Ann: March 2023 Quarterly Activities Report and Appendix 5B, page-36

I've had a small position in WAK for 18 long months now. Delays, delays, delays. In fairness though, I think management has done a reasonable job given the pandemic and inflationary pressures. I do however give them low marks for communication. There have been production startup problems that they haven't been candid about, and now that staffing (and presumably production) is ramping and they're almost out of cash, they make us guess on production, sales, and revenue.

I am taking a very positive view of yesterday's announcement. I do not think they would ramp to 3 shifts and 24/7 operation, especially given their perilous cash position, unless they had worked out the kinks in the production line and can sell everything they can produce. I am convinced management would be loath to do another CR anywhere near this price. I am now guessing they will exit FY23 with a production run rate approaching nameplate of 200 kt/y.

In Q2 update, the average price received for kaolin sales in H1 was $339/t. So at nameplate 200kt/y, 96% conversion to sales, and $339/t, that is a monthly revenue run rate of $5.4M/month. If I inflate DFS production costs by 20%, I get costs of $253/t for an EBITDA of $16.5M or a monthly $1.4M.

Mid next month the 20 kg bagging operation is due to come online which should give the average sales price a bump.

They have apparently managed to hire 3 shifts locally, so that risk is gone, and if I'm right and they are on the verge of demonstrating solid production, that huge risk will be behind us.

I think, after a long wait, it is now game-on. If production and sales do indeed materialize and no further capital raisings are required, this puppy could finally rerate.

I was surprised the stock didn't react to yesterday's news, but I guess the long delays means they've been left for dead and no one is paying attention. I substantially increased my position this morning. The order book, fwiw, is hugely stacked on the bid.