That is not the Announcement that I had hoped to see. There are...

That is not the Announcement that I had hoped to see. There are positives (highly likely, but uncommitted increased sales along the lines that I have mentioned in my last post) and negatives (share dilution and concentration of risk in one buyer). This leaves me ambivalent at best, rather than delighted. The next Announcements that could give the SP a fillip are the Annual Report and the usual Presentation.

On off-take agreements, subject to WAK's capacity to produce product, Stanco is not going to buy more product from WAK than it would have bought anyhow, IMO. Off-take agreements are mainly useful when raising funds. The extra cash injection should hasten the ramp-up of capacity and investment in inventory, so breaking into profitability should happen sooner, but that positive is offset by share dilution.

An extended off-take agreement would have helped the SP, but not the business, IMO. The words, “Stanco’s investment bolsters their determination to exceed the existing off-take/distribution agreement volumes by targeting additional strategic markets within the Asia-Pacific region.” are just mellifluous words, because the likely reality is that Stanco would buy what is commercially advantageous, anyhow. That is, a greater range of product to more market subsectors and more geographies. The WAK's products (and future new products) that suit Stanco are what Stanco can sell into the following subsectors: fibreglass; glassware; ceramics; papermaking; and electric wire and cables.

If it makes sense for Stanco to take a cruder product in bulk, and process it in Asia, it could happen, and is likely to happen as a way to monetise silica sand, IMO. Silica sand is usually added to pressure-cast ceramic slurry (called “slip”, so WAK may advantageously leave much of the silica sand in a bulk-shipped product for a slip blend to be made in Asia. Imerys and Sibelco sell slip blends for pressure-cast ceramics, so Stanco can do likewise.