Ann: March 2023 Quarterly Activities Report and Appendix 5B, page-8

The words, “A Taiwanese distributor has executed a 10-year distribution agreement with a 6 year offtake agreement. The target offtake of 432kt of kaolin in the six years.” come from the 2021 AGM Presentation. It reflects a time when WAK had little to sell, other than what could be produced by the pilot plant at Kwinana, and that was K99, a vast improvement on the K90 that WAK could produce in its earlier years before it floated, but with the benefit of hindsight, as suggested below, maybe not good enough.

In the 22/03/2023 Webinar, Andrew Sorensen stated that WAK had produced K999 for the first time on 17/03/2023. I recall being surprised that 99.9% purity had warranted the mindspace, because I thought new development was focused on wet processing. Coupled with the statement that WAK had received its biggest order ever, I thought that the two were linked, because kaolin for fibreglass requires fine particle size distribution and low iron, titania and carbonaceous content. By definition, a 99.9% purity kaolin would have little contaminant, because the named contaminants and the grit would total to less than 0.1%. Specification for kaolin for textile-grade fibreglass focuses on removing whatever causes fibre thread drawn not to break.

The parties (Dak Tai Trading and WAK) would have discussed the purity specifications preferred, as opposed to tolerated, and if WAK had responded positively, Dak Tai Trading would have ordered product, subject to higher purity. After 17/03/2023, WAK knew it could produce it, subject to adjusting settings to what it did for the pilot plant that I would expect WAK would have used to develop K999. The purchase order was probably in hand, and it was a matter for WAK to accept it, if WAK could meet the specifications

The foregoing conjecture, makes sense when tied to Andrew mentioning delivery of that large order in April-May, and that WAK has since announced moving to a second shift. Also, the recent CR made sense in that light, and you may remember that Dak Tai Trading's parent hurled circa $1.5m at the CR.There is a lot more to the K999 story than what we mushrooms have been told

The same quality issue (what is preferred, rather than tolerated) applies to all WAK's distributors and all products in a setting where the slightly lower K99 plant throughput means the cost differential between K99 and K999 kaolin is small. The delegation of European and Asian buyers to WAK, and WAK visiting China, both in the March 2023 quarter is, perhaps, closely linked to K999. WAK and Dai Tak Trading and its parent company Stanco are so closely linked that they would not have required face-to-face meeting to effect business. Mentioning that WAK visited China suggests there is something relevant on the table between WAK and CMP Tianjin (a European company based in China, and exporting from there.

Fiddling around with settings to get 99.9% purity would probably have taken place at the pilot plant in Kwinana. As the quality got closer to 99.9% purity, Dak Tai Trading probably placed small purchase orders. The tonnage of kaolin produced by the pilot plant, as per the March quarter Announcement, surprised me, but it fits into the foregoing scenario that I have painted.

Andrew Sorensen was patently chuffed when he mentioned some of the foregoing facts, and I instinctively though that 99.9% purity was hugely important, but it was more gut-feel than what I have reasoned in this post. A more ebullient person than Andrew Sorensen would have waxed lyrical about it. There is often more behind his words than than what is obvious.

The 20kg bagging facility would also suggest more purchase orders being made and accepted in the near future, perhaps after July. I have not refined my thoughts on selling into more geographies, but enough has mentioned about “European customers” to suggest there is a significant story there. Anyhow, WAK's immediate focus is probably on delivering product, and funding Stage 3 expansion, rather than securing more sales in the long term.

When I wrote this post's opening sentence many hours ago, I knew I would give vent to my Micawberish psyche, but writing the post coalesced disparate thoughts I had, and I am more positive at the conclusion of the post than I was at the start, so I thank you for that. Be warned though, this post is substantially conjecture – a product of an imaginative mind that needs to be entertained.

I bought more shares on Friday at 15c.