Westwater Resources walks a fine line


Westwater Resources (WWR) is treading in dangerous waters, but could have some upside. The company comes with decreasing amounts of working capital and has had almost no income since ending its involvement in uranium mining to graphite and vanadium mining. However, work continues on developing a graphite and vanadium processing plant in Kellyton, Alabama, as well as a nearby graphite and vanadium deposit in Coosa County. The company hopes to sell graphite to companies making batteries for electric vehicles, which has resulted in an agreement to provide graphite to battery maker SK ON and discussions with other manufacturers. However, the company’s reliance on sales of stock, tax credits and subsidies has put a major strain on its ability to continue as a company. 

Originally a uranium mining company, in the late 2010s Westwater pivoted to trying to build up sources for battery components in the United States. They attempted to develop lithium mines before getting into graphite for battery anodes. In 2018 they acquired Alabama Graphite and have been focused on developing graphite resources there. In 2020 they sold off their uranium assets and returned their lithium concessions to the federal government, according to Business Wire.  

Last year, the Chinese government imposed export controls on graphite products, while the company projects demand for graphite anodes to outstrip supply after 2025. It is banking on these two factors continuing. 

Nevertheless, government interest in electric vehicles as part of the energy transition, the current consensus among Democrats and Republicans to charge high tariffs on Chinese electric vehicles and the willingness of governments to spend money friendshoring key manufacturing industries are a glimmer of light in a dark tunnel, even if it means getting acquired by a company with better financials.

For most people, Westwater Resources is a hold. If you already own it, you’re clearly comfortable with a long term bet, and if you don’t own it you should probably avoid it for now. However, for the investor with a diversified portfolio and a tolerance for risk, Westwater shares are cheap enough that a little investment could go a long way if there’s a turnaround. 

An electric vehicle’s battery is charged. Westwater wants to produce graphite for the anodes used to lihium-ion batteries. Photo by Posessed Photograph on Unsplash.


The two biggest troubles for Westwater are this year’s decline in Western electric vehicle sales and the success for Chinese firms, like Xiaomi, which has seen sales three to five times greater than expected, according to Reuters. The company has bet its future on the energy transition and specifically on being able to sell graphite to battery makers, therefore it stands to benefit from American tariffs on Chinese graphite and electric vehicles — but China has a better position in other markets, like Europe

Electric vehicle sales in the United States were down over seven percent in Q1 of this year compared to 2023 Q4, according to The New York Times. Sales at Tesla are down 13 percent compared to this time last year and shares have fallen over 30 percent. While not as dramatic as the decline at Tesla, EV sales are down across the board. Ford is slowing production, while Rivian laid off 10 percent of its workforce in February and another one percent in April. They are also delaying construction of a new factory in Georgia; Fisker may be going bankrupt and Lordstown Motors did go under last year. This is, naturally, a bad sign for a company hoping to sell battery materials to those companies.


Westwater shares are currently priced at under $0.50 ($0.44) at the time of the writing. In a recent SEC filing, they are proposing an amendment to their charter at their next annual shareholders’ meeting to increase the number of shares of common stock from 100,000,000 to 200,000,000 at a par value of $0.001 per share. According to the filing, 57.1 million shares of common stock are issued and outstanding, a little over 560,000 shares are reserved for possible future issuance under an incentive plan from 2013 and about 42.3 million shares are unissued and unreserved, so the amendment would increase that by 100,000,000. The company’s rationale is that they want a large number of shares available for future employee compensation programs, acquisitions and, perhaps most importantly, raising more capital, without having to have as many shareholders’ meetings.

Although Westwater Resources describes its share history as “volatile”, “in decline” might be a better summary. It reached a high of around $9 a share in early February of 2021 and has been on a downward trend ever since.  

Westwater recorded a net loss of about $7.8 million in 2023, adding to an “accumulated deficit” of over $300 million. It adds up to a loss per share of $0.15, which was actually an improvement on 2022, when they had a net loss of over $11 million and a net loss per share of $0.25. The good news is that despite posting net losses for the past several years, the company has no debt. 

They do need another $152 million to finish building their new facility — and probably more to actually begin mining and processing graphite. 

Westwater currently has a market capitalization of $23.4 million, according to Google Finance. 


There are three major risks for Westwater: firstly, the slowdown in EV sales could continue for several years, blunting the demand for batteries and therefore for graphite anodes. Secondly, the United States, China or both could lift their respective tariffs, which would likely result in Chinese electric vehicles outcompeting American vehicle and battery manufacturing. Thirdly, they could be unable to get the financing to complete the Kellyton plant. 

There are other risks they face, such as being unable to attract qualified workers and the risk that the Coosa graphite deposit can’t be mined profitably. Volatility in the global price of graphite could also affect them negatively. If it gets too low the mine won’t be profitable to operate regardless of its commercial viability, moreover, such a downturn could be more damaging to Westwater than a better capitalized competitor. In 2023, for example, strong EV demand from previous years resulted in companies increasing production, but a slow down in EV sales in China resulted in an oversupply that pushed prices for flake graphite down to $550 per ton, according to Investor News. They also project flake graphite prices rising to $850 per ton as demand exceeds supply starting this year. 

One important risk they face is competition from companies that are either better capitalized or state-supported. Direct competitors include companies like Eagle Graphite, GrafTech and Asbury Carbons, which operate in the United States, and multinationals like Graphite India, AMG and Nippon Graphite Industries.  

According to Investing News Network, a longer term risk is the development of silicon-carbon composite anodes, which would require less graphite to make. However, these are not ready to scale yet.  


Westwater Resources is betting big on getting its Kellyton plant up and running before it runs out of money. However, a lack of capital and a slowdown in demand for electric vehicles, combined with an onslaught of Chinese imports, will make this year a critical one for the company’s future. At the same time, there are real upsides to Westwater as one of the few non-Chinese suppliers of a critical mineral in a critical industry. For those with a tolerance for risk, having some Westwater stock might be a longshot, but a real possibility of paying off. A takeover is also possible, given the company’s lack of debt and the potential of domestic, or at least, friend-shored battery manufacturing.

This piece was originally written for Seeking Alpha, but was rejected. I’ve posted it here with permission. I do not own any Westwater stock and I am not a CFA. This is not financial advice.