The Company is experiencing unprecedented demand for its kaolin products well in excess of its planned supply capacity. Deliveries to customers from the Wickepin plant have commenced and the average FOB price FY23 YTD is A$278 per tonne, which is well ahead of projections. As the production ramps up over the balance of this financial year to reach 200,000tpa, the company is?forecasting positive cash flow from the Wickepin operations in the first half of CY23.
- The company’s successful kaolin market development program?has paved the way for a rapid ramp up of the 200,000tpa Wickepin plant which commenced production in September 2022. Such is the demand it’s kaolin products, WA Kaolin is bringing forward investment in some of the Stage 2 plant which, when complete, will take the total capacity to 400,000tpa. WA Kaolin is recognised in the kaolin industry as an emerging globally significant producer of kaolin.
A recap of the company’s 2022 successful milestones include;
- Wickepin Plant Operational
- Stage 1 operations underway: First production in September 2022
- Operational start up completed to budget despite challenging environment (COVID-19, supply chain, labour shortages)
- Accelerated early investment into portions of Stage 2 production ramp up due to customer demand
- Executed Additional Major Long-term Offtake Agreements
- Offtake agreement signed for up to 13,500 tonnes over 3 years with Vietnamese distributor
- Additional contracts with customers in Australia, Malaysia and South Korea
- Customer demand for Wickepin quality premium Kaolin continues to far outstrip Stage 1 supply capability
- Price Premium Achieved
- Wickepin quality attracting sales premium above expectation
- Average FOB price A$278/t (FY23 YTD) vs 2020 Prospectus estimate of A$240/t
- Stage 2 product bagging line (due H1 CY23) provides access to high margin 20kg bag market
- Growing Production & Operational Cashflow
- Initial Stage 1 production ramp up continuing to achieve daily production records
- Wickepin operational ramp up forecast to be cashflow positive within H1 CY23
- Ramp up to sell out full Stage 1 production capacity forecast by June 2023
- Primed for production?as the Wickepin Kaolin project is a World Class deposit discovered by Rio Tinto in 1980’s and acquired by WA Kaolin in 1999. The project includes strong logistical infrastructure to support further expansions plans and includes proximity to power, water, road rail and towns. The ore and mineral reserves are:
- Ore Reserve: 30.5mt1 of ultra bright, high purity kaolinised granite?
- Mineral Resource: 644.5 mt2 of ultra bright, high purity kaolinized granite (includes ore reserve)
- WA Kaolin is economically positioned?as research has indicated the global kaolin market was estimated to be worth US$4.24 billion in 2021 and is forecast to grow at a compound annualised growth rate (CAGR) of 3.7% from 2022 to 2030, this includes:
- In 2021, the paper industry continued to be the major consumer of kaolin worldwide, where it is used as a filler or coating, accounting for approximately 39% of market share in terms of volume.
- The Asia Pacific kaolin market accounted for approximately 50% of the global volume share in 2021 due to strong economic growth and increasing industrialisation. Ceramics and fibreglass are forecast to be the fastest growing applications for kaolin in the region. An increasing number of ceramic manufacturing companies in China have contributed to the growth of the kaolin industry in recent years and this trend is expected to continue.
- Due to the quality of WA Kaolin’s kaolin product, it has typically attracted a higher price than the market average. Furthermore, the reduction of capacity in China due to mine closures has placed upward pressure on prices.
- Managing Director – Andrew Sorensen, has a +30yr established track record for growth?which includes minerals/exploration industry experience and operations management. Prior to joining WA Kaolin, Andrew held senior leadership positions across a broad range of industries, including General Manager CMTP Pty Ltd Derrimut, Vice President / General Manager (Asia Pacific) for Potters Industries Inc. and Manufacturing Manager for PQ Australia Pty Ltd. Andrew joined WA Kaolin in 2006 and has overseen several of the company’s key developmental milestones. He is fundamental in driving and implementing the Company’s vision and strategy, overseeing the day-to-day activities of the business, liaising with the Board where necessary.
- WA Kaolin boasts a highly experienced?Board?and?Management?Team, have extensive hands-on operational and commercial experience in minerals exploration, production and development in Australian and around the world.
- Directors have skin in the game?– they have invested considerable amounts of their own money in via direct share purchases/capital raises, including the Executive Director of the Company, Alf Baker, and CEO Andrew Sorensen have also committed to subscribe to $1.0 million by way of a Converting Loan, and are fully committed to the project and motivated to ensure its scaled production success.
WA KAOLIN LIMITED?(WAK)?is an ASX-listed, Kaolin mineral exploration, extraction and processing company poised for significant growth due to increasing global demand for kaolin, which has a bright future and a growing range of applications.
WA Kaolin listed on the Australian Securities Exchange (ASX) in November 2020, having completed a Definitive Feasibility Study for the Wickepin Kaolin Project which detailed the potential to ramp up production to 400,000 tonnes of kaolin per year.
WA Kaolin has an established JORC 2012 resource of more than 100 million tonnes of extremely high-grade, easy access kaolin at a site near the town of Wickepin, 220km southeast of Perth, Western Australia. This represents one of the largest known remaining premium primary resources of kaolin in the world.
In September 2022, WA Kaolin completed commissioning of Stage 1 of the Wickepin Processing Plant, enabling the Company to commence a two-stage production ramp-up, starting with the Stage 1 target of 200,000 tonnes per annum. It is anticipated that free cash flow will enable the further expansion of this capacity to 400,000 tonnes per annum after 36 months
