Energy materials developer Westwater Resources is now found in the enviable position of capital sufficiency – at least for the next two years. With common stock placement agreements already in place, the Company was able to move swiftly to take advantage of favorable price movements beginning in October 2020 and through February 2021. After the stock price languished near under $2.00 per share for months in early 2020, the stock was boosted favorable trends in the U.S. equity market that propelled valuation metrics and increased trading volumes. Over the four months ending January 2021, the Company was successful in raising $104.2 million at prices well over $5.00 per share.
The Company now has over $100 million in its cash kitty. During the conference call to discuss year-end 2020 financial results, management suggested the current cash resources are sufficient for working capital through the end of the year 2022 with the potential for some allocation to the budget for Westwater’s graphite materials processing plant planned for construction in Coosa County, Alabama. A pilot test of the Company’s proprietary graphite materials process is underway to supply data for a final feasibility study of the graphite project. In turn the feasibility study, which has already commenced, will provide a detailed budget for the graphite processing plant as well as the adjacent graphite mining operation planned for 2028. Additionally, the study will provide a thorough analysis of economic viability of the project.
Some shareholders may have been troubled by the increase in Westwater’s total shares outstanding to 29.4 million compared to 3.3 million shares outstanding at the end of 2019. While no astute investor likes dilution, capital resources are required for successful execution on Westwater’s plan to become the first domestic source of graphite in eighty years. If accomplished, we believe Westwater could be placed in a highly visible position in the energy materials market as the sole domestic source of a mineral recognized as critical by the U.S. government. We expect this first-to-market accomplishment to be pivotal in future market penetration and a strong driver of long-term value.
In our view, in the near-term it will not be quarter reports that fire up investors for WWR shares. Instead, we expect attention-getting announcements from Westwater as the pace of activity in Westwater’s graphite development projects accelerate. The Company is on schedule to reach key milestones in 2021. We expect announcements related to the completion of the Company’s graphite materials pilot process sometime in early 2021 and the publication by June 2021 of a final feasibility study for the Alabama graphite mine and minerals processing plant.
We continue to rate WWR at Speculative Buy with a $20.00 price target.
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