Ann: WAK - Commissioning Completed at Wickepin - Kaolin Shipped, page-40

I wrote my earlier post off the top of my head, so I mentioned $40 million invested by the original entrepreneurs, knowing that it was a tad more. $42M is what has been reported.

Also, I did not want to go off at a tangent to learn what words Management used to state its long-term plan to be a globally significant kaolin supplier. This goal has been suggested since the float, but the more recent words in the FY22 Annual Report are, “The Company is primarily focused on establishing itself as the preferred supplier of high-grade premium kaolin products globally”. If one trawls through the Internet for information on global kaolin players, WAK is never mentioned. This should change if Management's “focus? is realised, and that is when the Big Boys will want in on the Wickepin action. The knowledgeable ones would already be alert to the potential, IMO. These comments relate to my fond hope of a golden-swan event that would give the SP a fillip.

I did not explain that a “primary” resource means it is not an alluvial resource. The ore is found where nature occasioned it to be formed by weathering granite. Alluvial granite tends to include a fraction of plant material, and the carbon it contains tends to give the kaolin a grey colour that is a significant negative. Also, in respect to life of mine, I did not dwell on the issue of the ore extracted being about twice the tonnage of the kaolin produced. With various losses, a 50% kaolin ore would give a commerciL yield of circa 40% kaolin output, which means that 400,000 tonnes of kaolin a year requires a million tones of ore (400,000/40%). The Prospectus focused on Stages 1 and 2, and merely hinted further expansion subject to market demand and CAPEX availability.

The 60 cents that I mentioned just happens to be what Breakaway ventured in 2021, but they erred in thinking the market would realise WAK's potential within twelve months. I derived my 60 cents independently, and on the basis of tonnages and margins a few years hence to derive a then-value, which I discounted to a 30/06/2022 value. My model is too iffy to warrant it to be of any value beyond myself, and it excluded the hope of that golden-swan event to give myself greater confidence in the 60 cents.

I do not want to impugn the ethics of Managemen, but my Machiavellian mind has suggested that Management may have no interest in ramping the SP to the point where the 25 cent options are exercised, because the funds raised would not counteract the negative of the resultant share dilution. If the profit per tonne is good and the market is screaming for supply, Management would have no problem finding CAPEX funds that increase debt to a manageable level, but have no share-dilutary effect. Needless to say, I am against a CP at a discount price – a topic that calls for a stand-alone post.