In February 2023, the Company announced that it had successfully completed, on time and on budget, the above-mentionedPittong plant upgrade
In February 2023, the Pittong plant was operated continuously over a 6-dayperiod, and produced in total, 1,004 tonnes of hydrous kaolin. This represents a 245% uplift in production....
Pittong’s ability toproduce ~50,000 tonnes per annum of hydrous kaolin, representing an 83% utilisation rate of the 60,000 tonnes name plateprocessing capacity.
Suvo signed a major take or pay Offtake Agreement (“Agreement”) with ChaozhouChengcheng Industrial Co.,Ltd (“Chaozhou”) in November 2022. This is a major supply agreement for the Company coveringa minimum order quantity of 4,275 tonnes over a three-year term.
In April 2023, Suvo signed another Sales Agreement (“the Agreement”) with Chinese distributor, Qingdao Minglang NewMaterial Co., Ltd (“Qingdao”). The Agreement covers up to 500 tonnes (+/-10%) of hydrous kaolin...
to sell the additionalhydrous kaolin tonnes available from the Company’s Pittong plant requires an in depth and acute understanding of eachregion throughout Asia. Management is confident that it is acquiring the necessary knowledge of how the market works....
So, he upgraded plant with an ability to produce 50000 tonnes pa of hydrous kaolin now has contracts to sell 4775 tonnes in place over a time frame of up to 3 years for roughly a total value of just under $4million with the last sales agreement signed in April this year.
To sell more requires an in depth and acute understanding of individual regions in Asia - management is confident to acquire such knowledge.
Thus the plant was upgraded without the necessary knowledge of whether the 50000 or more tonnes of product will find a home. Guess that explains why such 'massive' amounts as 4775 tonnes have been contracted for sale so far and also why there have been no additional major sales agreements since April. Management is busy studying the possibility of further sales as they have had no idea how the market works but preempted such markets by spending millions on upgrades. Sums it up well?? Not so sure management is on the ball but seems to have kicked an on goal. Well done.
Perhaps there is no need to study why the share price is at well below capacity levels but then again, perhaps they'll fund one just to gain some insight and to acquire such knowledge. A bit of a pointer - getting product sales up to the now completed upgraded nameplate capacity would be very strategic as currently the plant is idling at less than 10% full capacity.
Holders should make sure sure to acquire some knowledge before voting for directors and for giving any bonus shares or renumeration benefits to people who appear to have trouble understanding how their own company's markets work so as to force them to understand that holders need people who already know and understand what they're doing.
And then this:
Suvo is not yet at the stage where it is generating positive cash flows at the group level. Further, no assurance can be giventhat Suvo will become profitable in the future. Accordingly, the Company may require additional equity or debt funding in theshort, medium or long term. The ability of Suvo to access funding is never certain...
One thing is certain, the share price will not improve until positive cashflow is achieved and whether Suvo survives until then is uncertain, given lack of sufficient sales or lack of funding access via equity or debt funding should it be required. Now back to my studies trying to understand why so much money has been spent on plant upgrade with resultant plant under utility . AIMO
SUV Price at posting:
2.9¢ Sentiment: Hold Disclosure: Held
