Update Report – Westwater Resources (WWR)

A change-over of senior officers for Westwater appears to have been handled with some ease, as the Company elevates its chief operating officer to replace the retiring chief executive officer.  To make certain the new CEO Chad Potter can remain focused on the construction of the graphite materials processing facility in Kellyton, Alabama, some of the usual executive responsibilities will be carried out by the Company’s chairman, Terence Cryan, who was named Executive Chairman.  In our view, the right talent is still represented on Westwater’s executive team, even if its ranks appear to be a bit thin following the retirement of Christopher Jones.  The path forward for the next two years is already well mapped out and appears now to be a matter of strong and timely execution.  In this regard, Potter is well suited to the new assignment with an extensive operational background.

Our target price of $20.00 for WWR remains frustratingly afar.  Nonetheless, a recent valuation exercise at the time of this report has validated our goal.  The calculation determined the Company’s intrinsic value is $21.29 per share based on the application of a price-to-book value multiple derived from a group of sixteen public companies in the graphite sector.  As shown in Table II on page 8 of this report, a review of this group’s most recent corporate announcements suggests that Westwater Resources is well to the leading edge of the sector.  Westwater has begun construction of a processing facility with the capacity to process 8,050 metric tons of graphite concentrate and produce 7,500 metric tons of battery-grade graphite materials per year.  The Westwater sales team has also built up a business pipeline populated by as many as forty parties interested enough to sign non-disclosure agreements and take up testing of Waterwater’s proprietary battery materials.  At least two of these prospects have moved forward with volume testing and preliminary order discussion.

Accordingly, we continue to view WWR as egregiously undervalued at the current price level.  The Company should be given far greater regard for its accomplishments compared to the balance of the graphite sector.

 

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