Westwater Resources (NYSE-A:WWR) Inc’s Coosa deposit in Coosa County, Alabama, is the most advanced natural flake graphite deposit in the contiguous United States, but getting this asset into production is not on top of the company’s to-do list right now.
Westwater has instead decided to develop its Kellyton graphite processing plant in east-central Alabama first in a bid to generate revenue and cash flow faster than otherwise possible by producing battery-grade graphite products from a non-Chinese source of natural flake graphite until the Coosa deposit is developed.
This was the latest in a series of strategic moves by Westwater — including the acquisition of its subsidiary Alabama Graphite (CSE:ALP) Corp in 2018 and the sale of its uranium assets completed in 2020 — to optimally position itself as a pure-play graphite company set to become the first fully integrated, domestic supplier of battery-grade graphite products in the US.
Westwater finished 2Q 2022 with a cash balance of $109 million and a working capital balance of $102.7 million, putting it in a strong position to execute its vision.
According to Westwater’s recently appointed CFO and vice president Steve Cates, the company will be able to achieve revenue faster than other miners through its plant-first approach, which he said has de-risked its projects.
Cates told Proactive that this was in part due to the fact the company did not have to rely on permitting to progress. “A lot of junior mining companies have a deposit and they bet the company on the permitting process,” Cates explained. “While Alabama is a great state and we don’t see any issues as far as permitting goes, it does take time, and these delays can be problematic.”
“The other thing is that you only get to mine your graphite deposit once, so with the supply/demand imbalance that is projected for graphite, we think we’ll be able to mine our graphite at much more attractive prices in the future.”
Analysts at Water Tower Research agree, writing in a note in July 2022 that Westwater’s plant-first approach would allow it to achieve revenues and generate operating cash faster than would otherwise be the case.
“By focusing on processing and production capacity for battery-grade graphite products before developing its own mine, Westwater should be able to develop a profitable business even while purchasing graphite flakes from third parties,” analysts wrote.
As the US ramps up battery manufacturing to support the green energy transition, domestic graphite production will be critical, noting that China currently controls about 75% of global graphite production and it has imposed a policy of resource nationalization.
According to Allied Market Research, the global graphite market was valued at $14.3 billion in 2019 but is expected to reach $21.6 billion by 2027. “We see that there are a lot of tailwinds to the market and Westwater is in a good position to take advantage of that,” Cates said.
Processing before production
Westwater, via its subsidiary Alabama Graphite, began construction of its $202 million Kellyton processing plant in 4Q 2021. The plant will refine raw graphite into coated spherical purified graphite for use in lithium-ion batteries — of which graphite makes up 50% by weight of the critical minerals required — that power electric vehicles and other products such as smartphones, televisions, computers, and tablets.
Phase 1 construction of the plant is underway with commissioning targeted to begin in mid-2023. The company held a ceremonial groundbreaking for the project in April attended by the Governor of Alabama and other elected officials. In June, it received an air permit for the processing plant from the Alabama Department of Environmental Management which was the final permit required for Alabama Graphite to complete Phase 1 construction. In July, earthwork and site grading were completed with the company moving approximately 97 thousand cubic yards of dirt during this work.
“There are multiple potential phases of this project,” Cates told Proactive. “Once we’ve completed Phase 1, we’re going to take all the knowledge gained from the construction and operating experience, and incorporate that knowledge in a feasibility study for Phase 2.”
Once operational, Phase 1 of the project is expected to support purified graphite production of 7500 metric tonnes per year and is set to be fuelled by the company’s flagship Coosa graphite deposit, which Westwater plans to bring into production in 2028.
‘Made-in-USA’ graphite
Located in the heart of Alabama’s past-producing graphite belt, which was home to significant graphite production from the late 1800s through to the 1950s, the Coosa deposit hosts near-surface, oxidized high-grade graphitic material.
A 2015 drill program at Coosa returned promising assay results, with purification trials returning purity of more than 99.9% graphitic carbon (Cg) across all flake sizes of Coosa graphite concentrate.
Now, Westwater is awaiting the results from its recently completed graphite and vanadium drill program completed in April 2022 and is working on an updated technical resource report for the site. “We’ll have an update later this year,” Cates said.
As Westwater executive chairman Terence Cryan told Proactive, together the Kellyton processing plant and the Coosa deposit represented the first fully integrated battery-grade graphite project in the US. “There are very few companies that exist in the battery-grade graphite space that are fully integrated, so as a fully integrated, North American producer, we are positioned to be a major player,” he said.
Westwater also holds the mineral rights to more than 1,300 acres of land in Chilton County, Alabama, which includes the past-producing Bama graphite mine. Like the Coosa deposit, the project hosts a widespread occurrence of weathered graphitic schist near the surface.
Proprietary purification technology
Also supporting Westwater’s acceleration towards revenue and cash flow is its patent-pending graphite purification process which would allow the company to take a variety of graphite feedstock and treat and process it.
As Cates explained, this process was safer and more environmentally friendly because, unlike other purification methodologies, it does not use hydrofluoric acid, which is more expensive to manage, requires more water, and produces damaging by-products. “Our process provides an advantage from a greening perspective,” he concluded.
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