Westwater Goes All In On Graphite

A LETTER TO OUR SHAREHOLDERS

Dear Fellow Shareholders,

Throughout 2021, Westwater Resources took significant steps in developing and executing its business plan for the Kellyton graphite processing facility and the Coosa graphite deposit, both located in the State of Alabama.  Our Board and the management team thanks all shareholders for their continued support of the Company.  We encourage you to review this proxy statement, vote in support of the proposals, and in doing so help to advance the Company on the initiatives discussed below.

In the first quarter of 2021, the Company began work on the definitive feasibility study (DFS) for the Kellyton facility, began operation of the pilot plant program to generate battery-grade graphite products for use with potential customers, and commenced exploration activities at the Coosa deposit.  In addition, the Company transferred its stock listing to NYSE American and reopened its corporate office in Centennial, Colorado as the COVID pandemic eased.  During the second quarter of the year, the Company selected a site for its graphite processing facility in Kellyton, Alabama and executed several agreements with state and local governmental entities to support the construction and operation of that facility.  In addition, work continued on the DFS, and drilling continued at the Coosa deposit.  In the third quarter,  the Company re-focused its DFS to address the production of Coated Spherical Purified Graphite (CSPG) and our executive management team expanded with the addition of Chad Potter as the new Chief Operating Officer (COO).  Mr. Potter was tasked with the responsibility for managing all business activities in Alabama.  In the fourth quarter, the DFS was completed and based in part on its findings, the Board approved the expenditure of approximately $202 million for the construction of Phase I of the Kellyton facility.  In addition, the Board approved the purchase of two buildings, totaling 90,000 square feet and adjacent to the site of the Kellyton facility, which will be used for administrative offices, laboratories, training space, and warehouse storage.  Finally, in the fourth quarter the Company engaged Samuel Engineering as engineering and procurement contractor for the Kellyton facility and Fite Construction as the construction manager for the project.

Since late 2021, numerous engineering, procurement, and construction activities at the Kellyton graphite processing facility have occurred and are continuing.  The Company has ordered long-lead time, specialized equipment for the facility, and the team is managing the supply chain and transportation logistics associated with those deliveries.  Permitting for the construction of the facility is well advanced and key personnel are being hired.  The Company currently anticipates that construction of Phase I will be completed during the first half of 2023, and that operations will generate, each year, approximately 3,700 metric tonnes of CSPG and 3,800 metric tonnes of purified fine product.  Phase II of the facility is expected to increase production per year to 15,800 metric tonnes of CSPG and 16,600 metric tonnes of purified fines.   Phase II will be the subject of an updated DFS, construction is anticipated to begin in 2024, and operation is anticipated in 2025.  In addition, during 2022 the Company will continue its work to characterize the Coosa graphite deposit to prepare the DFS for that deposit, with the future goal to mine the deposit by the end of 2028 after securing the necessary permits.  With the Kellyton facility and the Coosa deposit, Westwater Resources and its subsidiaries in Alabama are expected to become the first producer of U.S. sourced and processed graphite materials for the battery markets. The graphite products that we will make are essential to the growth of the electric vehicle and other battery-related industries here in the United States and the rest of the world.

As the Company has previously announced, the U.S. government has concluded that graphite – a crucial component of electric batteries and a component currently sourced almost exclusively from China – is a strategic element.  Westwater will produce its graphite products at the Kellyton facility using environmental-friendly processes and using materials sourced outside of China until mining can commence at the Coosa deposit.  Alabama Governor Kay Ivey and her administration have regularly expressed their support for the Kellyton facility, and last summer they agreed to provide various tax incentives in return for our commitment to hire and train over 100 full-time, permanent workers at the facility.  Local governmental entities are also supportive of our plans.  Alexander City entered a public-private partnership with the Company to facilitate the upgrade of their wastewater treatment system for use by our facility.  The Lake Martin Industrial Development Corporation provided 70 acres of land, at no cost, on which our facility will be built, and has provided a 10-year abatement of non-educational property tax.  With this support from federal, state, and local governmental entities, your Company is well positioned to continue it business plan in 2022 and beyond.

We are asking the shareholders of Westwater Resources to vote in favor of important issues set out in our proxy statement for the 2022 annual meeting, all of which we believe will be essential to advancing our battery graphite business plan.   As part of your consideration, we offer some reasons for your vote:

  • We ask that you vote FOR each Director. Our Board is comprised of five Directors, most having served for several years.  Pagliara (serving since 2017), Ms. Anderson (serving since 2018), and Ms. Peacock (serving since 2020) are each independent, and they chair, respectively, and comprise the Nominating and Corporate Governance Committee, the Compensation Committee, and the Audit Committee.  In February 2022, our long-serving President and Chief Executive Officer (CEO) – Christopher Jones – retired from the Company and the Board.  Mr. Potter (then already serving as the Company’s COO) was elected as the new President and CEO, appointed to the Board, and he became Chair of the Safety and Sustainability Committee.  Also in February 2022, the Chairman of the Board, Terence Cryan (serving since 2017), agreed to become the Company’s Executive Chairman.  As explained in the proxy, each of these nominee’s possess the requisite management and leadership experience to create a well-rounded and capable Board and they will contribute to the overall effectiveness of the Board and its Committees.  Notably, two-thirds of the independent Directors on your Board are female.
  • We ask that you vote YES to extend the term of the Company’s Omnibus Incentive Plan, which is used to align compensation with performance. A significant portion of the compensation of the Company’s management team consists of shares of Company stock, which are issued from the Incentive Plan.  Two-thirds of those shares are performance-based, are not guaranteed, and only vest if the Company meets specific long terms goals.  We believe that long-term, incentive-based compensation, which increases the management team’s ownership in the company, properly aligns their pay with Company performance.  The continued availability of the Incentive Plan is critical to this philosophy.
  • We ask that you vote YES on “Say on Pay.” Over the past 4 years we have listened to shareholder feedback and worked to align our short-term and long-term incentive compensation plans for our management team directly with performance goals related to health and safety, Company initiatives related in part to product development and sales, as well as total shareholder return.   Please look at our compensation discussion and analysis section of the proxy and consider if you agree with us that our compensation package is aligned with the Company’s performance over the past year.

2021 was an important year of progress for Westwater Resources.  We are grateful to our shareholders for their continued support and feedback.  We are also grateful to our dedicated management team and business partners that continue to exemplify a best-in-class safety culture, creativity, and teamwork to support the strategic growth of our graphite business.  With a well-defined business plan, a record of achievement, and an experienced and accomplished team at Westwater – we are confident that the continued success of your Company, as part of the Green Energy Economy, can be achieved.

Sincerely,

Terence J. Cryan
Executive Chairman of the Board

Chad M. Potter
President and CEO

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Westwater Resources, Inc. (WWR), is an explorer and developer of US-based mineral resources essential to clean energy production.

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