Westwater Resources (WWR: Nasdaq) announced this week the company will begin in September 2020 to construct a pilot plant to produce battery-grade graphite materials. The company has developed three proprietary graphite materials for use in the anode component of lithium ion batteries and in alloys used to enhance efficiency in alkaline batteries. A German engineering firm, Dorfner Anzaplan has been perfecting the processes to produce these materials. Now the engineers will put the final touches on a pilot plant design and will play a role in the construction phase that begins in the next few weeks.
To begin low-volume production at the pilot plant, Westwater has purchased graphite concentrate from a third party. The supplier was chosen for the similarity of its graphite concentrate to the natural flake graphite found at a resource licensed by the company in Coosa County, Alabama. By late 2022, Westwater expects to be the first U.S. domestic source of battery grade graphite, mining graphite from a new mine in Alabama and processing it to standards of battery manufacturers at a high-volume plant located adjacent to the mine site.
In the meantime,
Germany is apparently the location for the pilot plant, making it possible for the
engineers at Dorfner Anzaplan to oversee the pilot plant operation. Equipment needed to purify and shape the
graphite into battery-grade materials are in the queue for a timely
installation. A shipment of thirty
metric tons of graphite concentrate is expected to arrive in Germany within the
next several weeks, providing enough concentrate to produce as much as ten
metric tons of purified micronized graphite materials. Production at the pilot plant is expected to
begin before the end of 2020.
Availability of
production at the pilot plant should provide adequate supplies of test
materials for prospective customers.
Westwater already has an order for one metric ton of PMG material for large-volume
qualification tests by an undisclosed alkaline battery manufacturer. Westwater
recently added a senior executive to focus on graphite material sales strategy
and execution. The seat has been filled
by a professional experienced in business development for specialty chemicals,
including battery materials.
The marketing
and sales effort could be made easier by recent encouraging tests of two of
Westwater’s proprietary graphite materials.
In June 2020, the Company disclosed favorable results of resistivity
tests of its Purified Micronized Graphite
(PMG) product as a conductive
material. The internationally recognized
4T test is a standard electrical impedance measuring technique that uses
separate pairs of current-carrying and voltage-sensing electrodes. The actual material tested had been produced
using laboratory-scale equipment by Dorfner AnzaPlan. In additional to demonstrating desirable
resistivity, PMG sample demonstrated
superior or comparable resistivity to materials produced by other graphite
manufacturers, at least the ones for which data is publicly available.
Dorfner also
produced samples of its Coated Spherical
Purified Graphite (CSPG) using laboratory-scale equipment that simulates
the production process anticipated by the Company. Independent tests were performed on the CSPG sample, finding that the material
performed as well or better as a battery anode material than benchmark
commercially available natural flake and synthetic graphite materials. In an apparent spirit of confidence in the
product, Westwater released the test results for the CSPG, which could have attracted the attention of customers as well
as investors.
Traders reacted
to the pilot plant construction news with enthusiasm, bidding Westwater’s
shares higher by 5% in the first day of trading following the
announcement. Trading volume was
exceptional on the day, reaching well over 23 million shares. Indeed, trade in Westwater’s shares has shown
greater efficiency in recent weeks.
Average daily trading volume has increased to approximately 920,000
shares per day from 153,000 per day observed three months ago. Also the bid/ask spread as a percentage of
the share price has declined to 3.8% of the price from 6.0% three months
ago. This is both as a consequence of
the recent increase in share price as well as a small reduction in the bid/ask
spread. If Westwater’s shares follow the
track of many other stocks, the improvement in trading efficiency could help
attract a wider investor audience.
Neither the author of the Small Cap Strategist web
log, Crystal Equity Research nor its affiliates have a beneficial interest in
the companies mentioned herein. WWR is
included in the CER Series published by Crystal Equity Reseach for issuer
sponsored research coverage. Crystal
Equity Research has a Speculative Buy recommendation on WWR.
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