Investors may have concerns about Westwater Resources’ financial position against the $202 million price tag for a natural flake graphite processing plant the Company is building near Kellyton, AL, but the marketing and sales team is not letting the hand wringing slow them down. A new prospective customer has signed a letter of intent with the Company to provide an estimated 925 metric tons of ULTRA-PMG once the Kellyton plant is operational by the end of 2023. Details on the prospective buyer and its products were not disclosed and the exact timing of orders and shipments probably may not be known until a final agreement is signed. Nonetheless, the development is a boost for Westwater potential revenue streams. It could also support management’s efforts in seeking additional financing to bridge any gap between cash resources and the Company’s capital budget.
Indeed, Westwater reported $100.3 million in total cash at the end of September 2022, the last reported financial results. The apparently plump cash kitty may have been enough to attract a suitor. Last month Idaho Strategic Resources (IDR: NYSE) announced its interest in acquiring all Westwater Resources common stock. Neither the offering price nor the purchase consideration were specified. Apparently, Westwater leadership declined the offer by letter and suggested an introductory meeting or call, but at the time of this report IDR had not responded.
We continue to rate WWR at Speculative Buy. While the stock does not always respond dramatically to quarter financial reports, we believe the fourth quarter and year-end 2022 report expected in the next few weeks could be an exception. After a lengthy period of price suppression by year-end 2022 tax loss selling and other macroeconomic and political worries that weigh on the valuation of all U.S. equities, WWR may be poised to rebound on encouraging news related to its capital position as well as progress with the construction project in Kellyton, AL. The Company regularly posted images of the construction activities on the corporate website, demonstrating the project is on schedule for completion yet in 2023. Confirmation that the project is also on budget could be comfort to shareholders concerned about capital adequacy.
Additional details are available in the full report dated January 11, 2023, by clicking on the image below.
Please note the important disclosures and disclaimers at the end of every Crystal Equity Research publication.
Please consider the environment before printing any Crystal Equity Research publication.