I agree, this is a serious business substantially funded and run...

I agree, this is a serious business substantially funded and run by folk who have been successful in other initiatives.

WAK hs been around for a decade preparing to exploit its Wickepin kaolin resources that it has owned for a decade, and it has spent years developing the K99 process to exploit that specific kaolin deposit. WAK is a buy and hold punt for me. Their target market is known, and unlike the ultra-high-purity alumina story, and world-changing nanotube story, what WAK intends to produce and sell is a bog-standard industrial mineral that is a feedstock for ancient industries like the paper and ceramic sectors, and decades-old sectors like fibreglass and rubber. WAK is not sexy, but it will be around for decades, or taken over at a premium price by the likes of Imrys.

Postscript for WolfgangH

I mentioned in an earlier post today that the corollary of good news can look like bad news (delayed timing of becoming cash-flow positive). Good news to the effect that:

• the market wants WAK's K99 products;
• this is not restricted to K99F (for fibreglass); and
• premium prices are being obtained,

presents Management with a dilemma. Do they seize the moment, and divert funds to being able to meet that demand, or do they focus on achieving positive cash flow soon. It is a delightful dilemma to have. The Presentation states, “Customer demand for Wickepin quality premium Kaolin continues to far outstrip Stage 1 ramp up forecast.” and “Product Pricing premium achieved over initial projections.”

I do not think the market appreciates the WAK advantage of ore quality and quantity twinned with Wickepin-specific IP to produce a range of marketable kaolin products at a juicy delta (the gap between FOB cost and effective FOB price).

I have until a few hours ago been negative on the viability of K99P (paper grade), because of the expense of wet processing to get into the premium-price grades, and I wondered if this was a soundly based goal, or a dysfunctional obsession. However, the reference to K999P (99.9% pure) product, and the words, “Planned entry into the high premium paper market (via unique processing circuit R&D) suggests that WAK may well have a high-delta product at volume in the offing. The dilemma is, does WAK delay getting into K999P to get an erlier cash-flow positive date, or not.

There are a number of decisions faced with that dilemma – the 20kg packaging to get a better price being one. The Quarterly updates states, “WA Kaolin has also invested in automatic packaging equipment to fill 20kg bags which will come online towards the end of FY2023. WA Kaolin plans to market its kaolin product to customers which cannot purchase products in the larger bulk bags, providing access to a broader market in the sector.” The Presentation states. “Stage 2 product bagging line (due H1 CY23) provides access to high margin 20kg bag market.” A distributor like Choko (see https://www.choko.asia > kaolin) would want to sell smaller bags of K99 products.

On another CR soon, The presentation states, “Estimated 12-month build, targeted outstanding funding to be completed via cashflow from operations.” I do not know if Management is relying on the 25c options occasioning related cash inflow, or not. I personally would prefer the SP to stay below 25c until after the 20 November 2023 options expiry date. I am happy to hang back from making a capital gain for a year or more.

The Presentation also states. “WAK intends to implement further 200ktpa modular increases to cater for product demand growth.” This is a bolder statement than what has been stated since the Prospectus was issued in 2020, because it does not have the clause, “subject to a range of factors, including demand, funding and approvals.”

As I have mentioned in previous posts, the war in Ukraine has left European tile makers short of kaolin. So it is interesting to read in the Presentation, “WA Kaolin Ltd will be represented at several major ceramics trade exhibitions during CY23 to increase our penetration into this important market”. See https://imformed.com/industrial-mineral-supply-disruption-ukraine-crisis/ and https://ctasc.com/ctda-article-from...clay-supply-shortage-due-to-ukraine-conflict/. Also, the Quarterly Update statement, “The Wickepin Kaolin Project recently hosted a site visit comprising a delegation of Asian and European customers” suggests that some European kaolin buyers are interested in investigating Australia as a kaolin supplier.
What EBT margin can be expected at 400,000mta, and when would sales be 400,000mta, I cannot say. I suspect the former will be a two-digit dollar number greater than $50 per tonne, and the latter, would be some time in FY2026.