Ann: WAK - Market Update, page-2

This is a very positive Announcement. The new classifier is going to make a huge difference, IMO.

WAK's kaolin is astoundingly pure, so it requires no decontamination, other than removing the silica sand in which the kaolin is hosted. The corollary of purity is whiteness, a key price determinant. Many competitors have to undergo costly wet processes to decontaminate their product, although on the plus side their kaolin particle-size distribution (PSD) is finer if they mine sandy alluvial kaolin. Relative to some competitors, WAK has a classification cost disadvantage, and competitors have a decontamination disadvantage, so the delta between these costs may be small.
|
Excavating WAK's Wickepin ore requires no drilling and blasting to mine (the drilling rig that WAK owns is used to pinpoint where to excavate). Much the same is true for competitors who have sandy alluvial kaolin. Some sedimentary kaolin is hosted in sedimentary rock that requires drilling, blasting, crushing and milling.

I have had decades of sales and marketing experience, and my experience is that the difficult bit is to find a sales prospect prepared to discuss business. Until now, the PSD that WAK could offer would not have been fine enough to elicit any interest from potential users of kaolin to discuss business. The new classifiers significantly change WAK's sales-prospecting game.

The words "separator" and "classifier" tend to be vague, but there is a difference. Separators handle volume better, and classifiers allow setting cut points more precisely. What WAK was struggling with was that at circa 45 microns, there is a pivot point, and WAK could not via its separator technology deliver the PSD that the continuous-filament fibreglass subsector now demands. By adding a classifier to the loop, WAK need not compromise its separator's throughput efficiency to achieve a 45-micron cut point that a classifier handles with consummate ease. The additional benefit is that for the pressure-cast ceramics subsectors (sanitaryware especially, which uses pressurised slip casting) that require a coarser kaolin to hasten water drainage, WAK can rebalance its K99 separator technology to be a bit coarser than it is now set, and use the classifier to carry the can for a finer cut point.

The above paragraph suggests that WAK must look at its market holistically to optimally exploit its oreb0dy. That is, get a balance of its sales for a variety of PSD specifications. It's like the beef industry - hooves and horns are sold to A; hides to B; hearts, livers and kidneys to C. bovine gallstones to D, lungs and other waste to E; and so on to get the best price from every market niche. For WAK, the products that it sells are precursor products to be be further processed abroad (negotiations on two partnerships (one for ceramics and the other for paper) in Asia are yet to be Announced); products that require a high cut point that suits separator technology (pressure cast ceramics, probably "engineered" to specification to improve high-load fluidity); and products with tight cut points below at or below 45 microns, like high-gloss paint and continuous filament fibreglass.

Management has for a long time been keen on investing in Stage 2, which suggests it has reason to believe it needs that capacity. The second classifier that WAK ordered may initially be attached to K99 Plant 1, and shifted to Plant 2 when it is commissioned. Also, I assume that Management invested in its own excavator recently for the same volume-expected reason.

Moving an increased tonnage by road may be a problem, because nothing further has been stated about the promised rail-transport upgrade. WAK's demonstrated demand for volume transport may be what has occasioned the delay. This is something on which I'll attempt to get WAK's view, but for reasons of confidentiality, Management pay prefer to say nothing.