WA Kaolin

WA Kaolin secures $7.5 million for stage two investment and working capital for Wickepin Project, Western Australia

WA Kaolin (ASX:WAK) reports it has secured $7.5 million in funding for stage two investment and working capital for the processing plant at the Wickepin Kaolin Project in Western Australia.

The company says the $7.5 million capital raise comprises a $5 million share placement, a $1 million converting loan and a $1.5 million share purchase plan (SPP).

First production from Wickepin stage one commenced in October with production to steadily increase to around 200,000 tonnes per annum by the end of FY2023, and the company notes the Wickepin Kaolin Project was completed in October on budget.

WA Kaolin says it is now an emerging ‘globally significant’ kaolin producer experiencing unprecedented demand for kaolin products. Deliveries to customers from the Wickepin plant have commenced and the average Free on Board (FOB) price FY23 YTD is $278 per tonne, which is ahead of the company’s projections.

WA Kaolin CEO Andrew Sorensen said: “The Wickepin products have hit the market and the high-quality kaolin is attracting a price premium above our expectations.

“We are now executing contracts with new customers in Australia, Japan and Malaysia as well as our existing offtakers”

We are now executing contracts with new customers in Australia, Japan and Malaysia as well as our existing offtakers.

As the production ramps up over the balance of this financial year, we are forecasting a positive cash flow from our Wickepin operations in the first half of 2023.

The ramp up to meet the volume demands of our customers requires working capital as we build inventories and fill the export logistics pipeline, and this raise supports that demand as well as allowing us to continue the incremental investment in the planned stage two elements.”

WA Kaolin says the placement comprises a single tranche share placement of over 33.333 million fully paid ordinary shares at an issue price of $0.15 per new share to investors in Australia  to raise A$5 million, and firm commitments have been received for the full amount to be raised.

A subsidiary of Stanco International Corp, WA Kaolin’s offtake partner and existing shareholder, has committed to subscribe to $1.3 million in the placement.

WA Kaolin Executive Director Alf Baker, and CEO Andrew Sorensen have also committed to subscribe to $1 million by way of a converting loan which will automatically convert to ordinary shares at the same issue price, upon obtaining approval from the company’s shareholders at a general meeting to be held early next year.

If shareholder approval is not obtained, the converting loan will be unsecured and repayable on 1 June 2024 occurring 8% interest per annum until paid.

The company is also inviting its shareholders in Australia and New Zealand to participate in the SPP at the same issue price as the placement, with WA Kaolin intending to raise $1.5 million.

Further information regarding the SPP will be provided to eligible shareholders in the SPP offer booklet which will be made available to eligible shareholders shortly.

The Wickepin Kaolin Project is located 220km southeast of Perth in Western Australia, and has a mineral resource of 644.5 million tonnes including an ore reserve estimate of 30.5 million tonnes of kaolinised granite.

WA Kaolin says it has a 2-stage ramp up strategy for the project with stage one aiming to optimise the production rate up to 200,000 tonnes per annum, followed by the second stage which will expand the production to 400,000 tonnes per annum.

The company acquired the project from Rio Tinto (ASX:RIO) in 1999, and since then WA Kaolin has invested over $42 million to develop and progress the Wickepin Project.

Images: WA Kaolin Ltd
Written By Harry Mulholland
Hailing from the Central Coast region of NSW, Harry is a passionate journalist with a background in print, radio and ESG news. When not bashing away on his keyboard, he can be found brewing a coffee or playing with his dog.