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WA Kaolin

We have looked at valuing WA Kaolin a number of ways, including NPV, PER, and peer comparison, and with each measure, we come up with a valuation range of between A$0.30/sh and over A$1/sh. The valuations are sensitive to a range of factors, but we believe the factor most relevant to driving the perception of value is the rate of sales volume growth (ie announced contracts), and the implications for future expansion.

Our price target of A$0.60/sh is based on where the share price will be in 12 months time, that is by the middle of 2022, with the Stage 1 plant operating, and the market getting a sense of how quickly the company will grow. Both NPV and PER valuations will be determined by perception of the timing of Stage 2.

  • WA Kaolin is on track to complete Wickepin Stage 1 construction in August 2021 with commissioning expected by January 2022, and commercial production in the March 2022 quarter, with additional stages to follow.
  • The kaolin market is forecast to grow at over 4%pa over the next five years at least, creating the opportunity, and possibly the necessity, for WA Kaolin to grow into a significant global supplier.
  • The company’s Resource base is sufficient to support production of over 1Mtpa, with timing of market penetration being the limiting factor.
  • Drivers of share price appreciation are expected to be:
    • Evidence of product acceptance by market through 2021 and 2022
    • Construction completed Q4 2021, commissioned by January 2022
    • Ramp up to full production during first half of 2022
    • Clarity on timing and funding of Stage 2 in 2023



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