I have forgotten whatever Management has earlier stated in...

I have forgotten whatever Management has earlier stated in relation to volumes, but the recent Christmas felicitation (received via eMail on 20 December 2022)” makes it clear that WAK would be producing circa 200,000 tonnes by the end of June 2023. In Management's words, “As you will be aware, we achieved first production from Stage 1 at the Wickepin Kaolin Project in Western Australia during October, with production now ramping up to ~200,000 tonnes per annum rate by the end of FY2023.” This is probably six months earlier than I thought.

Stage 2 construction is either yet to commence, and it should reach ~200,000 tonnes per annum by the end of calendar year 2023 at best, and a more likely date may be June 2024. This was the core of what the Prospectus offered. Expansion beyond that was expressed in vaguer words, with the rider, subject to funds available and market demand. In the words of the Prospectus, “The Company's objective is to continue to add on 200,000t modules in stages with the implementation of each subsequent stage subject to a range of factors, including demand, funding and approvals.”

I am not sure if just below 400,000 tonnes (380,000 tonnes per annum) is a bottleneck until the reconnection of the rail link occurs, and formal arrangements for its use is established. The Prospectus stated, “The Company does not have in place formal arrangements for the use of rail or port services to transport its kaolin and instead relies on informal and ad hoc arrangements.” The DFS states, “WAK will use road transport to deliver product to port. There is sufficient road transport capacity available to transport the permitted 380,000 tpa, but WAK will work diligently with authorities and stakeholders to re-open the tier 3 rail line from Wedin to Narrogin and negotiate suitable rolling stock with the rail operator, so the majority of product movement can be on rail.”

I would prefer WAK to hold production at circa 400,000 tonnes a year, and expand when it has generated the funds (including lending facilities) to invest in a Stage 3, which could be another K99 dry-process plant at the mine site, and whatever it takes to produce paper-grade kaolin at Wedin, which probably includes a slurry pipe to Wedin, including a water return pipe. Paper-grade kaolin must be less viscous than other grades, which requires a wet process focused on that additive step. This was alluded to in the DFI, to wit, “The Works Approval that underpins the Project is for a project involving both wet and dry processing facilities, with the dry facility located at the site chosen for the initial development considered in this DFS and the wet facility located at the nearby Wedin rail siding. The development considered by this DFS is for the dry processing facility and an expansion of that facility. The Company intends to complete the wet processing facility at some time in the future, when process development work has been successfully completed and market conditions allow.”