Coverage of Westwater Resources (WWR) is updated through a new research report published on November 19, 2020. The Company appears to have accelerated its progress toward the battery-grade graphite market. A new timetable issued with financial results for the third quarter 2020, calls for materials production through a pilot process yet in 2020 and continuing in early 2021. Following recent sales of common stock, the Company is now well fortified with a cash kitty of $53 million to complete a final feasibility study and seek project financing for a commercial scale graphite processing plant that will be located in Alabama. Results from the pilot process will provide data for the feasibility study and construction of the commercial scale plant in 2022. The Company will rely on third-party suppliers of suitable graphite concentrate until it is ready to being mine activity in 2028.
Our rating of WWR remains Speculative Buy. After an extended period of slower but consistent progress, the Company appears well on a path for a return from its investment in graphite assets. The probability for success has improved significantly.
Our price target has been revised to $20.00 to reflect the anticipated divestiture of the Company’s uranium assets, recent progress with the development of battery-grade graphite materials, and the accomplishment of financing for near-term strategic objectives. These developments significantly improve the probability of success in realizing profits from Company’s graphite materials. Importantly, the revised target price also reflects increased shares outstanding through the sale of common stock.
We note that the stock has experienced an increase in price volatility under exceptional trading volumes. The stock price movement appears to have been linked to news and developments in the broader energy materials markets that has resulted in highly speculative trading in the shares of graphite, lithium, uranium and cobalt developers. Accordingly, we offer a particular caution to investors with low tolerance for price volatility.
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