Ann: WAK - Stage 1 Progress / Delay in Full Production Rate, page-24

Following on the comment that the rail upgrade is slated for 2025, I fiddled my spreadsheet assuming that from FY26 WAK would be free of the road-permit limitation, or it would negotiate a road permit for any reasonable delay of the rail facility. It would not make a difference if the transport bottleneck applied for a few years, because one could simply increase the plant tally in later years to achieve the same SP valuation, as I had decided to do that evaluation.

I decided to use a year some years hence when the plant capacity for the 30.5MT reserve plateaus, and assume that no dividends are distributed before then. Selecting that year's EBIT divided by all the shares and options gives an EBIT per share, and multiplying it by an EBIT multiple gives a hypothetical SP at that time, which we can reduce to present value. The target SP does not have to be accurate – for me, it must simply be realistically worth something in the 35 cent to 60 cent range. Mooting a target SP is more an issue of the underlying assumptions being biased to more upside than downside risk.

On upside risk, if the kaolin processing plant capacity is increased at a greater tempo, it does not matter that the 30.5MT ore reserve is exhausted early, because WAK can increase the reserve by deciding to mine nearby pits within the M70/1143 mining lease. I created five rows of EBIT $M at EBIT per tonne at $100, $90, $80, $70 and $60 – a topic covered in an earlier post.

The installation of new plants is simply plugged into row 6 (New plant used) of my spreadsheet, with fractional numbers indicating the in-use part for the financial year in which a new plant is installed. The residual capacity is carried into the year that follows in row 7 (Residual new plant). The logic at C7 being =ROUNDUP(B6)-B6, so if B6 has .8, then C7 would have .2. Row 8 (Sum of plant used) is simply a cumulative total. The other logic should be obvious. The tempo of plant installations is critical, but moot, so that needs more debate.

The things that can be easily changed in the spreadsheet as it now exists are the timing of plant installations, the EBIT multiple, the rate of interest used in the present-value calculation, and the base year selected as the basis of the valuation (I selected FY2030, but FY2029 may be preferable, because that is when production plateaus. One could change the EBIT dollars, but I did not, because there were a range of them. To a degree I made the target SP to approximately fall in the 35c to 60c range mentioned in an earlier post by tweaking the tempo of plant installation. When the SP gets within that range is another matter. The discount rate of 10% that I used is conservative, particularly considering that the EBIT is presumed to be in today's dollars.

* In the table below, target SP is the PV of EBIT per share, and then PV calculation uses Years, Interest & EBIT Multiple stated in the table.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12	Column 13
0	Fin Year	2023	2024	2025	2026	2027	2028	2029	2030	2031	2032	2033	2034
1	Year	1	2	3	4	5	6	7	8	9	10	11	12
2	New plnt	0.8	1	0.25	0.25	0.25	0.25
3	Residual		0.2		0.75	0.75	0.75	0.75
4	plnt used	0.8	2	2.25	3.25	4.25	5.25	6	6	6	6	6	6
5	[/B]
6	Plants	1	2	3	4	5	6	6	6	6	6	6	6
7
8	Ore in yr	0.32	0.8	0.9	1.3	1.7	2.1	2.4	2.4	2.4	2.4	2.4	2.4
9	Ore cum	0.32	1.12	2.02	3.32	5.02	7.12	9.52	11.92	14.32	16.72	19.12	21.52
10
11	K99 in yr	0.16	0.4	0.45	0.65	0.85	1.05	1.2	1.2	1.2	1.2	1.2	1.2
12
13	Rev tonne	$300.00
14	Rev $M	$48.00	$120.00	$135.00	$195.00	$255.00	$315.00	$360.00	$360.00	$360.00	$360.00	$360.00	$360.00
15
16	EBIT pt	$100.00
17	EBIT $M	$16.00	$40.00	$45.00	$65.00	$85.00	$105.00	$120.00	$120.00	$120.00	$120.00	$120.00	$120.00
18	EBIT pt	$90.00
19	EBIT $M	$14.40	$36.00	$40.50	$58.50	$76.50	$94.50	$108.00	$108.00	$108.00	$108.00	$108.00	$108.00
20	EBIT pt	$80.00
21	EBIT $M	$12.80	$32.00	$36.00	$52.00	$68.00	$84.00	$96.00	$96.00	$96.00	$96.00	$96.00	$96.00
22	EBIT MT	$70.00
23	EBIT $M	$11.20	$28.00	$31.50	$45.50	$59.50	$73.50	$84.00	$84.00	$84.00	$84.00	$84.00	$84.00
24	EBIT MT	$60.00
25	EBIT $M	$9.60	$24.00	$27.00	$39.00	$51.00	$63.00	$72.00	$72.00	$72.00	$72.00	$72.00	$72.00
26
27	Shares	30JUN21	282821885		Years	Interest	EBIT Multiple	Target SP *	$120.00
28	Options		167232813		8	10.00%	6	0.64	$0.23	EBIT ps
29	Incentives		27500000						$108.00
30	SPP		16280695					0.57	$0.20	EBIT ps
31	Placement		33888889						$96.00
32	Tot shrs		527724282					0.51	$0.18	EBIT ps
33									$84.00
34								0.45	$0.16	EBIT ps
35									$72.00
36								0.38	$0.14	EBIT ps