Westwater Resources Announces First Off-Take Agreement for Sale of Graphite from its Kellyton Plant
Westwater Resources, Inc. (WWR) has announced the execution of its first off-take agreement with SK On Co., Ltd., a leading electric vehicle battery manufacturer, to supply natural purified graphite anode products from its Kellyton Graphite Plant to SK On battery plants located within the U.S. The agreement is a critical step in advancing Westwater's graphite business and securing additional financing needed to complete construction of Phase I of the Kellyton Graphite Plant.
The agreement between Westwater Resources and SK On is significant in the context of the growing demand for electric vehicle (EV) batteries and the strategic importance of securing raw materials for battery production. As nations and companies alike push for energy independence and reduced carbon footprints, the sourcing of battery components from domestic suppliers becomes increasingly valuable. This deal underlines a trend where battery manufacturers are looking to diversify and secure their supply chains against geopolitical risks and potential shortages of critical minerals.
From a market perspective, this off-take agreement could signal Westwater's potential growth and the strengthening of its market position. It could also influence the stock's attractiveness to investors, as the commitment from a major player like SK On provides a level of validation and anticipated revenue stability. However, the impact on Westwater's financials will depend on the pricing terms, volume commitments and the company's ability to scale production effectively to meet SK On's demands.
The off-take agreement is a pivotal element for Westwater Resources as it seeks additional financing for the construction of its Kellyton Graphite Plant. Such agreements are often viewed favorably by lenders and investors because they provide a clearer revenue forecast and reduce the risk associated with new production facilities. The commitment from SK On to purchase a minimum amount of graphite anode material annually provides Westwater with a predictable cash flow, enhancing the company's ability to secure financing on favorable terms.
It's also important to note that the demand for graphite, particularly in the form of natural purified graphite for anodes, is expected to rise as the EV market expands. The agreement positions Westwater to capitalize on this growth, provided they can maintain production quality and cost-effectiveness. Investors will be watching closely for updates on production capabilities, additional off-take agreements and the overall financial health of the company as it progresses with its phase I construction.
The reference to 'IRA-compliant source by 2025' is an indication of the regulatory landscape's impact on the EV battery supply chain. The Inflation Reduction Act (IRA) includes provisions that incentivize the use of materials sourced from the U.S. or free-trade agreement partners for EV batteries. This agreement could position Westwater as a key player in the U.S. market, potentially benefiting from these incentives and meeting the increasing demand for domestically sourced battery materials.
Furthermore, the legal stipulations of the off-take agreement, such as the minimum purchase amount and the ability for mutual increases, are crucial for understanding the long-term implications of this deal. This structure provides flexibility for SK On while offering Westwater a degree of sales certainty. The legal frameworks governing these agreements will be essential in managing the relationship between Westwater and SK On and any disputes or renegotiations could have material effects on Westwater's operations and financials.
02/05/2024 - 06:30 AM
Westwater contracts to supply natural purified graphite anode material to SK On, a leading manufacturer of EV batteries, at its plants in the U.S.
Off-Take Agreement a critical element to obtaining financing for construction of Kellyton Phase I
CENTENNIAL, Colo. --(BUSINESS WIRE)--
Westwater Resources, Inc. (NYSE: American: WWR) , an energy technology and battery-grade natural graphite company (“Westwater Resources” or “Westwater”), today announced the execution of its first off-take agreement with SK On Co., Ltd. (“SK On” and such agreement, the “Off-Take Agreement”), a leading electric vehicle (“EV”) battery manufacturer, supplying electric vehicle batteries to Ford, Hyundai, Volkswagen and others.
Pursuant to the terms of the Off-Take Agreement, Westwater will supply CSPG-10 natural graphite anode products (the “Product”) from its Kellyton Graphite Plant located near Kellyton, Alabama to SK On battery plants located within the U.S. Under the terms of the Procurement Agreement, SK On will be obligated to purchase, on an annual basis, a quantity of Product equal to a percentage of the forecasted volume required by SK On (the “Minimum Purchase Amount”), provided that the Minimum Purchase Amount may be increased from time to time by the mutual agreement of the parties. The forecasted volume required by SK On in the final year of the Off-Take Agreement is 10,000 mt of Product.
“The contract with SK On is another important step in advancing Westwater’s graphite business. We are excited to partner with a leading global manufacturer of EV batteries and assist SK On to further establish its U.S. -based supply chain. This agreement is also a critically important step to securing the additional financing needed to complete construction of Phase I of our Kellyton Graphite Plant,” said Terence Cryan, Westwater’s Executive Chairman.
Frank Bakker, Westwater’s President & CEO, 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. Our technical and commercial teams have worked very hard to complete the necessary steps to achieve this important milestone. We believe that Westwater is well positioned as one of the first U.S. -based suppliers of natural purified graphite for companies seeking an IRA-compliant source by 2025.”
About Westwater Resources, Inc.
Westwater Resources is an energy technology company that is focused on developing battery-grade natural graphite. Westwater Resources’ primary project is the Kellyton Graphite Processing Plant that is under construction in east-central Alabama . In addition, Westwater Resource’s Coosa Graphite Deposit is the most advanced natural flake graphite deposit in the contiguous United States — and is located across 41,965 acres (~17,000 hectares) in Coosa County, Alabama . For more information, visit westwaterresources.net .
About SK On
SK On is a global leading electric vehicle battery developer, manufacturer, and solutions provider whose mission is to make our world a cleaner and more convenient place as an electrification linchpin. SK On was launched as an independent company in October 2021 after SK Innovation, South Korea’s largest energy company, decided to split off its battery business unit. SK On aims to become a world leader in the clean energy industry by leveraging its global production base and R&D capabilities, as well as its production and quality management know-how. SK On is a 50/50 joint venture partner together with Ford Motor Company in BlueOval SK.
Headquartered in Seoul, South Korea , SK On has a worldwide presence with battery plants currently operating or in construction across the United States , Europe , and Asia .
Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as “will,” “can be,” “expected,” and other similar words. Forward-looking statements in this release include, among other things, statements concerning Westwater’s future sales of CSPG products to SK On, including the amounts, timing, and types of products included within those sales, and Westwater’s expectations with respect to the Off-Take Agreement. Westwater cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Westwater; accordingly, there can be no assurance that such suggested results will be realized. Additional risks facing Westwater‘s future prospects are discussed in the Westwater Resources, Inc. Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent securities filings.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240204550608/en/
Westwater Resources, Inc.
Info@WestwaterResources.net
Investor Relations
Investorrelations@westwaterresources.net
Source: Westwater Resources, Inc.
What is the ticker symbol for Westwater Resources, Inc.?
The ticker symbol for Westwater Resources, Inc. is WWR.
Who is the off-take agreement with?
The off-take agreement is with SK On Co., Ltd., a leading electric vehicle battery manufacturer.
What products will Westwater supply under the off-take agreement?
Westwater will supply CSPG-10 natural graphite anode products from its Kellyton Graphite Plant.
What is the forecasted volume required by SK On in the final year of the Off-Take Agreement?
The forecasted volume required by SK On in the final year of the Off-Take Agreement is 10,000 mt of Product.
What is the significance of the agreement with SK On for Westwater?
The agreement is a critical step in advancing Westwater's graphite business and securing additional financing needed to complete construction of Phase I of the Kellyton Graphite Plant.
