will be bankable enough for the financiers or the company would not have signed them off and there are valid reasons WKT has left 2 as MOUs and 1 as HOA.
We now need to build the plant.
The 2 MOUs we cant committ to anything Binding this year as we cant supply them unless we increase production to 80K TPA (Late next year).
The Company has made statements that they are not looking to convert the MOUs into Binding. (because we cant deliver enough product in the first 40K TPA)
The 1 HOA with the Germans will only commit 6 months before production for the super jumbo premium product.
The company is smart enough to not miss out on the upswing of prices.
We actually do not want Binding Offtake Agreements that lock in prices at todays prices as it serves WKT far better $$$ wise and also protects the offtake buyers as market prices are predicted to rise higher next year.
It creates fairness for the Buy and Seller with price certainty when they are at a set period of time out from when delivery is required.
This provides everlasting certainty for both parties and all the terms are already in the Binding
Term Sheet. Its the foundation of long term business relationships that automatically trigger Binding Offtake Agreements.
At the agreed timeframe prior to the product being delivered the established price points and quantities are transformed into Binding Offtake Agreements from the agreed terms in the Binding Term Sheet.
Financiers will have a more precise understanding that it is more advantageous to the company to have the Binding Term Sheets with long term partners until we get the plant built, that will trigger the Binding Offtake Agreements.
Once the plant is built then we can begin locking in Binding Offtake Agreements when there is clear line of site to delivery schedules.
WKT will increase profits as limited supply becomes high demand and pricing pressures begin to apply, therefore pricing moves upwards and our pricing involves agreed data and mechanisms to determine spot prices.
As the payback period on the project is done very quickly its far better to give away some interest payments from revenue upside for the first year or 2 then give away equity that shareholders lose for the Life Of Mine or Life of the company.
The 3rd BOA (WOGEN) is now to be WKT Global Sales, Purchasing, Marketing and Distribution Partner for the next 5 years is an international commodity trading house with a global network of clients that has been around since 1972.
Wogen will be providing a working capital facility up to $8M USD / $11.2M AUD. Wogen will be marketing and seeking NEW BOAs for the next 5 years. Wogen will be responsible for the distribution and logistics. Wogen will be purchasing WKT products and Wogen will be responsible for the creditworthiness of the final purchaser.
What I foresee is WKT may roll the other 2 BOAs into the Wogen partnership if required.
WKT will be producing more than 40K TPA next year with existing BOAs, MOUs and HOAs once the plant is built. More so again when WOGEN begin delivering new offtake agreements and business opportunities.
Time will tell indeed : ))
WKT Price at posting:
27.5¢ Sentiment: Buy Disclosure: Held
(20min delay)