In the poultry meat business, there are markets for drumsticks,...

In the poultry meat business, there are markets for drumsticks, thighs, wings, breast meat, whole chickens, and secondary markets for everything else, including the heads that are bought by crocodile farms and other buyers. However, nobody raises chickens because they have a buyer for chicken heads. Selling chicken heads only makes economic sense as a byproduct. Without the other business, there would not be a chicken-heads business.

Similarly for alluvial kaolin mined in Brazil and the USA, alluvial forces fracture the kaolin to a fine particle size, but some particles are large, and until about 1960 large-particle kaolin was discarded. That material is nowadays delaminated, and hence it is a monetised byproduct for kaolin miners who historically discarded large-particle-size kaolin.

WAK's ore being primary kaolin tends to be coarse, so its natural market is for pressure-cast ceramics, which requires large particle-kaolin. When WAK has a delamination facility, that too suits WAK's ore because of the large particle size, plus the high crystal perfection. WAK's ore is unsuited for a fine-grained product, mainly because it is difficult to dry-float filter fine kaolin particles. The solution to the problem is to sell the coarse-grain kaolin into the pressure-cast ceramics subsector, and the delaminated paper-coatings subsector, and to a degree treat the continuous-filament fibreglass subsector as a byproduct on a marginal costing basis to optimise the commercial operation holistically.

Stanco's offtake agreement has put the cart before the horse. It is akin to founding a poultry business because one has a large offtake agreement for chicken heads. K99F is good business to have as a byproduct to the K99C product (and what I call near-ore) for the pressure-cast ceramics subsector, and for the paper-coatings subsector. Both K99C and near-ore are well suited to WAK's ore body, and in the kaolin business, it is the ore that drives the products that one should produce as the mainline business.

What makes K99F worth pursuing is that it demands high-purity, which suits the Wickepin ore body, so in that respect it is superior to alluvial ore that tends to have carbonaceous matter, a serious contaminant for continuous-filament fibreglass subsector, and it may have iron oxide too. Both carbon and iron occasion more filament breaks than the subsector tolerates. Stanco has a presence in markets other than the continuous-filament fibreglass subsector, and it should be in its own interest to help WAK sell products that are complementary to K99F

As a retired IT codger, I am not an expert in this field, so the foregoing view could be flawed. If my perspective is correct, then Management should lay out a longer-term view based on the ceramics and paper markets, with fibreglass being a welcome fillip to the whole. That is, change the story to this holistic longer-term perspective, if it is valid.