Ann: WAK - Stage 1 Progress / Delay in Full Production Rate, page-6

I have given this matter of profitability a great deal of thought, but not arrived at a point where I could venture a well-written post.

Initially I fould it difficult to wrap my mind around the resource, because of varying terminology and tonnages mentioned. As a non-mining type I tended to conflate words like "resource" and “reserves”. Also, I did not know if a 200,000 tonne per year plant meant the input or the output. Likewise in respect to price, were the prices FOB, CIF et cetera. Also, the prices and costs mentioned in various documents two years ago are now substantially invalid, particularly in respect to shipping and FOB prices that has achieved.

I have not done much more than understand the business better than I did originally. I have concluded that for now, WAK can sell everything it can produce at $300 a tonne, FOB. Mining lease M70/1433 has reserves of 109 million tones of kaolinised granite, which at a yield of circa 50% means 54 million tonnes of kaolin. The DFS used a smaller part of the mining lease that had 30.5MT of kaolinised granite, and it had about a dozen years in mind to do that. I have stuck to the basics of the DFS, but abandoned anything else it considered, because I simply wanted a projection of tonnage to which to apply a range of NPAT dollars per tonne.

The kaolinised granite reserves of mining lease M70/1143 are stated as:

– Measured – 38.0MT – 82 whiteness ––– 51% yield – 21.3MT kaolin
– Indicated–– 27.7MT – 83 whiteness––– 50% yield – 13.9MT kaolin
– Inferred –– 43.3MT – 83 whiteness ––– 49% yield – 19.3MT kaolin
– Total ––– 109.1MT – 82 whiteness ––– 50% yield – 54.5MT kaolin

The DFS reported Project Ore Reserves (NB, not the Mineral Resource) for M70/4413 as:

– Probable – 30.5MT – 83.7 whiteness – 51.8 yield – 15.8MT kaolin

Using the DFS as a basis for the first dozen years (roughly). If WAK used the following plant capacity (.75 of a plant would mean a new plant had been used for ¾ of a year). It would exhaust The 30.5MT of kaolinised granite in 11 years.

I am sure that if and when I progress this further, I'll find flaws. Also, like working out a square root of a number via approximation, the process is iterative, and one could come up with a combination of plant installations and years to exhaust the first 30.5MM with which one feels comfortable.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12
1	Year​	1​	2​	3​	4​	5​	6​	7​	8​	9​	10​	11​
2	Plants​	1​	3​	5​	7​	9​	9​	9​	9​	9​	9​	9​
3
4	New plant used​	0.5​	1.25​	1.5​	1.5​	1.25​
5	Earlier used​		0.5​	0.75​	0.5​	0.5​	0.75​
6	Tot plant used​	0.5​	2.25​	4.5​	6.5​	8.25​	9​	9​	9​	9​	9​	9​
7
8	Ore MT in year​	0.2​	0.9​	1.8​	2.6​	3.3​	3.6​	3.6​	3.6​	3.6​	3.6​	3.6​
9	Ore cumulative​	0.2​	1.1​	2.9​	5.5​	8.8​	12.4​	16​	19.6​	23.2​	26.8​	30.4​
10
11	K99 MT in year​	0.1​	0.45​	0.9​	1.3​	1.65​	1.8​	1.8​	1.8​	1.8​	1.8​	1.8​
12