CENTENNIAL, Colo. - Westwater Resources, Inc. (NYSE American: WWR), a company specializing in battery-grade natural graphite, has entered into its inaugural off-take agreement with SK On Co., Ltd., a prominent electric vehicle (EV) battery manufacturer. The contract stipulates that Westwater will provide its CSPG-10 natural graphite anode products from the Kellyton Graphite Plant in Alabama to SK On's battery facilities within the United States.
This agreement marks a significant milestone for Westwater as it seeks to establish itself as a key player in the graphite market, particularly for the EV industry. The terms of the agreement require SK On to purchase a predetermined minimum quantity of the product annually, with the potential to increase this amount by mutual consent. By the final year of the contract, the forecasted volume required by SK On is expected to reach 10,000 metric tons of the product.
Terence Cryan, Westwater's Executive Chairman, emphasized the importance of this deal for advancing the company's graphite business and securing necessary financing for the construction of the first phase of their Kellyton Graphite Plant.
Frank Bakker, President & CEO of Westwater, added, "This is the first off-take agreement for Westwater, and the Company is actively negotiating additional off-take agreements with other customers. We believe the contract with SK On is also the first agreement for the supply of CSPG between a South Korean EV battery manufacturer and a U.S. natural purified graphite producer."
Westwater Resources is developing the Kellyton Graphite Processing Plant and holds the Coosa Graphite Deposit in Alabama, which is considered the most advanced natural flake graphite deposit in the contiguous United States. SK On, a company launched from SK Innovation, operates globally with battery plants in the U.S., Europe, and Asia.
The information in this article is based on a press release.
InvestingPro Insights
As Westwater Resources, Inc. forges a crucial off-take agreement with SK On Co., Ltd., investors and industry watchers may find it valuable to consider the financial health and market performance of the company. According to InvestingPro, Westwater Resources holds more cash than debt on its balance sheet, which is a positive sign for the company's financial stability. Furthermore, the company is trading at a low Price / Book multiple of 0.2, as of the last twelve months ending Q3 2023. These metrics suggest that the company's stock might be undervalued, potentially offering an attractive entry point for investors.
However, it's worth noting that Westwater Resources has been quickly burning through cash and suffers from weak gross profit margins, with a gross profit of negative $0.03 million in the same period. The stock price has been quite volatile and is trading near its 52-week low, with the price having fallen significantly over the last year by 50.78%. Additionally, the company has not been profitable over the last twelve months and does not pay a dividend to shareholders, indicating potential risks for income-focused investors.
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