Ann: WAK - Stage 1 Progress / Delay in Full Production Rate, page-58

SWIILTD
I posted my last post in error. I hit the send-message button, when I wanted to use the preview button. Relevant changes are underlined below.

Do you, or anyone for that matter, have an opinion on Kaolin tonnage sold per year in near-future years, and related thereto, revenue and EBIT? I have posted on these three things in past weeks, but I do not want to be trapped in my own thought cacoon.

It may be easier to think in dry-processed equivalents, because that is all that WAK has done, so to a degree, prices and margins can be reasonably guessed, and would be known by WAK. The logic of using dry-processing equivalents is that getting into wet processing would only be done if it were a more profitable alternative, so sticking with dry-processed kaolin simply adds a layer of conservatism to my thinking.

WAK has stated in the past that it may install a plant a year, and that sometime hence it hoped to produce a million tonnes of kaolin a year ("over a million" were the words). Sticking with .2 MTA plants, that requires five plants to get 1 MTA. If one includes a 2.5MTA plant (Breakaway suggested two of them) the five-plant capacity would be 1.o5, which is not an issue. Three .2MTA plants and two .25MTA plants would deliver 1.1 MTA. There is no need to think of a new plant every year it could be slower, and hence take six or seven years to get to a suspected plateau of circa 1 MTA . That circa 1 MTA is when I would set the "Base Year" that I use to establish a share value, which I discount to Present Value.

Transporting product to Kwinana could be an issue even when the rail link is rconnected. For instance, the rail operator may need time to have enough freight cars. Marketing increased tonnage at a viable price could be another constraint, although I do not think it is.

Funding capacity could be a constraint, but not if the market is strong enough to allow the quantity to be exported at viable prices. It is easy to borrow money on a project basis (a new plant) if one can demonstrate how viable the proct would be. Alternatively, some mining services companies, like NWH (NRW Holdings), are keen to expand their BOO (Build, Own, Operate) business in the mining sector.

BOO deals can be very flexible, with a built-in option for the mine owner to terminate arrangements via a payout. As an aside, the mining services business, Primero, has a long history of plant engineering, and in respect to kaolin, Google "Primero" "Suvo", and "Primero" "Andromeda". NRW Holdings owns Primero. For those who dream about WAK getting into ultra-high-purity alumina in years to come - see Primero's involvement at https://www.investi.com.au/api/announcements/cmx/2f85cb90-8dc.pdf