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DISCONTINUED OPERATIONS | 9 Months Ended
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Sep. 30, 2020
DISCONTINUED OPERATIONS |
DISCONTINUED OPERATIONS | 8. DISCONTINUED OPERATIONS In the third quarter of 2020, the Company made the strategic decision to focus most of its resources on its graphite business, agreeing to the sale of its uranium business as further discussed below, and discontinuing its investment in its lithium business. 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 September 1, 2020, the Company signed a binding LOI to sell its U.S. uranium assets located in New Mexico and Texas to enCore Energy Corp., a corporation incorporated under the laws of British Columbia, Canada. The proposed transaction with enCore will be structured as a direct share purchase in which enCore acquires all issued and outstanding equity securities of Westwater’s wholly-owned uranium subsidiaries, URI Inc., Neutron Energy Inc., and Uranco, Inc., as well as related subsidiaries, HRI-Churchrock, Inc., Hydro Restoration Corp., Belt Line Resources, Inc., and Uranium Resources, Inc. (f/k/a URI Minerals, Inc.). Westwater expects to receive enCore shares valued at approximately $2.0 million and retain royalties from future production from the New Mexico uranium properties. As part of the proposed transaction, enCore will receive $3.0 million of cash collateral currently pledged against reclamation performance obligation bonds totaling approximately $9.3 million upon the successful replacement of those performance obligation bonds. EnCore will also assume other liabilities related to the uranium properties including asset retirement obligations and outstanding royalties payable. The sale is expected to close on or before December 31, 2020. The Company considers assets to be held for sale when management approves and commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, the asset is available for immediate sale in its present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, the sale of the asset is expected to be completed within one year and it is unlikely that significant changes will be made to the plan. Management has concluded that the sale of its U.S. uranium assets to enCore meets these criteria. As a result, the assets and liabilities in the disposal group are classified as held for sale for all periods presented on the Condensed Consolidated Balance Sheet as of September 30, 2020. This divestiture will allow the Company to devote most of its available resources to the development of high-performance battery graphite. This transaction represents a major strategic shift for Westwater and is expected to significantly affect current and future operations and financial results. Due to this shift, the Company’s uranium segment has been classified as a discontinued operation and is reported separately from continuing operations on the Condensed Consolidated Statement of Operations for all periods presented. The carrying amounts of the major classes of assets and liabilities related to the Company’s discontinued uranium and lithium operations and classified as held for sale as of September 30, 2020 and December 31, 2019 were as follows:
| September 30, |  | December 31,
| 2020 |  | 2019
(thousands of dollars) |  |  |  |  |
Restricted Cash | $ | 3,000 |  | $ | —
Prepaid and other current assets |  | 89 |  |  | 151
Net property, plant and equipment |  | 6,207 |  |  | —
Operating lease right-of-use assets |  | 10 |  |  | —
Current Assets Held for Sale |  | 9,306 |  |  | 151
Net property, plant and equipment |  | — |  |  | 11,342
Operating lease right-of-use assets |  | — |  |  | 14
Restricted cash |  | — |  |  | 3,000
Assets Held for Sale, non-current |  | — |  |  | 14,356
Total Assets Held for Sale | $ | 9,306 |  | $ | 14,507
Accounts payable | $ | 140 |  | $ | 25
Accrued liabilities |  | 808 |  |  | 776
Asset retirement obligations - current |  | 5,969 |  |  | 894
Operating lease liability - current |  | 10 |  |  | 6
Notes payable - current |  | 331 |  |  | —
Other current liabilities |  | 500 |  |  | —
Current Liabilities Held for Sale |  | 7,758 |  |  | 1,701
Asset retirement obligations, net of current |  | — |  |  | 5,406
Operating lease liability, net of current |  | — |  |  | 8
Other long-term liabilities |  | — |  |  | 500
Liabilities Held for Sale, non-current |  | — |  |  | 5,914
Total Liabilities Held for Sale | $ | 7,758 |  | $ | 7,615
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 and 2019 were as follows:
|  | For the Three Months Ended |  | For the Nine Months Ended |
|  | September 30, |  | September 30, |
(thousands of dollars) |  | 2020 |  | 2019 |  | 2020 |  | 2019 |
Mineral property expenses |  | $ | (752) |  | $ | (820) |  | $ | (1,924) |  | $ | (2,181) |
General and administrative expenses |  |  | (405) |  |  | (356) |  |  | (1,273) |  |  | (1,181) |
Accretion of asset retirement obligations |  |  | (32) |  |  | (197) |  |  | (170) |  |  | (353) |
Depreciation and amortization |  |  | (30) |  |  | (20) |  |  | (36) |  |  | (66) |
Impairment of uranium properties |  |  | (5,200) |  |  | — |  |  | (5,200) |  |  | — |
Gain on disposal of uranium assets |  |  | — |  |  | 729 |  |  | — |  |  | 729 |
Other income (expense) |  |  | 30 |  |  | — |  |  | 30 |  |  | — |
Net Loss from Discontinued Operations |  | $ | (6,389) |  | $ | (664) |  | $ | (8,573) |  | $ | (3,052) |
Our cash flow information for 2020 and 2019 included the following activities related to discontinued operations:
| For the Three Months Ended |  | For the Nine Months Ended
| September 30, |  | September 30,
|  | 2020 |  | 2019 |  |  | 2020 |  | 2019
(thousands of dollars) |  |  |  |  |  |  |  |  |
Depreciation and amortization | $ | 30 | $ | 20 |  | $ | 36 | $ | 66
Capital Expenditures |  | - |  | - |  |  | (101) |  | -
Accretion of asset retirement obligations |  | 32 |  | 197 |  |  | 170 |  | 353
Impairment of uranium properties |  | 5,200 |  | - |  |  | 5,200 |  | -

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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