WA Kaolin has launched a capital raise as it looks to boost production at its Wickepin kaolin project in Western Australia.
The $7.5 million capital raise comprises a $5 million share placement, $1 million converting loan and $1.5 share purchase plan, with proceeds to fund Wickepin’s continued ramp up towards Stage 2 operation.
Having achieved first Wickepin production in October 2022, WA Kaolin is aiming to achieve approximately 200,000 tonnes per annum (tpa) of kaolin production by the end of the 2022–23 financial year (FY23) as part of Stage 1 operations.
Stage 2 will see the company look to achieve 400,000tpa of kaolin production.
WA Kaolin said it had received firm commitments for the $5 million share placement, which was priced at $0.15 per share. This represents a 11.8 per cent discount to WA Kaolin’s closing share price of $0.17 on November 24.
A subsidiary of Stanco International Group, WA Kaolin’s offtake partner and existing shareholder, will subscribe to $1.3 million in the placement.
WA Kaolin executive director Alf Baker and chief executive officer Andrew Sorensen will subscribe to the $1 million converting loan, which will automatically convert to ordinary shares at the same $0.15 issue price following approval from company shareholders at a general meeting in early 2023.
WA Kaolin said it was fetching an average FOB (free on board) kaolin price of $278 per tonne so far in the 2022–23 financial year, which reflected the soaring global demand for kaolin products.
“The Wickepin products have hit the market and the high-quality kaolin is attracting a price premium above our expectations,” Sorensen said.
“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 2 elements.”