit to the Company. On April 12, 2023, the U.S. Environmental Protection Agency (the “EPA”) announced new proposed federal vehicle emissions standards that will accelerate the ongoing transition to a clean vehicle future. The proposed standards align with commitments made by automakers and U.S. states as they plan to accelerate adoption of clean vehicle technologies in the light- and medium-duty fleets in the next 10 to 15 years. Under the proposed light-duty vehicle standards, the EPA will require increasingly stringent greenhouse gas standards, which by model year 2032 would result in an industry-wide average target of 82 grams of carbon dioxide created per mile traveled. This represents a 56% decrease from the model year 2026 standard set in 2021. For medium-duty vehicles, the EPA is proposing a target of 275 grams of carbon dioxide created per mile traveled by model year 2032, which would represent a 44% reduction compared to the model year 2026 standard. Car and truck companies are moving to include electric vehicles as an integral and growing part of current and future product lines, leading to an increasing variety of clean vehicles for consumers. In October 2023, The People’s Republic of China announced a new set of export restrictions on certain graphite products. Beginning on December 1, 2023, Chinese exporters will be required to apply for permits to ship two types of graphite material, including “high-purity, high-hardness and high-intensity synthetic graphite material and natural flake graphite and its products.” Nearly 100% of today’s battery-grade, natural graphite materials involve processing in China. These new export restrictions are expected to increase prices of Chinese graphite materials and could disrupt global production of electric vehicle batteries. Westwater has developed graphite-purification technology and advanced product-development processes designed to meet the demands of potential customers for battery-grade graphite materials. Westwater is developing methodologies and constructing facilities intended to produce high purity, battery-grade graphite products at its Kellyton Graphite Plant. These products are being designed to serve all major battery sectors. In addition, we believe the processes we intend to use are environmentally sustainable and permittable in the United States, where a robust regulatory environment complements our core values to reliably deliver safe, well-made products to our customers. Westwater has supported, and will continue to support, the efforts by the relevant United States governmental agencies, the State of Alabama and local municipalities to ensure that they remain aware of the importance of natural battery-grade graphite, its importance to the nation’s security, and how the Kellyton Graphite Plant and the Coosa Graphite Deposit fit into the critical minerals-equation. ### Equity Financings #### Capital Raises during three and nine months ended September 30, 2023 During the three and nine months ended September 30, 2023 the Company sold 1.4 million and 3.7 million shares of common stock for net proceeds of $1.2 million and $3.3 million, respectively, pursuant to the ATM Offering Agreement. During the three months ended September 30, 2023, the Company did not sell any shares of common stock pursuant to the 2020 Lincoln Park PA. During the nine months ended September 30, 2023, the Company sold 0.9 million shares of common stock for net proceeds of $0.8 million pursuant to the 2020 Lincoln Park PA resulting in a cash balance of approximately $11.7 million at September 30, 2023. See *Note 4 to the Interim Financial Statements* for additional information. ### RESULTS OF OPERATIONS ### Summary Our net loss for the three months ended September 30, 2023, was $3.5 million, or $0.07 per share, as compared with a net loss of $3.5 million, or $0.07 per share for the same period in 2022. The Company’s net loss position remained flat despite higher costs related to product development; offset by less foreign exchange loss during the period. Our net loss for the nine months ended September 30, 2023, was $9.5 million, or $0.19 per share, as compared with a net loss of $9.4 million, or $0.21 per share for the same period in 2022. The $0.1 million increase in our net loss from the prior year period was due primarily to higher product development costs during the period; partially offset by lower costs for exploration activities, higher interest income earned on our cash balance, and less foreign exchange loss during the period. ### Product Development Expenses Product development expenses for the three and nine months ended September 30, 2023, were $1.0 million and $2.7 million, respectively, an increase of $0.7 million and $1.8 million compared to the same periods in 2022, respectively. Higher product development costs for the three and nine months ended September 30, 2023, compared to the same periods in 2022, are due primarily to additional sample production of battery-grade natural graphite products for evaluation by potential customers and work being performed under the JDA. As the Company works with SK On under the JDA and engages with other potential customers, additional samples are required to be prepared, and in some cases, in larger quantities for evaluation and testing by potential customers. ### Exploration Expenses Exploration expenses for the three months ended September 30, 2023 remained flat compared to the same quarter in 2022. For the nine months ended September 30, 2023, costs decreased by $0.4 million compared to the same period in 2022, due to the Company completing its initial drilling program related to the Coosa Graphite Deposit in April 2022. ### General and Administrative Expenses General and administrative expense for the three and nine months ended September 30, 2023, were $2.5 million and $7.6 million, respectively, a decrease of $0.1 million and an increase of $0.1 million compared to the same periods in 2022, respectively. For the three months ended September 30, 2023, the decrease in costs primarily related to a reduction in personnel and associated overhead costs. For the nine months ended September 30, 2023, the increase in costs includes approximately $0.3 million for severance charges related to the departure of the Company’s former Chief Executive Officer in January 2023; partially offset by approximately $0.2 million of stock award forfeitures related to his departure in January 2023. ### Arbitration Costs During the three months ended September 30, 2023 and 2022, the Company did not incur any arbitration costs. During the nine months ended September 30, 2023, the Company did not incur any arbitration costs compared to $0.1 million in the same period in 2022. On December 13, 2018, Westwater filed a Request for Arbitration against the Republic of Turkey before the International Centre for the Settlement of Investment Disputes (“ICSID”), pursuant to the Treaty between the United States of America and the Republic of Turkey concerning, the Reciprocal Encouragement and Protection of Investments (the “Treaty”), seeking damages and other relief. The Request for Arbitration was filed as a result of the Republic of Turkey’s unlawful actions against the Company’s licenses for the Temrezli and Sefaatli uranium projects owned by Westwater’s Turkish subsidiary Adur Madencilik Limited Sirketi (“Adur”). Specifically, in June 2018, the Turkish government cancelled all of Adur’s exploration and operating licenses with retroactive effect, rendering Westwater’s investment in Adur effectively worthless. On March 3, 2023, the arbitral tribunal issued its final award in the proceeding. The tribunal agreed with Westwater that Westwater’s investment in Turkey was protected by the Treaty, and that Turkey’s cancellation of the Company’s licenses for the Temrezli and Sefaatli uranium projects owned by Adur amounted to an expropriation of Westwater’s investment in violation of Turkey’s obligations under the Treaty. The tribunal disagreed with Westwater’s projections of what its investment was worth and how much the investment would have returned if Turkey had not cancelled the licenses. The tribunal’s award requires Turkey to pay Westwater a total of approximately $1.3 million in damages, approximately $3.7 million to reimburse Westwater for its fees, expenses and costs of the arbitration, and interest in an amount yet to be determined. In Westwater’s arbitration proceeding against the Republic of Turkey, subsequent to the issuance of the tribunal’s decision on March 3, 2023, Westwater filed a Notice of Rectification on April 14, 2023. Turkey filed its response on May 19, 2023; Westwater filed its reply on June 2, 2023; and Turkey filed its rejoinder on June 14, 2023. The Notice of Rectification sought to correct an error in the tribunal’s calculation of the amount of the award. On July 27, 2023, the tribunal issued its decision, denied Westwater’s request for rectification, and awarded Turkey approximately $54 thousand for its costs. As of September 30, 2023, Westwater has not recognized the tribunal’s award in its consolidated financial statements. Recognition of the tribunal’s award in Westwater’s consolidated financial statements occurs when and if collection is probable. ### Other Income (Expense) Other income (expense) for the three and nine months ended September 30, 2023, increased by $0.5 million and $1.3 million, respectively, compared to the same periods in 2022, due to less foreign exchange loss for the three and nine months ended September 30, 2023, as well as higher interest income on our cash accounts for the nine month period ended September 30, 2023. ### FINANCIAL POSITION ### Operating Activities Net cash used in operating activities of $12.2 million for the nine months ended September 30, 2023, represents an increase of $3.6 million compared to the same period in 2022. The increase in cash used in operating activities was due to an increase in other long-term assets of $2.9 million primarily related to purchases of raw material inventory and higher product development expenses of $1.8 million. These increases were partially offset by other income (expense) of $1.3 million resulting from higher interest income earned on the Company’s cash balance and less foreign exchange loss during the period. ### Investing Activities Net cash used in investing activities increased by $23.3 million for the nine months ended September 30, 2023, as compared to the same period in 2022. The increase was a result of higher capital expenditures related to the construction of Phase I of the Kellyton Graphite Plant, which began construction related activities in December 2021. The capital expenditures in the first nine months of 2023 included the receipt of additional long-lead equipment components, completing the construction of five primary plant buildings and installation of overhead cranes ahead of equipment installation. The Company also continued engineering related to the Phase I optimization and construction of the R&D Lab, which is currently in operation. Further, in August, Westwater began installing micronizers, shaping mills, and steel in its shaping building. During the same period in 2022, activity included earthwork and site grading, which was completed in July 2022, progress payments related to long-lead equipment items, work on underground utilities and foundations, and detailed design engineering and project management activities. ### Financing Activities Net cash provided by financing activities was $4.0 million for the nine months ended September 30, 2023, comprised of sales of common stock through the Company’s ATM Offering Agreement and 2020 Lincoln Park PA. Net cash provided by financing activities for the same period in 2022 was $25.6 million. The $21.6 million decrease was primarily due to lower sales activity under the ATM Offering Agreement during the first nine months of 2023 compared to the same period in 2022. ### LIQUIDITY AND CAPITAL RESOURCES Since 2009, the Company has relied on equity financings, debt financings and asset sales to fund its operations. During the nine months ended September 30, 2023, 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 reduced from anticipated levels until the requisite additional funding needed to complete Phase I of the Kellyton Graphite Plant is in place to best allocate our use of cash. 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, and the Company’s planned non-discretionary expenditures for one year past the issue date of these Interim Financial Statements, which, in the aggregate, exceed the cash on hand as of the date of these Interim Financial Statements, excluding external funding opportunities and the Company’s current equity facilities. On September 30, 2023, the Company’s cash balance was approximately $11.7 million. During the nine months ended September 30, 2023, the Company sold 4.6 million shares of common stock for net proceeds of $4.1 million pursuant to the ATM Offering Agreement and 2020 Lincoln Park PA. As of September 30, 2023, the Company may offer and sell shares of its common stock having an aggregate offering price of up to approximately $17.3 million under the ATM Offering Agreement and has 8.8 million shares of common stock available for future sales pursuant to the 2020 Lincoln Park PA. The Company has historically relied and expects to continue to rely, on debt and equity financing to fund its operations and business plan until operations commence at the Kellyton Graphite Plant. Along with evaluating the continued use of the ATM Offering Agreement and the 2020 Lincoln Park PA, 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 under the Company’s financing facilities or through 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. While the Company has utilized its equity facilities to advance 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 declines in the equity and debt capital markets, rising interest rates, inflation and generally uncertain economic 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 now 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 September 30, 2023, after giving effect to these limitations and the current public float of our common stock, 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 $17.3 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 Registration Statement and prospectus supplements thereto. If our public float increases such that we may sell additional amounts under the ATM Offering Agreement and the Registration Statement, we will file another prospectus supplement prior to making additional sales. ### OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements. ### CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS With the exception of historical matters, the matters discussed in this report are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding the adequacy of funding, liquidity, access to capital, financing activities, the timing or occurrence of any future drilling or production from the Company’s properties, economic conditions, the strategic goals of the business, arbitration matters, costs of Phase I of the Kellyton Graphite Plant and estimated construction and commissioning timeline and completion date, the outcome of the feasibility study and start date for the mining of the Coosa Graphite Deposit, and the Company’s anticipated cash burn rate and capital requirements. Words such as “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” “target” and variations of these words, comparable words and similar expressions generally indicate forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, among others: - the spot price and long-term contract price of graphite (both flake graphite feedstock and purified graphite products) and vanadium, and the world-wide supply and demand of graphite and vanadium; - the effects, extent and timing of the entry of additional competition in the markets in which we operate; - our ability to obtain contracts with customers; - available sources and transportation of graphite feedstock; - the ability to control costs and avoid cost and schedule overruns during the development, construction and operation of the Kellyton Graphite Plant; - the ability to construct and operate the Kellyton Graphite Plant in accordance with the requirements of permits and licenses and the requirements of tax credits and other incentives; - the effects of inflation, including labor shortages and supply chain disruptions; - rising interest rates and the associated impact on the availability and cost of financing sources; - the availability and supply of equipment and materials needed to construct the Kellyton Graphite Plant; - stock price volatility; - government regulation of the mining and manufacturing industries in the United States; - unanticipated geopolitical, geological, processing, regulatory and legal or other problems we may encounter; - the results of our exploration activities, and the possibility that future exploration results may be materially less promising than initial exploration results; - any graphite or vanadium discoveries not being in high enough concentration to make it economic to extract the metals; - our ability to finance growth plans; - currently pending or new litigation or arbitration; and - our ability to maintain and timely receive mining and other permits from regulatory agencies. In addition, other factors are described in our Annual Report, and the other reports we file with the SEC. Most of these factors are beyond our ability to predict or control. Future events and actual results could differ materially from those set forth herein, contemplated by or underlying the forward-looking statements. Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements made herein, except as required by law. ## Controls and procedures As filed, 2,199 characters. ### Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings with the SEC is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management has recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply judgment in evaluating the Company’s controls and procedures. During the fiscal period covered by this report, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2023. ### Changes in Internal Controls The Company completed the first phase of our initiative to improve our enterprise resource planning (“ERP”) system. The completion of the first phase enhanced our internal control over financial reporting due to increased automation. We are monitoring our internal control over financial reporting for effectiveness throughout the transition. Except for our continuous monitoring of the new ERP system, as described above, there were no changes in our internal control over financial reporting during the nine months ended September 30, 2023 that materially affected, or are reasonably likely to materially affect our internal control over financial reporting. ## Risk factors As filed, 296 characters. An investment in our common stock involves various risks. When considering an investment in us, careful consideration should be given to the risk factors discussed in *Risk Factors in Item 1A* in our Annual Report. There are no material changes to the risk factors described in our Annual Report. Filed Nov 14, 2023. Source: SEC EDGAR, the filing index for accession 0001558370-23-019042. Last ingested by Listed: Oct 24, 2026, 14:58 ET. No prices; not investment advice.