It looks brilliant. Current owners got around $100 million of plant for $6.5 million, but they have spent another $30 million, need more, and have sold nothing.
Kaolin is not something you sell by the ton. The price depends on what the customer wants, what you can get them to pay, and what it costs you to get it to them.
None of that has happened yet, maybe because the company still does not have any method of getting the kaolin from the mine site to the nearest port. When they do it will be a 700 ton barge, or, if they can hire one, a 3000 ton barge. Fact is, I don't think they are in too much of a hurry because they have no firm orders.
The killer, for me, on investing at 14c or 15c or any price for that matter was when I saw a reference to Pierpont's comments and checked them out - www.pierpont.com.au - look in archives and search for kaolin. This will give you enough background to say eeeek!!!
I will change my mind when they have had a second quarter of positive cashflow, showing a profit, repeating sales, thinking about a dividend.
Sure, it will cost more, but at least we will know that they can do it, which is a major doubt right now.
Till then it is best avoided.
Regards
K
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